-----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, AiuDxiklVIOHynrFfrJhTrlsU7HYz6WNorV3A3x35AVN5uY75VWLA7l4f/6cta0U jbWWcoE1s3HbUCFJdCr1uA== 0000950112-95-002725.txt : 19951017 0000950112-95-002725.hdr.sgml : 19951017 ACCESSION NUMBER: 0000950112-95-002725 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19951016 SROS: NYSE 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-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-52695 FILM NUMBER: 95581062 BUSINESS ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132000 FORMER COMPANY: FORMER CONFORMED NAME: PAINE WEBBER INC DATE OF NAME CHANGE: 19840523 S-3/A 1 PAINE WEBBER GROUP INC AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1995 REGISTRATION NOS. 33-52695-01 33-52695 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 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 (212) 713-2000 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive office) THEODORE A. LEVINE VICE PRESIDENT, GENERAL COUNSEL & SECRETARY PAINE WEBBER GROUP INC. 1285 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 (212) 713-2000 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------ PLEASE SEND COPIES OF ALL COMMUNICATIONS TO: PETER S. WILSON CRAVATH, SWAINE & MOORE WORLDWIDE PLAZA 825 EIGHTH AVENUE NEW YORK, NEW YORK 10019 (212) 474-1000 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: When market conditions warrant after the effective date of this Registration Statement. ------------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. Z If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED AMOUNT MAXIMUM MAXIMUM AMOUNT OF TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE REGISTRATION OF SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) FEE(3) Debt Securities(4).............................. $400,000,000 100% $400,000,000 $137,932
(1) Or, if any Debt Securities are issued at an original issue discount, such greater amount as shall result in an aggregate offering price to the public which shall not exceed the amount set forth under "Proposed maximum aggregate offering price". Debt Securities may be denominated in U.S. Dollars or the equivalent in other currencies or composite currencies. (2) Estimated solely for the purpose of determining the registration fee. (3) Previously paid. (4) This Registration Statement also relates to $444,575,000 in Debt Securities previously registered pursuant to Registration Statement No. 33-51149. A registration fee of $517,241 was paid in connection with Registration Statement No. 33-51149. ------------------- Pursuant to Rule 429 of the rules and regulations of the Commission under the Securities Act of 1933, the Prospectus contained herein also relates to Registration Statement No. 33-51149, as to which this constitutes Post-Effective Amendment No. 1. Such Post-Effective Amendment shall hereafter become effective concurrently with the effectiveness of this Registration Statement in accordance with Section 8(c) of the Securities Act of 1933. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUBJECT TO COMPLETION--OCTOBER 16, 1995 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED , 1995) PAINE WEBBER GROUP INC. MEDIUM-TERM SENIOR NOTES, SERIES C, AND MEDIUM-TERM SUBORDINATED NOTES, SERIES D DUE FROM NINE MONTHS TO 30 YEARS FROM DATE OF ISSUE ------------ Paine Webber Group Inc. (the "Company") may offer from time to time its Medium-Term Senior Notes, Series C ("Senior Notes"), and Medium-Term Subordinated Notes, Series D ("Subordinated Notes"). The Senior Notes and Subordinated Notes offered by this Prospectus Supplement are hereinafter referred to as the "Notes". The Company may sell up to U.S. $844,575,000 aggregate principal amount (or its equivalent in another currency or composite currency) of Notes, subject to reduction as a result of the sale of other Securities (as defined in the accompanying Prospectus). The Notes will be due from nine months to 30 years from the date of issue, as selected by the purchaser and agreed to by the Company, and may be subject to redemption at the option of the Company or repayment at the option of the holder. The Notes may be denominated or payable in U.S. dollars or in such foreign currencies or composite currencies (each a "Specified Currency") as may be designated by the Company at the time of offering. The Specified Currency, interest rate or interest rate formula, issue price and stated maturity ("Stated Maturity") of any Note and any other terms of such Note not set forth herein or in the accompanying Prospectus will be set forth in a related Pricing Supplement (the "Pricing Supplement") to this Prospectus Supplement. Unless otherwise indicated in the applicable Pricing Supplement, each Note will bear interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case of certain Notes issued at a price representing a discount from the principal amount payable at Stated Maturity (a "Zero-Coupon Note"), or at a floating rate (a "Floating Rate Note") determined by reference to the Commercial Paper Rate, the Prime Rate, the Federal Funds Rate, LIBOR, the Treasury Rate (each as defined under "Description of Notes") or such other interest rate formula as may be designated in the applicable Pricing Supplement, as adjusted by the Spread or Spread Multiplier (each as defined under "Description of Notes"), if any, applicable to such Note. The Senior Notes will constitute Superior Indebtedness (as defined in the accompanying Prospectus), and the Subordinated Notes will be subordinated to all Superior Indebtedness. See "Description of Notes". Each Note will be represented by either a global security (a "Global Note") registered in the name of The Depository Trust Company, as Depositary (the "Depositary") or its nominee (each such Note represented by a Global Note being referred to herein as a "Book-Entry Note"), or a certificate issued in definitive form (a "Certificated Note"), as set forth in the applicable Pricing Supplement. Interests in Book-Entry Notes will be shown on, and transfers thereof will be effected only through, the records maintained by the Depositary and its participants. Except as described in "Description of Notes--Book-Entry Notes", owners of beneficial interests in Global Notes will not be entitled to receive Notes in definitive form and will not be considered the holders thereof. Unless otherwise indicated in the applicable Pricing Supplement, the Notes cannot be redeemed or repaid prior to their Stated Maturity and will be issued only in fully registered form in the denomination of U.S. $100,000 or any larger amount that is an integral multiple of U.S. $1,000 or, in the case of Notes denominated in a Specified Currency other than U.S. dollars, in the denominations set forth in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, interest on the Fixed Rate Notes will be payable on each March 1 and September 1 and at maturity. Interest on the Floating Rate Notes will be payable on the dates specified herein and in the applicable Pricing Supplement. See "Description of Notes". Unless otherwise specified in the applicable Pricing Supplement, Notes denominated or payable in other than U.S. dollars or European Currency Units ("ECU") will not be sold in, or to residents of, the country issuing the Specified Currency. ------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Public(1) Agent's Commissions(2) Proceeds to Company (2)(3) Per Note....................... 100% .08% to .75% 99.25% to 99.92% Total(4)....................... U.S. $844,575,000 U.S. $675,660 to $6,334,313 U.S. $838,240,688 to $843,899,340
(1) Unless otherwise specified in the applicable Pricing Supplement, the price to the public of Notes will be 100% of their principal amount. (2) The Company will pay each of PaineWebber Incorporated ("PWI") and CS First Boston Corporation (with PWI, the "Agents", and each, an "Agent") a commission of from .08% to .75%, depending on Stated Maturity, of the principal amount of any Notes sold through such Agent, as agent (or sold to such Agent as principal under circumstances in which no other discount is agreed upon). (3) Before deducting estimated expenses of U.S. $[ ] payable by the Company, including reimbursement of certain of the Agents' expenses. See "Plan of Distribution". (4) Or the equivalent thereof in other currencies or composite currencies. ------------ Offers to purchase Notes are being solicited on a reasonable efforts basis, from time to time, by the Agents on behalf of the Company. The Notes are not and will not be listed on any securities exchange; the Notes do not have an established trading market; and there can be no assurance that the maximum amount of the Notes offered by this Prospectus Supplement will be sold or that there will be a secondary market for the Notes. The Company reserves the right to sell Notes directly on its own behalf. The Company may use additional agents as it may designate from time to time to solicit offers to purchase Notes. The name of any such additional agent and details as to the arrangements between such agent and the Company will be set forth in the applicable Pricing Supplement. The Company also may sell Notes at a discount to an Agent for its own account or for resale to one or more purchasers at varying prices relating to prevailing market prices at the time of resale or, if set forth in the applicable Pricing Supplement, at a fixed public offering price, as determined by such Agent. In addition, an Agent may offer Notes purchased by it as principal to other dealers. The Company reserves the right to withdraw, cancel or modify the offering contemplated hereby without notice. The Company or the soliciting Agent may reject any offer to purchase Notes in whole or in part. See "Plan of Distribution". This Prospectus Supplement and the accompanying Prospectus may be used by the Company, PWI (a wholly-owned subsidiary of the Company) or other affiliates of the Company in connection with offers and sales related to secondary market transactions in the Notes and in Senior Notes and Subordinated Notes previously sold at negotiated prices related to prevailing market prices at the time of sale or otherwise. PWI or such other Company affiliates may act as principal or agent in such transactions. ------------ PAINEWEBBER INCORPORATED CS FIRST BOSTON ------------ The date of this Prospectus Supplement is , 1995. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENTS MAY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, OVER-ALLOT OR EFFECT TRANSACTIONS WITH A VIEW TO STABILIZING OR MAINTAINING THE MARKET PRICE OF THE NOTES OR OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN ANY OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IMPORTANT CURRENCY INFORMATION Unless otherwise specified in the applicable Pricing Supplement, purchasers are required to pay for each Note by delivery of the requisite amount of the Specified Currency in which such Note is denominated. Unless otherwise specified in the applicable Pricing Supplement and except, under certain circumstances, for Notes payable in a Specified Currency other than U.S. dollars as described under "Foreign Currency Risks--Payment Currency", payments of principal of and premium, if any, and interest on each Note will be made in the Specified Currency in which such Note is denominated. However, at the election of the holder of a Note, payments of principal of and premium, if any, and interest on Notes payable in other than U.S. dollars may be converted into U.S. dollars on the terms and conditions described below under "Description of Notes--Payment of Principal and Interest". References herein to "U.S. dollars", "U.S. $" or "$" are to the lawful currency of the United States. DESCRIPTION OF NOTES The following description of the particular terms of the Notes offered hereby (referred to in the accompanying Prospectus as "Offered Securities") supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of Offered Securities set forth in the Prospectus, to which description reference is hereby made. The following description will apply to each Note unless otherwise specified in the applicable Pricing Supplement. The statements under this heading are subject to the detailed provisions of each Indenture (as defined below). Whenever particular provisions of an Indenture are referred to, such provisions are incorporated by reference herein as a part of the statements made and the statements are qualified in their entirety by such reference. GENERAL The Senior Notes offered hereby will be issued under the Senior Indenture referred to in the accompanying Prospectus with Chemical Bank, as Trustee ("Senior Trustee"). The Subordinated Notes offered hereby will be issued under the Subordinated Indenture referred to in the accompanying Prospectus with Chemical Bank Delaware, as Trustee ("Subordinated Trustee"). The Senior Indenture and Subordinated Indenture are herein sometimes referred to collectively as the "Indentures" and individually as an "Indenture". The Senior Trustee and Subordinated Trustee are herein sometimes referred to collectively as the "Trustees" and individually as a "Trustee". The Senior Notes constitute a single series of Securities under the Senior Indenture and currently may be issued in an aggregate principal amount of up to an additional U.S. $844,575,000, less an amount equal to the aggregate principal amount of any other Securities, including any other series of medium-term notes (including any Subordinated Notes), issued under the accompanying Prospectus. The Subordinated Notes constitute a single series of Securities under the Subordinated Indenture and currently may be issued in an S-2 aggregate principal amount of up to an additional U.S. $844,575,000, less an amount equal to the aggregate principal amount of any other Securities, including any other series of medium-term notes (including any Senior Notes), issued under the accompanying Prospectus. The foregoing limits may be increased by the Company without the consent of any of the holders of the Notes if in the future it determines that it may wish to sell additional Senior Notes or Subordinated Notes. Any Note denominated in other than U.S. dollars will be treated for purposes of the foregoing limit as having a principal amount in U.S. dollars determined by converting the principal amount of such Note into U.S. dollars at the noon buying rate in The City of New York for cable transfers for the Specified Currency thereof as certified for customs purposes by the Federal Reserve Bank of New York (the "Exchange Rate") on the first New York Business Day (as hereinafter defined) next preceding the date on which the Company accepts the offer to purchase such Note. For a description of the rights associated with different series of Securities under the Indentures, see "Description of Securities" in the accompanying Prospectus. Unless previously redeemed or repaid, a Note offered hereby will mature at its Stated Maturity, which may be a date from nine months to 30 years from its date of issue as selected by the purchaser and agreed to by the Company, and may be subject to redemption at the option of the Company or repayment at the option of the holder prior to its Stated Maturity as set forth under "Optional Redemption, Repayment and Repurchase". As used herein, "Maturity" with respect to a Note shall mean the date on which the principal of such Note or an installment of principal becomes due, whether at its Stated Maturity, upon redemption or early repayment or otherwise. Each Note will be denominated and payable in a Specified Currency as specified in the applicable Pricing Supplement. The Notes will be issuable only in fully registered form without coupons. Each Note will be issued initially as either a Book-Entry Note or a Certificated Note. See "Book-Entry Notes" below. Currently, only Notes that are denominated and payable in U.S. dollars may be issued as Book-Entry Notes. Unless otherwise specified in the applicable Pricing Supplement, the authorized denominations of any Note denominated in U.S. dollars will be U.S. $100,000 and integral multiples of U.S. $1,000 in excess thereof. The authorized denominations of Notes denominated in other than U.S. dollars will be set forth in the applicable Pricing Supplement. Certificated Notes may be presented for registration of transfer or exchange at the Corporate Trust Office of Chemical Bank in the Borough of Manhattan, The City of New York (the "Notes Office"). Chemical Bank will act as Paying Agent (the "Paying Agent") with respect to the Subordinated Notes. Certain Notes may be issued which provide for an amount less than the principal amount thereof to be due and payable in the event of an acceleration of the maturity thereof (each an "Original Issue Discount Security"), including by reason of redemption or early repayment. The amount so payable on an Original Issue Discount Security in the event of such an acceleration will be determined in accordance with the applicable Pricing Supplement and the terms of such Original Issue Discount Security. Original Issue Discount Securities may be Zero-Coupon Notes or may bear interest at a rate which at the time of issuance is below market rates and will be sold at a discount (which may be substantial) below their stated principal amount. Certain Original Issue Discount Securities may be issued with original issue discount for United States Federal income tax purposes. For a discussion of Federal income tax considerations with respect to Notes issued with such original issue discount, see "Certain United States Federal Income Tax Considerations--United States Holders--Original Issue Discount". The Company has previously sold Senior Notes and Subordinated Notes and other series of medium-term notes. As of September 18, 1995, 1995, U.S. $636,475,000 aggregate principal amount of S-3 Senior Notes were outstanding under the Senior Indenture and U.S. $6,000,000 aggregate principal amount of the Company's Medium-Term Subordinated Notes, Series B, and U.S. $282,150,000 aggregate principal amount of Subordinated Notes were outstanding under the Subordinated Indenture. The Senior Notes will constitute Superior Indebtedness and will rank pari passu with all other unsecured debt of the Company except subordinated debt. The Subordinated Notes will be subordinated in right of payment, to the extent and in the manner set forth in the Subordinated Indenture, to the prior payment in full of all Superior Indebtedness. As of June 30, 1995, the aggregate outstanding principal amount of Superior Indebtedness was U.S. $2.8 billion (including U.S. $547.4 million of commercial paper U.S. $44.9 million of bank loans, but excluding Superior Indebtedness consisting of guarantees and other commitments and contingent liabilities and obligations of the type which are generally described in the notes entitled "Short-Term Borrowings" and "Commitments and Contingencies in the notes to the Company's Consolidated Financial Statements for the quarter ended June 30, 1995, included in the Company's Quarterly Report on Form 10-Q for such fiscal quarter). See "Description of Securities--Subordination" in the accompanying Prospectus. PAYMENT OF PRINCIPAL AND INTEREST Unless otherwise specified in the applicable Pricing Supplement and except, under certain circumstances, for a Note payable in a Specified Currency other than U.S. dollars, payments of principal of and premium, if any, and interest on each Note will be made in the Specified Currency in which such Note is denominated, provided that holders of Notes payable in other than U.S. dollars may, by following the procedures described in the next paragraph, elect to have such payments converted into U.S. dollars. See also "Foreign Currency Risks". Unless otherwise specified in the applicable Pricing Supplement, a holder of a Note payable in other than U.S. dollars may elect to receive payment of principal of and premium, if any, and interest on such Note in U.S. dollars by transmitting a written request for such payment to the Senior Trustee, in the case of Senior Notes, or to the Paying Agent, in the case of Subordinated Notes, at the Notes Office on or prior to the applicable Regular Record Date (as hereinafter defined) or at least 16 days prior to Maturity, as the case may be. Such request may be in writing (mailed or hand delivered) or by cable, telex or other form of facsimile transmission. A holder of a Note payable in other than U.S. dollars may elect to receive payment in U.S. dollars for all principal, premium, if any, and interest payments and need not file a separate election for each payment. Such election will remain in effect until such Note is transferred or until such election is changed by written notice to the Senior Trustee or the Paying Agent, as the case may be, but written notice of any such change must be received by the Senior Trustee or the Paying Agent, as the case may be, on or prior to the applicable Regular Record Date or at least 16 days prior to Maturity, as the case may be. Holders of Notes payable in other than U.S. dollars whose Notes are to be held in the name of a broker or nominee should contact such broker or nominee to determine whether and how an election to receive payments in U.S. dollars may be made. The U.S. dollar amount to be received by a holder of a Note denominated in other than U.S. dollars who elects to receive payment in U.S. dollars will be based on the highest bid quotation in The City of New York received by an agent (which may be Chemical Bank or an affiliate thereof) appointed by the Company for such purpose (the "Exchange Rate Agent") as of 11:00 A.M., New York City time, on the second Business Day (as hereinafter defined) preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) selected by the Exchange Rate Agent for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to all holders of Notes electing to receive U.S. dollar payments and at which the applicable dealer commits to S-4 execute a contract. If such bid quotations are not available, payments will be made in the Specified Currency, except as provided below under "Foreign Currency Risks--Payment Currency". All currency exchange costs will be borne by the holder of the Note by deductions from such payments. Interest will be payable to the person in whose name a Note is registered at the close of business on the Regular Record Date next preceding each Interest Payment Date (as hereinafter defined) except that, in the case of Notes issued between a Regular Record Date and an Interest Payment Date, interest payable on such Interest Payment Date will be paid to the person in whose name such Note was initially registered; provided, however, that interest payable at Maturity will be payable to the person to whom principal shall be payable. Unless otherwise indicated in the applicable Pricing Supplement, the "Regular Record Date" with respect to any Note shall be the date 15 calendar days prior to each Interest Payment Date, whether or not such date shall be a Business Day. Unless otherwise indicated in the applicable Pricing Supplement and except as provided below, interest will be payable, in the case of Fixed Rate Notes, on each March 1 and September 1; in the case of Floating Rate Notes which reset daily, weekly, monthly or quarterly, on the third Wednesday of March, June, September and December of each year; in the case of Floating Rate Notes which reset semi-annually, on the third Wednesday of the two months of each year specified in the applicable Pricing Supplement; and, in the case of Floating Rate Notes which reset annually, on the third Wednesday of the month specified in the applicable Pricing Supplement, and, in each case, at Maturity. Each date on which interest is payable on any Note (other than at Maturity) is referred to in this Prospectus Supplement as an "Interest Payment Date". Holders of Zero-Coupon Notes will not receive periodic payments of interest on such Notes. Unless otherwise specified in the applicable Pricing Supplement, payments of interest on any Note with respect to any Interest Payment Date or at Maturity will include interest accrued from and including the later of the date of issuance of such Note and the most recent Interest Payment Date for such Note to which interest has been paid or provided for to but excluding such current Interest Payment Date or Maturity; provided, however, that if the Interest Reset Dates (as hereinafter defined) with respect to any Floating Rate Note are daily or weekly, interest payable on such Note on any Interest Payment Date or at Maturity will include interest accrued from and including the later of the date of issuance of such Note and the day following the most recent Regular Record Date to which interest on such Note has been paid or provided for to and including the next preceding Regular Record Date or Maturity, except that, if such a Note is issued between a Regular Record Date and the next succeeding Interest Payment Date, interest paid on such Interest Payment Date will include interest accrued from and including the date of issuance to but excluding such Interest Payment Date, and interest paid on the Interest Payment Date following such Interest Payment Date will include interest accrued from and including such Interest Payment Date (or from and including the date of issuance, if interest was not paid or provided for on such Interest Payment Date) to and including the Regular Record Date following such Interest Payment Date. With respect to a Floating Rate Note, accrued interest from the date of issuance or from the last date to which interest has been paid or provided for is calculated by multiplying the face amount of such Floating Rate Note by an accrued interest factor. Such accrued interest factor is computed by adding the interest factor calculated for each day from the date of issuance, or from the last date to which interest has been paid or provided for, to the date for which accrued interest is being calculated. Unless otherwise specified in the applicable Pricing Supplement, the interest factor (expressed as a decimal) for each such day is computed by dividing the interest rate (expressed as a decimal) applicable to such date by 360, in the case of Commercial Paper Rate Notes, Prime Rate Notes, Federal Funds Rate Notes or LIBOR Notes, or by the actual number of days in the year, in the case of Treasury Rate Notes, or by such number as may be specified in the applicable Pricing Supplement, in the case of any Floating Rate Note with another Interest Rate Basis (as such terms are hereinafter defined). Unless otherwise S-5 specified in the applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-day months. Unless otherwise specified in the applicable Pricing Supplement, any payment of principal, premium, if any, or interest required to be made on a Note on a day which is not a Business Day in respect of such Note need not be made on such day, but may be made on the next day which is such a Business Day with the same force and effect as if made on such day, and no interest shall accrue as a result of such delayed payment, except that in connection with any LIBOR Note, if such next succeeding Business Day is in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day. The term "Business Day" as used herein with respect to any Note means each day, other than a Saturday or Sunday, that is (i) not a day on which banking institutions in the Business Day Centers with respect to such Note are authorized or obligated by law or executive order to close, (ii) if such Note is a LIBOR Note, a London Banking Day and (iii) if such Note is denominated in ECU, any day that is not designated as an ECU settlement day by the ECU Banking Association in Paris or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made. "Business Day Centers", unless otherwise specified in the applicable Pricing Supplement, with respect to any Note shall mean The City of New York and, in the case of any Note payable in a Specified Currency other than U.S. dollars or ECU, the principal financial center of the country issuing the Specified Currency. As used herein, "London Banking Day" shall mean any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. "New York Business Day", as used herein, shall mean each day, other than a Saturday or Sunday, that is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. Unless otherwise specified in the applicable Pricing Supplement, payments in U.S. dollars of interest on Certificated Notes (other than interest payable at Maturity) will be made by mailing a check to the registered holders of such Notes entitled thereto at their addresses appearing on the security register for the Notes. Notwithstanding the foregoing, at the option of the Company, such payments may be made by wire transfer to an account with a bank located in the continental United States (or other jurisdiction acceptable to the Company and the Senior Trustee, in the case of Senior Notes, or the Paying Agent, in the case of Subordinated Notes), but only if appropriate payment instructions from the registered holder of a Certificated Note have been received in writing by the Senior Trustee or the Paying Agent, as the case may be, not less than five Business Days prior to the applicable Interest Payment Date. Unless otherwise specified in the applicable Pricing Supplement, payments of principal of and premium, if any, and interest on the Certificated Notes will be made, if at Stated Maturity or upon earlier redemption, then on the Stated Maturity or the date fixed for redemption, as applicable, upon surrender of the Notes at the Notes Office, and if upon repayment prior to Stated Maturity, then on the applicable date for repayment, provided the holder shall have complied with the requirements for repayment set forth herein and in the Notes. See "Optional Redemption, Repayment and Repurchase" below. All such payments shall be made in immediately available funds, provided that the Certificated Notes to be paid are presented to the Notes Office in time for the Senior Trustee or the Paying Agent, as the case may be, to make such payments in such funds in accordance with its normal procedures. Beneficial owners of Book-Entry Notes will be paid in accordance with the Depositary's and its participants' procedures in effect from time to time as described in the accompanying Prospectus under "Description of Securities--Global Securities". Unless otherwise specified in the applicable Pricing Supplement, payments of principal of and premium, if any, and interest on any Note to be made in other than U.S. dollars will be made on the date due by wire transfer to such account with a bank located in the country issuing the Specified Currency (or, with respect to Notes denominated in ECU, Brussels) or other jurisdiction acceptable to the Company and the Senior Trustee, in the case of Senior Notes, or the Paying Agent, in the case of Subordinated Notes, as shall have been designated at least 15 days prior to the applicable Interest S-6 Payment Date or Maturity, as the case may be, by the registered holder of such Note, provided that, in the case of payment of principal, premium, if any, and interest due at Maturity, the Note is presented to the Senior Trustee or the Paying Agent, as the case may be, in time for the Senior Trustee or the Paying Agent, as the case may be, to make such payments in such funds in accordance with its normal procedures. Such designation shall be made by filing the appropriate information with the Senior Trustee or the Paying Agent, as the case may be, at the Notes Office and, unless an appropriate revocation is received by the Senior Trustee or the Paying Agent, as the case may be, any such designation made with respect to any Note by a registered holder will remain in effect with respect to any further payments with respect to such Note payable to such holder. If a payment with respect to any such Note cannot be made by wire transfer because the required designation has not been received by the Senior Trustee or the Paying Agent, as the case may be, on or before the requisite date or for any other reason, a notice will be mailed to the registered holder of such Note at its registered address requesting a designation pursuant to which such wire transfer can be made and, upon receipt by the Senior Trustee or the Paying Agent, as the case may be, of such a designation, such payment will be made within 15 days of such receipt. The Company will pay any administrative costs imposed by banks in connection with making payments by wire transfer, but any tax, assessment or governmental charge imposed upon payments will be borne by the registered holders of the Notes in respect of which payments are made. At the option of the Company, payments on a Note may be made for value on any date on which a payment of principal, premium, if any, or interest is due in a place other than the United States, even though, as a result of time zone differences, it may at the time such payment is made to the holder of such Note be the preceding day in the United States or it may be necessary to make a payment on the preceding day in the United States in order that such payment be available to be credited for value on the due date in such place. If the principal of or premium, if any, or interest on any Note is payable in a Specified Currency other than U.S. dollars and such Specified Currency is not available (as determined by the Company) due to the imposition of exchange controls or other circumstances beyond the control of the Company and in certain other circumstances, the Company will be entitled to satisfy its obligations to the holder of such Note by making such payment in U.S. dollars, all as described under "Foreign Currency Risks--Payment Currency". Any payment made under such circumstances in U.S. dollars where the required payment is in other than U.S. dollars will not constitute an Event of Default under the applicable Indenture. Any such determination by the Company made in good faith will be binding on the Senior Trustee or the Paying Agent, as the case may be, and such holder. See "Description of Securities--Payment and Paying Agents" in the accompanying Prospectus. INTEREST RATE Each Note will bear interest from its date of issuance until the principal thereof is paid or made available for payment. Such interest will be payable on each Interest Payment Date and at Maturity as specified above under "Payment of Principal and Interest". Each Fixed Rate Note will bear interest at a fixed rate, which may be zero in the case of a Zero-Coupon Note. Each Floating Rate Note will bear interest at a variable rate determined by reference to an interest rate formula, which may be adjusted by adding or subtracting the Spread or multiplying by the Spread Multiplier (each term as defined below), if any, unless otherwise specified therein. A Floating Rate Note may also have either or both of the following: (a) a maximum numerical interest rate limitation, or ceiling, on the rate of interest which may accrue during any interest period (a S-7 "Maximum Rate"); and (b) a minimum numerical interest rate limitation, or floor, on the rate of interest which may accrue during any interest period (a "Minimum Rate"). The "Spread" is the number of basis points (one basis point equals one-hundredth of a percentage point) specified in the applicable Pricing Supplement as being applicable to the interest rate for such Note and the "Spread Multiplier" is the percentage specified in the applicable Pricing Supplement as being applicable to the interest rate for such Note. If so specified in the applicable Pricing Supplement, the fixed rate of interest with respect to a Fixed Rate Note or the Spread or Spread Multiplier, if any, with respect to a Floating Rate Note may vary over the term of the Note in the manner and to the extent specified in such Pricing Supplement. "Index Maturity" means, with respect to a Floating Rate Note, the period to maturity of the instrument or obligation on which the interest rate formula is based, as specified in the applicable Pricing Supplement. Unless otherwise provided in the applicable Pricing Supplement, Chemical Bank will be the calculation agent (the "Calculation Agent") with respect to the Floating Rate Notes. In any case in which determination of any interest rate requires the Calculation Agent to obtain quotes of rates from banks or other sources, any such quote may be given by the Calculation Agent or an affiliate of the Calculation Agent, provided that the Calculation Agent or such affiliate satisfies all of the applicable criteria for such a bank or other source set forth herein or in the applicable Pricing Supplement. Absent manifest error, any calculation made by the Calculation Agent shall be conclusive and binding on the Company, the applicable Trustee and the holders of the applicable Notes. The applicable Pricing Supplement relating to a Fixed Rate Note will designate a fixed rate of interest per annum payable on such Fixed Rate Note. The applicable Pricing Supplement relating to a Floating Rate Note will designate an interest rate basis (the "Interest Rate Basis") for such Floating Rate Note. The Interest Rate Basis for each Floating Rate Note will be: (a) the Commercial Paper Rate, in which case such Note will be a Commercial Paper Rate Note, (b) the Prime Rate, in which case such Note will be a Prime Rate Note, (c) the Federal Funds Rate, in which case such Note will be a Federal Funds Rate Note, (d) LIBOR, in which case such Note will be a LIBOR Note, (e) the Treasury Rate, in which case such Note will be a Treasury Rate Note, or (f) such other interest rate formula as is set forth in such Pricing Supplement. The applicable Pricing Supplement for a Floating Rate Note will specify the Interest Rate Basis and, if applicable, the Index Maturity, the Spread, the Spread Multiplier, the Maximum Rate, the Minimum Rate, the Initial Interest Rate, the Interest Payment Dates, the Regular Record Dates, the Calculation Dates, the Interest Determination Dates and the Interest Reset Dates (as such terms are hereafter defined) with respect to such Note. Unless otherwise specified in the applicable Pricing Supplement, the rate of interest on each Floating Rate Note will be reset daily, weekly, monthly, quarterly, semi-annually or annually (each an "Interest Reset Date"), as specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the Interest Reset Date will be, in the case of Floating Rate Notes which reset daily, each Business Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes which reset weekly, the Tuesday of each week (except as hereinafter provided); in the case of Floating Rate Notes which reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes which reset quarterly, the third Wednesday of March, June, September and December; in the case of Floating Rate Notes which reset semi-annually, the third Wednesday of two months of each year as specified in the applicable Pricing Supplement; and in the case of Floating Rate Notes which reset annually, the third Wednesday of one month of each year as specified in the applicable Pricing Supplement; provided, however, that (a) the interest rate in effect from the date of issuance to the first Interest Reset Date with respect to a Floating Rate Note will be the Initial Interest Rate (as set forth in the applicable Pricing Supplement) except that if the Interest Reset Date is daily or weekly and such Note is issued between a Regular Record Date and an Interest Payment Date, the Initial Interest Rate shall be the rate for the period from original issuance of the Note until the first Interest Reset Date on or after the first Interest Payment Date with respect to such Note and (b) the interest rate in effect for the ten days immediately prior to Maturity of any Note will be that in effect on the tenth day preceding such Maturity. Unless S-8 otherwise specified in the applicable Pricing Supplement, if any Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day with respect to such Floating Rate Note, the Interest Reset Date for such Floating Rate Note shall be postponed to the next day that is a Business Day with respect to such Floating Rate Note, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Unless otherwise specified in the applicable Pricing Supplement, the "Interest Determination Date" pertaining to an Interest Reset Date for a Commercial Paper Rate Note (the "Commercial Paper Interest Determination Date") and for a Prime Rate Note (the "Prime Rate Interest Determination Date") will be the second New York Business Day preceding the Interest Reset Date with respect to such Note, for a LIBOR Note will be the second London Banking Day (the "LIBOR Interest Determination Date") preceding the Interest Reset Date with respect to such Note, for a Federal Funds Rate Note will be the first New York Business Day (the "Federal Funds Interest Determination Date") preceding the Interest Reset Date with respect to such Note and for a Treasury Rate Note (the "Treasury Interest Determination Date") will be the day of the week in which such Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week. If an auction date shall fall on any Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead be the first New York Business Day immediately following such auction date. All percentages resulting from any calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with five one-millionths of a percentage point being rounded upward) and all currency or composite currency amounts used in or resulting from such calculation will be rounded, if necessary, to the nearest one-hundredth of a unit (with .005 of a unit being rounded upward). In addition to any Maximum Rate which may be applicable to any Floating Rate Note, the interest rate on the Notes will in no event be higher than the maximum rate permitted by New York law, as the same may be modified by United States law of general application. Under present New York law, the maximum rate of interest is 25% per annum on a simple interest basis. This limit shall not apply to Notes in which U.S. $2,500,000 or more has been invested. Unless otherwise indicated in the applicable Pricing Supplement, the "Calculation Date" pertaining to any Interest Determination Date will be the earlier of (i) the tenth day after such Interest Determination Date or, if any such day is not a New York Business Day, the next succeeding New York Business Day and (ii) the New York Business Day next preceding the relevant Interest Payment Date or Maturity, as the case may be. Upon the request of the holder of any Floating Rate Note, the Calculation Agent will provide the interest rate then in effect, and, if determined, the interest rate which will become effective on the next Interest Reset Date with respect to such Floating Rate Note. Interest rates or interest rate formulas are subject to change by the Company from time to time, but no such change will affect any Note already issued or as to which an offer to purchase has been accepted by the Company. S-9 COMMERCIAL PAPER RATE NOTES Commercial Paper Rate Notes will bear interest at the interest rates (calculated by the Calculation Agent with reference to the Commercial Paper Rate and the Spread or Spread Multiplier, if any) specified on the face of the Commercial Paper Rate Note and in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement, "Commercial Paper Rate" means, with respect to any Commercial Paper Interest Determination Date, the Money Market Yield (as defined below) of the rate on such date for commercial paper having the Index Maturity specified in the applicable Pricing Supplement as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15(519)") under the heading "Commercial Paper". In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Commercial Paper Interest Determination Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate on such Commercial Paper Interest Determination Date for commercial paper having the Index Maturity specified in the applicable Pricing Supplement as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any successor publication of the Federal Reserve Bank of New York ("Composite Quotations") under the heading "Commercial Paper". If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in Composite Quotations, the rate for that Commercial Paper Interest Determination Date shall be calculated by the Calculation Agent and shall be the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 A.M., New York City time, on that Commercial Paper Interest Determination Date, of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the Index Maturity specified in the applicable Pricing Supplement placed for an industrial issuer whose bond rating is "AA", or the equivalent, from at least one nationally recognized rating agency; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate will be the Commercial Paper Rate in effect on such Commercial Paper Interest Determination Date. "Money Market Yield" shall be a yield (expressed as a percentage) calculated in accordance with the following formula: Money Market Yield = D X 360 -------------- X 100 360 - (D X M) where "D" refers to the per annum rate for commercial paper, quoted on a bank discount basis and expressed as a decimal; and "M" refers to the actual number of days in the interest period for which interest is being calculated. PRIME RATE NOTES Prime Rate Notes will bear interest at the interest rates (calculated by the Calculation Agent with reference to the Prime Rate and the Spread or Spread Multiplier, if any) specified on the face of the Prime Rate Note and in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement, "Prime Rate" means, with respect to any Prime Rate Interest Determination Date, the arithmetic mean of the prime or base rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Prime Rate Interest Determination Date by three major money center banks in The City of New York selected by the Calculation Agent. If fewer than three such quotations are provided, the Prime Rate shall be determined on the basis of the quotations provided, if any, together with the rates furnished on such date in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of at least U.S. $750 million and being subject to supervision or examination S-10 by Federal or State authority, selected by the Calculation Agent to provide such rate or rates; provided, however, that if the banks or trust companies selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate will be the Prime Rate in effect on such Prime Rate Interest Determination Date. FEDERAL FUNDS RATE NOTES Federal Funds Rate Notes will bear interest at the interest rates (calculated by the Calculation Agent with reference to the Federal Funds Rate and the Spread or Spread Multiplier, if any) specified on the face of the Federal Funds Rate Note and in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement, "Federal Funds Rate" means, with respect to any Federal Funds Interest Determination Date, the rate on such date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Federal Funds Interest Determination Date, the Federal Funds Rate will be the interest rate on such Federal Funds Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If such rate is not yet published in Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Federal Funds Interest Determination Date, the Federal Funds Rate for such Federal Funds Interest Determination Date will be the rate on such Federal Funds Interest Determination Date made publicly available by the Federal Reserve Bank of New York which is equivalent to the rate which appears in H.15(519) under the heading "Federal Funds (Effective)"; provided, however, that if such rate is not made publicly available by the Federal Reserve Bank of New York by 9:00 A.M., New York City time, on the Calculation Date, the Federal Funds Rate will be the Federal Funds Rate in effect on such Federal Funds Interest Determination Date. LIBOR NOTES LIBOR Notes will bear interest at the interest rates (calculated by the Calculation Agent with reference to LIBOR and the Spread or Spread Multiplier, if any) specified on the face of the LIBOR Note and in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR" will be indexed to the offered rate for U.S. dollar deposits and will be determined by the Calculation Agent in accordance with the following provisions: (i) As specified in the applicable Pricing Supplement, with respect to any LIBOR Interest Determination Date, LIBOR will be determined on the basis of either (a) the rate for deposits in U.S. dollars having the Index Maturity specified in the applicable Pricing Supplement, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date, which appears on Telerate Screen Page 3750 (as defined below) as of 11:00 A.M., London time, on such LIBOR Interest Determination Date, if such rate appears on Telerate Screen Page 3750, or (b) the arithmetic mean, as determined by the Calculation Agent, of the offered rates for deposits in U.S. dollars of not less than $1,000,000 having the Index Maturity specified in the applicable Pricing Supplement, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date, which appear on the Reuters Screen LIBO Page (as defined below) as of 11:00 A.M., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear on the Reuters Screen LIBO Page. "Telerate Screen Page 3750" means the display designated as page "British Bankers Assoc. Interest Settlement Rates" on the Telerate system, page 3750 (or such other page or pages as may replace such page on the system for the purpose of displaying such rates). "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page or pages as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). If no rate appears on Telerate Screen Page 3750 or if S-11 fewer than two offered rates appear on the Reuters Screen LIBO Page, as applicable, LIBOR for such LIBOR Interest Determination Date will be determined as described in (ii) below. If neither Telerate Screen Page 3750 or the Reuters Screen LIBO Page is specified in the applicable Pricing Supplement, LIBOR will be determined as if Telerate Screen Page 3750 had been specified. (ii) With respect to a LIBOR Interest Determination Date on which no rate appears on Telerate Page 3750 as described in (i)(a) above, if LIBOR determined on the basis of (i)(a) is specified in the applicable Pricing Supplement, or on which fewer than two offered rates appear on the Reuters Screen LIBO Page as described in (i)(b) above, if LIBOR determined on the basis of (i)(b) is specified in the applicable Pricing Supplement, LIBOR will be determined on the basis of the rates at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date at which deposits in U.S. dollars having the Index Maturity specified in the applicable Pricing Supplement, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time, are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Calculation Agent. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York City time, on such LIBOR Interest Determination Date by three major banks in The City of New York, selected by the Calculation Agent, for loans in U.S. dollars to leading European banks having the Index Maturity specified in the applicable Pricing Supplement commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time; provided, however, that if the banks selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR with respect to such LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR Interest Determination Date. If LIBOR with respect to any LIBOR Note is indexed to the offered rate for deposits in a Specified Currency other than U.S. dollars, the applicable Pricing Supplement will set forth the method for determining such rate. TREASURY RATE NOTES Treasury Rate Notes will bear interest at the interest rates (calculated by the Calculation Agent with reference to the Treasury Rate and the Spread or Spread Multiplier, if any) specified on the face of the Treasury Rate Note and in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement, "Treasury Rate" means, with respect to any Treasury Interest Determination Date, the rate for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity specified in the applicable Pricing Supplement as published in H.15(519) under the heading "U.S. Government Securities-Treasury Bills--Auction Average (Investment)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, the auction average rate (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) for such auction as otherwise made available by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the Index Maturity designated in the applicable Pricing Supplement are not published or made available as provided above by 3:00 P.M., New York City time, on such Calculation Date, or if no such auction is held in a particular week (or on the preceding Friday, if applicable), then the Treasury Rate shall be S-12 calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates as of approximately 3:30 P.M., New York City time, on such Treasury Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent, for the issue of Treasury bills with a remaining maturity closest to the specified Index Maturity; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate will be the Treasury Rate in effect on such Treasury Interest Determination Date. BOOK-ENTRY NOTES Upon issuance, all Book-Entry Notes having the same Specified Currency, original issuance date, Stated Maturity, redemption and repayment provisions, if any, Interest Payment Dates, Regular Record Dates, and, in the case of Fixed Rate Notes, interest rate, or, in the case of Floating Rate Notes, Interest Rate Basis, Initial Interest Rate, Index Maturity, Interest Reset Dates, Spread, if any, Spread Multiplier, if any, Maximum Rate, if any, and Minimum Rate, if any, will be represented by a single Global Note. Each Global Note representing Book-Entry Notes will be deposited with, or on behalf of, the Depositary, and registered in the name of the Depositary or its nominee. Book-Entry Notes will not be exchangeable at the option of the holder for Certificated Notes and, except under the circumstances described in the accompanying Prospectus under "Description of Securities--Global Securities", will not otherwise be issuable in the form of Certificated Notes. The Depositary has advised the Company and the Agents as follows: The Depositary is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. The Depositary holds securities of its participants and facilitates the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depositary's participants include securities brokers and dealers (including the Agents), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to the Depositary and its participants are on file with the Securities and Exchange Commission. A further description of the Depositary's procedures with respect to Global Notes representing Book-Entry Notes is set forth in the accompanying Prospectus under "Description of Securities-- Global Securities". The Depositary has confirmed to the Company, the Agents and the Trustees that it intends to follow such procedures. OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE The Pricing Supplement relating to each Note will indicate either that such Note cannot be redeemed prior to its Stated Maturity or that such Note will be redeemable at the option of the Company on a date or dates or under circumstances (which may include those described under "Payment of Additional Amounts" below) specified prior to its Stated Maturity at a price or prices set forth in the applicable Pricing Supplement, together with accrued interest to the date of redemption. Unless otherwise specified in the applicable Pricing Supplement, the Notes will not be subject to any sinking fund. The Company may redeem any of the Notes that are redeemable and remain outstanding either in whole or, except as otherwise provided under "Payment of Additional Amounts" below, from time to time in part, upon not less than 30 nor more than 45 days' notice. If less than all of the Notes having the same terms (except as to principal amount and date of issuance) are to be redeemed, the S-13 Notes to be redeemed shall be selected by the applicable Trustee by such method as such Trustee shall deem fair and appropriate and otherwise as provided under the applicable Indentures. The Pricing Supplement relating to each Note will indicate either that such Note cannot be repaid at the option of the holder prior to its Stated Maturity or that such Note will be repayable at the option of the holder on a date or dates or under circumstances specified prior to its Stated Maturity at a price or prices set forth in the applicable Pricing Supplement, together with accrued interest to the date of repayment. In order for a Note to be repaid, the Senior Trustee, in the case of Senior Notes, or the Paying Agent, in the case of Subordinated Notes, must receive at the Notes Office at least 30 days but not more than 45 days prior to the repayment date (a) appropriate wire instructions and (b) either (i) the Note with the form entitled "Option to Elect Repayment" on the reverse of the Note duly completed or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or trust company in the United States or any other "eligible guarantor institution" (as such term in defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended) setting forth the name of the holder of the Note, the principal amount of the Note, the portion of the principal amount of the Note to be repaid, the certificate number or a description of the tenor and terms of the Note, a statement that the option to elect repayment is being exercised thereby and a guarantee that the Note to be repaid with the form entitled "Option to Elect Repayment" on the reverse of the Note duly completed will be received by the Senior Trustee or the Paying Agent, as the case may be, not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter and such Note and form duly completed must be received by the Senior Trustee or the Paying Agent, as the case may be, by such fifth Business Day. Tender of a Note for repayment shall be irrevocable. The repayment option may be exercised by the holder of a Note for less than the entire principal amount of the Note provided that the principal amount of the Note remaining outstanding after repayment is an authorized denomination. No transfer or exchange of any Note (or, in the event that any Note is to be repaid in part, the portion of the Note to be repaid) will be permitted after exercise of a repayment option. All questions as to the validity, eligibility (including time of receipt) and acceptance of any Note for repayment will be determined by the Company, whose determination will be final, binding and non-appealable. If a Note is represented by a Global Note, the Depositary's nominee will be the holder of such Note and therefore will be the only entity that can exercise a right to repayment. In order to ensure that the Depositary's nominee will timely exercise a right to repayment with respect to a particular Note, the beneficial owner of such Note must instruct the broker or other direct or indirect participant through which it holds an interest in such Note to notify the Depositary of its desire to exercise a right to repayment. Different firms have different cutoff times for accepting instructions from their customers and, accordingly, each beneficial owner should consult the broker or other direct or indirect participant through which it holds an interest in a Note in order to ascertain the cutoff time by which such an instruction must be given in order for timely notice to be delivered to the Depositary. The Company may at any time repurchase Notes at any price in the open market or otherwise. Notes so purchased by the Company may, at the discretion of the Company, be held or resold or surrendered to the applicable Trustee for cancellation. PAYMENT OF ADDITIONAL AMOUNTS If so specified in the applicable Pricing Supplement, the Company will, subject to the limitations and exceptions set forth below, pay to the holder of any Note who is a United States Alien (as defined below) such additional amounts ("Additional Amounts") as may be necessary in order that every net payment of principal of, premium, if any, and interest on such Note, after deduction or withholding by the Company, any Trustee, the Paying Agent or any of the Company's other paying agents for or on account of any present or future tax, assessment or other governmental charge imposed upon such S-14 holder with respect to or as a result of such payment by the United States or any political subdivision or taxing authority thereof or therein, will not be less than the amount provided for in such Note to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply to any one or more of the following: (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the existence of any present or former connection between such holder (or between a fiduciary, settlor or beneficiary of, or person holding a power over, such holder, if such holder is an estate or a trust, or between a member or shareholder of such holder, if such holder is a partnership or corporation) and the United States, including, without limitation, such holder (or such fiduciary, settlor, beneficiary, person holding a power, member or shareholder) being or having been a citizen or resident or treated as a resident thereof or being or having been engaged in a trade or business therein or being or having been present therein or having or having had a permanent establishment therein, or (ii) such holder's present or former status as a domestic or foreign personal holding company, a passive foreign investment company or a controlled foreign corporation, a private foundation or other tax-exempt organization for United States Federal income tax purposes or a corporation that accumulates earnings to avoid United States Federal income tax; (b) any tax, assessment or other governmental charge that would not have been so imposed but for the presentation by the holder of such Note for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof was duly provided for, whichever occurs later; (c) any estate, inheritance, gift, sales, transfer, excise or personal property tax or any similar tax, assessment or other governmental charge; (d) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the holder or beneficial owner of such Note, if such compliance is required by statute or by regulation of the United States or any taxing authority thereof as a precondition to relief or exemption from such tax, assessment or other governmental charge; (e) any tax, assessment or other governmental charge that is (i) payable otherwise than by deduction or withholding from payments of principal of or premium, if any, or interest on such Note or (ii) required to be deducted or withheld by any paying agent from any such payment, if (and only if) such payment can be made without such deduction or withholding by any other paying agent; (f) any tax, assessment or other governmental charge imposed on interest received by a person holding, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of the Company entitled to vote (taking into account the applicable attribution of ownership rules under Section 871(h)(3) of the Internal Revenue Code of 1986, as amended (the "Code")) or that is a controlled foreign corporation related to the Company (directly or indirectly) through stock ownership; or (g) any combination of items (a), (b), (c), (d), (e) and (f); nor will Additional Amounts be paid with respect to payment of the principal of or premium, if any, or interest on such Note to any United States Alien that is a fiduciary or partnership or to a person other than the sole beneficial owner of such Note to the extent that a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the holder of such Note. If so specified in the applicable Pricing Supplement, any Note registered in the name of a United States Alien may be redeemed at the option of the Company in whole, but not in part, at any time, on giving not less than 30 nor more than 45 days' notice in accordance with the provisions described in "Description of Securities--Notices" in the accompanying Prospectus (which notice shall be irrevocable), at a redemption price equal to the principal amount thereof (or, in the case of an Original Issue Discount Security, the amount specified in the applicable Pricing Supplement), together with accrued interest to the redemption date, if the Company determines that the Company has or will become obligated to pay Additional Amounts with respect to such Note on the next succeeding Interest Payment Date as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in the application or official interpretation of such laws, S-15 regulations or rulings by a taxing authority, court or regulatory agency, whether or not rendered or taken with respect to the Company, or any action taken by any taxing authority, court or regulatory agency (including any change in administrative policy or enforcement practice of such taxing authority), whether or not taken with respect to the Company, which change or amendment becomes effective, or action is taken, on or after the original issuance date of such Note, and such obligation cannot be avoided by the Company taking reasonable measures available to it. Prior to giving any such notice of redemption, the Company shall deliver to the applicable Trustee a certificate stating that the Company is entitled to effect such redemption and setting forth a statement of such facts showing that the conditions precedent to the right of the Company so to redeem have occurred, and an opinion of independent legal counsel addressed to the Company and such Trustee to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of such change or amendment. Notice of the intention of the Company to redeem any such Note pursuant to this paragraph shall not be given earlier than 90 days prior to the earliest date that the obligation to pay Additional Amounts would arise were a payment in respect of such Note due on such date. As used herein, "United States Alien" means any person who, for United States Federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership, one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust. NOTES LINKED TO COMMODITY PRICES, EQUITY INDICES OR OTHER FACTORS AND OTHER TERMS OF NOTES Notes may be issued, from time to time, with the principal amount payable on any principal payment date, or the amount of interest payable on any Interest Payment Date or on any principal payment date, to be determined by reference to one or more commodity prices, equity indices, the rate of exchange between a Specified Currency and any other currency or composite currency or other factors or interest rate formulas and on such other terms (which may differ from the terms set forth herein) as may be set forth in the relevant Pricing Supplement. FOREIGN CURRENCY RISKS THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED OR PAYABLE IN A CURRENCY OTHER THAN U.S. DOLLARS, AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISERS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED OR PAYABLE IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS. EXCHANGE RATES AND EXCHANGE CONTROLS An investment in Notes that are denominated or payable in a Specified Currency other than U.S. dollars entails significant risks that are not associated with a similar investment in a security denominated and payable in U.S. dollars. Such risks include, without limitation, the possibility of significant changes in rates of exchange between the U.S. dollar and such Specified Currency and the possibility of the imposition or modification of foreign exchange controls by either the U.S. or foreign governments. Such risks generally depend on factors over which the Company has no control, such as economic and political events and the supply of and demand for the relevant currencies. In recent years, rates of exchange between the U.S. dollar and certain foreign currencies have been highly volatile and such volatility may be expected in the future. Fluctuations in any particular exchange rate that have S-16 occurred in the past are not necessarily indicative, however, of fluctuations in the rate that may occur during the term of any Note. Depreciation of the Specified Currency for a Note against the U.S. dollar would result in a decrease in the effective yield of such Note below its coupon rate and, in certain circumstances, could result in a loss to the investor on a U.S. dollar basis. Governments have imposed from time to time, and may in the future impose, exchange controls which could affect exchange rates as well as the availability of a Specified Currency for making payments with respect to a Note. There can be no assurances that exchange controls will not restrict or prohibit payments of principal or any premium or interest in any Specified Currency. Even if there are no actual exchange controls, it is possible that, on a payment date with respect to any particular Note, the Specified Currency in which amounts then due in respect of such Note are payable would not be available to the Company. In that event, the Company will make any required payment in the manner set forth below under "Payment Currency". Foreign exchange rates can either be fixed by sovereign governments or float. Exchange rates of most economically developed nations are permitted to fluctuate in value relative to the U.S. dollar. Sovereign governments, however, rarely voluntarily allow their currencies to float freely in response to economic forces. Sovereign governments in fact use a variety of techniques, such as intervention by a country's central bank or imposition of regulatory controls or taxes, to affect the exchange rate of their currencies. Governments may also issue a new currency to replace an existing currency or alter the exchange rate or relative exchange characteristics by devaluation or revaluation of a currency. Thus, a special risk in purchasing a Note that is denominated or payable in a foreign currency or composite currency is that its U.S. dollar equivalent yield could be affected by governmental actions which could change or interfere with theretofore freely determined currency valuation, fluctuations in response to other market forces and the movement of currencies across borders. Currently, there are limited facilities in the United States for conversion of U.S. dollars into foreign currencies and vice versa, and few banks offer non-U.S. dollar-denominated checking or savings account facilities in the United States. Accordingly, unless otherwise specified in the applicable Pricing Supplement, payment of principal of and premium, if any, and interest on Notes made in a Specified Currency other than U.S. dollars will be made from an account with a bank located in the country issuing the Specified Currency (or, with respect to Notes denominated in ECU, Brussels). Unless otherwise specified in the applicable Pricing Supplement, Notes denominated or payable in a Specified Currency other than U.S. dollars or ECU will not be sold in, or to residents of, the country issuing such Specified Currency. The information set forth in this Prospectus Supplement, any Pricing Supplement and the accompanying Prospectus is directed to prospective purchasers of Notes who are United States residents, and the Company disclaims any responsibility to advise prospective purchasers who are residents of countries other than the United States with respect to any matters that may affect the purchase or holding of, or receipt of payments of principal of and premium, if any, and interest on, Notes. Such persons should consult their own legal and financial advisors with regard to such matters. Any Pricing Supplement relating to Notes denominated or payable in a Specified Currency other than U.S. dollars will contain information concerning historical exchange rates for such Specified Currency against the U.S. dollar, a description of such Specified Currency, a description of any exchange controls affecting such Specified Currency and any other required information concerning such Specified Currency. GOVERNING LAW AND JUDGMENTS The Notes will be governed by and construed in accordance with the laws of the State of New York. Courts in the United States have not customarily rendered judgments for money damages denominated in any currency other than the U.S. dollar. The Judiciary Law of the State of New York provides, however, that, in an action based upon an obligation denominated in a currency other than U.S. dollars, a court shall render a judgment or decree in the currency of the underlying obligation and the judgment S-17 or decree shall be converted into U.S. dollars at the rate of exchange prevailing on the date of entry of the judgment or decree. It is not known whether the foregoing provision would be applied (a) in any action based on an obligation denominated in a composite currency or (b) by a Federal court sitting in the State of New York. PAYMENT CURRENCY Except as set forth below or in the applicable Pricing Supplement, if payment in respect of a Note is required to be made in a Specified Currency other than U.S. dollars and on any date on which a payment is due with respect to such Note such Specified Currency is not available (as determined by the Company) due to the imposition of exchange controls or other circumstances beyond the Company's control, or is no longer used by the government of the country issuing such Specified Currency or for the settlement of transactions by public institutions of or within the international banking community, then all such payments due on such payment date shall be made in U.S. dollars. The amount so payable on any such payment date in such Specified Currency shall be converted into U.S. dollars at a rate determined by the Exchange Rate Agent as of the second Business Day prior to the date on which such payment is due on the basis of the most recently available Exchange Rate for such Specified Currency, or as otherwise specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, if payment on a Note is required to be made in ECU and on a payment date with respect to such Note ECU are not available (as determined by the Company) due to circumstances beyond the Company's control, or are no longer used in the European Monetary System, then all such payments due on such payment date shall be made in U.S. dollars. Unless otherwise indicated in the applicable Pricing Supplement, the amount so payable on any such payment date in ECU shall be converted into U.S. dollars at a rate determined by the Exchange Rate Agent as of the second Business Day prior to the date on which such payment is due on the following basis: The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU as of the last date on which ECU were used in the European Monetary System. The equivalent of ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Components. The U.S. dollar equivalent of each of the Components shall be determined by the Exchange Rate Agent on the basis of the most recently available Exchange Rate for the Components. If the official unit of any component currency is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall have a value on the date of division equal to the amount of the former component currency divided by the number of currencies into which that currency was divided. All determinations referred to above made by the Exchange Rate Agent shall be at its sole discretion (except to the extent expressly provided herein or in the applicable Pricing Supplement that any determination is subject to approval by the Company or other persons) and, in the absence of manifest error, shall be conclusive for all purposes and binding on holders of the Notes and the Company, and the Exchange Rate Agent shall have no liability therefor. Unless otherwise specified in the applicable Pricing Supplement, Notes denominated in a Specified Currency other than U.S. dollars will provide that, in the event of an official redenomination of the Specified Currency, the obligations of the Company with respect to payments on such Notes shall, in all cases, be deemed immediately following such redenomination to provide for payment of that amount of the redenominated Specified Currency representing the amount of such obligations immediately before such redenomination. S-18 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the principal United States Federal income tax consequences resulting from the beneficial ownership of Notes by certain persons. This summary does not purport to consider all the possible United States Federal tax consequences of the purchase, ownership or disposition of Notes and is not intended to reflect the individual tax position of any beneficial owner. It deals only with Notes and currencies or composite currencies other than U.S. dollars ("Foreign Currency") held as capital assets. Moreover, except as expressly indicated, it addresses initial purchasers and does not address beneficial owners that may be subject to special tax rules, such as banks, insurance companies, dealers in securities or currencies, purchasers that hold Notes (or Foreign Currency) as a hedge against currency risks or as part of a straddle with other investments or as part of a "synthetic security" or other integrated investment (including a "conversion transaction") comprised of a Note and one or more other investments, or purchasers that have a "functional currency" other than the U.S. dollar. Except to the extent discussed below under "Non-United States Holders", this summary is not applicable to non-United States persons not subject to United States Federal income tax on their worldwide income. This summary is based upon the United States Federal tax laws and regulations as now in effect and as currently interpreted and does not take into account possible changes in such tax laws or such interpretations, any of which may be applied retroactively. It does not include any description of the tax laws of any state, local or foreign governments that may be applicable to Notes or holders thereof, and it does not discuss the tax treatment of Notes denominated in certain hyperinflationary currencies or dual currency Notes. Persons considering the purchase of Notes should consult their own tax advisors concerning the application of the United States Federal tax laws to their particular situations as well as any consequences to them under the laws of any other taxing jurisdiction. UNITED STATES HOLDERS Payments of Interest In general, interest on a Note, whether payable in U.S. dollars or a Foreign Currency (other than certain payments on a Discount Note, as defined and described below under "Original Issue Discount"), will be taxable to a beneficial owner who or which is (i) a citizen or resident of the United States, (ii) a corporation created or organized under the laws of the United States or any State thereof (including the District of Columbia) or (iii) a person otherwise subject to United States Federal income taxation on its worldwide income (a "U.S. Holder") as ordinary income at the time it is received or accrued, depending on the holder's method of accounting for tax purposes. If an interest payment is denominated in or determined by reference to a Foreign Currency, then special rules, described below under "Foreign Currency Notes", apply. Original Issue Discount The following discussion summarizes the United States Federal income tax consequences to U.S. Holders of Notes issued with original issue discount for Federal income tax purposes ("OID"). U.S. Holders of a Note issued with OID generally will be subject to special tax accounting rules provided in the Code. On February 4, 1994, the Treasury Department published final regulations (the "OID Regulations"), which expand and illustrate the rules provided by the Code. Special rules apply to OID on a Discount Note that is denominated in Foreign Currency. See "Foreign Currency Notes--Foreign Currency Discount Notes". General. A Note will be treated as issued with OID (a "Discount Note") if the excess of the Note's "stated redemption price at maturity" over its issue price is greater than or equal to a de minimis amount (set forth in the Code and the OID Regulations). Generally, the issue price of a Note (or any Note that is part of an issue of Notes) will be the first price at which a substantial amount of Notes that are part of such issue of Notes are sold (other than to underwriters, placement agents or wholesalers). Under the OID Regulations, the "stated redemption price at maturity" of a Note is the sum of all S-19 payments provided by the Note that are not payments of "qualified stated interest". A "qualified stated interest" payment includes any stated interest payment on a Note that is unconditionally payable at least annually at a single fixed rate (or at certain floating rates) that appropriately takes into account the length of the interval between stated interest payments. If a particular issue of Notes will constitute an issue of Discount Notes, the applicable Pricing Supplement will so state. In general, if the excess of a Note's stated redemption price at maturity over its issue price is de minimis, then such excess constitutes "de minimis OID". Under the OID Regulations, unless the election described below under "Election to Treat All Interest as Original Issue Discount" is made, such a Note will not be treated as issued with OID (in which case the following paragraphs under "Original Issue Discount" will not apply) and a U.S. Holder of such a Note will recognize capital gain with respect to such de minimis OID as stated principal payments on the Note are made. The amount of such gain with respect to each such payment will equal the product of the total amount of the Note's de minimis OID and a fraction, the numerator of which is the amount of the principal payment made and the denominator of which is the stated principal amount of the Note. In certain cases, Notes that bear stated interest and are issued at par may be deemed to bear OID for Federal income tax purposes, with the result that the inclusion of interest in income for Federal income tax purposes may vary from the actual cash payments of interest made on such Notes, generally accelerating income for cash method taxpayers. Under the OID Regulations, a Note may be a Discount Note where, among other things, (i) a Floating Rate Note provides for a Maximum Rate or a Minimum Rate that is reasonably expected as of the issue date to cause the yield on the debt instrument to be significantly less, in the case of a Maximum Rate, or more, in the case of a Minimum Rate, than the expected yield determined without the Maximum Rate or Minimum Rate, as the case may be; (ii) a Floating Rate Note provides for significant front-loading or back-loading of interest; or (iii) a Note bears interest at a floating rate in combination with one or more other floating or fixed rates. Unless specified in the applicable Pricing Supplement, Floating Rate Notes will not be Discount Notes. The Code and the OID Regulations provide rules that require a U.S. Holder of a Discount Note having a maturity of more than one year from its date of issue to include OID in gross income before the receipt of cash attributable to such income, without regard to the holder's method of accounting for tax purposes. The amount of OID includible in gross income by a U.S. Holder of a Discount Note is the sum of the "daily portions" of OID with respect to the Discount Note for each day during the taxable year or portion of the taxable year in which the U.S. Holder holds such Discount Note ("accrued OID"). The daily portion is determined by allocating to each day in any "accrual period" a pro rata portion of the OID allocable to that accrual period. Under the OID Regulations, accrual periods with respect to a Note may be any set of periods (which may be of varying lengths) selected by the U.S. Holder as long as (i) no accrual period is longer than one year and (ii) each scheduled payment of interest or principal on the Note occurs on the first day or final day of an accrual period. The amount of OID allocable to an accrual period equals the excess of (a) the product of the Discount Note's adjusted issue price at the beginning of the accrual period and the Discount Note's yield to maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) over (b) the sum of any payments of qualified stated interest on the Discount Note allocable to the accrual period. The "adjusted issue price" of a Discount Note at the beginning of the first accrual period is the issue price and at the beginning of any accrual period thereafter is (x) the sum of the issue price of such Discount Note, the accrued OID for each prior accrual period (determined without regard to the amortization of any acquisition premium or bond premium, which are discussed below), and the amount of any qualified stated interest on the Note that has accrued prior to the beginning of the accrual period but is not payable until a later date, less (y) any prior payments on the Discount Note that were not qualified stated interest payments. If a payment (other than a payment of qualified stated interest) is made on the first day of an accrual period, then the adjusted issue price at the beginning of such accrual period is reduced by the amount of the payment. If a portion of the initial purchase price of a Note is attributable to interest that accrued prior to the S-20 Note's issue date, the first stated interest payment on the Note is to be made within one year of the Note's issue date and such payment will equal or exceed the amount of pre-issuance accrued interest, then the issue price will be decreased by the amount of pre-issuance accrued interest, in which case a portion of the first stated interest payment will be treated as a return of the excluded pre-issuance accrued interest and not as an amount payable on the Note. The OID Regulations contain certain special rules that generally allow any reasonable method to be used in determining the amount of OID allocable to a short initial accrual period (if all other accrual periods are of equal length) and require that the amount of OID allocable to the final accrual period equal the excess of the amount payable at the maturity of the Discount Note (other than any payment of qualified stated interest) over the Discount Note's adjusted issue price as of the beginning of such final accrual period. In addition, if an interval between payments of qualified stated interest on a Discount Note contains more than one accrual period, then the amount of qualified stated interest payable at the end of such interval is allocated pro rata (on the basis of their relative lengths) between the accrual periods contained in the interval. U.S. Holders of Discount Notes generally will have to include in income increasingly greater amounts of OID over the life of the Notes. Acquisition Premium. A U.S. Holder that purchases a Discount Note at its original issuance for an amount in excess of its adjusted issue price but less than its stated redemption price at maturity (any such excess being "acquisition premium"), and that does not make the election described below under "Election To Treat All Interest as Original Issue Discount", is permitted to reduce the daily portions of OID by a fraction, the numerator of which is the excess of the U.S. Holder's purchase price for the Note over the issue price, and the denominator of which is the excess of the sum of all amounts payable on the Note after the purchase date, other than payments of qualified stated interest, over the Note's issue price. Alternatively, a U.S. Holder may elect to compute OID accruals as described under "Original Issue Discount--General" above, treating the U.S. Holder's purchase price as the issue price. Optional Redemption. If the Company has an option to redeem a Discount Note, or the holder has an option to cause a Discount Note to be repaid, prior to the Discount Note's Stated Maturity, such option will be presumed to be exercised if, by utilizing any date on which such Discount Note may be redeemed or repaid as the maturity date and the amount payable on such date in accordance with the terms of such Discount Note (the "redemption price") as the stated redemption price at maturity, the yield on the Discount Note would be (i) in the case of an option of the Company, lower than its yield to Stated Maturity, or (ii) in the case of an option of the holder, higher than its yield to Stated Maturity. If such option is not in fact exercised when presumed to be exercised, the Note would be treated solely for OID purposes as if it were redeemed or repurchased, and a new Note were issued, on the presumed exercise date for an amount equal to the Discount Note's adjusted issue price on that date. Short-Term Notes. Under the Code, special rules apply with respect to OID on Notes that mature one year or less from the date of issuance ("Short-Term Notes"). In general, a cash basis U.S. Holder of a Short-Term Note is not required to include OID in income as it accrues for United States Federal income tax purposes unless it elects to do so. Accrual basis U.S. Holders and certain other U.S. Holders, including banks, regulated investment companies, dealers in securities and cash basis U.S. Holders who so elect, are required to include OID in income as it accrues on Short-Term Notes on a straight-line basis or, at the election of the U.S. Holder, under the constant yield method (based on daily compounding). In the case of U.S. Holders not required and not electing to include OID in income currently, any gain realized on the sale or retirement of Short-Term Notes will be ordinary income to the extent of the OID accrued on a straight-line basis (unless an election is made to accrue the OID under the constant yield method) through the date of sale or retirement. U.S. Holders who are not required and do not elect to include OID on Short-Term Notes in income as it accrues will be required to defer deductions for interest on borrowings allocable to Short-Term Notes in an amount not exceeding the deferred income until the deferred income is realized. S-21 Any U.S. Holder of a Short-Term Note can elect to apply the rules in the preceding paragraph taking into account the amount of "acquisition discount", if any, with respect to the Note (rather than the OID with respect to such Note). Acquisition discount is the excess of the stated redemption price at maturity of the Short-Term Note over the U.S. Holder's purchase price therefor. Acquisition discount will be treated as accruing on a ratable basis or, at the election of the U.S. Holder, on a constant-yield basis. For purposes of determining the amount of OID subject to these rules, the OID Regulations provide that no interest payments on a Short-Term Note are qualified stated interest, but instead such interest payments are included in the Short-Term Note's stated redemption price at maturity. Notes Purchased at a Premium Under the Code, a U.S. Holder that purchases a Note for an amount in excess of its stated redemption price at maturity will not be subject to the OID rules and may elect to treat such excess as "amortizable bond premium", in which case the amount of qualified stated interest required to be included in the U.S. Holder's income each year with respect to interest on the Note will be reduced by the amount of amortizable bond premium allocable (based on the Note's yield to maturity) to such year. Any election to amortize bond premium is applicable to all bonds (other than bonds the interest on which is excludible from gross income) held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and may not be revoked without the consent of the Internal Revenue Service ("IRS"). See also "Election to Treat All Interest as Original Issue Discount". Notes Purchased at a Market Discount A Note, other than a Short-Term Note, will be treated as issued at a market discount (a "Market Discount Note") if the amount for which a U.S. Holder purchased the Note is less than the Note's issue price, subject to a de minimis rule similar to the rule relating to de minimis OID described under "Original Issue Discount--General". In general, any gain recognized on the maturity or disposition of a Market Discount Note will be treated as ordinary income to the extent that such gain does not exceed the accrued market discount on the Note. Alternatively, a U.S. Holder of a Market Discount Note may elect to include market discount in income currently over the life of the Market Discount Note. Such an election applies to all debt instruments with market discount acquired by the electing U.S. Holder on or after the first day of the first taxable year to which the election applies and may not be revoked without the consent of the IRS. Market discount accrues on a straight-line basis unless the U.S. Holder elects to accrue such discount on a constant yield to maturity basis. Such an election is applicable only to the Market Discount Note with respect to which it is made and is irrevocable. A U.S. Holder of a Market Discount Note that does not elect to include market discount in income currently generally will be required to defer deductions for interest on borrowings allocable to the Note in an amount not exceeding the accrued market discount on the Note until the maturity or disposition of the Note. The market discount rules do not apply to a Short-Term Note. Election To Treat All Interest as Original Issue Discount Any U.S. Holder may elect to include in gross income all interest that accrues on a Note using the constant yield method described above under the heading "Original Issue Discount--General," with the modifications described below. For purposes of this election, interest includes stated interest, OID, de minimis OID, market discount, acquisition discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. S-22 In applying the constant yield method to a Note with respect to which this election has been made, the issue price of the Note will equal the electing U.S. Holder's adjusted basis in the Note immediately after its acquisition, the issue date of the Note will be the date of its acquisition by the electing U.S. Holder, and no payments on the Note will be treated as payments of qualified stated interest. This election is generally applicable only to the Note with respect to which it is made and may not be revoked without the consent of the IRS. If this election is made with respect to a Note with amortizable bond premium, the electing U.S. Holder will be deemed to have elected to apply amortizable bond premium against interest with respect to all debt instruments with amortizable bond premium (other than debt instruments the interest on which is excludible from gross income) held by such electing U.S. Holder as of the beginning of the taxable year in which the election is made or any debt instruments acquired thereafter. The deemed election with respect to amortizable bond premium may not be revoked without the consent of the IRS. If the election described above to apply the constant yield method to all interest on a Note is made with respect to a Market Discount Note, as defined above, then the electing U.S. Holder will be treated as having made the election discussed above under "Notes Purchased at a Market Discount" to include market discount in income currently over the life of all debt instruments held or thereafter acquired by such U.S. Holder. Purchase, Sale and Retirement of the Notes A U.S. Holder's tax basis in a Note generally will equal its U.S. dollar cost (which, in the case of a Note purchased with a Foreign Currency, will be the U.S. dollar value of the purchase price on the date of purchase), increased by the amount of any OID or market discount (or acquisition discount, in the case of a Short-Term Note) included in the U.S. Holder's income with respect to the Note and the amount, if any, of income attributable to de minimis OID included in the U.S. Holder's income with respect to the Note, and reduced by the sum of (i) the amount of any payments that are not qualified stated interest payments, and (ii) the amount of any amortizable bond premium applied to reduce interest on the Note. A U.S. Holder generally will recognize gain or loss on the sale or retirement of a Note equal to the difference between the amount realized on the sale or retirement and the U.S. Holder's tax basis in the Note. The amount realized on a sale or retirement for an amount in Foreign Currency will be the U.S. dollar value of such amount on the date of sale or retirement. Except to the extent described above under "Original Issue Discount--Short Term Notes" or "Notes Purchased at a Market Discount" or below under "Foreign Currency Notes--Exchange Gain or Loss", and except to the extent attributable to accrued but unpaid interest, gain or loss recognized on the sale or retirement of a Note will be capital gain or loss and will be long-term capital gain or loss if the Note was held for more than one year. Foreign Currency Notes Interest Payments. If an interest payment is denominated in or determined by reference to a Foreign Currency, the amount of income recognized by a cash basis U.S. Holder will be the U.S. dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. Accrual basis U.S. Holders may determine the amount of income recognized with respect to such interest payment in accordance with either of two methods. Under the first method, the amount of income recognized will be based on the average exchange rate in effect during the interest accrual period (or, with respect to an accrual period that spans two taxable years, the partial period within the taxable year). Upon receipt of an interest payment (including a payment attributable to accrued but unpaid interest upon the sale or retirement of a Note) determined by reference to a Foreign Currency, an accrual basis U.S. Holder will recognize ordinary income or loss measured by the difference between such average exchange rate and the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. Under the second method, an accrual basis U.S. Holder may elect to translate interest income into U.S. S-23 dollars at the spot exchange rate in effect on the last day of the accrual period or, in the case of an accrual period that spans two taxable years, at the exchange rate in effect on the last day of the partial period within the taxable year. Additionally, if a payment of interest is actually received within 5 business days of the last day of the accrual period or taxable year, an accrual basis U.S. Holder applying the second method may instead translate such accrued interest into U.S. dollars at the spot exchange rate in effect on the day of actual receipt (in which case no exchange gain or loss will result). Any election to apply the second method will apply to all debt instruments held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder and may not be revoked without the consent of the IRS. Exchange of Amounts in Other than U.S. Dollars. Foreign Currency received as interest on a Note or on the sale or retirement of a Note will have a tax basis equal to its U.S. dollar value at the time such interest is received or at the time of such sale or retirement, as the case may be. Foreign Currency that is purchased will generally have a tax basis equal to the U.S. dollar value of the Foreign Currency on the date of purchase. Any gain or loss recognized on a sale or other disposition of a Foreign Currency (including its use to purchase Notes or upon exchange for U.S. dollars) will be ordinary income or loss. Foreign Currency Discount Notes. OID for any accrual period on a Discount Note that is denominated in a Foreign Currency will be determined in the Foreign Currency and then translated into U.S. dollars in the same manner as stated interest accrued by an accrual basis U.S. Holder. Upon receipt of an amount attributable to OID (whether in connection with a payment of interest or the sale or retirement of a Note), a U.S. Holder may recognize ordinary income or loss. Amortizable Bond Premium. In the case of a Note that is denominated in a Foreign Currency, bond premium will be computed in units of Foreign Currency, and amortizable bond premium will reduce interest income in units of the Foreign Currency. At the time amortized bond premium offsets interest income, a U.S. Holder may realize ordinary income or loss, measured by the difference between exchange rates at that time and at the time of the acquisition of the Notes. Market Discount. Market discount is determined in units of the Foreign Currency, accrued market discount that is required to be taken into account on the maturity or upon disposition of a Note is translated into U.S. dollars at the exchange rate on the maturity or the disposition date, as the case may be (and no part is treated as exchange gain or loss), accrued market discount currently includible in income by an electing U.S. Holder is translated into U.S. dollars at the average exchange rate for the accrual period (or the partial accrual period during which the U.S. Holder held the Note), and exchange gain or loss is determined on maturity or disposition of the Note (as the case may be) in the manner described above under "Foreign Currency Notes--Interest Payments" with respect to the computation of exchange gain or loss on the receipt of accrued interest by an accrual method holder. Exchange Gain or Loss. Gain or loss recognized by a U.S. Holder on the sale or retirement of a Note that is attributable to changes in exchange rates will be treated as ordinary income or loss. However, exchange gain or loss is taken into account only to the extent of total gain or loss realized on the transaction. Notes Linked to Commodity Prices, Equity Indices or Other Factors The applicable Pricing Supplement will contain a discussion of any special United States Federal income tax rules with respect to Notes described above under "Description of Notes--Notes Linked to Commodity Prices, Equity Indices or Other Factors and Other Terms of Notes". NON-UNITED STATES HOLDERS Subject to the discussion of backup withholding below, payments of principal (and premium, if any) and interest (including OID) by the Company or any agent of the Company (acting in its capacity as such) to any holder of a Note that is not a U.S. Holder (a "Non-U.S. Holder") will not be subject to S-24 United States Federal withholding tax, provided, in the case of interest (including OID), that (i) the Non-U.S. Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (ii) the Non-U.S. Holder is not a controlled foreign corporation for United States tax purposes that is related to the Company (directly or indirectly) through stock ownership and (iii) either (A) the Non-U.S. Holder certifies to the Company or its agent under penalties of perjury that it is not a United States person and provides its name and address or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution") and holds the Note certifies to the Company or its agent under penalties of perjury that such statement has been received from the Non-U.S. Holder by it or by another financial institution and furnishes the payor with a copy thereof. If a Non-U.S. Holder is engaged in a trade or business in the United States and interest (including OID) on the Note is effectively connected with the conduct of such trade or business, the Non-U.S. Holder, although exempt from the withholding tax discussed in the preceding paragraph (provided that such holder furnishes a properly executed IRS Form 4224 on or before any payment date to claim such exemption), may be subject to United Stated Federal income tax on such interest (or OID) in the same manner as if it were a U.S. Holder. In addition, if the same Non-U.S. Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits for the taxable year, subject to certain adjustments. For purposes of the branch profits tax, interest (including OID) on a Note will be included in the earnings and profits of such holder if such interest (or OID) is effectively connected with the conduct by such holder of a trade or business in the United States. In lieu of the certificate described in the preceding paragraph, such a holder must provide the payor with a properly executed IRS Form 4224 to claim an exemption from United States Federal withholding tax. Any capital gain, market discount or exchange gain realized on the sale, exchange, retirement or other disposition of a Note by a Non-U.S. Holder will not be subject to United States Federal income or withholding taxes if (i) such gain is not effectively connected with a United States trade or business of the Non-U.S. Holder and (ii) in the case of an individual, such Non-U.S. Holder (A) is not present in the United States for 183 days or more in the taxable year of the sale, exchange, retirement or other disposition or (B) does not have a tax home (as defined in Section 911(d)(3) of the Code) in the United States in the taxable year of the sale, exchange, retirement or other disposition and the gain is not attributable to an office or other fixed place of business maintained by such individual in the United States. Notes held by an individual who is neither a citizen nor a resident of the United States for United States Federal tax purposes at the time of such individual's death will not be subject to United States Federal estate tax, provided that the income from such Notes was not or would not have been effectively connected with a United States trade or business of such individual and that such individual qualified for the exemption from United States Federal withholding tax (without regard to the certification requirements) described above. PURCHASERS OF NOTES THAT ARE NON-U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED STATES WITHHOLDING AND OTHER TAXES UPON INCOME REALIZED IN RESPECT OF THE NOTES. INFORMATION REPORTING AND BACKUP WITHHOLDING For each calendar year in which Notes are outstanding, the Company is required to provide the IRS with certain information, including each holder's name, address and taxpayer identification number (either the holder's Social Security number or its employer identification number, as the case may be), the aggregate amount of principal and interest paid (including OID, if any) to that holder S-25 during the calendar year and the amount of tax withheld, if any. This obligation, however, does not apply with respect to certain U.S. Holders, including corporations, tax-exempt organizations, qualified pension and profit sharing trusts and individual retirement accounts. In the event that a U.S. Holder subject to the reporting requirements described above fails to supply its correct taxpayer identification number in the manner required by applicable law or underreports its tax liability, the Company, its agents or paying agents or a broker may be required to "backup" withhold a tax equal to 31% of each payment of interest (including OID) and principal (and premium if any) on the Notes. This backup withholding is not an additional tax and may be credited against the U.S. Holder's United States Federal income tax liability, provided that the required information is furnished to the IRS. Under current Treasury Department regulations, backup withholding and information reporting will not apply to payments made by the Company or any agent thereof (in its capacity as such) to a Non-U.S. Holder of a Note if such holder has provided the required certification that it is not a United States person as set forth in clause (iii) in the first paragraph under "Non-U.S. Holders" above, or has otherwise established an exemption (provided that neither the Company nor its agent has actual knowledge that the holder is a United States person or that the conditions of any exemption are not in fact satisfied). Payment of the proceeds from the sale of a Note to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that if the broker is a United States person, a controlled foreign corporation for United States tax purposes or a foreign person 50 percent or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment was effectively connected with a United States trade or business, information reporting may apply to such payments. Payment of the proceeds from a sale of a Note to or through the United States office of a broker is subject to information reporting and backup withholding unless the holder or beneficial owner certifies as to its taxpayer identification number or otherwise establishes an exemption from information reporting and backup withholding. S-26 PLAN OF DISTRIBUTION The Notes are being offered on a continuing basis by the Company through the Agents, each of which has agreed to use its reasonable efforts to solicit offers to purchase Notes. The Company will have the sole right to accept offers to purchase Notes and may reject any proposed purchase of Notes in whole or in part. Each of the Agents shall have the right, in its discretion reasonably exercised, to reject any offer to purchase Notes received by it, in whole or in part. The Company will pay each Agent a commission of from .08% to .75% of the principal amount of any Note, depending upon the Stated Maturity of such Note, for sales made through such Agent as agent. The Company also may sell Notes at a discount to an Agent for its own account or for resale to one or more purchasers at varying prices related to prevailing market prices at the time of resale or, if set forth in the applicable Pricing Supplement, at a fixed public offering price, as determined by such Agent. After any initial public offering of Notes to be resold to purchasers at a fixed public offering price, the public offering price and any concession or discount may be changed. In addition, an Agent may offer Notes purchased by it as principal to other dealers. Notes sold by an Agent to a dealer may be sold at a discount and, unless otherwise specified in the applicable Pricing Supplement, such discount allowed will not be in excess of the discount received by such Agent from the Company. Unless otherwise specified in the applicable Pricing Supplement, any Note purchased by an Agent as principal will be purchased at 100% of the principal amount thereof less a percentage equal to the commission applicable to an agency sale of a Note of identical maturity. The Company reserves the right to sell Notes directly on its own behalf. No commission will be payable on any Notes sold directly by the Company. In addition, the Company may use additional agents as it may designate from time to time to solicit offers to purchase Notes on terms substantially identical to those set forth above for the Agents. The name of any such additional agent and details as to the arrangements between such agent and the Company will be set forth in the applicable Pricing Supplement. Each of the Agents, whether acting as agent or principal, and any additional agents appointed from time to time may be deemed to be an "underwriter" within the meaning of the Securities Act of 1933 (the "Act"). The Company has agreed to indemnify the Agents against certain liabilities, including liabilities under the Act or to contribute to payments that the Agents may be required to make in respect thereof. The Company has agreed to reimburse the Agents for all out-of-pocket expenses (including advertising expenses) incurred by the Agents with the advance approval of the Company. The estimated maximum amount of such reimbursable expenses in connection with or related to the distribution of the Notes is $100,000. In addition, the Company has agreed to reimburse the Agents for the reasonable fees and disbursements of their counsel incurred in connection with the distribution agreement between the Company and the Agents. The estimated maximum amount of such reimbursable fees and disbursements (excluding reimbursement of "blue sky" fees and other disbursements) is $100,000. The Notes do not have an established trading market and will not be listed on any securities exchange. Each Agent may make a market in the Notes, but such Agent is not obligated to do so and may discontinue any market-making at any time without notice. No assurance can be given as to the existence or liquidity of any secondary market for the Notes, or that the maximum amount of the Notes offered hereby will be sold. In addition to offering Notes through the Agents as described herein, the Company may sell other Securities offered by the accompanying Prospectus. Such Securities may include one or more series of medium-term notes other than the Senior Notes and the Subordinated Notes. Any such Securities so offered and sold will reduce correspondingly the maximum aggregate principal amount of Notes that may be offered by this Prospectus Supplement. PWI is a wholly owned subsidiary of the Company. CS First Boston Corporation and certain affiliates thereof engage in transactions with and perform services for the Company and its subsidiaries in the ordinary course of business. All distributions of the Notes will conform to the requirements set forth in the applicable sections of Schedule E of the By-laws of the National Association of Securities Dealers, Inc. S-27 SUBJECT TO COMPLETION OCTOBER 16, 1995 PROSPECTUS PAINE WEBBER GROUP INC. DEBT SECURITIES ------------------- Paine Webber Group Inc. (the "Company") intends to issue from time to time in one or more series senior debt securities (the "Senior Securities") and/or subordinated debt securities (the "Subordinated Securities") each of which will be a direct, unsecured obligation of the Company and which will be offered to the public on terms to be determined at the time of sale (the Senior Securities and the Subordinated Securities being herein referred to collectively as the "Securities"). The Company may sell Securities with an aggregate principal amount of up to $844,575,000, or the equivalent thereof if any of the Securities are denominated in a foreign currency or a composite currency. The Securities may be sold for U.S. dollars, foreign currencies or composite currencies, and the principal, premium, if any, and any interest on the Securities may be payable in U.S. dollars, foreign currencies or composite currencies. The Securities of a series may be issued in registered form without coupons, in bearer form with or without coupons attached or in the form of one or more global securities in registered or bearer form. The classification as Senior Securities or Subordinated Securities, specific designation, aggregate principal amount, currency (if other than U.S. dollars) or composite currency in which the principal, premium, if any, or any interest is payable, authorized denominations, offering price, maturity, rate (or method of calculation) and time and place of payment of any interest, any redemption terms or other specific terms of the Securities in respect of which this Prospectus is being delivered ("Offered Securities") and any listing on a securities exchange are set forth in an accompanying supplement to this Prospectus (the "Prospectus Supplement"), together with the terms of offering of the Offered Securities. The Securities may be sold (i) directly to purchasers, (ii) through agents designated from time to time, (iii) to dealers or (iv) through underwriters or a group of underwriters. If agents of the Company or underwriters are involved in the sale of the Offered Securities, their names are set forth in the applicable Prospectus Supplement. If agents of the Company, underwriters or dealers are involved in the sale of the Offered Securities, descriptions of their compensation and indemnification arrangements and the net proceeds to the Company are set forth in the applicable Prospectus Supplement. ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------------------------------- THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. ------------------- This Prospectus and the related Prospectus Supplement may be used by the Company, PaineWebber Incorporated ("PaineWebber") or PaineWebber International (U.K.) Ltd. ("PaineWebber International"), each a wholly owned subsidiary of the Company, or other affiliates of the Company in connection with offers and sales related to secondary market transactions in the Securities at negotiated prices related to prevailing market prices at the time of sale or otherwise. PaineWebber, PaineWebber International or such other Company affiliates may act as principal or agent in such transactions. ------------------- The date of this Prospectus is [ ], 1995. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. IN CONNECTION WITH AN OFFERING OR DISTRIBUTION, THE UNDERWRITERS OR, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE AGENTS FOR SUCH OFFERING OR DISTRIBUTION MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED SECURITIES OR OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN ANY OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ------------------- AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the office of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C., as well as at the Regional Offices of the Commission at North Western Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois, and Seven World Trade Center, 13th Floor, New York, New York. Copies can also be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, reports, proxy statements and other information concerning the Company can also be inspected at the offices of the New York Stock Exchange (the "NYSE"), 20 Broad Street, New York, New York, and the Pacific Stock Exchange, 301 Pine Street, San Francisco, California. The Company has filed with the Commission registration statements on Form S-3 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act of 1933 (the "Securities Act"), relating to the Securities. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. ------------------- DOCUMENTS INCORPORATED BY REFERENCE The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, and June 30, 1995 and the Company's Current Reports on Form 8-K dated December 27, 1994, as amended by Form 8-K/A dated February 24, 1995, and May 1, 1995, as filed with the Commission pursuant to the Exchange Act (File No. 1-7367), are hereby incorporated by reference in this Prospectus. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the respective date of filing of each such document. Any statement contained herein, in any Prospectus Supplement or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement herein, in any Prospectus Supplement or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will furnish without charge upon written or oral request by any person, including any beneficial owner, to whom this Prospectus is delivered, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents. Requests for such copies should be directed to Assistant Secretary, Paine Webber Group Inc., 1285 Avenue of the Americas, New York, New York 10019, telephone (212) 713-2722. ------------------- NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, A PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED BY REFERENCE AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PAINE WEBBER GROUP INC. OR ANY AGENT, UNDERWRITER OR DEALER. NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AND A PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION THEY CONTAIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES. References herein to "U.S. dollars", "U.S. $" or "$" are to the lawful currency of the United States. 2 THE COMPANY Paine Webber Group Inc. is a holding company which, together with its operating subsidiaries, forms one of the largest full-service securities and commodities firms in the industry. Founded in 1879, the Company employs approximately 16,100 people in 325 offices worldwide. In late 1994 and early 1995, the Company, in a series of transactions, acquired certain net assets and specific businesses of Kidder, Peabody Group Inc. The Company's principal line of business is to serve the investment and capital needs of individual, corporate, institutional and public agency clients through its broker-dealer subsidiary, PaineWebber, and other specialized subsidiaries. The Company holds memberships in all major securities and commodities exchanges in the United States, and makes a market in many securities traded on Nasdaq National Market or on other over-the-counter markets. Additionally, PaineWebber is a primary dealer in U.S. government securities. The Company is comprised of interrelated business groups, including the Private Client Group, International, Institutional Fixed Income Sales and Trading, Institutional Equity Sales and Trading, Municipal Securities Group, Investment Banking, Asset Management, Real Estate, Research and Transaction Services, which utilize common operational and administrative personnel and facilities. The Private Client Group consists primarily of a domestic branch office system and consumer product groups through which PaineWebber and certain other subsidiaries provide clients with financial services and products, including the purchase and sale of securities, option contracts, commodity and financial futures contracts, direct investments, selected insurance products, fixed income instruments and mutual funds. The Company may act as a principal or agent in providing these services. Fees charged vary according to the size and complexity of a transaction, and the activity level of a client's account. Through the International, Institutional Fixed Income Sales and Trading and Institutional Equity Sales and Trading groups, the Company places securities for, and executes trades on behalf of, institutional clients both domestically and internationally. In addition, the Company takes positions in both listed and unlisted equity and fixed income securities to facilitate client transactions or for the Company's own account. The Municipal Securities Group originates, underwrites, sells and trades taxable and tax-exempt issues for municipal and public agency clients. Through the Investment Banking group, the Company provides financial advice to, and raises capital for, a broad range of domestic and international corporate clients. Investment Banking manages and underwrites public and private offerings, participates as an underwriter in syndicates of public offerings managed by others, and provides advice in connection with mergers and acquisitions, lease financings and debt restructurings. The Asset Management group is comprised of Mitchell Hutchins Asset Management Inc. ("MHAM"), Mitchell Hutchins Institutional Investors Inc. ("MHII") and Mitchell Hutchins Investment Advisory division ("MHIA"). MHAM and MHII provide investment advisory and portfolio management services to pension and endowment funds. MHAM also provides investment advisory and portfolio management services to individuals and mutual funds. MHIA provides portfolio management services to individuals, trusts and institutions. The Real Estate group provides a full range of capital market services to real estate clients, including underwriting of debt and equity securities, principal lending activity, debt restructuring, property sales and bulk sales services, and a broad range of other advisory services. The Research group provides investment advice to institutional and individual investors, and other business areas of the Company, on approximately 890 companies in 62 industry sectors. The Transaction Services group includes correspondent services, prime brokerage and securities lending businesses, and specialist trading. Through Correspondent Services Corporation, the Company provides execution and clearing services to broker-dealers in the U.S. and overseas. The Company also 3 acts as a specialist responsible for executing transactions and maintaining an orderly market in certain securities. The Company's businesses operate in one of the nation's most highly regulated industries. Violations of applicable regulations can result in the revocation of broker-dealer licenses, the imposition of censures or fines, and the suspension or expulsion of a firm, its officers or employees. The Company's business is regulated by various agencies, including the Securities and Exchange Commission, the New York Stock Exchange Inc. (the "NYSE") the Commodity Futures Trading Commission and the National Association of Securities Dealers, Inc. The Company's principal executive offices are located at 1285 Avenue of the Americas, New York, New York 10019 (Telephone: (212) 713-2000). For purposes of the foregoing description, all references to the "Company" refer collectively to Paine Webber Group Inc. and its operating subsidiaries, unless the context otherwise requires. USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the Securities offered hereby will be used for general corporate purposes, including, but not limited to, funding investments in or extensions of credit to subsidiaries, repayments of indebtedness of the Company or its subsidiaries, and possible acquisitions. The precise amount and timing of the application of the funds will depend upon future requirements and the availability of other funds to the Company and its subsidiaries. Management of the Company expects that the Company and its subsidiaries will engage in additional financings as needs arise. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the Company for the five-year period ended December 31, 1994, and the six-month period ended June 30, 1995. FISCAL YEAR ENDED SIX MONTHS ENDED DECEMBER 31 JUNE 30 - ---------------------------------------- ------------------ 1990 1991 1992 1993 1994 1995 - ---- ---- ---- ---- ---- ------------------ * 1.2 1.4 1.3 1.0 ** * For 1990, earnings were inadequate to cover fixed charges and would have had to increase $102,633,000 in order to cover the deficiency. ** For the six months ended June 30, 1995, earnings were inadequate to cover fixed charges and would have had to increase $92,828,000 in order to cover the deficiency. For purposes of computing the ratio of earnings to fixed charges, "earnings" consist of earnings before taxes on income and fixed charges and "fixed charges" consist of interest expense incurred on securities sold under repurchase agreements, and short-term and long-term borrowings and that portion of rental expense estimated to be representative of the interest factor. DESCRIPTION OF SECURITIES The Senior Securities are to be issued under an Indenture dated as of March 15, 1988, as amended by a supplemental indenture dated as of September 22, 1989, and by a supplemental indenture dated as of March 22, 1991, between the Company and Chemical Bank, as Trustee (the "Senior Indenture"). The Subordinated Securities are to be issued under an Indenture dated as of March 15, 1988, as amended by a supplemental indenture dated as of September 22, 1989, by a supplemental indenture dated as of March 22, 1991, and by a supplemental indenture dated as of November 30, 1993, between the Company and Chemical Bank Delaware, as Trustee (the "Subordinated Indenture"). The Senior Indenture and the Subordinated Indenture (being sometimes referred to herein collectively as the 4 "Indentures" and individually as an "Indenture") are filed as exhibits to the Registration Statement. The Company may enter into one or more additional indentures providing for Senior Securities or Subordinated Securities with one or more banking institutions organized under the laws of the United States or any state serving as trustee. Reference is made to the Prospectus Supplement for information regarding the indenture under which the Offered Securities will be issued. The statements under this heading are subject to the detailed provisions of each Indenture. Whenever particular provisions of the Indentures or terms defined therein are referred to, such provisions or definitions are incorporated by reference herein as a part of the statements made and the statements are qualified in their entirety by such reference. GENERAL The Securities of a series may be issued in fully registered form without Coupons ("Registered Securities") or in bearer form with or without Coupons attached ("Bearer Securities") or both. Securities of a series may also be issued in whole or in part in the form of one or more global securities (each, a "Global Security"). Unless otherwise specified in the applicable Prospectus Supplement, the Securities will be only Registered Securities. Registered Securities which are book-entry securities ("Book-Entry Securities") may be issued in the form of registered Global Securities. Securities denominated in U.S. dollars will be issued, unless otherwise set forth in the applicable Prospectus Supplement, in denominations of $1,000 or an integral multiple thereof for Registered Securities, and only in the denomination of $5,000 for Bearer Securities. (Section 302) Neither of the Indentures limits the aggregate principal amount of Securities which may be issued thereunder. The Securities will be direct, unsecured obligations of the Company. The Subordinated Securities will be subordinated in right of payment, to the extent and in the manner set forth in the Subordinated Indenture, to the prior payment in full of all Superior Indebtedness as described below under "Subordination". If any of the Securities are sold for any foreign currency or composite currency or if principal of (or premium, if any) or any interest on any of the Securities is payable in any foreign currency or composite currency, the restrictions, elections, Federal income tax consequences, specific terms and other information with respect to such issue of Securities and such foreign currency or composite currency will be set forth in the Prospectus Supplement relating thereto. If the amount of payments of principal of (or premium, if any) or any interest on any of the Securities is determined with reference to any type of index or formula or changes in prices of particular securities, currencies, intangibles, goods, articles or commodities, the Federal income tax consequences, specific terms and other information with respect to such issue of Securities and such index or formula, securities, currencies, intangibles, goods, articles or commodities will be set forth in the Prospectus Supplement relating thereto. The Securities may be issued in one or more series with the same or various maturities at or above par or with an original issue discount. Certain Securities may be issued which provide for an amount less than the principal amount thereof to be due and payable in the event of an acceleration of the maturity thereof (each an "Original Issue Discount Security"), including by reason of redemption or early repayment. Original Issue Discount Securities may bear no interest or may bear interest at a rate which at the time of issuance is below market rates and will be sold at a discount (which may be substantial) below their stated principal amount. Certain Original Issue Discount Securities may be issued with original issue discount for United States Federal income tax purposes. The Prospectus Supplement with respect to any Offered Securities issued with such original issue discount will contain a discussion of Federal income tax considerations with respect thereto. Reference is made to the Prospectus Supplement for the following terms of the Offered Securities: (i) the title and any limit on the aggregate principal amount of the Offered Securities and whether the 5 Offered Securities are Senior Securities or Subordinated Securities; (ii) the percentage of their principal amount at which the Offered Securities will be issued; (iii) the date or dates on which the Offered Securities will mature; (iv) the rate or rates (which may be fixed or variable) per annum, if any, at which the Offered Securities will bear interest or the method of determining such rate or rates; (v) the date or dates from which such interest, if any, shall accrue and the date or dates at which such interest, if any, will be payable; (vi) the place where the principal of (and premium, if any) and interest, if any, on the Offered Securities will be payable; (vii) the terms for redemption or early repayment, if any, including any mandatory or optional sinking fund or analogous provision; (viii) the principal amount of any Offered Securities which are Original Issue Discount Securities that is payable upon acceleration of the maturity of such Offered Securities; (ix) if other than U.S. dollars, the currency, currencies, composite currency or composite currencies for which the Offered Securities may be purchased and the currency, currencies, composite currency or composite currencies in which the payment of principal of (or premium, if any) or any interest on such Offered Securities will be made and, if the Company or the Holders of Offered Securities may elect to receive such payment in a currency, currencies, composite currency or composite currencies other than that in which the Offered Securities are stated to be payable, then, the period or periods within which, and the terms and conditions upon which, such election may be made and, if the amount of such payments may be determined with reference to an index based on a currency, currencies, composite currency or composite currencies other than that in which the Offered Securities are stated to be payable, then the manner in which such amounts shall be determined; (x) whether the Offered Securities will be issued as Registered Securities or Bearer Securities or both and the terms upon which any Bearer Securities of such series may be exchanged for Registered Securities of such series; (xi) whether the Offered Securities are to be issued in whole or in part in the form of one or more Global Securities and, if so, the identity of the depositary or depositaries for such Global Security or Securities; (xii) if a temporary Global Security is to be issued with respect to some of or all the Offered Securities, any requirements for certification of ownership by non-United States persons that will apply prior to (a) the issuance of a definitive Security or (b) the payment of interest on an interest payment date that occurs before the issuance of a definitive Security; (xiii) if a temporary Global Security is to be issued with respect to some of or all the Offered Securities, the terms upon which interests in such temporary Global Security may be exchanged for interests in a definitive Global Security or for definitive Securities and the terms upon which interests in a definitive Global Security, if any, may be exchanged for definitive Securities; (xiv) whether and under what circumstances the Company will pay additional amounts to certain Holders of Offered Securities in respect of any tax, assessment or governmental charge required to be withheld or deducted and, if so, whether the Company will have the option to redeem such Offered Securities rather than pay any additional amounts; (xv) if the amount of payments of principal of (or premium, if any) or any interest on the Offered Securities may be determined with reference to an index based on the prices, changes in prices, or differences between prices, of securities, currencies, intangibles, goods, articles or commodities, or otherwise by application of a formula, the manner in which such amounts shall be determined; (xvi) any additional Events of Default (as defined below under "Events of Default, Notice and Waiver") or restrictive covenants provided for with respect to the Offered Securities; and (xvii) any other terms of the Offered Securities not inconsistent with the applicable Indenture. If any Offered Securities are Bearer Securities, the Prospectus Supplement will describe any applicable restrictions (including, without limitation, any restrictions required to comply with United States Federal income tax laws and regulations) on the offer, sale and delivery of such Bearer Securities in addition to those set forth under "Limitations on Issuance of Bearer Securities". Each Indenture provides that, at the option of the Company, interest on the Registered Securities of any series that bears interest may be paid by mailing a check to the address of the Person entitled thereto as such address shall appear in the Security Register. (Section 301) The Indentures do not prohibit (i) a consolidation, merger or sale of assets or other similar transactions that may adversely affect the creditworthiness of the Company or a successor or combined 6 entity, (ii) a change of control of the Company or (iii) leveraged transactions involving the Company, whether or not involving a change of control. In addition, under the terms of the Indentures the Company is entitled to defease the Offered Securities. As a result, the Indentures do not protect Holders against a substantial decline in the value of the Offered Securities which may result from the aforementioned transactions. EXCHANGE, REGISTRATION AND TRANSFER Registered Securities (other than a Global Security, except as provided below) of any series will be exchangeable for other Registered Securities of the same series and of a like aggregate principal amount and tenor of any authorized denominations. In addition, if Securities of any series are issuable as both Registered Securities and Bearer Securities, at the option of the Holder, and subject to the terms of the Indenture, Bearer Securities (with all unmatured Coupons, except as provided below, and all matured Coupons in default) of such series will be exchangeable into Registered Securities of the same series of any authorized denominations and of a like aggregate principal amount and tenor. Bearer Securities with coupons appertaining thereto surrendered in exchange for Registered Securities between a Regular Record Date or a Special Record Date and the relevant date for payment of interest shall be surrendered without the Coupon relating to such date for payment of interest and interest will not be payable on such date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the Holder of such Coupon when due in accordance with the terms of the applicable Indenture. Bearer Securities will not be issued in exchange for Registered Securities. (Section 305) No service charge will be made for any transfer or exchange of the Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge in connection therewith. (Section 305) Securities may be presented for exchange as provided above, and Registered Securities (other than a Global Security) may be presented for registration of transfer (duly endorsed, or accompanied by a satisfactory instrument of transfer), at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose with respect to any series of Securities and referred to in an applicable Prospectus Supplement, without service charge and upon payment of any taxes and other governmental charges as described in the applicable Indenture. The Company has appointed Chemical Bank as Security Registrar for each Indenture. (Section 305) If a Prospectus Supplement refers to any transfer agents (in addition to the Security Registrar) initially designated by the Company with respect to any series of Securities, the Company may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that, if Securities of a series are issuable solely as Registered Securities, the Company will be required to maintain a transfer agent in each Place of Payment for such series and, if Securities of a series are issuable as Bearer Securities, the Company will be required to maintain (in addition to the Security Registrar) a transfer agent in a Place of Payment for such series located in Europe. The Company may at any time designate additional transfer agents with respect to any series of Securities. (Section 1002) The Company shall not be required to: (i) issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before any selection of Securities of that series to be redeemed and ending at the close of business on (a) if Securities of the series are issuable only as Registered Securities, the day of mailing of the relevant notice of redemption and (b) if Securities of the series are issuable as Bearer Securities, the day of the first publication of the relevant notice of redemption or, if Securities of the series are also issuable as Registered Securities and there is no publication, the day of mailing of the relevant notice of redemption; (ii) register the transfer of or exchange any Registered Security, or portion thereof, called for redemption, except the unredeemed portion of any Registered Security being redeemed in part; or (iii) exchange any Bearer Security called 7 for redemption, except to exchange such Bearer Security for a Registered Security of that series and like tenor which is simultaneously surrendered for redemption. (Section 305) For a discussion of restrictions on the exchange, registration and transfer of Global Securities, see "Global Securities" below. PAYMENT AND PAYING AGENTS Unless otherwise indicated in an applicable Prospectus Supplement, payment of principal of (and premium, if any) and any interest on Bearer Securities will be payable, subject to any applicable laws and regulations, at the offices of such Paying Agents outside the United States as the Company may designate from time to time and payment of interest on Bearer Securities with Coupons appertaining thereto will be made only against surrender of the Coupon relating to the applicable Interest Payment Date. (Sections 311 and 1002) No payment with respect to any Bearer Security will be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States. Notwithstanding the foregoing, payments of principal of (and premium, if any) and any interest on Bearer Securities denominated and payable in U.S. dollars will be made at the office of the Company's Paying Agent in the Borough of Manhattan, The City of New York, if (but only if) payment of the full amount thereof in U.S. dollars at all offices or agencies outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions. (Section 1002) Unless otherwise indicated in an applicable Prospectus Supplement, payment of principal of (and premium, if any) and any interest on Registered Securities will be made at the office of such Paying Agent or Paying Agents as the Company may designate from time to time, except that at the option of the Company payment of any interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. (Section 301) Unless otherwise indicated in an applicable Prospectus Supplement, payment of any installment of interest on Registered Securities will be made to the Person in whose name such Registered Security is registered at the close of business on the Regular Record Date for such interest. (Section 307) Unless otherwise indicated in an applicable Prospectus Supplement, the Corporate Trust Office of Chemical Bank in the Borough of Manhattan, The City of New York, will be designated as the Company's Paying Agent in the Borough of Manhattan, The City of New York, for payments with respect to Offered Securities (subject to the limitation described above in the case of Bearer Securities). Any Paying Agents outside the United States and any other Paying Agents in the United States initially designated by the Company for the Offered Securities will be named in an applicable Prospectus Supplement. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that, if Securities of a series are issuable solely as Registered Securities, the Company will be required to maintain a Paying Agent in each Place of Payment for such series and, if Securities of a series are issuable as Bearer Securities, the Company will be required to maintain (i) a Paying Agent in the Borough of Manhattan, The City of New York, for payments with respect to any Registered Securities of the series (and for payments with respect to Bearer Securities of the series in the circumstances described above, but not otherwise), and (ii) a Paying Agent in a Place of Payment located outside the United States where Securities of such series and any Coupons appertaining thereto may be presented and surrendered for payment; provided that if any of the Securities of such series are listed on The International Stock Exchange of the United Kingdom and the Republic of Ireland Limited, the Luxembourg Stock Exchange or any other stock exchange located outside the United States and such stock exchange shall so require, the Company will maintain a Paying Agent in London, Luxembourg or any other required city located outside the United States, as the case may be, for the Securities of such series. (Section 1002) 8 All money paid by the Company to a Paying Agent for the payment of principal of (or premium, if any) or any interest on any Security or Coupon that remains unclaimed at the end of two years after such principal, premium or interest shall have become due and payable will be repaid to the Company and the Holder of such Security or Coupon will thereafter look only to the Company for payment thereof. (Section 1003) If so specified in an applicable Prospectus Supplement, the Company may, at its option, defer payments of interest otherwise payable on an Interest Payment Date for a period and upon the terms and conditions described in such Prospectus Supplement. GLOBAL SECURITIES If so specified in an applicable Prospectus Supplement, all or any portion of the Securities of a series may be issued in the form of one or more Global Securities that will be deposited with, or on behalf of, a depositary (a "Depositary") identified in the Prospectus Supplement relating to such series. Global Securities may be issued in either registered or bearer form and in either temporary or definitive form. The specific terms of the depositary arrangement with respect to any Securities of a series will be described in the Prospectus Supplement relating to such series. Unless otherwise specified in the applicable Prospectus Supplement, the Company anticipates that the following provisions will apply to all depositary arrangements. Unless otherwise specified in an applicable Prospectus Supplement, Securities which are to be represented by a Global Security to be deposited with or on behalf of a Depositary will be represented by a Global Security registered in the name of such Depositary or its nominee. Upon the issuance of a Global Security, the Depositary for such Global Security will credit, on its book-entry registration and transfer system, the respective principal amounts of the Securities represented by such Global Security to the accounts of institutions that have accounts with such Depositary or its nominee ("participants"). The accounts to be credited shall be designated by the underwriters of such Securities, by certain agents of the Company or by the Company, if such Securities are offered and sold directly by the Company. Ownership of beneficial interests in a Global Security will be limited to participants or persons that may hold interests through participants. Ownership of a beneficial interest in such Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary or its nominee (with respect to participants' interests) for such Global Security or by participants or persons that hold through participants. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Security. So long as the Depositary for a Global Security, or its nominee, is the owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Securities represented by such Global Security for all purposes under the Indenture governing such Securities. Except as set forth below, owners of beneficial interests in a Global Security will not be entitled to have Securities of the series represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of Securities of such series in definitive form and will not be considered the owners or holders thereof under the Indenture governing such Securities. Accordingly, each person owning a beneficial interest in a Global Security must rely on the procedures of the Depositary for such Global Security and, if such person is not a participant, on the procedures of the participant and, if applicable, the indirect participant, through which such person owns its interest, to exercise any rights of a holder under such Indenture. Subject to the restrictions discussed under "Limitations on Issuance of Bearer Securities," payment of principal of (and premium, if any) and any interest on Securities registered in the name of or held by a Depositary or its nominee will be made to such Depositary or its nominee, as the case may be, as the registered owner or the holder of the Global Security representing such Securities. None of the Company, the Trustee for such Securities, any Paying Agent, any Authenticating Agent or the 9 Security Registrar for such Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security representing such Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. (Section 307) The Company expects that the Depositary for Securities, upon receipt of any payment of principal of (or premium, if any) or any interest on a definitive Global Security representing such Securities, will credit immediately participants' accounts with payments in amounts proportionate to their respective holdings in principal amount of beneficial interest in such Global Security as shown on the records of such Depositary. The Company also expects that payments by participants to owners of beneficial interests in such Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name". Such payments will be the responsibility of such participants. Receipt by owners of beneficial interests in a temporary Global Security of payments of principal of (or premium, if any) or any interest on such Global Security will be subject to the restrictions discussed under "Limitation on Issuance of Bearer Securities." Unless and until it is exchanged in whole for Securities in definitive form, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. (Section 312) If a Depositary for Securities of any series is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within ninety days, the Company will issue Securities of such series in like tenor and terms in definitive registered form in exchange for the Global Security or Global Securities representing all such Securities. Further, an owner of a beneficial interest in a Global Security representing Securities of a series may, on terms acceptable to the Company and the Depositary for such Global Security, receive Securities of such series in definitive registered form. In addition, the Company may at any time and in its sole discretion determine not to have any Securities of a series represented by Global Securities and, in such event, will issue Securities of such series in like tenor and terms in definitive registered form in exchange for the Global Security or Global Securities representing all such Securities. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery in definitive form of Securities of the series represented by such Global Security equal in aggregate principal amount to such beneficial interest and to have such Securities registered in the name of the owner of such beneficial interest. (Section 312) If so specified in an applicable Prospectus Supplement, all or any portion of the Securities of a series that are issuable as Bearer Securities initially will be represented by one or more temporary Global Securities, with one or more Coupons or without Coupons, to be deposited with a common depository in London for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euro-clear System ("Euro-clear") and Centrale de Livraison de Valeurs Mobilieres S.A. ("CEDEL") for credit to the respective accounts of the beneficial owners of such Securities (or to such other accounts as they may direct). On and after the exchange date determined as provided in any such temporary Global Security and described in an applicable Prospectus Supplement, each such temporary Global Security will be exchangeable for a like aggregate principal amount of definitive Securities in like tenor and terms in bearer form, registered form or definitive global bearer form, or any combination thereof, as specified in an applicable Prospectus Supplement. No Bearer Security (including a Global Security in definitive bearer form) delivered in exchange for a portion of a temporary Global Security shall be mailed or otherwise delivered to any location in the United States (as defined under "Limitations on Issuance of Bearer Securities") in connection with such exchange. (Sections 303 and 304) Unless otherwise specified in an applicable Prospectus Supplement, definitive Securities in respect of any portion of a temporary Global Security will only be delivered, and interest in respect of any 10 portion of a temporary Global Security payable in respect of an Interest Payment Date occurring prior to the issuance of definitive Securities will only be paid, upon delivery of a certificate signed by Euro-clear or CEDEL, as the case may be, with respect to the portion of the temporary Global Security held for the account of the beneficial owner in the form required by the applicable Indenture. Such certificate must be dated no earlier than the exchange date or such Interest Payment Date, as the case may be, and must be based on statements provided to Euro-clear or CEDEL, as applicable, by its account holders who are beneficial owners of interests in such temporary Global Security to the effect that such portion is beneficially owned (i) by a person that is not a United States person or (ii) by or through a qualifying financial institution in compliance with applicable Treasury regulations. If any Securities of a series are issuable in definitive global form, the applicable Prospectus Supplement will describe the circumstances, if any, under which beneficial owners of interests in any such definitive Global Security may exchange such interests for Securities of such series and of like tenor, terms and principal amount in any authorized form and denomination. No Bearer Security delivered in exchange for a portion of a definitive Global Security shall be mailed or otherwise delivered to any location in the United States in connection with such exchange. (Section 305) A Person having a beneficial interest in a definitive Global Security, except with respect to payment of principal of (and premium, if any) and any interest on such definitive Global Security, will be treated as a Holder of such principal amount of Outstanding Securities represented by such definitive Global Security as shall be specified in a written statement of the Holder of such definitive Global Security, or, in the case of a definitive Global Security in bearer form, of Euro-clear or CEDEL, which is produced to the Trustee by such Person. (Section 203) Principal of (and premium, if any) and any interest on a definitive Global Security will be payable in the manner described in the applicable Prospectus Supplement. CERTAIN RESTRICTIVE PROVISIONS The Senior Indenture relating to Offered Securities to be issued on a parity with other senior indebtedness of the Company provides that, with certain limited exceptions, the Company will not, nor will it permit any Restricted Subsidiary (as defined in the Senior Indenture) to, pledge as security for any loan the capital stock or indebtedness of any Restricted Subsidiary or create, incur, assume or permit to exist any lien on any property or asset of the Company. (Section 1008) Such provisions shall apply to all such Offered Securities unless the applicable Prospectus Supplement expressly states otherwise. CONSOLIDATION, MERGER AND SALE OF ASSETS Each Indenture provides that the Company, without the consent of the Holders of any of the Outstanding Securities, may consolidate with or merge into any other corporation or transfer or lease its assets substantially as an entirety to any Person or may acquire or lease the assets of any Person substantially as an entirety or may permit any corporation to merge into the Company provided that: (i) the successor is a corporation organized under the laws of any domestic jurisdiction; (ii) the successor corporation, if other than the Company, assumes the Company's obligations under such Indenture and the Securities issued thereunder; (iii) immediately after giving effect to the transaction, no Event of Default and no event that, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; and (iv) certain other conditions are met. (Section 801) MODIFICATION OF THE INDENTURES Each Indenture provides that the Company and the Trustee thereunder may, without the consent of any Holders of Securities, enter into supplemental indentures for the purposes, among other things, of adding to the Company's covenants, adding additional Events of Default, establishing the form or terms of Securities or, provided such action shall not adversely affect the interests of the Holders of any series of Securities in any material respect, curing ambiguities or inconsistencies in such Indenture or making other provisions. (Section 901) 11 Each Indenture contains provisions permitting the Company, with the consent of the Holders of not less than 66 2/3% in principal amount of the Outstanding Securities of each affected series, to execute supplemental indentures adding any provisions to or changing or eliminating any of the provisions of such Indenture or modifying the rights of the Holders of the Securities of such series, except that no such supplemental indenture may, without the consent of the Holders of all the Outstanding Securities affected thereby, among other things: (i) change the maturity of the principal of, or any installment of principal of or interest on, any of the Securities; (ii) reduce the principal amount thereof (or any premium thereon) or the rate of interest, if any, thereon; (iii) reduce the amount of the principal of Original Issue Discount Securities payable on any acceleration of maturity; (iv) change the currency, currencies, composite currency or composite currencies in which any of the Securities or any premium or interest thereon is payable; (v) change any obligation of the Company to maintain an office or agency in the places and for the purposes required by such Indenture; (vi) impair the right to institute suit for the enforcement of any payment due on any Securities on or after their applicable maturity date; (vii) reduce the percentage in principal amount of the Outstanding Securities of any series the consent of the Holders of which is required for any such supplemental indenture or for any waiver of compliance with certain provisions of, or of certain defaults under, such Indenture; or (viii) with certain exceptions, modify the provisions for the waiver of certain covenants and defaults and any of the foregoing provisions. (Section 902) WAIVER OF CERTAIN COVENANTS The Senior Indenture provides that the Company will not be required to comply with certain restrictive covenants (including those described above under "Certain Restrictive Provisions") if the Holders of not less than 66 2/3% in principal amount of each series of Outstanding Securities affected thereby waive compliance with such restrictive covenants. (Section 1005) EVENTS OF DEFAULT, NOTICE AND WAIVER An Event of Default in respect of any series of Securities (unless it is either inapplicable to a particular series or has been modified or deleted with respect to any particular series) is defined in each Indenture to be: (i) a default for 30 days in the payment of any installment of interest upon any of the Securities of such series when due; (ii) a default in the payment of principal of (or premium, if any, on) any of the Securities of such series when due; (iii) a default in the deposit of any sinking fund payment when the same becomes due by the terms of the Securities of such series; (iv) a default in the performance, or breach, of any other covenants or warranties of the Company in the applicable Indenture which shall not have been remedied for a period of 60 days after notice from the Trustee thereunder or the Holders of not less than 25% in principal amount of the Outstanding Securities of such series; (v) certain events of bankruptcy, insolvency or reorganization of the Company; and (vi) such other events as may be specified for such series. (Section 501) Each Indenture provides that if an Event of Default specified therein in respect of any series of Outstanding Securities issued under such Indenture shall have occurred and be continuing, either the Trustee thereunder or the Holders of not less than 25% in principal amount of the Outstanding Securities of such series may declare the principal (or, if such Securities are Original Issue Discount Securities, such portion of the principal amount as may be specified by the terms of such Securities) of all of the Outstanding Securities of such series to be immediately due and payable. (Section 502) Each Indenture provides that the Holders of not less than a majority in principal amount of the Outstanding Securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee thereunder, or exercising any trust or power conferred on such Trustee, with respect to the Securities of such series, provided that such Trustee may act in any way that is not inconsistent with such directions and may decline to act if any such direction is contrary to law or to such Indenture or would involve such Trustee in personal liability. (Section 512) 12 Each Indenture provides that the Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all of the Outstanding Securities of such series waive any past default under the applicable Indenture with respect to such series and its consequences, except a default (i) in the payment of the principal of (or premium, if any) or any interest on any of the Securities of such series or (ii) in respect of a covenant or provision of such Indenture which, under the terms of such Indenture, cannot be modified or amended without the consent of the Holders of all of the Outstanding Securities of such series affected thereby. (Section 513) Each Indenture contains provisions entitling the Trustee thereunder, subject to the duty of such Trustee during an Event of Default in respect of any series of Securities to act with the required standard of care, to be indemnified by the Holders of the Securities of such series before proceeding to exercise any right or power under such Indenture at the request of the Holders of the Securities of such series. (Sections 601 and 603) Each Indenture provides that the Trustee thereunder will, within 90 days after the occurrence of a default in respect of any series of Securities, give to the Holders of the Securities of such series notice of all uncured and unwaived defaults known to it; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or any interest on, or any sinking fund installment with respect to, any of the Securities of such series, such Trustee will be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interest of the Holders of the Securities of such series; and provided, further, that such notice shall not be given until at least 30 days after the occurrence of an Event of Default regarding the performance, or breach, of any covenant or warranty of the Company under such Indenture other than for the payment of the principal of (or premium, if any) or any interest on, or any sinking fund installment with respect to, any of the Securities of such series. The term default for the purpose of this provision only means any event that is, or after notice or lapse of time, or both, would become, an Event of Default with respect to the Securities of such series. (Section 602) Each Indenture requires the Company to file annually with the Trustee thereunder a certificate, executed by an officer of the Company, indicating whether the Company is in default under such Indenture. (Section 1004) MEETINGS Each Indenture contains provisions for convening meetings of the Holders of Securities of a series if Securities of that series are issuable as Bearer Securities to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action that may be made, given or taken by such Holders pursuant to such Indenture. (Section 1301). A meeting may be called at any time by the Trustee under the applicable Indenture, and also, upon request, by the Company or the Holders of at least 10% in principal amount of the Outstanding Securities of such series, in any such case upon notice given in accordance with "Notices" below. (Section 1302) Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum at a meeting of Holders of Securities of such series; provided, however, that if any action is to be taken at such meeting with respect to a consent or waiver which is required to be given by the Holders of not less than 66 2/3% in principal amount of the Outstanding Securities of a series, the Persons entitled to vote 66 2/3% in principal amount of the Outstanding Securities of such series shall constitute a quorum. In the absence of a quorum, (i) a meeting called by the Company or the Trustee shall be adjourned for a period of not less than 10 days, and in the absence of a quorum at any such adjourned meeting, the meeting shall be further adjourned for a period of not less than 10 days and (ii) a meeting called by the Holders shall be dissolved. Any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action which may be made, given or taken by the Holders of a specified percentage in principal amount of Outstanding Securities of a series may be adopted at a meeting or adjourned meeting duly reconvened at which a quorum is present by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of that series. Any resolution 13 passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with the applicable Indenture will be binding on all Holders of Securities of that series and of the related Coupons whether or not present or represented at the meeting. With respect to any consent, waiver or other action which the applicable Indenture expressly provides may be given by the Holders of a specified percentage of Outstanding Securities of all series affected thereby (acting as one class), only the principal amount of Outstanding Securities of any series represented at a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid and voting in favor of such action shall be counted for purposes of calculating the aggregate principal amount of Outstanding Securities of all series affected thereby favoring such action. (Section 1304) NOTICES Except as otherwise provided in each Indenture, notices to Holders of Bearer Securities will be given by publication at least once in a daily newspaper in The City of New York and London and in such other city or cities as may be specified in such Bearer Securities and will be mailed to such Persons whose names and addresses were previously filed with the Trustee under the applicable Indenture within the two preceding years, within the time prescribed for the giving of such notice. Notices to Holders of Registered Securities will be given by mail to the addresses of such Holders as they appear in the Security Register, within the time prescribed for the giving of such notice. (Section 106) TITLE Title to any Bearer Securities (including Bearer Securities that are Global Securities) and any Coupons appertaining thereto will pass by delivery. The Company, the appropriate Trustee and any agent of the Company or such Trustee may treat the Holder of any Bearer Security, the Holder of any Coupon and the registered owner of any Registered Security as the absolute owner thereof (whether or not such Security or Coupon shall be overdue and notwithstanding any notice to the contrary) for the purpose of making payment and for all other purposes. (Section 308) REPLACEMENT OF SECURITIES AND COUPONS Any mutilated Security and any Security with a mutilated Coupon appertaining thereto will be replaced by the Company at the expense of the Holder upon surrender of such mutilated Security or Security with a mutilated Coupon to the appropriate Trustee. Securities or Coupons that become destroyed, stolen or lost will be replaced by the Company at the expense of the Holder upon delivery to the appropriate Trustee of evidence of the destruction, loss or theft thereof satisfactory to the Company and such Trustee; in the case of any Coupon which becomes destroyed, stolen or lost, such Coupon will be replaced (upon surrender to the appropriate Trustee of the Security with all appurtenant Coupons not destroyed, stolen or lost) by issuance of a new Security in exchange for the Security to which such Coupon appertains. In the case of a destroyed, lost or stolen Security or Coupon an indemnity satisfactory to the appropriate Trustee and the Company may be required at the expense of the Holder of such Security or Coupon before a replacement Security will be issued. (Section 306) DEFEASANCE Unless the Prospectus Supplement relating to the Offered Securities provides otherwise, the Company at its option (i) will be Discharged (as such term is defined in the applicable Indenture) from any and all obligations in respect of the Offered Securities (except for certain obligations to register the transfer or exchange of Securities, replace stolen, lost or mutilated Securities and Coupons, maintain paying agencies and hold moneys for payment in trust) or (ii) need not comply with certain restrictive covenants of the applicable Indenture (including those described above under "Certain Restrictive Provisions"), if there is deposited with the Trustee money and/or (a) in the case of Securities and Coupons denominated in U.S. dollars, U.S. Government Obligations (as defined in the applicable Indenture), or (b) in the case of Securities and Coupons denominated in a foreign currency, Foreign 14 Government Securities (as defined in the applicable Indenture), which in each case through the payment of interest thereon and principal thereof in accordance with their terms will provide money, in an amount sufficient to pay in the currency, currencies, composite currency or composite currencies in which the Offered Securities are payable all the principal of, and interest on, the Offered Securities on the dates such payments are due in accordance with the terms of the Offered Securities. Among the conditions to the Company's exercising any such option, the Company is required to deliver to the appropriate Trustee an opinion of counsel to the effect that the deposit and related defeasance would not cause the Holders of the Offered Securities to recognize income, gain or loss for United States Federal income tax purposes and that the Holders will be subject to United States Federal income tax in the same amounts, in the same manner and at the same times as would have been the case if such deposit and related defeasance had not occurred. (Sections 401 and 403) SUBORDINATION The payment of the principal of (and premium, if any) and any interest on the Subordinated Securities, including sinking fund payments, is subordinated in right of payment, to the extent and in the manner set forth in the Subordinated Indenture, to the prior payment in full of all Superior Indebtedness. (Section 1401) Superior Indebtedness is defined as (i) the principal of, premium, if any, and accrued and unpaid interest on (a) indebtedness of the Company for money borrowed, whether outstanding on the date of execution of the Subordinated Indenture or thereafter created, incurred or assumed, (b) guarantees by the Company of indebtedness for money borrowed by any other person, whether outstanding on the date of execution of the Subordinated Indenture or thereafter created, incurred or assumed, (c) indebtedness evidenced by notes, debentures, bonds or other instruments of indebtedness for the payment of which the Company is responsible or liable, by guarantees or otherwise, whether outstanding on the date of execution of the Subordinated Indenture or thereafter created, incurred or assumed, and (d) obligations of the Company under any agreement to lease, or any lease of, any real or personal property, whether outstanding on the date of execution of the Subordinated Indenture or thereafter created, incurred or assumed, (ii) any other indebtedness, liability or obligation, contingent or otherwise, of the Company and any guarantee, endorsement or other contingent obligation of the Company in respect of any indebtedness, liability or obligation, whether outstanding on the date of execution of the Subordinated Indenture or thereafter created, incurred or assumed, and (iii) modifications, renewals, extensions and refundings of any such indebtedness, liabilities, obligations or guarantees; unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such indebtedness, liabilities, obligations or guarantees, or such modification, renewal, extension or refunding thereof, are not superior in right of payment to the Subordinated Securities; provided, however, that Superior Indebtedness will not be deemed to include, and the Subordinated Securities will rank equal in right of payment to, the Company's 7 3/4% Subordinated Notes due 2002, and all other such subordinated securities, including but not limited to the Medium-Term Subordinated Notes, Series B, and the Medium-Term Subordinated Notes, Series D, of the Company, or any obligation of the Company to any subsidiary. (Sections 101, 1401 and 1408) The Subordinated Indenture and the Subordinated Securities do not contain any covenants or other provisions that would limit the issuance of additional Superior Indebtedness. No payment by the Company on account of principal of (or premium, if any) or any interest on the Subordinated Securities, including sinking fund payments, may be made if any default or event of default with respect to any Superior Indebtedness shall have occurred and be continuing and written notice thereof shall have been given to the Trustee by the Company or to the Company and the Trustee by the holders of at least 10% in principal amount of any kind or category of any Superior Indebtedness (or a representative or trustee on their behalf). Upon any acceleration of the principal due on the Subordinated Securities or any payment or distribution of assets of the Company to creditors upon any dissolution, winding up, liquidation or reorganization, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal of (and premium, if any) and interest due or to become due on all Superior Indebtedness must be paid in full before the holders of 15 Subordinated Securities are entitled to receive or retain any payment (other than shares of stock or subordinated indebtedness provided by a plan of reorganization or adjustment which does not alter the rights of holders of Superior Indebtedness). Subject to the payment in full of all Superior Indebtedness, the holders of the Subordinated Securities are to be subrogated to the rights of the holders of Superior Indebtedness to receive payments or distributions of assets of the Company applicable to Superior Indebtedness until the Subordinated Securities are paid in full. (Section 1402) By reason of such subordination, in the event of insolvency, creditors of the Company who are holders of Superior Indebtedness, as well as certain general creditors of the Company, may recover more, ratably, than the holders of the Subordinated Securities. In addition, since the Company is a holding company, the right of the Company, and therefore the right of creditors of the Company (including holders of Senior Securities and Subordinated Securities), to participate in any distribution of assets of any subsidiary of the Company upon its liquidation or reorganization or otherwise is necessarily subject to the prior claims of creditors of the subsidiary, except to the extent that claims of the Company itself as a creditor of the subsidiary may be recognized. Also, dividend payments and advances to the Company by PaineWebber are restricted by the provisions of the net capital rules of the Commission and the NYSE and covenants in various loan agreements. GOVERNING LAW The Indenture, the Securities and the Coupons will be governed by, and construed in accordance with, the laws of the State of New York. (Section 112) THE TRUSTEES UNDER THE INDENTURES Chemical Bank is the Trustee under the Senior Indenture. Chemical Bank is a depositary for funds and performs other services for, and transacts other banking business with, the Company in the normal course of business. Chemical Bank Delaware is the Trustee under the Subordinated Indenture. ERISA MATTERS The Company, PaineWebber, PaineWebber International and other affiliates of the Company may each be considered a "party in interest" (within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or a "disqualified person" (within the meaning of Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")) with respect to many employee benefit plans ("Plans") that are subject to ERISA. The purchase of Securities by a Plan that is subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of Section 4975 of the Code (including individual retirement arrangements and other plans described in Section 4975(e)(1) of the Code) and with respect to which the Company, PaineWebber, PaineWebber International or any other affiliate of the Company is a service provider (or otherwise is a party in interest or a disqualified person) may constitute or result in a prohibited transaction under ERISA or Section 4975 of the Code, unless such Securities are acquired pursuant to and in accordance with an applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain transactions determined by an independent qualified professional asset manager), PTCE 91-38 (an exemption for certain transactions involving bank collective investment funds) or PTCE 90-1 (an exemption for certain transactions involving insurance company pooled separate accounts). Any pension or other employee benefit plan proposing to acquire any Securities should consult with its counsel. 16 PLAN OF DISTRIBUTION The Company may sell the Securities being offered hereby (i) directly to one or more purchasers, (ii) through agents designated from time to time, (iii) through underwriters or dealers or a group of underwriters. The applicable Prospectus Supplement will set forth the terms of the offering of any Offered Securities, including the name or names of any underwriters, the purchase price of the Offered Securities and the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which the Offered Securities may be listed. If a bidding or auction process is utilized, it will be described in the Prospectus Supplement. If underwriters are used in the sale, Offered Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Offered Securities may be offered to the public either through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Unless otherwise set forth in the applicable Prospectus Supplement, the obligations of the underwriters to purchase the Offered Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all of the Offered Securities if any are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Offered Securities may be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offer or sale of Offered Securities will be named, and any commissions payable by the Company to such agents will be set forth, in the applicable Prospectus Supplement. Unless otherwise indicated in the applicable Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. If so indicated in the applicable Prospectus Supplement, the Company will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase Offered Securities from the Company at the public offering price set forth in such Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the applicable Prospectus Supplement and such Prospectus Supplement will set forth the commission payable for the solicitation of such contracts. Any underwriters, dealers or agents participating in the distribution of Securities may be deemed to be underwriters and any discounts or commissions received by them on the sale or resale of Offered Securities may be deemed to be underwriting discounts and commissions under the Securities Act. Agents and underwriters may be entitled under agreements entered into with the Company to indemnification by the Company against certain liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which the agents or underwriters may be required to make in respect thereof. Agents and underwriters may be customers of, engage in transactions with, or perform services for the Company in the ordinary course of business. Unless otherwise specified in the applicable Prospectus Supplement, the Company and each underwriter, dealer and agent participating in the distribution of any Offered Securities which are issuable in bearer form will agree that, in connection with the original issuance of any Bearer Security and during the period ending 40 days after the date of original issuance of such Bearer Security, they will not offer, sell or deliver such Bearer Security, directly or indirectly, to a United States person or to any person within the United States, except to the extent permitted under applicable Treasury regulations. Any other restrictions on the offer or sale of Offered Securities in or from jurisdictions other than the United States or within the United States will be set forth in the applicable Prospectus Supplement. 17 All Offered Securities will be a new issue of securities with no established trading market. Certain agents through whom, and underwriters to whom, Offered Securities are sold by the Company for public offering and sale may make a market in such Offered Securities, but such agents and underwriters will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of the trading market for any Offered Securities. PaineWebber, PaineWebber International or one or more other affiliates of the Company may participate in distributions of the Offered Securities. All distributions of the Offered Securities will conform to the requirements set forth in the applicable sections of Schedule E of the By-laws of the NASD. LIMITATIONS ON ISSUANCE OF BEARER SECURITIES In compliance with United States Federal income tax laws and regulations, in general a Bearer Security may not be offered, sold or delivered, directly or indirectly, to a United States person or to any person within the United States in connection with the original issuance of such Bearer Security or during the period ending 40 days after the date of original issuance of such Bearer Security. However, offers or sales can be made during this period to certain institutions, including certain international organizations and foreign branches of U.S. financial institutions (a "qualifying financial institution"), that satisfy the requirements prescribed by applicable Treasury regulations. In addition, sales can be made to a United States person acquiring a Bearer Security through a qualifying financial institution in compliance with applicable Treasury regulations. Definitive Bearer Securies will not be delivered to a holder, however, unless the beneficial owner of the Securities has complied with the certification requirements described above under "Description of Securities--Global Securities" or, in any event, within the United States. Bearer Securities will bear the following legend on their face and on any Coupons which may be detached therefrom or, if the obligation is evidenced by a book entry, in the book of record in which the book entry is made: "Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the United States Internal Revenue Code". The Sections referred to in such legend provide that, with certain exceptions, a United States taxpayer who holds a Bearer Security will not be allowed to deduct any loss with respect to, and will not be eligible for capital gain treatment with respect to any gain realized on, the sale, exchange, redemption or other disposition of such Bearer Security. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source, and "United States" means the United States of America and its possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa and the Northern Mariana Islands). LEGAL MATTERS The validity of the Securities offered hereby will be passed upon for the Company by its General Counsel, Theodore A. Levine, and for the agents or underwriters, if any, by Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York. Cravath, Swaine & Moore acts from time to time as legal counsel to the Company and its subsidiaries on various matters. 18 EXPERTS The consolidated financial statements of the Company for the year ended December 31, 1994, incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1994, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The combined statements of assets acquired and liabilities assumed of the Real Estate, Eurobond, Retail, Brokerage and Asset Management businesses (the "Purchased Businesses") of Kidder, Peabody Group Inc. as of December 26, 1994, or prior date of transfer (the Real Estate and Eurobond businesses are combined on their respective closing dates--December 9 and December 16, 1994) and the combined statement of operations of the Purchased Businesses for the years ended December 27, 1993, December 28, 1992 and December 30, 1991, in the Company's Current Report of Form 8-K dated December 27, 1994, as amended by Form 8-K/A dated February 24, 1995, have been audited by KPMG Peat Marwick, LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such combined statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 19 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS OR ANY PRICING SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PAINE WEBBER GROUP INC. OR ANY AGENT, UNDERWRITER OR DEALER. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS NOR ANY PRICING SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS AND ANY PRICING SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION THEY CONTAIN IS CORRECT AS OF ANY DATE OF ISSUE TIME SUBSEQUENT TO THEIR RESPECTIVE DATES. ------------------- TABLE OF CONTENTS PAGE ---- Prospectus Supplement Important Currency Information...... S-2 Description of Notes................ S-2 Foreign Currency Risks.............. S-16 Certain United States Federal Income Tax Considerations................ S-19 Plan of Distribution................ S-27 Prospectus Available Information............... 2 Documents Incorporated by Reference...................... 2 The Company......................... 3 Use of Proceeds..................... 4 Ratio of Earnings to Fixed Charges........................... 4 Description of Securities........... 4 ERISA Matters....................... 16 Plan of Distribution................ 17 Limitations on Issuance of Bearer Securities........................ 18 Legal Matters....................... 18 Experts............................. 19 [LOGO] U.S. $844,575,000 PAINE WEBBER GROUP INC. MEDIUM-TERM SENIOR NOTES, SERIES C, AND MEDIUM-TERM SUBORDINATED NOTES, SERIES D DUE FROM NINE MONTHS TO 30 YEARS FROM DATE OF ISSUE ------------------- PROSPECTUS SUPPLEMENT ------------------- PAINEWEBBER INCORPORATED CS FIRST BOSTON ------------------- [ * ] 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated expenses in connection with the issuance and distribution of the securities being registered. All the amounts shown are estimates. Registration fee.............................................. $137,932 NASD filing fee............................................... 30,500 Rating agency fees............................................ 101,000 Fees and expenses of accountants.............................. 40,000 Fees and expenses of counsel.................................. 100,000 Fees and expenses of Trustees................................. 50,000 Printing and engraving expenses............................... 9,000 Blue Sky fees and expenses.................................... 20,000 Miscellaneous................................................. 6,568 -------- Total................................................... $495,000 -------- -------- ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 102 of the General Corporation Law of the State of Delaware gives corporations the power to eliminate or limit the personal liability of directors under certain circumstances. Section 145 of the General Corporation Law of the State of Delaware gives corporations the power to indemnify directors and officers under certain circumstances. Article IX of the Restated Certificate of Incorporation (relating to the elimination of personal liability of directors to the Registrant) of Paine Webber Group Inc. is hereby incorporated by reference to Exhibit 3.1 hereto. Article VII of Paine Webber Group Inc.'s By-Laws (relating to indemnification of directors and officers of the Registrant) is hereby incorporated by reference to Exhibit 3.2 hereto. 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 of 1933. The Registrant also maintains fiduciary liability insurance for losses in connection with claims made against directors or officers for violation of any of the responsibilities, obligations or duties imposed upon fiduciaries under the Employee Retirement Income Security Act of 1974. The indemnification provisions (relating to indemnification of, among others, controlling persons, directors and officers of the Registrant against certain liabilities) contained in the proposed forms of Underwriting Agreement and Distribution Agreement are hereby incorporated by reference to Exhibits 1.1 and 1.2 hereto. ITEM 16. EXHIBITS. 1.1* --Form of Underwriting Agreement. 1.2* --Form of Distribution Agreement. 3.1* --Restated Certificate of Incorporation of the Registrant. 3.2* --By-Laws of the Registrant. 4.1a* --Proposed Form of Debt Securities (Medium-Term Senior Note, Series C, Fixed Rate). 4.1b* --Proposed Form of Debt Securities (Medium-Term Subordinated Note, Series D, Fixed Rate). II-1 4.1c* --Proposed Form of Debt Securities (Medium-Term Senior Note, Series C, Floating Rate). 4.1d* --Proposed Form of Debt Securities (Medium-Term Subordinated Note, Series D, Floating Rate). 4.1e --Proposed form of Debt Securities (Senior Note, Fixed Rate). (incorporated by reference to Exhibit 4.1e to Registrant's Registration Statement No. 33-58124 on Form S-3 filed with the Commission on February 10, 1993.) 4.1f --Proposed form of Debt Securities (Subordinated Note, Floating Rate). (incorporated by reference to Exhibit 4.1f to Registrant's Registration Statement No. 33-58124 on Form S-3 filed with the Commission on February 10, 1993.) 4.2a --Indenture dated as of March 15, 1988, between the Registrant and Chemical Bank, as Trustee, relating to Senior Debt Securities. (incorporated by reference to Exhibit No. 4.2a to the Registrant's Registration Statement No. 33-29253 on Form S-3 filed with the Commission on June 14, 1989.) 4.2b* --Supplemental Indenture dated as of September 22, 1989, between the Registrant and Chemical Bank, as Trustee, relating to Senior Debt Securities. 4.2c* --Supplemental Indenture dated as of March 22, 1991, between the Registrant and Chemical Bank, as Trustee, relating to Senior Debt Securities. 4.2d --Indenture dated as of March 15, 1988, between the Registrant and Chemical Bank Delaware, as Trustee, relating to Subordinated Debt Securities. (incorporated by reference to Exhibit No. 4.2b to Registrant's Registration Statement No. 33-29253 on Form S-3 filed with the Commission on June 14, 1989.) 4.2e* --Supplemental Indenture dated as of September 22, 1989, between the Registrant and Chemical Bank Delaware, as Trustee, relating to Subordinated Debt Securities. 4.2f* --Supplemental Indenture dated as of March 22, 1991, between the Registrant and Chemical Bank Delaware, as Trustee, relating to Subordinated Debt Securities. 4.2g* --Supplemental Indenture dated as of November 30, 1993, between the Registrant and Chemical Bank Delaware, as Trustee, relating to Subordinated Debt Securities. 5* --Opinion of Theodore A. Levine in respect of the legality of the Debt Securities registered hereunder, containing the consent of such counsel. 12 --Computation of Ratios of Earnings to Fixed Charges. (incorporated by reference to Exhibit 12.2 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1995.) 23.1* --Consent of Ernst & Young LLP. 23.2* --Consent of KPMG Peat Marwick LLP. 23.3 --Consent of Counsel. (The consent of Theodore A. Levine is included in his opinion filed herewith as Exhibit 5.) 24 --Power of Attorney (set forth on the signature pages of this Registration Statement). 25.1* --Form T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of Chemical Bank. 25.2* --Form T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of Chemical Bank Delaware.
- ------------ * Filed herewith. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement, notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any II-2 deviation from the low or high end of the maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF L933, PAINE WEBBER GROUP INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO., 1 TO THE 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 OCTOBER 16, 1995. PAINE WEBBER GROUP INC. (Registrant) By /s/ DONALD B. MARRON ................................... (Donald B. Marron, Chairman of the Board, Chief Executive Officer and Director) PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT AND POWER OF ATTORNEY HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE - ------------------------------------ ------------------------------------ ----------------- /s/ DONALD B. MARRON Chairman of the Board, Chief October 16, 1995 .................................... Executive Officer, Director (Donald B. Marron) (principal executive officer) * Vice President and Chief Financial October 16, 1995 .................................... Officer (principal financial and (Regina Dolan) accounting officer) * Director October 16, 1995 .................................... (T. Stanton Armour) * Director October 16, 1995 .................................... (E. Garrett Bewkes, Jr.) /s/ RETO BRAUN Director October 16, 1995 .................................... (Reto Braun) * Director October 16, 1995 .................................... (John A. Bult) /s/ FRANK P. DOYLE Director October 16, 1995 .................................... (Frank P. Doyle) * Director October 16, 1995 .................................... (Joseph J. Grano, Jr.)
II-4
SIGNATURE TITLE DATE - ------------------------------------ ------------------------------------ ----------------- * Director October 16, 1995 .................................... (John E. Kilgore, Jr.) /s/ JAMES W. KINNEAR Director October 16, 1995 .................................... (James W. Kinnear) /s/ NAOSHI KIYONO Director October 16, 1995 .................................... (Naoshi Kiyono) * Director October 16, 1995 .................................... (Robert M. Loeffler) * Director October 16, 1995 .................................... (Edward Randall, III) * Director October 16, 1995 .................................... (Henry Rosovsky) /s/ YOSHINAO SEKI Director October 16, 1995 .................................... (Yoshinao Seki) *By: /s/ THEODORE A. LEVINE ............................... Theodore A. Levine Attorney-in-Fact
II-5 EXHIBIT INDEX 1.1* --Form of Underwriting Agreement. 1.2* --Form of Distribution Agreement. 3.1* --Restated Certificate of Incorporation of the Registrant. 3.2* --By-Laws of the Registrant. 4.1a* --Proposed Form of Debt Securities (Medium-Term Senior Note, Series C, Fixed Rate). 4.1b* --Proposed Form of Debt Securities (Medium-Term Subordinated Note, Series D, Fixed Rate). 4.1c* --Proposed Form of Debt Securities (Medium-Term Senior Note, Series C, Floating Rate). 4.1d* --Proposed Form of Debt Securities (Medium-Term Subordinated Note, Series D, Floating Rate). 4.1e --Proposed form of Debt Securities (Senior Note, Fixed Rate). (incorporated by reference to Exhibit 4.1e to Registrant's Registration Statement No. 33-58124 on Form S-3 filed with the Commission on February 10, 1993.) 4.1f --Proposed form of Debt Securities (Subordinated Note, Floating Rate). (incorporated by reference to Exhibit 4.1f to Registrant's Registration Statement No. 33-58124 on Form S-3 filed with the Commission on February 10, 1993.) 4.2a --Indenture dated as of March 15, 1988, between the Registrant and Chemical Bank, as Trustee, relating to Senior Debt Securities. (incorporated by reference to Exhibit No. 4.2a to the Registrant's Registration Statement No. 33-29253 on Form S-3 filed with the Commission on June 14, 1989.) 4.2b* --Supplemental Indenture dated as of September 22, 1989, between the Registrant and Chemical Bank, as Trustee, relating to Senior Debt Securities. 4.2c* --Supplemental Indenture dated as of March 22, 1991, between the Registrant and Chemical Bank, as Trustee, relating to Senior Debt Securities. 4.2d --Indenture dated as of March 15, 1988, between the Registrant and Chemical Bank Delaware, as Trustee, relating to Subordinated Debt Securities. (incorporated by reference to Exhibit No. 4.2b to Registrant's Registration Statement No. 33-29253 on Form S-3 filed with the Commission on June 14, 1989.) 4.2e* --Supplemental Indenture dated as of September 22, 1989, between the Registrant and Chemical Bank Delaware, as Trustee, relating to Subordinated Debt Securities. 4.2f* --Supplemental Indenture dated as of March 22, 1991, between the Registrant and Chemical Bank Delaware, as Trustee, relating to Subordinated Debt Securities. 4.2g* --Supplemental Indenture dated as of November 30, 1993, between the Registrant and Chemical Bank Delaware, as Trustee, relating to Subordinated Debt Securities. 5* --Opinion of Theodore A. Levine in respect of the legality of the Debt Securities registered hereunder, containing the consent of such counsel. 12 --Computation of Ratios of Earnings to Fixed Charges. (incorporated by reference to Exhibit 12.2 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1995.) 23.1* --Consent of Ernst & Young LLP. 23.2* --Consent of KPMG Peat Marwick LLP. 23.3 --Consent of Counsel. (The consent of Theodore A. Levine is included in his opinion filed herewith as Exhibit 5.) 24 --Power of Attorney (set forth on the signature pages of this Registration Statement). 25.1* --Form T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of Chemical Bank. 25.2* --Form T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of Chemical Bank Delaware. - ------------ * Filed herewith. EX-1.1 2 [Draft--8/15/95] PAINE WEBBER GROUP INC. Underwriting Agreement ---------------------- , 199 To the Representative(s) named in Schedule I hereto of the Underwriters named in Schedule II hereto Dear Sirs: Paine Webber Group Inc., a Delaware corporation (the "Company"), proposes to issue and sell to the under- writers, including you, named in Schedule II hereto (the "Underwriters") for whom (if more than you) you are acting as representatives (the "Representatives"), the principal amount of its securities identified in Schedule I hereto to be issued under an Indenture dated as of March 15, 1988, as supplemented by a First Supplemental Indenture dated as of September 22, 1989, and by a Second Supplemental Indenture dated as of March 22, 1991 (as so supplemented, the "Indenture"), between the Company and , as trustee (the "Trustee"). All or part, as the context may require, of such securities are hereinafter called the "Securities". If the firm or firms listed in Schedule II hereto include only the firm or firms listed in Schedule I hereto, then the terms "Underwriters" and "Representatives" shall each be deemed to refer to such firm or firms. 1. Sale and Purchase of the Securities. The ------------------------------------ Company agrees to sell to each Underwriter, and each Under- writer, on the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein stated, agrees to purchase from the Company, at the purchase price set forth in Schedule I hereto the principal amount of Securities set forth opposite the name of such Underwriter in Schedule II hereto except that if Schedule I hereto provides for the sale of Securi- ties pursuant to delayed delivery arrangements, the respec- tive principal amounts of Securities to be purchased by the Underwriters shall be as set forth in Schedule II hereto, less the respective amounts of Contract Securities deter- mined as provided below. Securities to be purchased by the Underwriters are herein sometimes called the "Underwriters' Securities" and Securities to be purchased pursuant to 2 Delayed Delivery Contracts (as hereinafter defined) are herein called "Contract Securities". The obligations of the Underwriters under this Agreement are several and not joint. If so provided in Schedule I hereto, the Under- writers are authorized to solicit offers to purchase Securi- ties from the Company pursuant to delayed delivery contracts ("Delayed Delivery Contracts"), substantially in the form of Schedule III hereto, but with such changes therein as the Company may authorize or approve. The Underwriters will endeavor to make such arrangements, and, as compensation therefor, the Company will pay to the Representatives, for the account of the Underwriters, on the Closing Date (as hereinafter defined), the fee set forth in Schedule I hereto with respect to the principal amount of Securities for which Delayed Delivery Contracts are made. Delayed Delivery Contracts are to be with corporations or institutions. The Company will make Delayed Delivery Contracts in all cases where sales of Contract Securities arranged by the Under- writers have been approved by the Company but, except as the Company may otherwise agree, each such Delayed Delivery Contract must be for not less than the minimum principal amount set forth in Schedule I hereto and the total princi- pal amount of Contract Securities may not exceed the maximum principal amount set forth in Schedule I hereto. The Underwriters will not have any responsibility in respect of the validity or performance of Delayed Delivery Contracts. The principal amount of Securities to be purchased by each Underwriter as set forth in Schedule II hereto shall be reduced by an amount which shall bear the same proportion to the total principal amount of Contract Securities as the principal amount of Securities set forth opposite the name of such Underwriter bears to the total principal amount of Securities set forth in Schedule II hereto, except to the extent that you determine that such reduction shall be otherwise than in such proportion and so advise the Company in writing; provided, however, that the total principal -------- ------- amount of Securities to be purchased by all Underwriters shall be the total principal amount set forth in Schedule II hereto less the total principal amount of Contract Securi- ties. 2. Payment and Delivery. Delivery by the Company --------------------- of the Underwriters' Securities to the Representatives for the respective accounts of the several Underwriters and payment by the Underwriters therefor by certified or offi- cial bank check or checks payable in New York Clearing House funds to the Company shall take place at the office, on the 3 date and at the time specified in Schedule I hereto, which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 10 hereof (such date and time of delivery and payment for the Underwriters' Securities being herein called the "Closing Date"). The Underwriters' Securities shall be registered in such names and shall be in such denominations as the Representatives shall request at least three full business days prior to the Closing Date and shall be made available to the Representatives for checking and packaging, at such place as is designated by the Representatives, at least one full business day prior to the Closing Date. 3. Registration Statements and Prospectus; Public ---------------------------------------------- Offering. The Company represents and warrants to each - --------- Underwriter that the Company meets the requirements for the use of Form S-3 under the Securities Act of 1933, as amended, and the rules and regulations adopted thereunder (respectively, the "Securities Act" and the "Rules"), and has carefully prepared and filed with the Securities and Exchange Commission (the "Commission") one or more registration statements on Form S-3 (the file numbers of which are set forth in Schedule I hereto), which have become effective, for the registration under the Securities Act of the Securities. Such registration statements, as amended by any amendment which has become effective at the date of this Agreement, meet the requirements set forth in Rule 415(a) under the Securities Act and comply in all other material respects with such Rule. The Company proposes to file with the Commission pursuant to Rule 424(b) under the Securities Act ("Rule 424(b)") a supplement to the form of prospectus included in such registration statements relating to the Securities and the plan of distribution thereof and has previously advised you of all further information (financial and other) with respect to the Company to be set forth therein. The registration statements, each as amended by any amendment which has become effective at the date of this Agreement, including the exhibits thereto and all documents incorporated therein by reference pursuant to Item 12 of Form S-3 (the "Incorporated Documents"), are hereinafter referred to as the "Registration Statements", and the form of prospectus included in such Registration Statements as then amended, including the Incorporated Documents, is hereinafter referred to as the "Basic Prospectus"; and such supplemented form of prospectus, in the form in which it shall be filed with the Commission pursuant to Rule 424(b) 4 (including the Basic Prospectus as so supplemented) is hereinafter referred to as the "Final Prospectus". Any preliminary form of the Final Prospectus which has heretofore been filed pursuant to Rule 424(b) is hereinafter called the "Interim Prospectus". Any reference herein to the Registration Statements, the Basic Prospectus, any Interim Prospectus or the Final Prospectus shall be deemed to refer to and include the Incorporated Documents which were filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before the date of this Agreement or the issue date of the Basic Prospectus, any Interim Prospectus or the Final Prospectus, as the case may be; and any reference herein to the terms "amend", "amend- ment" or "supplement" with respect to the Registration Statements, the Basic Prospectus, any Interim Prospectus or the Final Prospectus shall be deemed to refer to and include the filing of any Incorporated Documents under the Exchange Act after the date of this Agreement or the issue date of the Basic Prospectus, any Interim Prospectus or the Final Prospectus, as the case may be. The Company hereby confirms that the Underwriters and dealers have been authorized to distribute or cause to be distributed any Interim Prospectus and are authorized to distribute the Final Prospectus (as from time to time amended or supplemented if the Company furnishes amendments or supplements thereto to the Underwriters). 4. Representations and Warranties. The Company ------------------------------- represents and warrants to each Underwriter that: (a) The Commission has not issued an order preventing or suspending the use of the Basic Prospec- tus or any Interim Prospectus. (b) The Basic Prospectus and any Interim Prospec- tus have complied in all material respects with the requirements of the Securities Act and of the Rules and, as of their respective dates, did not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. (c) As of the date hereof, when the Final Pro- spectus is first filed with the Commission pursuant to Rule 424(b), when, before the Closing Date, any amend- ment to either of the Registration Statements becomes effective, when, before the Closing Date, any document 5 incorporated by reference in either of the Registration Statements is filed with the Commission, when any supplement to the Final Prospectus is filed with the Commission and on the Closing Date, the Registration Statements, the Final Prospectus and any such amendment or supplement will comply in all material respects with the requirements of the Securities Act and the Rules, the Incorporated Documents will comply in all material respects with the requirements of the Exchange Act and the rules and regulations adopted by the Commission thereunder, and the Registration Statements will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading, the Indenture will comply in all material respects with the requirements of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules thereunder and the Final Prospectus (together with any supplement thereto) will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation -------- ------- and warranty does not apply to (i) statements or omissions in either of the Registration Statements or the Final Prospectus (or in amendments or supplements thereto) made in reliance upon information furnished in writing to the Company by the Representatives on behalf of any Underwriter expressly for use therein or (ii) that part of either Registration Statement which shall constitute the Statement of Eligibility and Qualification of the Trustee under the Trust Indenture Act on Form T-1, except statements or omissions therein made in reliance upon information furnished in writing to the trustee by or on behalf of the Company for use therein. (d) The certificate delivered pursuant to paragraph (e) of Section 5 hereof will be on the date on which it is to be delivered in all material respects true and complete. (e) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation by the Company of the transactions 6 contemplated by this Agreement, except those which have been obtained or which may be required under the Securities Act and such qualifications as may be required under state laws in connection with the purchase and distribution of the Securities by the Underwriters, and consummation of such transactions will not result in the breach of any terms of, or constitute a default under, any other agreement or undertaking of the Company. 5. Conditions of the Underwriters' Obligations. -------------------------------------------- The obligations of the Underwriters hereunder are subject to the following conditions: (a) Pursuant to Rule 424(b), the Final Prospectus shall have been filed with the Commission no later than the second business day following the earlier of the date of the determination of the offering price of the Securities or the date it is first used after effectiveness in connection with a public offering or sales, or transmitted by a means reasonably calculated to result in filing with the Commission by that date. (b) No order suspending the effectiveness of either of the Registration Statements, as amended from time to time, shall be in effect and no proceedings for such purpose shall be pending before or threatened by the Commission and any requests for additional information on the part of the Commission (to be included in either of the Registration Statements or the Final Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the Representatives. (c) Since the respective dates as of which information is given in the Registration Statements and the Final Prospectus, (i) there shall not have been any material change in the capital stock or long-term debt of the Company and its subsidiaries, (ii) there shall not have been any material adverse change in the general affairs, management, financial position or results of operations of the Company and its subsidiar- ies taken as a whole, whether or not arising from transactions in the ordinary course of business, in each case other than as set forth in or contemplated by the Final Prospectus and (iii) the Company and its subsidiaries shall not have sustained any material loss or interference with their business taken as a whole 7 from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree that is not set forth in the Final Prospectus if, in the judgment of the Representa- tives, any such development referred to in clauses (i), (ii) or (iii) makes it impracticable or inadvisable to proceed with the offering and delivery of the Securi- ties as contemplated by the Registration Statements and the Final Prospectus. (d) The representations and warranties of the Company contained herein shall be true and correct as of the date hereof, as of the date of the effectiveness of any amendment to either of the Registration Statements filed before the Closing Date, as of the date of filing of any document incorporated by reference therein before the Closing Date and on and as of the Closing Date and the Company shall have performed all covenants and agreements herein contained to be performed on its part at or prior to the Closing Date. (e) The Representatives shall have received on the Closing Date a certificate, dated the Closing Date, of the chief executive officer or a vice president and of the principal financial or accounting officer of the Company, which shall certify that (i) no order suspend- ing the effectiveness of either of the Registration Statements or prohibiting the sale of the Securities has been issued and no proceedings for such purpose are pending before or, to the knowledge of such officers, threatened by the Commission and (ii) the representations and warranties of the Company contained herein are true and correct on and as of the Closing Date and the Company has performed all covenants and agreements herein contained to be performed on its part at or prior to the Closing Date. (f) The Representatives shall have received on the Closing Date a signed letter (which may refer to letters previously delivered to one or more of the Representatives) from Ernst & Young, dated the Closing Date, substantially in the form of Exhibit A hereto. In addition, unless otherwise provided in Schedule I hereto, at the time this Agreement is executed, such firm of accountants shall have furnished to the Repre- 8 sentatives a letter or letters, dated the date of this Agreement, in form and substance satisfactory to the Repre- sentatives, to the effect set forth in Schedule I hereto, in the introductory paragraph to Exhibit A hereto, in clauses (a) and (b)(2) of Exhibit A hereto and, to the extent referring to information contained in Exchange Act reports incorporated in the Registration Statements and the Final Prospectus, in clauses (b)(1) and (c) of Exhibit A hereto. (g) The Representatives shall have received on the Closing Date from the General Counsel of the Company, an opinion and a letter, each dated the Closing Date, substantially identical to the proposed form of opinion and form of letter set forth in Exhibit B hereto. (h) The Representatives shall have received on the Closing Date from Cravath, Swaine & Moore, counsel for the Underwriters, an opinion and a letter, each dated the Closing Date, with respect to the Company, the Indenture, the Securities, the Registration Statements, the Final Prospectus, this Agreement and any Delayed Delivery Contracts and the form and sufficiency of all proceedings taken in connection with the authorization, sale and delivery of the Securities. Such opinion, letter and proceedings shall be reasonably satisfactory in all respects to the Representatives, and the Company shall have furnished to counsel for the Underwriters such documents as they may reasonably request for the purpose of enabling them to render such opinion and letter. (i) Subsequent to the execution of this Agree- ment, there shall not have been any decrease in the ratings of any of the Company's debt securities by Moody's Investors Service, Inc. or Standard & Poor's Corporation. (j) The Company shall have accepted Delayed Delivery Contracts in any case where sales of Contract Securities arranged by the Underwriters have been approved by the Company. (k) Subsequent to the execution of this Agree- ment, the Company shall not have filed an Incorporated Document under the Exchange Act unless a copy thereof shall have first been submitted to the Representatives 9 within a reasonable period of time prior to the filing thereof and the Representatives shall not have rea- sonably objected thereto in writing. 6. Covenants. The Company covenants and agrees ---------- as follows: (a) Before the termination of the offering of the Securities, not to file any amendment or supplement (including the Final Prospectus) to either of the Registration Statements relating to the Securities or the Basic Prospectus (other than an Incorporated Document filed under the Exchange Act) unless a copy thereof shall have first been submitted to the Representatives within a reasonable period of time prior to the filing thereof and the Representatives shall not have reasonably objected thereto in writing. Subject to the foregoing sentence, the Company will cause the Final Prospectus to be filed with the Commission or transmitted for filing with the Commission in accordance with the requirements of Rule 424(b). (b) As soon as the Company is advised thereof, to advise the Representatives (i) when the Final Prospec- tus shall have been filed with the Commission or mailed to the Commission for filing pursuant to Rule 424(b), (ii) when any amendment to either of the Registration Statements relating to the Securities shall have become effective, (iii) of the initiation or threatening by the Commission of any proceedings for the issuance of any order suspending the effectiveness of either of the Registration Statements, or the qualification of the Indenture, (iv) of receipt by the Company or any representative of or attorney for the Company of any other communication from the Commission relating to the Company (except for routine communications relating to the broker-dealer business of the Company), either of the Registration Statements (except for communications relating to securities other than the Securities), the Basic Prospectus, any Interim Prospectus or the Final Prospectus and (v) of the receipt by the Company or any representative of or attorney for the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any juris- diction or the initiation or threatening of any pro- ceeding for such purpose. The Company will make every reasonable effort to prevent the issuance of an order 10 suspending the effectiveness of either of the Registration Statements or the qualification of the Indenture and if any such order is issued to obtain as soon as possible the lifting thereof. (c) To deliver to the Representatives, without charge, (i) upon request and to the extent not previously delivered, signed copies of the Registration Statements and of any amendments thereto (including all exhibits filed with, or incorporated by reference in, any such document) and (ii) as many conformed copies of the Registration Statements and of any amendments thereto which shall become effective on or before the Closing Date (excluding exhibits) as the Representatives may reasonably request. (d) During such period as a prospectus is required by law to be delivered by an Underwriter or dealer, to deliver, without charge to the Representa- tives and to Underwriters and dealers, at such office or offices as the Representatives may designate, as many copies of any Interim Prospectus and the Final Prospectus as the Representatives may reasonably request. (e) During the period in which copies of the Final Prospectus are to be delivered as provided in paragraph (d) above, if any event occurs as a result of which it shall be necessary to amend or supplement the Final Prospectus in order to ensure that no part of the Final Prospectus contains an untrue statement of a material fact or omits to state a material fact neces- sary to make the statements therein, in light of the circumstances existing when the Final Prospectus is to be delivered to a purchaser, not misleading, forthwith to prepare, submit to the Representatives, file with the Commission and deliver without charge, to the Underwriters and to dealers (to the extent requested and at the addresses furnished by the Representatives to the Company) to whom Securities may have been sold by the Underwriters, and to other dealers upon request, either amendments or supplements to the Final Prospec- tus so that the statements in the Final Prospectus, as so amended or supplemented, will comply with the standard set forth in this paragraph (e). Delivery by Underwriters of any such amendments or supplements to the Final Prospectus shall not constitute a waiver of any of the conditions set forth in Section 5 hereof. 11 (f) To make generally available to the Company's security holders, as soon as practicable but in no event later than 45 days after the end of the 12-month period beginning at the end of the current fiscal quarter of the Company, an earnings statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder. (g) To take such action as the Representatives may request in order to qualify the Securities for offer and sale under the securities or "blue sky" laws of such jurisdictions as the Representatives may reasonably request; provided that in no event shall the -------- Company be obligated to subject itself to taxation or to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the offering or sale of the Securities, in any jurisdiction where it is not now so subject. (h) For so long as any of the Securities remain outstanding, to supply to the Representatives and to each other Underwriter who may so request in writing copies of such financial statements and other periodic and special reports as the Company may from time to time distribute generally to its lenders or to the holders of any class of its capital stock and to furnish to the Representatives copies of each annual or other report it shall be required to file with the Commission. (i) To pay, or reimburse if paid by the Represen- tatives, whether or not the transactions contemplated hereby are consummated or this Agreement is terminated, all costs and expenses incident to the performance of the obligations of the Company under this Agreement, including those relating to (i) the preparation, printing and filing of the Registration Statements and exhibits thereto, the Basic Prospectus, any Interim Prospectus and the Final Prospectus, all amendments and supplements to the Registration Statements, any Interim Prospectus and the Final Prospectus, and the preparation and printing or other reproduction of this Agreement, the Indenture and any agreement among underwriters and agreements with dealers relating to the offering of the Securities, (ii) the issuance of the Securities and the preparation and delivery of 12 certificates for the Securities, (iii) the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of the various jurisdictions referred to in paragraph (g) above, including the fees and disbursements of counsel for the Underwriters in connection therewith and the prepara- tion and printing of "blue sky" memoranda and legal investment memoranda, (iv) the furnishing to the Representatives and the Underwriters of copies of any Interim Prospectus and the Final Prospectus and all amendments or supplements to any Interim Prospectus and the Final Prospectus, and of the several documents required by this Section 6 to be so furnished, includ- ing costs of shipping and mailing, (v) the filing requirements, if any, of the National Association of Securities Dealers, Inc., in connection with its review of corporate financings, (vi) the furnishing to the Representatives and to the Underwriters of copies of all reports and information required by paragraph (h) above, including costs of shipping and mailing, (vii) all transfer taxes, if any, with respect to the sale and delivery of the Securities by the Company to the several Underwriters, (viii) the fees charged by rating agencies in connection with the rating of the Securities, (ix) the fees and expenses of the Trustee and (ix) the fee, if any, for listing the Securities on any national securities exchange. (j) For a period beginning at the time of execu- tion of this Agreement and ending on the later of the Closing Date or the date on which any price restric- tions on the sale of the Securities are terminated, without the prior consent of the Underwriters or the Representatives, not publicly to offer, sell, contract to sell or otherwise dispose of any debt securities of the Company. (k) If the Final Prospectus states that the Securities will be listed on a stock exchange, to use its best efforts to cause the Securities to be listed on such stock exchange. 7. Indemnification. (a) The Company agrees to ---------------- indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either the Securities Act or the Exchange Act against any and all losses, claims, damages and liabilities, joint or several (including any investigation, legal and 13 other expenses incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in either of the Registration Statements, the Basic Prospectus, any Interim Prospectus or the Final Prospectus, or any amendment or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as any such untrue statement or omission or alleged untrue statement or omission was made in (i) either of the Registration Statements, the Basic Prospectus, any Interim Prospectus or the Final Prospectus, or such amendment or supplement, in reliance upon and in conformity with information furnished in writing to the Company by the Representatives on behalf of any Underwriter expressly for use therein or (ii) that part of either of the Registration Statements which shall constitute the Statement of Eligibility and Qualification on Form T-1 of the Trustee under the Trust Indenture Act, except statements or omissions in such Registration Statement made in reliance upon information furnished in writing to the Trustee by or on behalf of the Company for use therein; provided, however, -------- ------- that such indemnity with respect to the Basic Prospectus or any Interim Prospectus shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) from whom the person asserting any such loss, claim, damage or liability purchased Securities that are the subject thereof if such person did not receive a copy of the Final Prospectus (not including the Incorporated Documents) at or prior to the confirmation of the sale of such Securities to such person in any case where such delivery is required by the Securities Act and the untrue statement or omission of a material fact contained in the Basic Prospectus or any Interim Prospectus was corrected in the Final Prospectus, unless such failure to deliver the Final Prospectus was a result of noncompliance by the Company with Section 6(d) hereof. (b) Each Underwriter agrees to indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of either the Securities Act or the Exchange Act, each director of the Company and each 14 officer of the Company who signs either of the Registration Statements to the same extent as the foregoing indemnity from the Company to each Underwriter, but only insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or omission or alleged untrue statement or omission that was made in either of the Registration Statements, the Basic Prospectus, any Interim Prospectus or the Final Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by the Representatives on behalf of such Underwriter expressly for use therein; provided, however, that the obligation of each -------- ------- Underwriter to indemnify the Company hereunder shall be limited to the total price at which the Securities purchased by such Underwriter hereunder were offered to the public. The Company acknowledges that the statements set forth in the last paragraph of the cover page, under the headings "Underwriting" and "Plan of Distribution" and, if Schedule I hereto provides for sales of Securities pursuant to delayed delivery arrangements, under the heading "Delayed Delivery Arrangements", in any Interim Prospectus or the Final Prospectus constitute the only information furnished in writing by or on behalf of the several Underwriters for inclusion in the documents referred to in the foregoing indemnity and you, as the Representatives, confirm that such statements are correct. (c) Any party that proposes to assert the right to be indemnified under this Section 7 will, promptly after receipt of notice of commencement of any action, suit or proceeding against any such party in respect of which a claim is to be made against an indemnifying party under this Section 7, notify each such indemnifying party of the commencement of such action, suit or proceeding, enclosing a copy of all papers served, but the omission so to notify such indemnifying party of any such action, suit or proceed- ing (i) shall not relieve it from liability under this Section 7 unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) shall not relieve it from any liability that it may have to any indemnified party otherwise than under this Section 7. In case any such action, suit or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, such indemnifying party or parties shall be entitled to participate in, and, to the extent that it or they shall wish, jointly with any other 15 indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party or parties to such indemnified party of its or their election so to assume the defense thereof, the indemnifying party or parties shall not be liable to such indemnified party for any legal or other expenses, other than reasonable costs of investigation subsequently incurred by such indemnified party in connection with the defense thereof. The indemnified party shall have the right to employ its counsel in any such action, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of counsel by such indemnified party has been authorized by the indemnifying party or parties, (ii) the indemnified party shall have reasonably concluded that there may be a conflict of interest between the indemnifying party or parties and the indemnified party in the conduct of the defense of such action (in which case the indemnifying party or parties shall not have the right to direct the defense of such action on behalf of the indemnified party) or (iii) the indemnifying party or parties shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party or parties. An indemnifying party shall not be liable for any settlement of any action or claim effected without its written consent. 8. Contribution. In order to provide for just ------------- and equitable contribution in circumstances in which the indemnification provided for in Section 7(a) is applicable but for any reason is held to be unavailable from the Company, the Company and the Underwriters agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which the Company and one or more of the Underwriters may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company and by the Underwriters from the offering of the Securities; provided, however, that in no case shall any -------- ------- Underwriter (except as may be provided in any agreement among underwriters relating to the offering of the Securities) be responsible for any amount in excess of the underwriting discount or commission applicable to the Securities purchased by such Underwriter hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Underwriters 16 shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and of the Underwriters in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses), and benefits received by the Underwriters shall be deemed to be equal to the total underwriting discounts and commissions, in each case as set forth on the cover page of the Final Prospectus. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or the Underwriters. The Company and the Underwriters agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this Section 8, no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls an Underwriter within the meaning of either the Securities Act or the Exchange Act shall have the same rights to contribution as such Underwriter, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statements and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this Section 8. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 8, notify such party or parties from whom contribution may be sought, but the omission so to notify such party or parties (i) shall not relieve such party or parties from liability under this Section 8 unless and to the extent it or they did not otherwise learn of such action and such failure results in the forfeiture by such party or parties of substantial rights and defenses and (ii) shall not relieve such party or parties from any other obligation it or they may have hereunder or otherwise than under this Section 8. No party shall be liable for contribution with respect to any action or claim settled without its consent. 17 9. Termination. This Agreement may be terminated ------------ by the Representatives or by Underwriters who have agreed to purchase in the aggregate at least 50% of the principal amount of the Securities by notifying the Company at any time, (a) prior to the earliest of (i) 5:00 p.m., New York time, on the day the Final Prospectus is transmitted for filing with the Commission pursuant to Rule 424(b) (or the actual time of such filing, if such filing in fact occurs prior to 5:00 p.m., New York time, on such date), (ii) the time of release by the Representatives for publication of the first newspaper advertisement that is subsequently published with respect to the Securities or (iii) the time when the Securities are first generally offered by the Representatives to dealers by letter or telegram; (b) at or prior to the Closing Date if, in the judgment of the Representatives or in the judgment of such Underwriters, as the case may be, payment for and delivery of the Securities is rendered impracticable or inadvisable because (i) additional material governmen- tal restrictions, not in force and effect on the date hereof, shall have been imposed upon trading in securi- ties generally or minimum or maximum prices shall have been generally established on the New York Stock Exchange, or trading in the Company's Common Stock shall have been suspended by the Commission or the New York Stock Exchange or trading in securities generally shall have been suspended on such Exchange or a general banking moratorium shall have been established by Federal or New York authorities, (ii) any event shall have occurred or shall exist which makes untrue or incorrect in any material respect any material statement or information contained in either of the Registration Statements or the Final Prospectus or which is not reflected in either of the Registration Statements or the Final Prospectus but should be reflected therein in order to make the statements or information contained therein not misleading in any material respect or (iii) any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis shall have occurred or shall have accelerated to such an extent as, in the judgment of the Representatives, to affect adversely the marketability of the Securities; or 18 (c) at or prior to the Closing Date, if any of the conditions specified in Section 5 hereof shall not have been fulfilled when and as required by this Agreement. If this Agreement is terminated pursuant to any of the provisions hereof, the Company shall not be under any liability (except as otherwise provided herein) to any Underwriter and no Underwriter shall be under any liability to the Company, except that (a) if this Agreement is termi- nated by the Representatives or the Underwriters because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company will reimburse the Underwriters for all reasonable out-of-pocket expenses (including the fees and disbursements of their counsel) incurred by them and (b) no Underwriter who shall have failed or refused to purchase the Securities agreed to be purchased by it hereunder, without some reason sufficient hereunder to justify its cancelation or termination of its obligations hereunder, shall be relieved of liability to the Company or to the other Underwriters for damages occasioned by its default. 10. Default of Underwriters. If one or more of ------------------------ the Underwriters shall fail (other than for a reason suffi- cient to justify the termination of this Agreement) to purchase on the Closing Date the Securities agreed to be purchased by such Underwriter or Underwriters, the Represen- tatives may find one or more substitute underwriters to purchase such Securities or make such other arrangements as the Representatives may deem advisable or one or more of the remaining Underwriters may agree to purchase such Securities in such proportions as may be approved by the Representa- tives in each case upon the terms herein set forth. If no such arrangements have been made within 24 hours after the Closing Date, and (a) the aggregate principal amount of Securities to be purchased by the defaulting Underwriters on the Closing Date shall not exceed 10% of the total princi- pal amount of Securities that the Underwriters are obligated to purchase on the Closing Date, each of the nondefaulting Underwriters shall be obligated to purchase such Securities on the terms herein set forth in proportion to their respective obligations hereun- der; or 19 (b) the aggregate principal amount of Securities to be purchased by the defaulting Underwriters on the Closing Date shall exceed 10% of the total principal amount of Securities that the Underwriters are obligated to purchase on the Closing Date, the Company shall be entitled to an additional period of 24 hours within which to find one or more substitute underwriters satisfactory to the Representatives to purchase such Securities upon the terms set forth herein. In any such case, either the Representatives or the Company shall have the right to postpone the Closing Date for a period of not more than five business days in order that the necessary changes and arrangements may be effected by the Representatives and the Company. If the aggregate principal amount of Securities to be purchased on the Closing Date by such defaulting Underwriter or Under- writers shall exceed 10% of the total principal amount of Securities that the Underwriters are obligated to purchase on the Closing Date, and neither the nondefaulting Under- writers nor the Company shall make arrangements pursuant to this Section 10 within the period stated for the purchase of the Securities that the defaulting Underwriter or Underwrit- ers agreed to purchase, this Agreement shall terminate without liability on the part of any nondefaulting Under- writer to the Company and without liability on the part of the Company except, in both cases, as provided in Sec- tions 6(i) and 9 hereof. The provisions of this Section 10 shall not in any way affect the liability of any defaulting Underwriter to the Company or the nondefaulting Underwriters arising out of such default. A substitute underwriter hereunder shall become an Underwriter for all purposes of this Agreement. 11. Miscellaneous. The reimbursement, indemnifi- -------------- cation and contribution agreements contained in Sec- tions 6(i), 7, 8 and 9 hereof and the representations, warranties and agreements of the Company in this Agreement shall remain in full force and effect regardless of (a) any termination of this Agreement except insofar as such termi- nation renders the performance of such agreements, other than those in Sections 6(i), 7, 8 and 9, inappropriate, (b) any investigation made by or on behalf of any Underwriter or controlling person or by or on behalf of the Company or any controlling person, director or officer and (c) delivery of and payment for the Securities under this Agreement. 20 This Agreement has been and is made solely for the benefit of the Underwriters and the Company, and their respective successors and assigns, and, to the extent expressed herein, for the benefit of persons controlling any of the Underwriters or the Company, directors and officers of the Company and their respective successors and assigns, and no other person, partnership, association or corporation shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include any purchaser of Securities from any Underwriter merely because of such purchase. This Agreement may be executed in counterparts, all of which, when taken together, shall constitute one original. 12. Notices. All notices and communications -------- hereunder shall be in writing and mailed or delivered, or by telephone or telegraph if subsequently confirmed in writing, to the Representatives at the address specified in Schedule I hereto and to the Company at 1285 Avenue of the Americas, New York, New York 10019, attention of the agent for service shown on the cover page of the most recent Registration Statement. 13. Applicable Law. This Agreement shall be --------------- governed by, and construed in accordance with, the laws of the State of New York. Please confirm that the foregoing correctly sets forth the agreement between us. Very truly yours, PAINE WEBBER GROUP INC. By______________________ Confirmed: [name of Representative], By________________________ 21 [name of Representative], By_________________________ Acting on behalf of themselves and the several Underwriters named in Schedule II annexed hereto. SCHEDULE I Underwriting Agreement dated Registration Statement No[s]. [insert 33-51149 or 33- 52695/52695-0 or both, as applicable]. Representative(s): [include address(es) for notices] Title, Purchase Price and Description of Securities: Title: Principal Amount: Purchase Price (include accrued interest or amortization, if any): Sinking fund provision: Redemption provisions: Other provisions: Closing Date, Time and Location: Delayed Delivery Arrangements: Fee: Minimum principal amount of each Contract: Maximum aggregate principal amount of all Contracts: $ Modification of items to be covered by the letter from Ernst & Young delivered pursuant to Section 5(f) at the time this Agreement is executed or statement that no such letter is to be delivered: Stock Exchange Listing: SCHEDULE II Principal Amount of Securities to Underwriters be Purchased - ------------ ------------- $ Total . . . . . . . . . . . . . . . $ ____________ SCHEDULE III Delayed Delivery Contract ------------------------- , 199 [Insert name and address of lead Representative] Dear Sirs: The undersigned hereby agrees to purchase from Paine Webber Group Inc. (the "Company"), and the Company agrees to sell to the undersigned, on , 199 (the "Delivery Date"), $ principal amount of the Company's (the "Securities") offered by the Company's Prospectus dated , and related Prospectus Supplement dated , receipt of a copy of which is hereby acknowledged, at a purchase price of % of the principal amount thereof, plus [accrued interest or amortization of original issue discount], if any, thereon from , 199 , to the date of payment and delivery, and on the further terms and conditions set forth in this contract. Payment for the Securities to be purchased by the undersigned shall be made on or before 11:00 a.m., New York City time, on the Delivery Date to or upon the order of the Company in New York Clearing House (next day) funds, at your office or at such other place as shall be agreed between the Company and the undersigned upon delivery to the undersigned of the Securities in definitive fully registered form and in such authorized denominations and registered in such names as the undersigned may request by written or telegraphic communication addressed to the Company not less than five full business days prior to the Delivery Date. If no request is received, the Securities will be registered in the name of the undersigned and issued in a denomination equal to the aggregate principal amount of Securities to be purchased by the undersigned on the Delivery Date. The obligation of the undersigned to take delivery of and make payment of Securities on the Delivery Date, and the obligation of the Company to sell and deliver Securities on the Delivery Date, shall be subject to the conditions 2 (and neither party shall incur any liability by reason of the failure thereof) that (1) the purchase of Securities to be made by the undersigned, which purchase the undersigned represents is not prohibited on the date hereof, shall not on the Delivery Date be prohibited under the laws of the jurisdiction to which the undersigned is subject, and (2) the Company, on or before the Delivery Date, shall have sold to certain underwriters (the "Underwriters") such principal amount of the Securities as is to be sold to them pursuant to the Underwriting Agreement referred to in the Prospectus and Prospectus Supplement mentioned above. Promptly after completion of such sale to the Underwriters, the Company will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the opinion of counsel for the Company delivered to the Underwriters in connection therewith. The obligation of the undersigned to take delivery of and make payment for the Securities, and the obligation of the Company to cause the Securities to be sold and delivered, shall not be affected by the failure of any purchaser to take delivery of and make payment for the Securities pursuant to other contracts similar to this contract. This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. It is understood that acceptance of this contract and other similar contracts is in the Company's sole discretion and, without limiting the foregoing, need not be on a first come, first served basis. If this contract is acceptable to the Company, it is required that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding contract between the Company and the undersigned, as of the date first above written, when such counterpart is so mailed or delivered. 3 This agreement shall be governed by and construed in accordance with the laws of the State of New York. Very truly yours, ______________________________ (Name of Purchaser) By ____________________________ (Signature and Title of Officer) ____________________________ (Address) Accepted: PAINE WEBBER GROUP INC. By ____________________________ (Authorized Signature) EXHIBIT A At the Closing Date, 1/ Ernst & Young shall - furnish to the Representatives a letter or letters (which may refer to letters previously delivered to one or more of the Representatives), dated as of the Closing Date, in form and substance satisfactory to the Representatives, confirm- ing that they are independent certified public accountants within the meaning of the Securities Act and the Exchange Act and the respective applicable published rules and regulations thereunder, that the response to Item 10 of the Registration Statements is correct insofar as it relates to them and stating in effect that: (a) in their opinion the consolidated financial statements and schedules examined by them and incorpor- ated by reference in the Registration Statements and the Final Prospectus and reported on by them comply in form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations; (b) on the basis of a reading of the "Selected Financial Data", if any, included or incorporated in the Registration Statements and the Final Prospectus and of the latest unaudited consolidated condensed financial statements made available by the Company and its consolidated subsidiaries; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and audit and executive committees of the Company; and inquiries of certain officials of the Company who have responsibility for financial and accounting matters of the Company and its subsidiaries as to transactions and events subsequent to the date of the most recent financial statements included or incorporated in the Registration Statements ____________________ 1/ All capitalized terms used herein shall have the - meanings ascribed to them in the Underwriting Agreement of which this Exhibit A is a part. 2 and the Final Prospectus, nothing came to their attention which caused them to believe that: (1) the amounts in the unaudited "Summary Financial Information", if any, included in the Final Prospectus, and the amounts in the "Selected Financial Data", if any, included or incorporated in the Registration Statements and the Final Prospectus, do not agree with the corresponding amounts in the audited financial statements from which such amounts were derived; (2) any unaudited financial statements included or incorporated in the Registration Statements and the Final Prospectus do not comply as to form in all material respects with applic- able accounting requirements and with the pub- lished rules and regulations of the Commission with respect to financial statements included or incorporated in quarterly reports on Form 10-Q under the Exchange Act or any material modifications should be made to such unaudited financial statements for them to be presented in conformity with such generally accepted accounting principles; (3) with respect to the period subsequent to the date of the most recent financial statements included or incorporated in the Registration Statement and the Final Prospectus, there were any changes, at a specified date not more than five business days prior to the date of the letter, in the consolidated long-term debt or non-convertible redeemable preferred stock of the Company and its subsidiaries or capital stock of the Company (excluding retained earnings and foreign currency translation adjustment) as compared with the amounts shown on the most recent consolidated balance sheet included or incorporated in the Registration Statements and the Final Prospectus, except in all instances for changes disclosed in such letter or letters; or (4) if any unaudited pro forma financial statements are included or incorporated in the Registration Statement and the Final Prospectus, on the basis of a reading of the unaudited pro forma financial statements, carrying out certain 3 specified procedures, inquiries of certain officials of the Company and the acquired company who have responsibility for financial and accounting matters, and proving the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the pro forma financial statements, nothing came to their attention which caused them to believe that the pro forma financial statements do not comply in form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X or that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of such statements; and (c) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company) set forth in the Registration Statements, and the Final Prospectus, as amended or supplemented, and in Exhibit 12 to the Registration Statements, including specified informa- tion, if any, included or incorporated from the Compa- ny's Annual Report on Form 10-K incorporated therein or specified information, if any, included or incorporated from any of the Company's Quarterly Reports on Form 10-Q incorporated therein, agrees with the accounting records of the Company and its subsidiaries, excluding any questions of legal interpretation. EXHIBIT B The Company 1/ shall furnish to the - Representatives the opinion of the General Counsel of the Company, dated the Closing Date, to the effect that: (i) each of the Company and PaineWebber Incorpo- rated, Mitchell Hutchins Asset Management Inc. and PaineWebber Real Estate Securities Inc., wholly owned subsidiaries (individually a "Subsidiary" and collectively the "Subsidiaries"), has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Final Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which the failure to qualify and be in good standing would materially and adversely affect the business or condition of the Company and its consolidated subsidiaries, considered as a whole; (ii) all the outstanding shares of capital stock of each Subsidiary have been duly and validly authorized and issued and are fully paid and nonassessable, and are owned by the Company either directly or through wholly owned subsidiaries free and clear of any perfected security interest and, to the knowledge of such counsel, after due inquiry of appropriate officers of the Company, any other security interests, claims, liens or encumbrances, except for restrictions on sales of capital stock contained in debt instruments; (iii) the Securities conform to the description thereof contained in the Final Prospectus; and, if the Securities are to be listed on the New York Stock Exchange, authorization thereof has been given, subject to official notice of issuance and evidence of satis- factory distribution, or the Company has filed a preliminary listing application and all required supporting documents with respect to the Securities with the New York Stock Exchange and such counsel has no reason to believe that the Securities will not be ________________ 1/ All capitalized terms used and not otherwise defined - herein shall have the meanings ascribed to them in the Underwriting Agreement of which this Exhibit B is a part. 2 authorized for listing, subject to official notice of issuance and evidence of satisfactory distribution; (iv) the Indenture has been duly authorized, executed and delivered by the Company, has been duly qualified under the Trust Indenture Act and constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws affecting creditors' rights generally from time to time in effect, and subject, as to enforceability, to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law); and the Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters pursuant to the Underwriting Agreement of which this Exhibit B is a part (the "Underwriting Agreement"), in the case of the Underwriters' Securities, or by the purchasers thereof pursuant to Delayed Delivery Contracts, in the case of any Contract Securities, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture enforceable in accordance with their terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting creditors' rights generally from time to time in effect, and subject, as to enforceability, to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law); (v) to the best knowledge of such counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries, of a character required to be dis- closed in the Registration Statements which are not adequately disclosed in the Final Prospectus; there is no franchise, contract or other document of a character required to be described in the Registration Statements or Final Prospectus, or to be filed as an exhibit, which is not described or filed as required; and the statements included or incorporated in the Final Prospectus describing any legal proceedings or material 3 contracts or agreements relating to the Company fairly summarize such matters; (vi) the Registration Statements and any amendments thereto relating to the Securities have become effective under the Securities Act; any required filing of the Basic Prospectus, any Interim Prospectus and the Final Prospectus, and any supplements thereto, pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b); to the best knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statements, as amended, has been issued, no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act; (vii) the Underwriting Agreement and any Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company; (viii) the information required to be set forth in each of the Registration Statements in answer to Item 10 (insofar as it relates to such counsel) of Form S-3, to the best knowledge of such counsel, is accurately set forth in such Registration Statement in all material espects or no response is required with respect to such Item; and the authorized equity capitalization of the Company is as described in the documents incorporated by reference in the Final Prospectus; (ix) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated in the Underwriting Agreement or in any Delayed Delivery Contract, except such as have been obtained under the Securities Act and the Trust Inden- ture Act and such as may be required under the "blue sky" laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters and such other approvals (specified in such opinion) as have been obtained; (x) none of the issue and sale of the Securities, the consummation by the Company of any other of the transactions contemplated in the Underwriting Agreement or in any Delayed Delivery Contract or the fulfillment of the terms of the Underwriting Agreement or of any 4 Delayed Delivery Contract will conflict with, result in a breach of, or constitute a default under the Restated Certificate of Incorporation, as amended, or By-laws of the Company or the terms of any indenture or other agreement or instrument known to such counsel and to which the Company or any of its subsidiaries is a party or bound, or any order or regulation known to such counsel to be applicable to the Company or any of its Subsidiaries of any court, regulatory body, admin- istrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its Subsidiaries; and (xi) to the knowledge of such counsel, no holder of securities of the Company has rights to the regis- tration of such securities under the Registration Statement. In rendering such opinion, such counsel may rely as to matters involving the application of laws of any jurisdiction other than the States of Delaware and New York or the United States, to the extent deemed proper and specified in such opinion, upon the opinion of other counsel of good standing believed to be reliable and who are satis- factory to counsel for the Underwriters. (B) The Company shall furnish to the Underwriters a letter from the General Counsel of the Company, dated the Closing Date to the effect that such counsel has no reason to believe that: (i) either Registration Statement and the Final Prospectus (except the Statements of Eligibility (Form T-1) included as exhibits to the Registration Statements, as to which he need not express any view) were not appropriately responsive in all material respects to the requirements of the Securities Act and the Trust Indenture Act and the respective applicable rules and regulations of the Securities and Exchange Commission thereunder and (ii) the Registration Statements, at the respective times they became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at the date of the letter, includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. EX-1.2 3 [Draft--8/18/95] $[ ] 1/ -------------- - Medium-Term Senior Notes, Series C, and --------------------------------------- Medium-Term Subordinated Notes, Series D, ----------------------------------------- Due from Nine Months to 30 Years -------------------------------- from Date of Issue ------------------ Paine Webber Group Inc. ----------------------- Distribution Agreement ---------------------- [ ], 1995 New York, New York PAINEWEBBER INCORPORATED 1285 Avenue of the Americas New York, New York 10019 CS FIRST BOSTON CORPORATION Park Avenue Plaza New York, New York 10055 Dear Sirs: Paine Webber Group Inc., a Delaware corporation (the "Company"), confirms its agreement with each of you with respect to the issue and sale by the Company of up to $[ ] 1/ aggregate principal amount of its - Medium-Term Senior Notes, Series C, and Medium-Term Subordinated Notes, Series D, Due from Nine Months to 30 Years from Date of Issue (the "Notes"). The Notes will be issued either as subordinated to ("Subordinated Notes") or on a parity with ("Senior Notes") other unsecured and unsubordinated indebtedness of the Company and will have the annual interest rates, maturities, redemption provisions, optional repayment rights and other terms as set forth in a supplement to the Prospectus referred to below. The Senior Notes will be issued under an Indenture dated as of March 15, 1988, between the Company and Chemical Bank, as trustee (the "Senior Note Trustee"), as amended by the First Supplemental Indenture dated as of September 22, 1989, and by the Second Supplemental Indenture dated as of March 22, 1991 (such - -------------------- 1/ Or the U.S. dollar equivalent. - 2 Indenture, as so supplemented, being hereinafter referred to as the "Senior Note Indenture"), each between the Company and the Senior Note Trustee. The Subordinated Notes will be issued under an Indenture dated as of March 15, 1988, between the Company and Chemical Bank Delaware, as trustee (the "Subordinated Note Trustee"), as amended by the First Supplemental Indenture dated as of September 22, 1989, by the Second Supplemental Indenture dated as of March 22, 1991, and by the Third Supplemental Indenture dated as of November 30, 1993 (such Indenture, as so supplemented, being hereinafter referred to as the "Subordinated Note Indenture"), each between the Company and the Subordinated Note Trustee. The Senior Note Indenture and the Subordinated Note Indenture are hereinafter sometimes referred to as the "Indentures"; and the Senior Note Trustee and the Subordinated Note Trustee are hereinafter sometimes referred to as the "Trustees". The Notes will be issued, and the terms thereof established, in accordance with the Indentures and, in the case of Notes sold pursuant to Section l(a), the Medium-Term Notes Administrative Procedures attached hereto as Annex A (the "Procedures"). For the purposes of this Agreement, the term the "Agent" shall refer to each of you acting solely in the capacity as agent for the Company pursuant to Section l(a) and not as principal, the term the "Purchaser" shall in each instance refer to the applicable Agent acting solely as principal pursuant to Section l(g) and not as agent, and the term "you" shall refer to each of you acting in both such capaci- ties or in either such capacity. 1. Appointment of Agents; Solicitation by the ------------------------------------------ Agents of Offers to Purchase; Sales of Notes to a Purchaser. - ------------------------------------------------------------ (a) Subject to the terms and conditions set forth herein, the Company hereby appoints each of the Agents to act as its agent for the purpose of soliciting offers to purchase all or part of the Notes from the Company upon the terms set forth in the Prospectus, as amended or supplemented from time to time, and in the Procedures. The appointment of the Agents hereunder is not exclusive and the Company may from time to time offer Notes for sale otherwise than to or through an Agent; provided, however, that so long as this -------- ------- Agreement is in effect the Company will not solicit offers to purchase Notes through any agent without amending this Agreement to appoint such agent an additional Agent hereunder on the same terms and conditions as provided herein for the Agents and without giving the Agents prior notice of such appointment. It is understood, however, that if from time to time the Company is approached by a prospective agent offering to solicit a specific purchase of Notes, the Company may engage such agent with respect to such specific purchase, provided that (i) such agent is 3 engaged on terms substantially similar to the applicable terms of this Agreement and (ii) the Agents are given notice of such engagement promptly after it is agreed to. (b) On the basis of the representations and warranties set forth herein, but subject to the terms and conditions set forth herein, each of the Agents agrees to use reasonable efforts, as agent of the Company, to solicit offers to purchase Notes from the Company upon the terms set forth in the Prospectus, as amended or supplemented from time to time, and in the Procedures. Each Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by such Agent and accepted by the Company, but such Agent shall not, except as otherwise provided in this Agreement, be obligated to disclose the identity of any purchaser or have any liability to the Company in the event any such purchase is not consummated for any reason. Subject to the provisions of this Section and to the Procedures, offers for the purchase of Notes may be solicited by an Agent at such times and in such amounts as such Agent may from time to time deem advisable. (c) The Company reserves the right, in its sole discretion, to suspend solicitation of offers to purchase Senior Notes or Subordinated Notes from the Company at any time for any period of time or permanently. Upon receipt of instructions from the Company, each Agent forthwith will suspend its solicitation of offers to purchase Senior Notes or Subordinated Notes, as the case may be, from the Company until such time as the Company has advised such Agent that such solicitation may be resumed. (d) Each Agent will communicate to the Company, orally or in writing, each offer to purchase Notes from the Company that is received by such Agent as agent of the Company and that is not rejected by such Agent as provided below. The Company will have the sole right to accept offers to purchase Notes from the Company and may reject any such offer, in whole or in part, for any reason. Each of the Agents may, in its discretion reasonably exercised, reject any offer to purchase Notes from the Company that is received by such Agent, in whole or in part, and any such rejection shall not be deemed a breach of such Agent's agreements contained herein. (e) The Company agrees to pay an Agent a commission, on the date of delivery by the Company of any Note sold hereunder (a "Closing Date"), with respect to each sale of Notes by the Company as a result of a solicitation made 4 by such Agent, in an amount equal to that percentage speci- fied in Schedule I hereto of the aggregate principal amount of each Senior Note and each Subordinated Note sold by the Company. Such commission shall be payable as specified in the Procedures. The commission rates may be amended from time to time by written agreement of the Company and the Agents. (f) Each of the Agents agrees, with respect to any Note denominated in a currency other than the U.S. dollar or the European Currency Unit, as agent, directly or indirectly, not to solicit offers to purchase, and as principal under any Terms Agreement (as hereinafter defined) or otherwise, directly or indirectly, not to offer, sell or deliver, such Note in, or to residents of, the country issuing such currency, except as permitted by applicable law. (g) Subject to the terms and conditions stated herein, whenever the Company and an Agent determine that the Company shall sell Notes directly to such Agent as purchaser (the "Purchaser"), each such sale of Notes shall be made in accordance with the terms of this Agreement and any supple- mental agreement relating thereto between the Company and the Purchaser. Each such supplemental agreement (which shall be substantially in the form of Annex B) is herein referred to as a "Terms Agreement". The Purchaser's com- mitment to purchase Notes pursuant to any Terms Agreement shall be deemed to have been made on the basis of the representations and warranties of the Company herein con- tained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall describe the Notes to be purchased by the Purchaser pursuant thereto and shall specify the principal amount of such Notes, the price to be paid to the Company for such Notes, the rate at which interest will be paid on the Notes, the Closing Date for such Notes, the place of delivery of the Notes and payment therefor, the method of payment and any modification of the requirements for the delivery of the opinions of counsel, the certificates from the Company or its officers and the letter from the Company's independent public accountants pursuant to Section 7(c). Such Terms Agreement shall also specify any period of time referred to in Section 5(l). Delivery of the certificates for Notes sold to the Purchaser pursuant to any Terms Agreement shall be made as agreed to between the Company and the Purchaser and set forth in the respective Terms Agreement, not later than the Closing Date set forth in such Terms Agreement, against payment of funds to the Company in the net amount due to the 5 Company for such Notes by the method and in the form set forth in such Terms Agreement. 2. Offering Procedures. The Procedures may be -------------------- amended only by written agreement of the Company and the Agents after notice to the Trustees, and, to the extent any such amendment affects a Trustee, with the approval of such Trustee. The Company and each of the Agents agree to perform the respective duties and obligations specifically provided to be performed by them in the Procedures. 3. Registration Statements and Prospectus. --------------------------------------- The Company has filed with the Securities and Exchange Commission (the "Commission"), pursuant to the Securities Act of 1933, as amended (the "Securities Act"), and the published rules and regulations adopted by the Commission thereunder (the "Rules"), a registration statement on Form S-3 (No. 33-51149) (the "First Registration Statement"), and a registration statement on Form S-3 (No. 33-[ ]) (the "Second Registration Statement") (such Second Registration Statement also constituting Post-Effective Amendment No. 1 to the First Registration Statement), each including a basic prospectus, which have become effective under the Securities Act under which the sale of $[ ] aggregate principal amount of debt securities (the "Securities"), including the Notes, remains registered at this time (the First Registration Statement and the Second Registration Statement, each including all exhibits thereto and each as amended at the date of this Agreement, being hereinafter collectively called the "Registration Statements"). The Company has included in the Registration Statements, or has filed or will file with the Commission pursuant to the applicable paragraph of Rules 424(b) and 429 under the Securities Act, a supplement to the form of prospectus included in the Registration Statements relating to the Notes and the plan of distribution thereof (the "Prospectus Supplement"). In connection with the sale of the Notes the Company proposes to file with the Commission pursuant to the applicable paragraph of Rules 424(b) and 429 under the Securities Act further supplements to the Prospectus Supple- ment specifying the interest rates, maturity dates, redemp- tion provisions, if any, optional repayment rights, if any, and other terms of the Notes sold pursuant hereto or the offering thereof. The Indentures have been qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The term "the Effective Date" shall mean, for each of the Registration Statements, each date that such Registration Statement and any post-effective amendment or amendments thereto became or become effective. "Basic Prospectus" shall mean the form of basic prospectus relating to the Securities contained in each Registration Statement 6 at the Effective Date. The term "Prospectus" means the Basic Prospectus as supplemented by the Prospectus Supple- ment. Any reference herein to a Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Prospec- tus includes the documents incorporated by reference therein pursuant to Item 12 of Form S-3 (the "Incorporated Docu- ments") which were filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before the Effective Date of such Registration Statement or the issue date of the Basic Prospectus, the Prospectus Supplement or the Prospectus, as the case may be, and any reference herein to "amend", "amendment" or "supplement" with respect to a Registration Statement, the Basic Prospectus, the Prospectus Supplement or the Prospectus includes the Incorporated Documents filed under the Exchange Act after the Effective Date of such Registration Statement or the issue date of the Basic Prospectus, the Prospectus Supplement or the Prospectus, as the case may be; and any reference herein to the Registration Statements includes each of the First Registration Statement and the Second Registration Statement only so long as Notes may be issued in the future thereunder and shall refer to either one or both of such Registration Statements, as appropriate. The Company confirms that you are authorized to distribute the Prospectus and any amendments or supplements thereto. 4. Representations and Warranties. The ------------------------------- Company represents and warrants to you as follows: (a) The Company meets the requirements for the use of Form S-3 under the Securities Act. The Registration Statements meet the requirements set forth in Rule 415(a)(1)(ix) or (x) of the Rules and comply in all other material respects with Rule 415 of the Rules. (b) As of the date hereof, on the Effective Date, when any amendment or supplement to the Prospectus is filed with the Commission pursuant to Rule 424 or Rule 429 of the Rules, as of the date of any Terms Agreement and on any Closing Date, (i) the Registration Statements, as amended as of any such time, the Prospectus, as amended or supplemented as of any such time, and the Incorporated Documents will comply in all material respects with the applicable requirements of the Securities Act and the Rules, and the Exchange Act and the Trust Indenture Act and the respective published rules and regulations adopted by the Commission thereunder, (ii) the Registration Statements, as amended as of any such time, did not or will not include any untrue statement of a material fact or omit to state any material fact required to 7 be stated therein or necessary in order to make the state- ments therein not misleading, and (iii) the Prospectus, as amended or supplemented as of any such time, will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the state- ments therein, in the light of the circumstances under which they were made, not misleading; except that this representa- tion and warranty does not apply to (x) statements or omissions made in reliance on and in conformity with infor- mation relating to you furnished in writing to the Company by you expressly for use in the Registration Statements, the Prospectus or any amendment or supplement thereto or (y) that part of the Registration Statements that shall constitute the Statements of Eligibility and Qualification on Form T-1 of the Trustees under the Trust Indenture Act, except statements or omissions in any such Statement made in reliance upon information furnished in writing to the applicable Trustee by or on behalf of the Company for use therein. (c) As of the time any Notes are issued and sold hereunder, the Indenture will constitute a legal, valid and binding instrument enforceable against the Company in accordance with its terms and such Notes will have been duly authorized, executed, authenticated and, when paid for by the purchasers thereof, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture. Each acceptance by the Company of an offer to purchase Notes from the Company and each request by the Company to you that you solicit offers to purchase Notes from the Company will be deemed to be a representation and warranty by the Company to you that the representations and warranties of the Company in this Agreement are true and correct as of the time of such acceptance and that such representations and warranties will be true and correct as of the Closing Date for such Notes, in each case as though made at and as of such time; it being understood that such representations and warranties will relate to the Registra- tion Statements as amended as of any such time and the Prospectus as amended or supplemented as of any such time. 5. Agreements. (a) Prior to the termination ----------- of the offering of the Notes, the Company will not file any amendment or supplement to either of the Registration Statements or the Prospectus (except for (i) periodic or current reports filed under the Exchange Act, (ii) a supplement relating to any offering of Notes providing solely for the specification of or a change in the maturity dates, the interest rates, the issuance prices or other 8 similar terms of any Notes or (iii) a supplement relating to an offering of Securities other than Notes) (including any document to be incorporated therein by reference) unless a copy thereof has been submitted to you a reasonable period of time before its filing and you have not reasonably objected thereto within a reasonable period of time after receiving such copy. Subject to the foregoing sentence, the Company will cause each amendment or supplement to the Prospectus to be filed with the Commission as required pursuant to the Securities Act, the applicable paragraph of Rules 424(b) and/or 429 of the Rules or, in the case of any document to be incorporated therein by reference, to be filed with the Commission as required pursuant to the Exchange Act, within the time period prescribed and will provide evidence satisfactory to you of such filing. (b) The Company will advise you promptly (i) when each amendment or supplement to the Prospectus shall have been filed with the Commission pursuant to Rules 424(b) and/or 429 or, in the case of any document incorporated therein by reference, when such document shall have been filed with the Commission pursuant to the Exchange Act, (ii) when, prior to the termination of the offering of the Notes, any amendment to either of the Registration Statements shall have been filed or become effective, (iii) of the initiation or threatening of any proceedings for, or receipt by the Company of any notice with respect to, the suspension of the qualification of the Notes for sale in any jurisdiction or the issuance of any order by the Commission suspending the effectiveness of either of the Registration Statements and (iv) of the receipt by the Company or any representative or attorney of the Company of any other communication from the Commission relating to either of the Registration Statements, the Prospectus or any amendment or supplement thereto or to the transactions contemplated by this Agreement. The Company will use its best efforts to prevent the issuance of an order suspending the effectiveness of either of the Registration Statements and, if any such order is issued, to obtain its lifting as soon as possible. (c) The Company will deliver to you, without charge, two conformed copies of the Second Registration Statement and each post-effective amendment to the Registration Statements filed after the date hereof (includ- ing all exhibits filed with any such document) and as many conformed copies of the Registration Statements and each such amendment (excluding exhibits) and each Indenture as you may reasonably request. 9 (d) The Company, during the period when a prospectus relating to the Notes is required to be delivered under the Act, will deliver, without charge, to you, at such office or offices as you may designate, as many copies of the Prospectus or any amendment or supplement thereto as you may reasonably request, and, if any event occurs during such period as a result of which the Prospectus, as then amended or supplemented, would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if during such period it is necessary to amend either Registration Statement or to amend or supplement the Prospectus to comply with the Securities Act or the Rules or the Exchange Act or the published rules and regulations adopted by the Commission thereunder, the Company promptly will (i) notify you to suspend solicitation of offers to purchase Notes from the Company, (ii) prepare and file with the Commission, subject to Section 5(a), and deliver, without charge, to you, an amendment or supplement which will correct such statement or omission or effect such compliance and (iii) supply any amended or supplemented Prospectus to you in such quantities as you may reasonably request. (e) The Company, during the period when a prospectus relating to the Notes is required to be delivered under the Act, will file promptly all documents required to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act. The Company will make generally available to its security holders as soon as practicable, but in any event not later than fifteen months after (i) the Effective Dates of the Registration Statements, (ii) the Effective Date of each post-effective amendment to either of the Registration Statements and (iii) the date of each filing by the Company with the Commission of an Annual Report on Form 10-K that is incorporated by reference in the Registration Statements, an earnings statement satisfying the provisions of Sec- tion 11(a) of the Securities Act and Rule 158 of the Rules. (f) The Company will take such actions as you designate in order to qualify the Notes for offer and sale under the securities or "blue sky" laws of such jurisdictions as you designate, will maintain such qualifi- cation in effect for so long as may be required for the distribution of the Notes and will arrange for the determi- nation of the legality of the Notes for purchase by institu- tional investors. 10 (g) The Company will supply to you copies of such financial statements and other periodic and special reports as the Company may from time to time distribute generally to the holders of any class of its capital stock and of each annual or other report it is required to file with the Commission. The Company shall furnish to you such information, documents, certificates of officers of the Company and opinions of counsel for the Company relating to the business, operations and affairs of the Company, the Registration Statements, the Prospectus, and any amendments thereof or supplements thereto, the Indenture, the Notes, this Agreement, the Procedures and the performance by the Company and you of its and your respective obligations hereunder and thereunder as you may from time to time and at any time prior to the termination of this Agreement reason- ably request. (h) The Company will, whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, (i) pay, or reimburse if paid by you, all costs and expenses incident to the performance of the obligations of the Company under this Agreement, including costs and expenses relating to (A) the preparation, printing and filing of the Registration Statements and exhibits thereto, the Prospectus, all amendments and supplements to either of the Registration Statements and the Prospectus, and the printing or other reproduction of the Indentures and this Agreement, (B) the authorization and issuance of the Notes and the preparation and delivery of certificates for the Notes, (C) the registration or qualification of the Notes for offer and sale under the securities or "blue sky" laws of the jurisdictions referred to in paragraph (f) of this Section 5 and the determination of the legality of the Notes, including the fees and disbursements of Cravath, Swaine & Moore, your counsel, in that connection, and the preparation and printing of preliminary and supplemental "blue sky" memoranda and legal investment memoranda, (D) the furnishing (including costs of shipping and mailing) to you of copies of the Prospectus, and all amendments or supplements to the Prospectus, and of all other documents, reports and other information required by this Section to be so furnished, (E) all transfer taxes, if any, with respect to the sale and delivery of the Notes by the Company, (F) the fees and expenses of the Trustees, (G) all fees charged by the National Association of Securities Dealers, Inc., in connection with the Notes and (H) the fees charged by rating agencies in connection with any rating of the Notes, (ii) reimburse you on a quarterly basis for all out-of- pocket expenses (including advertising expenses) incurred by you with the advance approval of the Company and (iii) reimburse the reasonable fees and disbursements 11 of Cravath, Swaine & Moore, your counsel, incurred in connection with this Agreement. (i) Each time that either of the Registration Statements or the Prospectus is amended or supplemented (other than by an amendment or supplement relating to any offering of Securities other than the Notes or providing solely for the specification of or a change in the maturity dates, the interest rates, the issuance prices or other similar terms of any Notes sold pursuant hereto), including by the filing of any document incorporated therein by reference, the Company will deliver or cause to be delivered forthwith to you a certificate of the chief executive, operating or financial officer or treasurer and the secre- tary or chief financial or accounting officer or treasurer of the Company, dated the date of the effectiveness of such amendment or the date of filing of such supplement, in form reasonably satisfactory to you, to the effect that the statements contained in the certificate that was last furnished to you pursuant to either Section 6(c) or this paragraph (i) are true and correct at the time of the effectiveness of such amendment or the filing of such supplement as though made at and as of such time (except that (i) the last day of the fiscal quarter for which financial statements of the Company were last filed with the Commission shall be substituted for the corresponding date in such certificate and (ii) such statements shall be deemed to relate to the Registration Statements and the Prospectus as amended or supplemented to the time of the effectiveness of such amendment or the filing of such supplement) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in Section 6(c) but modified to relate to the last day of the fiscal quarter for which financial statements of the Company were last filed with the Commission and to the Registration Statements and the Pro- spectus as amended or supplemented to the time of the effectiveness of such amendment or the filing of such supplement. (j) Each time that either of the Registration Statements or the Prospectus is amended or supplemented (other than by an amendment or supplement (i) relating to any offering of Securities other than the Notes, (ii) providing solely for the specification of or a change in the maturity dates, the interest rates, the issuance prices or other similar terms of any Notes sold pursuant hereto, or (iii) setting forth or incorporating by reference financial statements or other information as of and for a fiscal quarter, unless, in the case of clause (iii) above, in your reasonable judgment, such financial statements or other information are of such a nature that an opinion of 12 counsel should be furnished), including by the filing of any document incorporated therein by reference, the Company will furnish or cause to be furnished forthwith to you a written opinion and a written letter of counsel for the Company satisfactory to you, dated the date of the effectiveness of such amendment or date of filing of such supplement, in form satisfactory to you, of the same tenor as the opinion and letter referred to in Section 6(d) but modified to relate to the Registration Statements and the Prospectus as amended or supplemented to the time of the effectiveness of such amendment or the filing of such supplement or, in lieu of such opinion and letter, counsel last furnishing such an opinion and letter to you may furnish you with a letter to the effect that you may rely on such counsel's last opinion and last letter to the same extent as though it were dated the date of such letter authorizing reliance (except that statements in such counsel's last opinion and last letter will be deemed to relate to the Registration Statements and the Prospectus as amended or supplemented to the time of the effectiveness of such amendment or the filing of such supplement). (k) Each time that either of the Registration Statements or the Prospectus is amended or supplemented to set forth amended or supplemental financial information, including by the filing of any document incorporated therein by reference, the Company will cause its independent public accountants forthwith to furnish a letter, dated the date of the effectiveness of such amendment or the date of filing of such supplement, in form satisfactory to you, of the same tenor as the letter referred to in Section 6(f) with such changes as may be necessary to reflect the amended and supplemental financial information included or incorporated by reference in the Registration Statements and the Prospec- tus, as amended or supplemented to the date of such letter, provided that if either of the Registration Statements or the Prospectus is amended or supplemented solely to include or incorporate by reference financial information as of and for a fiscal quarter, the Company's independent public accountants may limit the scope of such letter, which shall be satisfactory in form to you, to the unaudited financial statements, the related "Management's Discussion and Analy- sis of Financial Condition and Results of Operations" and any other information of an accounting, financial or statis- tical nature included in such amendment or supplement, unless, in your reasonable judgment, such letter should cover other information or changes in specified financial statement line items. (l) During the period, if any, specified in any Terms Agreement, the Company shall not, without the prior 13 consent of the Purchaser, issue or announce the proposed issuance of any of its debt securities, including Notes, with terms substantially similar to the Notes being pur- chased pursuant to such Terms Agreement. (m) Upon your reasonable request on any Closing Date, the Company will furnish or cause to be furnished forthwith to you a written opinion of counsel for the Company satisfactory to you, dated such Closing Date, of the same tenor as paragraphs 1 and 3 of the opinion referred to in Section 6(d), but modified, as necessary, to relate to the Prospectus as amended or supplemented at such Closing Date and except that such opinion shall state that the Notes being sold by the Company on such Closing Date, when deliv- ered against payment therefor as provided in the applicable Indenture and this Agreement, will, assuming performance by the authenticating agent or the applicable Trustee under the applicable Indenture, have been duly executed, authenti- cated, issued and delivered and will constitute legal, valid and binding obligations of the Company entitled to the benefits of the applicable Indenture and enforceable in accordance with their terms, subject only to the exceptions as to enforcement set forth in paragraph 3 of the opinion referred to in Section 6(d), and that such Notes conform to the description thereof contained in the Prospectus as amended or supplemented to such Closing Date. 6. Conditions to the Obligations of each ------------------------------------- Agent. The obligations of each Agent to solicit offers to - ------ purchase Notes from the Company are subject to the accuracy, on the date of this Agreement, on the Effective Date of each Registration Statement, when any amendment or supplement to the Prospectus is filed with the Commission pursuant to the applicable paragraph of Rule 424(b) and/or 429 of the Rules and on each Closing Date, of the representations and warranties of the Company in this Agreement, to the accuracy and completeness of all statements made by the Company or any of its officers in any certificate delivered to such Agent or such Agent's counsel pursuant to this Agreement, to performance by the Company of its obligations under this Agreement and to each of the following additional conditions: (a) If filing of the Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the Prospectus, and any such supplement, shall have been filed in the manner and within the time period required by Rule 424(b); and no order suspending the effectiveness of either of the Registration Statements, as amended from time to time, shall be in effect and no proceedings for such purpose shall be pending before or 14 threatened by the Commission, and any requests for additional information on the part of the Commission (to be included in either of the Registration Statements or the Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of such Agent. (b) Since the date of the most recent financial statements included or incorporated by reference in the Prospectus, (i) there must not have been any change (of the type indicated in paragraph (b)(3) of Annex D to this Agreement) specified in the most recent letter of the type referred to in Section 5(k), in paragraph (f) of this Section 6 or in Section 7(c)(iv), (ii) there must not have been any material adverse change in the general affairs, prospects, management, business, properties, financial condition or results of operations of the Company and its subsidiaries taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated by the Prospectus, as then amended or supplemented, (iii) the Company and its subsidiaries must not have sustained any material loss or interference with their business or properties from fire, explosion, earthquake, flood or other calamity, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree not described in the Prospectus, as then amended or supplemented, and (iv) there must not have been any downgrading in the rating of any of the Company's debt securities by any nationally recognized statistical rating organization (as defined for purposes of Rule 436(g) of the Rules) or any public announcement by any such organization of any proposal by it to downgrade such rating or that it has under surveillance or review its rating of the Notes or any other debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating) if, in the judgment of such Agent, any such development referred to in clause (i), (ii), (iii) or (iv) makes it impracticable or inadvisable to proceed with the soliciting of offers to purchase Notes from the Company as contemplated by the Prospectus, as then amended or supplemented. (c) The Company shall have furnished to such Agent on the date of this Agreement a certificate of the Treasurer and the General Counsel of the Company, dated such date, certifying that (i) the signers have 15 carefully examined the Registration Statements, the Prospectus, the Indentures and this Agreement, (ii) the representations and warranties of the Company in this Agreement are accurate on and as of the date of such certificate and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied as a condition to the obligation of such Agent to solicit offers to purchase the Notes, (iii) since the date of the most recent financial statements included or incorporated by reference in the Prospectus, there has not been any material adverse change in the general affairs, prospects, management, business, properties, financial condition or results of operations of the Company and its subsidiaries taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus, as amended or supplemented as of the date of such certificate, and (iv) to the knowledge of such officers, no action to suspend the effectiveness of either of the Registration Statements, as amended as of the date of such certificate, or to prohibit the sale of the Notes has been taken or threatened by the Commission. (d) Such Agent shall have received on the date of this Agreement from the General Counsel of the Company an opinion and a letter each dated such date substantially identical to the proposed form of opinion and form of letter set forth in Annex C to this Agreement. (e) Such Agent shall have received on the date of this Agreement from Cravath, Swaine & Moore, its counsel, an opinion and a letter each dated such date with respect to the Company, the Notes, the Indentures, the Registration Statements, the Prospectus, this Agreement and the form and sufficiency of all proceedings taken in connection with the sale and delivery of the Notes. Such opinion, letter and proceedings shall be satisfactory in all respects to such Agent. The Company must have furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to render such opinion and letter. (f) Such Agent shall have received, at the date of this Agreement, a signed letter from Ernst & Young, independent accountants for the Company, substantially in the form of Annex D to this Agreement. 16 All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement will comply with this Agreement only if they are in form and scope satisfactory to such Agent and its counsel. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to such Agent and its counsel, this Agreement and all obligations of such Agent hereunder may be canceled at any time by such Agent. Notice of such cancelation shall be given to the Company in writing or by telephone or telegraph confirmed in writing. The documents required to be delivered by this Section 6 shall be delivered at the office of Cravath, Swaine & Moore, counsel for the Agents, at Worldwide Plaza, 825 Eighth Avenue, New York, New York, on the date of this Agreement. 7. Conditions to the Obligations of the Purchaser. ----------------------------------------------- The obligations of the Purchaser to purchase any Notes from the Company are subject to the accuracy, on the date of any related Terms Agreement and on the Closing Date for such Notes, of the representations and warranties of the Company in this Agreement, to the accuracy and completeness of all statements made by the Company or any of its officers in any certificate delivered to the Purchaser or its counsel pursuant to this Agreement, to performance by the Company of its obligations under this Agreement and to each of the following additional conditions: (a) No stop order suspending the effectiveness of either of the Registration Statements shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) Since the date of the most recent financial statements included or incorporated by reference in the Prospectus, (i) there must not have been any change (of the type indicated in paragraph (b)(3) of Annex D to this Agreement) specified in the most recent letter of the type referred to in Section 5(k), in Section 6(f) or in paragraph (c)(iv) of this Section 7, (ii) there must not have been any material adverse change in the general affairs, prospects, management, business, properties, financial condition or results of operations of the Company and its subsidiaries taken as 17 a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated by the Prospectus, as then amended or supplemented, (iii) the Company and its subsidiaries must not have sustained any material loss or interfer- ence with their business or properties from fire, explosion, earthquake, flood or other calamity, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree not described in the Prospec- tus, as then amended or supplemented, and (iv) there must not have been any downgrading in the rating of any of the Company's debt securities by any nationally recognized statistical rating organization (as defined for purposes of Rule 436(g) of the Rules) or, if so specified in the applicable Terms Agreement, any public announcement by any such organization of any proposal by it to downgrade such rating or that it has under surveillance or review its rating of the Notes or any other debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrad- ing, of such rating) if, in the judgment of the Purchaser, any such development referred to in clause (i), (ii), (iii) or (iv) makes it impracticable or inadvisable to consummate the purchase of the Notes. (c) If specified by any related Terms Agreement and except to the extent modified by such Terms Agreement, the Purchaser shall have received, appropriately updated, (i) a certificate of the Company, dated as of the Closing Date, to the effect set forth in Sec- tion 6(c) (except that references to the Prospectus shall be to the Prospectus as supplemented at the time of execution of the Terms Agreement), (ii) the opinion of the General Counsel of the Company, dated as of the Closing Date, to the effect set forth in Section 6(d), (iii) the opinion of Cravath, Swaine & Moore, counsel for the Purchaser, dated as of the Closing Date, to the effect set forth in Section 6(e) and (iv) a letter of Ernst & Young, independent accountants for the Company, dated as of the Closing Date, to the effect set forth in Section 6(f). (d) Prior to the Closing Date, the Company shall have furnished to the Purchaser such further informa- tion, certificates and documents as the Purchaser may reasonably request. If any of the conditions specified in this Section 7 shall not have been fulfilled in all material 18 respects when and as provided in this Agreement and any Terms Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement or such Terms Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Purchaser and its counsel, such Terms Agreement and all obligations of the Purchaser thereunder and with respect to the Notes subject thereto may be canceled at, or at any time prior to, the respective Closing Date by the Purchaser. Notice of such cancelation shall be given to the Company in writing or by telephone or telegraph confirmed in writing. 8. Right of Person Who Agreed to Purchase to Refuse ------------------------------------------------ to Purchase. The Company agrees that any person who has agreed - ------------ to purchase and pay for any Note, including the Purchaser and any person who purchases pursuant to a solicitation by an Agent, shall have the right to refuse to purchase such Note if, at the Closing Date therefor, any condition set forth in Section 6 or 7, as applicable, shall not be satisfied, it being understood that under no circumstances whatsoever shall an Agent have any duty or obligation to exercise the judgment permitted under Section 6(b) or Section 7(b) on behalf of any such person. 9. Indemnification. (a) The Company will indemnify ---------------- and hold harmless you, your directors, officers, employees and agents and each person, if any, who controls you within the meaning of either the Securities Act or the Exchange Act against any and all losses, claims, damages and liabilities, joint or several (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted), to which they, or any of them, may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, either Registration Statement or the Prospectus or any amendment or supplement to any of the foregoing, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that the Company will not be liable to the extent that such loss, claim, damage or liability arises from the sale of Notes by the Company to any person in the manner contemplated in the Prospectus, as amended or supplemented as of the time of the confirmation of such sale, as a result of a solicitation by you and is based upon an untrue statement or omission or alleged untrue statement or omission 19 (i) made in reliance upon and in conformity with information relating to you furnished in writing to the Company by you expressly for use in the document or (ii) in a preliminary prospectus if the Prospectus, as amended or supplemented as of the time of the confirmation of the sale to such person, corrected the untrue statement or omission or alleged untrue statement or omission which is the basis of the loss, claim, damage or liability for which indemnification is sought and a copy of the Prospectus, as so amended (but excluding any documents incorporated therein by reference), was not sent or given to such person at or before the confirmation of the sale to such person in any case where such delivery is required by the Securities Act, unless such failure to deliver the Prospectus, as so amended, was a result of noncompliance by the Company with Section 5(d). This indemnity agreement will be in addition to any liability that the Company might otherwise have. (b) You will indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of either the Securities Act or the Exchange Act, each director of the Company and each officer of the Company who signs either of the Registration Statements to the same extent as the foregoing indemnity from the Company to you, but only insofar as losses, claims, damages or liabilities arise from the sale of Notes by the Company to any person in the manner contemplated in the Prospectus as a result of a solicitation by you and are based upon any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, either Registration Statement or the Prospectus or any amendment or supplement to any of them in reliance upon and in conformity with information relating to you furnished in writing to the Company by you expressly for use in the document. This indemnity agreement will be in addition to any liability that you might otherwise have. (c) Any party that proposes to assert the right to be indemnified under this Section 9 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 9, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party (i) will not relieve it from liability under this Section 9 unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not relieve it from any liability that it may have to any indemnified party otherwise than under this Section 9. If 20 any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel satisfactory to the indemnified party, and, after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees and expenses of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded that there may be legal defenses available to it or other indemnified parties which are different from or in addition to those available to the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (3) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the fees and expenses of such counsel will be at the expense of the indemnifying party or parties and all such fees and expenses will be reimbursed promptly as they are incurred. An indemnifying party will not be liable for any settlement of any action or claim effected without its written consent or, in connection with any proceeding or related proceedings in the same jurisdiction, for the fees and expenses of more than one separate counsel for all indemnified parties. 10. Contribution. In order to provide for just and ------------- equitable contribution in circumstances in which the indemnification provided for in Section 9 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or you, the Company and each of you agree to contribute to the aggregate losses, claims, damages and liabilities (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) (collectively "Losses") to which the Company and one or more of you may be subject in such proportion as is appropriate to reflect the relative 21 benefits received by the Company and by each of you from the offering of the Notes from which such Losses arise; provided, -------- however, that in no case shall any of you be responsible for any - ------- amount in excess of the commissions received by you yourself in connection with the sale of Notes from which such Losses arise (or, in the case of Notes sold pursuant to a Terms Agreement, the aggregate commissions that would have been received by you yourself if such commissions had been payable). If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and each of you shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and each of you in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses) of the Notes from which such Losses arise, and benefits received by each of you shall be deemed to be equal to the total commissions received by you yourself in connection with the sale of Notes from which such Losses arise (or, in the case of Notes sold pursuant to a Terms Agreement, the aggregate commissions that would have been received by you yourself if such commissions had been payable). Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or any of you. The Company and each of you agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this Section 10, no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 10, any person who controls a party to this Agreement within the meaning of either the Securities Act or the Exchange Act will have the same rights to contribution as that party, and each officer of the Company who signed either of the Registration Statements and each director of the Company will have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this Section 10. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 10, notify such party or parties from whom contribution may be sought, but the omission so to notify (i) will 22 not relieve such party or parties from liability under this Section 10 unless and to the extent it or they did not otherwise learn of such action and such failure results in the forfeiture by such party or parties of substantial rights and defenses and (ii) will not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have otherwise than under this Section 10. No party will be liable for contribution with respect to any action or claim settled without its written consent. 11. Termination. (a) This Agreement may, as ------------ between the Company and you, be terminated for any reason at any time by either the Company or you giving written notice of such termination to the other party. If any such notice is given, this Agreement will terminate, as between the Company and you, at the close of business on the third business day following the receipt of such notice by the party to whom such notice is given. In the event of any such termination, no party shall have any liability to the other party hereto, except as provided in Sections l(e), 5(h), 9, 10 and 12, and this Agreement shall continue between the Company and any other party to this Agreement without regard to any such termination. (b) Each Terms Agreement shall be subject to termination in the absolute discretion of the Purchaser by notice given to the Company if, prior to delivery of any payment for Notes to be purchased thereunder, (1) trading in the equity securities of the Company is suspended by the Commission, by an exchange that lists such equity securities of the Company, or by the NASDAQ National Market, (2) additional material governmental restrictions, not in force on the date of this Agreement, have been imposed upon trading in securities generally or minimum or maximum prices have been generally established on the New York Stock Exchange or on the American Stock Exchange, or trading in securities generally has been suspended on any such Exchange or a general banking moratorium has been established by Federal or New York authorities or (3) any outbreak or material escalation of hostilities or other calamity or crisis occurs the effect of which is such as to make it, in the judgment of the Purchaser, impracticable to market such Notes. 12. Miscellaneous. The respective representations, -------------- warranties and agreements of the Company and you in this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of you, the Company or any person controlling you or the Company and will survive delivery of and payment for the Notes. The 23 reimbursement, indemnification and contribution agreements in Sections 1(e), 5(h), 9, 10 and 11 will remain in full force and effect regardless of any termination of this Agreement. This Agreement is for the benefit of you and the Company and the respective successors of each of you and the Company and, to the extent expressed in this Agreement, for the benefit of persons controlling you or the Company, and directors and officers of the Company, and their respective successors, and no other person, partnership, association or corporation shall acquire or have any right under or by virtue of this Agreement. Notwithstanding anything to the contrary contained in the Distribution Agreement dated November 30, 1993, between the Company and you (the "Prior Agreement"), the Prior Agreement shall terminate (except with respect to Sections 1(e), 5(h), 9, 10 and 11 thereof) immediately upon the execution and delivery of this Agreement. All notices and communications under this Agreement will be in writing, effective only on receipt and mailed or delivered by messenger, facsimile transmission or otherwise to Paine Webber Incorporated at 1285 Avenue of the Americas, New York, New York 10019, attention of General Counsel and Treasurer, to CS First Boston Corporation at Park Avenue Plaza, New York, New York 10055, attention of New Issue Processing Department, or to the Company at 1285 Avenue of the Americas, New York, New York 10019, attention of General Counsel and Treasurer. This Agreement may be signed in multiple counter- parts that taken as a whole constitute one agreement. This Agreement will be governed by and construed in accordance with the laws of the State of New York. Please confirm that the foregoing correctly sets forth the agreement between us. Very truly yours, PAINE WEBBER GROUP INC. by ________________________ Title: 24 Confirmed: PAINEWEBBER INCORPORATED by ____________________ Title: CS FIRST BOSTON CORPORATION by ____________________ Title: [Draft--8/16/95] Schedule I SENIOR AND SUBORDINATED MEDIUM-TERM NOTE FEES Maturity Senior Subordinated --------------------------------- ------ ------------ 9 months to less than 12 months .080 .080 12 months to less than 18 months .125 .125 18 months to less than 2 years .150 .150 2 years to less than 3 years .250 .250 3 years to less than 4 years .350 .350 4 years to less than 5 years .450 .450 5 years to less than 7 years .500 .500 7 years to less than 10 years .550 .550 10 years to less than 20 years .600 .600 20 years to 30 years .750 .750 Annex A ------- PAINE WEBBER GROUP INC. Medium-Term Notes Administrative Procedures ------------------------------------------- [ ], 1995 ----------------- Medium-Term Senior Notes, Series C, and Medium- Term Subordinated Notes, Series D, Due from Nine Months to 30 Years from Date of Issue (the "Notes") are to be offered on a continuing basis by Paine Webber Group Inc. (the "Com- pany"). Each of PaineWebber Incorporated, as agent, and CS First Boston Corporation, as agent (collectively, the "Agents"), has agreed to use reasonable efforts to solicit offers to purchase Notes from the Company. Neither Agent will be obligated to purchase Notes for its own account. The Notes are being sold pursuant to a Distribution Agreement between the Company and each of the Agents dated [ ], 1995 (the "Distribution Agreement"). The Notes will be issued either as subordinated to ("Subordinated Notes") or on a parity with ("Senior Notes") other unsecured and unsubordinated indebtedness of the Company and have been registered with the Securities and Exchange Commission (the "Commission"). Chemical Bank (the "Senior Note Trustee") is the trustee under the Indenture dated as of March 15, 1988, covering the Senior Notes, as supplemented by the First Supplemental Indenture dated as of September 22, 1989, and by the Second Supplemental Indenture dated as of March 22, 1991 (such Indenture, as so supplemented, being hereinafter referred to as the "Senior Note Indenture"), each between the Company and the Senior Note Trustee. Chemical Bank Delaware (the "Subordinated Note Trustee") is the trustee under the Indenture dated as of March 15, 1988, covering the Subordinated Notes, as supplemented by the First Supplemental Indenture dated as of September 22, 1989, by the Second Supplemental Indenture dated as of March 22, 1991, and by the Third Supplemental Indenture dated as of November 30, 1993 (such Indenture, as so supplemented, being hereinafter referred to as the "Subordinated Note Indenture"), each between the Company and the Subordinated Note Trustee. The Senior Note Indenture and the Subordinated Note Indenture are hereinafter sometimes called the "Indentures"; and the Senior Note "Trustee and the Subordinated Note Trustee are hereinafter sometimes called the "Trustees". Notes may be represented by a Global Note (as hereinafter defined) delivered to Chemical Bank (in such capacity, the "Custodian") as agent for The Depository Trust Company ("DTC"), with ownership of beneficial interests in such Global Notes recorded in the book-entry system main- tained by DTC (each such interest in a Global Note being 2 referred to herein as a "Book-Entry Note"), or may be represented by a certificate delivered to the holder thereof or a person designated by such holder (each a "Certificated Note"). An owner of a Book-Entry Note will not be entitled to receive a certificate representing such Note. In connec- tion with the qualification of the Book-Entry Notes for eligibility in the book-entry system maintained by DTC, Chemical Bank will perform the custodial, document control and administrative functions described in Part II below, in accordance with its respective obligations under a Letter of Representations from the Company and Chemical Bank to DTC relating to the Senior Notes and a Letter of Representations from the Company, Chemical Bank and the Subordinated Note Trustee to DTC relating to the Subordinated Notes (each a "Letter of Representations", and, collectively, the "Letters of Representations") and a Medium-Term Note Certificate Agreement (the "Certificate Agreement") between Chemical Bank and DTC, and its obligations as a participant in DTC, including DTC's Same-Day Funds Settlement system ("SDFS"). Administrative procedures and certain terms of the offering are explained below. Certain general terms of the offering, applicable to both Book-Entry Notes and Certifi- cated Notes, are set forth in Part I hereof. Book-Entry Notes will be issued in accordance with the administrative procedures set forth in Part II hereof, as adjusted in accordance with changes in DTC's operating requirements, and Certificated Notes will be issued in accordance with the administrative procedures set forth in Part III hereof. Unless otherwise defined herein, terms defined in the Distribution Agreement, the Indentures and the Notes shall be used herein as therein defined. Notes for which interest is calculated on the basis of a fixed interest rate, which may be zero, are referred to herein as "Fixed Rate Notes". Notes for which interest is calculated on the basis of a floating interest rate are referred to herein as "Floating Rate Notes". To the extent the procedures set forth below conflict with the provisions of the Notes, the Indentures, DTC's operating requirements or the Distribution Agreement, the relevant provisions of the Notes, the Indentures, DTC's operating requirements and the Distribution Agreement shall control. The Company will advise each Agent from time to time in writing of those persons with whom such Agent is to communicate with respect to offers to purchase Notes from the Company and the details of their delivery. References below to "the Agent" shall mean whichever of the Agents is involved in any proposed purchase and sale of any Note or Notes. Part I. Certain Terms of the Offering ----------------------------- 3 Price to Public: Each Note will be issued at the ---------------- percentage of its principal amount specified in the Prospectus Supple- ment, as then amended or supple- mented, relating to the Notes. Denominations: Notes denominated in U.S. dollars -------------- will be issued in minimum denomina- tions of $100,000 and in denomina- tions exceeding such amount by integral multiples of $1,000. Book-Entry Notes will not be denominated in any currency or composite currency other than the U.S. dollar. Certificated Notes denominated in other than U.S. dollars will be issued in the denominations specified pursuant to "Settlement Procedures" in Part III below. Registration: Notes will be issued only in fully ------------- registered form. Maturities: Each Note will mature on a date ----------- selected by the purchaser and agreed to by the Company, which will be not less than nine months and not more than 30 years after the date of issue thereof. Interest Payment: Each Note will bear interest (i) in -------- the case of Fixed Rate Notes, at the annual rate stated on the face thereof, payable in arrears on such dates as are specified therein (each such date of payment other than the maturity date being an "Interest Payment Date" with respect to such respect to such Fixed Rate Note) and at maturity and (ii) in the case of Floating Rate Notes, at a rate determined pursuant to the formula stated on the face thereof, payable in arrears on such dates as are 4 specified therein (each such date of payment other than the maturity date an "Interest Payment Date" with respect to such Floating Rate Note) and at maturity. Unless otherwise specified, each Note will bear interest from and including the later of its date of issue and the most recent date to which interest has been paid or provided for, to but excluding the current Interest Payment Date or the maturity date of such Note. Interest payments for a Note will include interest accrued to but excluding the Interest Payment Date; provided, however, that a -------- ------- Floating Rate Note which has a rate of interest that is reset daily or weekly will bear interest from and including the later of its date of issue and the day following the most recent Regular Record Date (as defined below) to which interest on such Note has been paid or provided for, to and including the next preceding Regular Record Date or the maturity date of such Note, except as otherwise provided in such Note. Unless otherwise specified, the "Regular Record Date" with respect to any Interest Payment Date for any Note shall be the 15th day preceding such Interest Payment Date, whether or not such date shall be a Business Day. Unless otherwise specified, interest (including payments for partial periods) will be calculated and paid, in the case of Fixed Rate Notes, on the basis of a 360-day year of twelve 30-day months and, in the case of Floating Rate Notes, on the basis of the actual number of days elapsed over a year of 360 days, except with respect to interest on Treasury Rate Notes (as defined in the Prospectus 5 Supplement relating to the Notes) which will be calculated and paid on the basis of the actual number of days elapsed over a year of 365 or 366 days, as applicable. Interest will be payable to the person in whose name the Note is registered at the close of business on the Regular Record Date next preceding the Interest Payment Date except that, in the case of Notes issued between a Regular Record Date and an Interest Payment Date, interest payable on such Interest Payment Date will be paid to the person in whose name such Note was initially registered; provided, -------- however, that interest payable at ------- Maturity (as defined below) will be payable to the person to whom principal shall be payable. "Maturity" shall mean the date on which the principal of a Note or an installment of principal becomes due, whether on the Maturity Date specified for such Note, upon redemption or early repayment or otherwise. Procedure for Rate ------------------ Setting and Posting: The Company and the Agents will -------------------- discuss from time to time the interest rates per annum to be borne by, the issuance price of, the aggregate principal amount of and maturity of Notes that may be sold as a result of the solicitation of offers by the Agents. If the Company establishes a fixed set of interest rates and maturities for an offering period (a "posting"), or if the Company decides to change already posted rates, it will promptly advise the Agents of the rates and maturities to be posted. If the Company decides to post interest rates and a decision has been reached to change the posted 6 interest rates, the Company will promptly notify the Agents. Each Agent forthwith will suspend solicitation of offers to purchase notes from the Company until such time as the Company has advised such Agent as to the new rates. Until such time only "indications of interest" may be recorded. Acceptance of ------------- Offers: The Agent will communicate to the ------- Company, orally or in writing, each offer to purchase Notes from the Company that is received by the Agent as agent of the Company and that is not rejected by the Agent as provided below. The Company will have the sole right to accept offers to purchase Notes from the Company and may reject any such offer, in whole or in part, for any reason. The Agent may, in its discretion reasonably exercised, reject any offer to purchase Notes from the Company that is received by the Agent, in whole or in part. The Company will promptly notify the Agent of its acceptance or rejection of an offer to purchase Notes. If the Company accepts an offer to purchase Notes it will confirm such acceptance in writing to the Agent. Suspension of ------------- Solicitation; ------------- Amendment or ------------ Supplement: As provided in the Distribution ----------- Agreement, the Company may suspend solicitation of offers to purchase at any time and, upon receipt of instructions from the Company, an Agent will forthwith suspend solicitation until such time as the Company has advised it that solicitation of offers to purchase may be resumed. 7 If an Agent receives the notice from the Company contemplated by Section 5(d) of the Distribution Agreement, it will promptly suspend solicitation and will only resume solicitation as provided in the Distribution Agreement. If the Company is required, pursuant to Section 5(d) of the Distribution Agreement, to prepare an amendment or supplement, it will promptly furnish such Agent with the pro- posed amendment or supplement; in all other cases, if the Company decides to amend or supplement either of the Registration Statements or the Prospectus, it will promptly advise such Agent and will furnish such Agent with the proposed amendment or supplement in accordance with the terms of the Distribution Agreement. The Company will promptly file such amendment or supplement, provide such Agent (and Cravath, Swaine & Moore or such other law firm as may be counsel to such Agent at the time) with copies of any such amendment or supplement, confirm to such Agent that such amendment or supplement has been filed with the Commission and advise such Agent that solicitation may be resumed. In the event that at any time the Company suspends solicitation of offers to purchase Notes from the Company there shall be any out- standing offers to purchase Notes from the Company that have been accepted by the Company but for which settlement has not yet occurred, the Company will promptly advise the Agent and the Trustees whether such sales may be settled and whether copies of the Pro- spectus as amended or supplemented to the time of the suspension may be delivered in connection with the settlement of such sales. The Company will have the sole respon- 8 sibility for such decision and for any arrangements which may be made in the event that the Company determines that such sales may not be settled or that copies of the Prospectus as so amended or supple- mented may not be so delivered. Delivery of ----------- Prospectus: A copy of the Prospectus, as most ----------- recently amended or supplemented on the date of delivery thereof (except as provided below), relating to any Note must be delivered to a purchaser prior to or together with the earliest of (i) any written offer of such Note, (ii) the delivery of the written confirmation provided for below and (iii) the delivery of any Note purchased by such purchaser. Subject to the foregoing and to the procedures described in Part II below, it is anticipated that delivery of the Prospectus, confirmation and Notes to the purchaser will be made simultane- ously at settlement. The Company shall ensure that the Agent receives copies of the Prospectus and each amendment or supplement thereto (including appropriate pricing stickers) in such quantities and within such time limits as will enable the Agent to deliver such confirmation or Note to a Purchaser as contemplated by these procedures and in compliance with the preceding sentence. If, since the date of acceptance of a purchaser's offer, the Prospectus shall have been supplemented solely to reflect any sale of Notes on terms different from those agreed to between the Company and such purchaser or a change in posted rates not applicable to such purchaser, such purchaser shall not receive the Prospectus as supplemented by such new supplement, but shall receive the 9 Prospectus as supplemented to reflect the terms of the Notes being purchased by such Purchaser and otherwise as most recently amended or supplemented on the date of delivery of the Prospectus. Confirmation: For each offer to purchase a Note ------------- from the Company solicited by the Agent and accepted by the Company, the Agent will issue a confirmation to the purchaser, with a copy to the Company, setting forth the Settlement Details (as hereinafter defined) and delivery and payment instructions. Business Day: "Business Day" with respect to any ------------- Note means each day, other than a Saturday or Sunday, that is (i) not a day on which banking institutions in the Business Day Centers with respect to such Note are authorized or obligated by law or executive order to close, (ii) if such Note is a LIBOR Note (as defined in the Prospectus Supplement), a London Banking Day (as hereinafter defined) and (iii) if such Note is denominated in the European Currency Unit ("ECU"), any day that is not designated as an ECU settlement day by the ECU Banking Association in Paris or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made. "Business Day Centers", unless otherwise specified in the applicable Note, with respect to any Note shall mean The City of New York and, in the case of any Note payable in a Specified Currency other than U.S. dollars or ECU, the principal financial center of the country issuing the Specified Currency. As used herein, "London Banking Day" shall mean any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. 10 Advertising Cost: The Company will determine with the ----------------- Agents the amount of advertising that may be appropriate in offering the Notes. Advertising expenses approved in advance by the Company will be paid by the Company. Payment of Expenses: Each Agent will forward to the -------------------- Company, following the end of each quarter, a statement of the out- of-pocket expenses incurred by such Agent during that quarter which are reimbursable to it pursuant to the terms of the Distribution Agree- ment. The Company will remit payment to such Agent promptly following the receipt of each such statement. Authenticity of --------------- Signatures: Neither Agent will have any obliga- ----------- tion or liability to the Company or either Trustee or any Authenticating Agent in respect of the authenticity of the signature of any officer, employee or agent of the Company or either Trustee or such Authenticating Agent on any Note. PART II. Administrative Procedures for Book-Entry Notes ---------------------------------------------- Issuance: On any date of settlement (as --------- defined under "Settlement" below) for one or more Book-Entry Notes, the Company will issue a single global note in fully registered form without coupons (a "Global Note") representing up to $150,000,000 principal amount of all of such Book-Entry Notes that have the same terms, except as to principal amount. Each Global Note will be dated and issued as of the date of its authentication by the relevant Trustee (or, in the case of the Subordinated Note Trustee, by Chemical Bank, as the Authenticating Agent). No Global 11 Note will represent any Certificated Note. Identification -------------- Numbers: The Company will arrange with the -------- CUSIP Service Bureau of Standard & Poor's Corporation (the "CUSIP Service Bureau") for the reservation of a series of CUSIP numbers (including tranche numbers) consisting of approximately 900 CUSIP numbers and relating to Global Notes representing Book- Entry Notes. The Company will obtain from the CUSIP Service Bureau a written list of such series of reserved CUSIP numbers and will deliver such list to Chemical Bank and DTC. The Company will assign CUSIP numbers to Global Notes as described below under Settlement Procedure "B". DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Company has assigned to Global Notes. Chemical Bank will notify the Company at any time when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global Notes, and if it deems necessary, the Company will reserve additional CUSIP numbers for assignment to Global Notes representing Book-Entry Notes. Upon obtaining such additional CUSIP numbers, the Company shall deliver a list thereof to Chemical Bank and DTC. Registration: Each Global Note will be registered ------------- in the name of Cede & Co., as nominee for DTC, on the Security Register maintained under the Indenture governing such Global Note. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (with respect to such Note, the "Participants") to act as agent 12 or agents for such owner in connec- tion with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Note in the account of such Participants. The ownership interest of such beneficial owner (or such participant) in such Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. So long as Cede & Co. is the registered owner of a Global Note, DTC will be considered the sole owner and holder of the Book-Entry Notes represented by such Global Note for all purposes under the Indenture governing such Global Note. Transfers: Transfers of a Book-Entry Note will ---------- be accomplished by book entries made by DTC and, in turn, by Participants (and in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Note. Consolidation ------------- and Exchange: Chemical Bank may deliver to DTC ------------- and the CUSIP Service Bureau at any time a written notice of consolida- tion specifying (i) the CUSIP numbers of two or more outstanding Global Notes that represent Book Entry Notes having the same terms other than principal amount and (for all such Notes other than zero coupon Notes) for which interest has been paid to the same date, (ii) a date, occurring at least 30 days after such written notice is delivered and (for all such Notes other than zero coupon Notes) at least 30 days before the next 13 Interest Payment Date for such Book-Entry Notes, on which such Global Notes shall be exchanged for a single replacement Global Note and (iii) a new CUSIP number, obtained from the Company, to be assigned to such replacement Global Note. Upon receipt of such a notice, DTC will send to its participants (including Chemical Bank) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, Chemical Bank will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Notes to be exchanged will no longer be valid. On the speci- fied exchange date, Chemical Bank will exchange such Global Notes for a single Global Note bearing the new CUSIP number and new Original Issue Date (determined in accordance with the Letters of Represent-ations), and the CUSIP numbers of the exchanged Global Notes will, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. Notwithstanding the foregoing, if the Global Notes to be exchanged exceed $150,000,000 in aggregate principal amount, one Global Note will be authenticated and issued to represent each $150,000,000 of principal amount of the exchanged Global Notes and an additional Global Note will be authenticated and issued to represent any remaining principal amount of such Global Notes (see "Denominations" below). Denominations: As noted in Part I above, Book- -------------- Entry Notes will be issued in minimum denominations of $100,000 and in denominations exceeding such 14 amount by integral multiples of $1,000. Global Notes will be denominated in principal amounts not in excess of $150,000,000. If one or more Book-Entry Notes having an aggregate principal amount in excess of $150,000,000 would, but for the preceding sentence, be represented by a single Global Note, then one Global Note will be issued to represent each $150,000,000 principal amount of such Book-Entry Note or Notes and an additional Global Note will be issued to represent any remaining principal amount of such Book-Entry Note or Notes. In such a case, each of the Global Notes representing such Book-Entry Note or Notes shall be assigned the same CUSIP number. Interest: General. Except as set forth --------- -------- below, each Book-Entry Note will bear interest as set forth in "Interest Payment" above, and such interest shall be payable as set forth therein. Standard & Poor's Corporation will use the information received in the pending deposit message described under Settlement Procedure "C" below in order to include the amount of any interest payable and certain other information regarding the related Global Note in the appropriate (daily or weekly) bond report published by Standard & Poor's Corporation. Payments of ----------- Principal and ------------- Interest: Payments of Interest Only. On the --------- -------------------------- fifth Business Day immediately preceding each Interest Payment Date, Chemical Bank will deliver to the Company's Treasurer's Office and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Global 15 Note on such Interest Payment Date and the total of such amounts. DTC will confirm the amount payable on each Global Note on such Interest Payment Date by reference to the appropriate (daily or weekly) bond reports published by Standard & Poor's Corporation. The Company will pay to Chemical Bank, as paying agent, the total amount of interest due on such Interest Payment Date and Chemical Bank will pay such amount to DTC at the times and in the manner set forth below under "Manner of Payment". Payments at Maturity. On or about --------------------- the first Business Day of each month, Chemical Bank will deliver to the Company and DTC a written list of principal and interest to be paid on each Global Note maturing in the following month. The Company, Chemical Bank and DTC will confirm the amounts of such principal and interest payments with respect to each such Global Note on or about the fifth Business Day preceding the Maturity of such Global Note. The Company will pay to Chemical Bank, as paying agent, the principal amount of such Global Note, together with interest due at such Maturity and Chemical Bank will pay such amount to DTC at the times and in the manner set forth below under "Manner of Payment". Promptly after payment to DTC of the principal and interest due at the Maturity of such Global Note, the Senior Note Trustee, in the case of Senior Notes, and the Authenticating Agent, in the case of Subordinated Notes, will cancel such Global Note and deliver it to the Company with an appropriate debit advice. On the first Business Date of each month, Chemical Bank will deliver to each Trustee a written statement 16 indicating the total principal amount of outstanding Global Notes for which such Trustee serves as trustee as of the immediately preceding Business Day. Manner of Payment. The total ------------------ amount of any principal and/or interest due on Global Notes on any Interest Payment Date or at Maturity shall be paid by the Company to Chemical Bank in funds available for use by Chemical Bank as of 9:30 a.m. (New York City time) on such date. The Company will make such payment on such Global Notes by instructing Chemical Bank to withdraw funds from an account maintained by the Company at Chemical Bank or by wire transfer to Chemical Bank. The Company will confirm such instruction in writing to Chemical Bank (with a copy to the Subordinated Note Trustee if such Global Notes represent Subordinated Note Trustee if such Global Notes represent Subordinated Notes). Prior to 10:00 a.m. (New York City time) on such date or as soon as possible thereafter, Chemical Bank will pay the foregoing amounts to DTC in same day funds in accordance with the payment provisions contained in the applicable Letter of Representations. DTC will allocate such payments to its Participants in accordance with its existing operating procedures. NEITHER THE COMPANY, AS ISSUER, CHEMICAL BANK, THE SENIOR NOTE TRUSTEE NOR THE SUBORDINATED NOTE TRUSTEE SHALL HAVE ANY RESPONSIBILITY OR LIABILITY FOR THE PAYMENT BY DTC TO SUCH PARTICIPANTS OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE BOOK-ENTRY NOTES. 17 Withholding Taxes. The amount of ------------------ any taxes required under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other person responsible for forwarding payments and materials directly to the beneficial owner of such Note. Settlement: The receipt by the Company of ----------- immediately available funds in payment for a Book-Entry Note and the authentication and issuance of the Global Note representing such Note shall constitute "settlement" with respect to such Book-Entry Note. All orders accepted by the Company will be settled on the third Business Day following the date of acceptance unless otherwise agreed by the purchaser and the Company. Such date of acceptance shall be specified upon acceptance of such offer. Settlement ---------- Procedures: Settlement Procedure with regard to ----------- each Book-Entry Note sold by the Company through an Agent, as agent, shall be as follows: A. Such Agent will provide to the Company (unless provided by the purchaser directly to the Company) by telephone, facsimile transmission or other means agreed upon by the Company and such Agent the following information (the "Settlement Details"): 1. Principal amount and issue price. 2. If a Fixed Rate Note, the interest rate, Regular Record Dates and Interest Payment Dates, if any. 18 3. Settlement date (Original Issue Date). 4. Maturity Date. 5. Type of Note (i.e., ---- Senior Note or Subordinated Note). 6. Agent's commission (to be paid in the form of a discount from the issue price remitted to the Company upon settlement). 7. Redemption provisions, if any. 8. Repayment provisions, if any. 9. If a Floating Rate Note, such of the following as are applicable: (i) Interest Rate Basis, (ii) Index Maturity, (iii) Spread or Spread Multiplier, (iv) Maximum Rate, (v) Minimum Rate, (vi) Initial Interest Rate, (vii) Calculation Date, (ix) Interest Determination Dates, (x) Interest Payment Dates, (xi) Regular Record Dates and (xii) Calculation Agent. 19 10. All other terms of the Book-Entry Note and all other items necessary to complete the applicable Global Note. Before accepting any offer to purchase a Book-Entry Note that will have terms in addition to or different from the terms set forth on any form of Note previously delivered by the Company to, and approved by, the applicable Trustee, other than merely as a result of completing any blanks (other than the "Other Terms") or equivalent blank) on such form the Company will provide a description of the proposed different or additional terms to the applicable Trustee and its counsel for the purpose of determining whether such terms are consistent with the applicable Trustee and its counsel for the purpose of determining whether such terms are consistent with the applicable Indenture, are administratively acceptable to such Trustee and its agents and to not affect such Trustee's or its agents' own rights, duties or immunities under the Notes or the applicable Indenture or otherwise in a manner which is not reasonably acceptable to such Trustee or its agents (all such terms having been authorized, as of the date of these administrative Procedures, by or pursuant to a Board Resolution and the applicable Trustee having received, as of the date of these Administrative Procedures, all opinions, certificates and orders required prior to the authentication and issuance of 20 a Note containing such terms). Any offer to purchase such a Book-Entry Note shall only be accepted by the Company if such terms shall be disapproved by the applicable Trustee or its counsel on one of the above- mentioned grounds after the foregoing review. In addition, before accepting any offer to purchase any Note to be settled in less than three Business Days, the Company will verify that the Authenticating Agent will have adequate time to prepare and authenticate such Note. B. The Company will assign a CUSIP number to the Global Note representing such Book-Entry Note and then advise Chemical Bank in writing, including facsimile or electronic trans- mission, and, in the case of Subordinated Notes, the Subor- dinated Note Trustee by tele- phone (confirmed in writing at any time on the same date) or facsimile transmission of the information set forth in Settlement Procedure "A" above, such CUSIP number and the name of the Agent. Each such communication by the Company shall constitute a representa- tion and warranty by the Company to Chemical Bank, each Trustee and each Agent that (i) such Book-Entry Note is then, and at the time of issuance and sale thereof will be, duly authorized for issu- ance and sale by the Company, (ii) such Book-Entry Note, and the Global Note representing such Book-Entry Note, will conform with the terms of the Indenture pursuant to which such Book-Entry Note is issued 21 and (iii) upon authentication and delivery of such Global Note and any other Securities to be issued on or prior to the settlement date for the Book- Entry Note represented by such Global Note, the aggregate amount of Securities which have been issued and sold by the Company will not exceed the amount of Securities registered under the Registration State- ments. C. Chemical Bank will enter a pending deposit message through DTC's Participant Terminal System, providing the following settlement information to DTC, such Agent, Standard & Poor's Corporation and, upon request, the Trustee under the Indenture pursuant to which each Book- Entry Note which is represented by the Global Note is to be issued: 1. The information set forth in Settlement Procedure "A". 2. Initial Interest Payment Date for each such Book-Entry Note, the number of days by which such date succeeds the related Regular Record Date and the amount of interest payable on such Interest Payment Date (to the extent known at such time). 3. CUSIP number of the Global Note representing such Book-Entry Note. 4. Whether such Global Note will represent any other Book-Entry Note (to the extent known at such time). 22 D. Upon receipt of appropriate documentation and instructions, the Company will instruct the Senior Note Trustee to prepare and authenticate each Senior Global Note and will instruct the Authenticating Agent to prepare and authenticate each Subordinated Global Note by facsimile transmission or other acceptable written means. E. Chemical Bank will complete and the Senior Note Trustee or the Authenticating Agent, as the case may be, will authenticate the Global Note, and Chemical Bank will register the Global Note in the name of Cede & Co., as nominee of DTC, and hold such Global Note for delivery on the Closing Date therefor to Chemical Bank, as Custodian. F. DTC will credit each Book-Entry Note represented by the Global Note to be issued to the applicable partici-pant account at DTC. G. Chemical Bank will enter an SDFS deliver order through DTC's Participant Terminal System with respect to each Book-Entry Note represented by the Global Note to be issued instructing DTC to (i) debit such Book-Entry Note to Chemical Bank's participant account and credit such Book- Entry Note to the Agent's participant account and (ii) debit such Agent's settle- ment account and credit Chemical Bank's settlement account for an amount equal to the price of such Book-Entry Note less such Agent's commission. The entry of such a deliver order shall constitute a representation and 23 warranty by Chemical Bank to DTC that (i) the Global Note representing such Book-Entry Note has been issued and authenticated and (ii) Chemical Bank is holding such Global Note pursuant to the Certificate Agreement. H. The Agent will enter an SDFS deliver order through DTC's Participant Terminal System with respect to each Book-Entry Note represented by the Global Note to be issued instructing DTC (i) to debit such Book- -Entry Note to such Agent's participant account and credit such Book-Entry Note to the participant account of the Participant with respect to such Book-Entry Note and (ii) to debit the settlement account of such Participant and credit the settlement account of such Agent for an amount equal to the price of such Book-Entry Note. I. Transfers of funds in accor- dance with SDFS deliver orders described in Settlement Proce- dures "G" and "H" will be settled in accordance with SDFS operating procedures (as referenced in the Letters of Representations) in effect on the settlement date. J. Chemical Bank will credit to an account of the Company main- tained at Chemical Bank funds available for immediate use in the amount transferred to Chemical Bank in accordance with Settlement Procedure "G". K. Chemical Bank, as Custodian, will hold the Global Note pursuant to the Certificate Agreement. Periodically, 24 Chemical Bank will send to the Company a statement setting forth the principal amount of Book-Entry Notes outstanding as of that date under each Indenture. L. The relevant Agent will deliver to the purchaser a copy of the most recent Prospectus applica- ble to the Notes with or prior to the earlier of any written offer of Notes and the confir- mation and payment by the purchaser of the Note. Such Agent will confirm the purchase of each Book-Entry Note to the purchaser either by transmitting to the Participant with respect to such Book-Entry Note a confirmation order or orders through DTC's institu- tional delivery system or by mailing a written confirmation to such purchaser. Settlement ---------- Procedures ---------- Timetable: For orders of Book-Entry Notes ---------- solicited by an Agent, as agent, and accepted by the Company for settlement on the first Business Day after the sale date, Settlement Procedures "A" through "L" set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: Settlement Procedure Time --------- ---- A-B 11:00 A.M. on the sale date C 2:00 P.M. on the sale date D 3:00 P.M. on Business Day before settlement date E 9:00 A.M. on settlement date 25 F 10:00 A.M. on settlement date G-H 2:00 P.M. on settlement date I 4:45 P.M. on settlement date J-L 5:00 P.M. on settlement date If a sale is to be settled more than one Business Day after the sale date, Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable but no later than 11:00 A.M. and 2:00 P.M., as the case may be, on the first Business Day after the sale date. Settlement Procedure "I" is subject to extension in accordance with any extension of Fedwire closing deadlines and in other events specified in the SDFS operating procedures in effect on the settlement date. Settlement Procedures "D-H" and "J-L" shall be completed as soon as practicable but no later than the respective dates set forth above. If settlement of a Book-Entry Note is rescheduled or canceled, the Company will as soon as practicable give Chemical Bank notice to such effect. Chemical Bank will deliver to DTC, through DTC's Participant Terminal System, a cancelation message to such effect by no later than 2:00 P.M. on the Business Day immediately preceding the scheduled settlement date (provided Chemical Bank has received such notice from the Company by noon on the Business Day immediately preceding the settlement date). Fails: If Chemical Bank fails to enter an ------ SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure "G", Chemical Bank may deliver to DTC, through DTC's Participant Terminal System, 26 as soon as practicable a withdrawal message instructing DTC to debit such Book-Entry Note to Chemical Bank's participant account. DTC will process the withdrawal message, provided that Chemical Bank's participant account contains a principal amount of the Global Note representing such Book-Entry Note that is at least equal to the principal amount to be debited. If a withdrawal message is processed with respect to all the Book-Entry Notes represented by a Global Note, the Senior Note Trustee, in the case of Senior Notes, or the Authenticating Agent, in the case of Subordi-nated Notes, will mark such Global Note "Canceled", make appropriate entries in its records and send such canceled Global Note to the Company. The CUSIP number assigned to such Global Note shall, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. If a withdrawal message is processed with respect to one or more, but not all, of the Book-Entry Notes represented by a Global Note, Chemical Bank and the Senior Note Trustee or the Authenticating Agent, as the case may be, will exchange such Global Note for two Global Notes, one of which shall represent such Book-Entry Note or Notes and shall be canceled immediately after issuance and the other of which shall represent the other Book-Entry Notes previously represented by the surrendered Global Note and shall bear the CUSIP number of the surrendered Global Note. If the purchase price for any Book-Entry Note is not timely paid to the Participant with respect to such Note by the beneficial purchaser thereof (or a person, including an indirect participant 27 in DTC, acting on behalf of such purchaser), such Participant and, in turn, the Agent for such Note may enter SDFS deliver orders through DTC's Participant Terminal System reversing the orders entered pursuant to Settlement Procedures "H" and "G", respectively. Thereafter, Chemical Bank will deliver the withdrawal message and take the related actions described in the preceding paragraph. Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. In the event of a failure to settle with respect to one or more, but not all, of the Book- Entry Notes to have been represented by a Global Note, Chemical Bank and the Senior Note Trustee or the Authenticating Agent, as the case may be, will provide, in accordance with Settlement Procedures "D" and "E", for the authentication and issuance of a Global Note representing the other Book-Entry Notes to have been represented by such Global Note and will make appropriate entries in its records. PART III Administrative Procedures for Certificated Notes ------------------------------------------------ Issuance: Each Certificated Note will be --------- dated and issued as of the date of its authentication by the relevant Trustee (or, in the case of the Subordinated Note Trustee, by the Authenticating Agent). Transfers and ------------- Exchanges: A Certificated Note (whether a ---------- Senior Note or a Subordinated Note) 28 may be presented for transfer or exchange at the principal corporate trust office in New York City of the Senior Trustee. Certificated Notes will be exchangeable for other Certificated Notes having identical terms but different authorized denominations. Cer- tificated Notes will not be exchangeable for Book-Entry Notes. Payments of ----------- Principal and ------------- Interest: On the fifth Business Day immedi- --------- ately preceding each Interest Pay- ment Date, Chemical Bank, as paying agent, will furnish the Company with the total amount of the inter- est payments to be made on such Interest Payment Date to the extent known. In addition, on or about the first Business Day of each month, Chemical Bank will provide to the Company's Treasurer's Office a list of the principal and interest to be paid on the respec- tive Notes maturing in the follow- ing month. The Company will pro- vide to Chemical Bank not later than any payment date sufficient moneys to pay in full all principal and interest payments due on such payment date. Chemical Bank shall make all such payments in accordance with the terms of the Notes. Notes presented to Chemical Bank at Maturity will be canceled by Chemical Bank. Chemical Bank will be responsible for withholding taxes on interest paid on Certificated Notes as required by applicable law. Settlement: The receipt by the Company of imme- ----------- diately available funds in exchange for an authenticated Certificated Note delivered to the Agent and the Agent's delivery of such Certifi- cated Note against receipt of imme- diately available funds shall, with 29 respect to such Certificated Note, constitute "settlement". All orders accepted by the Company will be settled on the third Business Day following the date of acceptance unless otherwise agreed by the purchaser and the Company. Such date of settlement shall be specified upon acceptance of such offer. Settlement ---------- Procedures: Settlement Procedures with regard ----------- to each Certificated Note sold by the Company through an Agent, as agent, shall be as follows: A. The Agent will provide to the Company (unless provided by the purchaser directly to the Company), by telephone, facsimile transmission or other means agreed upon by the Company and the Agent, the following information (the "Settlement Details"): 1. Exact name in which the Note or Notes are to be registered. 2. Exact address of registered owner and, if different, address for payment of principal and interest. 3. Taxpayer identifi-cation number of registered owner. 4. Principal amount and issue price. 5. If a Fixed Rate Note, the interest rate, Regular Record Dates and Interest Payment Dates, if any. 6. Settlement date (Original Issue Date). 7. Maturity Date. 30 8. Type of Note (i.e., Senior ---- Note or Subordinated Note). 9. Agent's commission (to be paid in the form of a discount from the issue price remitted to the Company upon settlement). 10. Redemption provisions, if any. 11. Repayment provisions, if any. 12. If a Floating Rate Note, such of the following as are applicable: (i) Interest Rate Basis, (ii) Index Maturity, (iii) Spread or Spread Multiplier, (iv) Maximum Rate, (v) Minimum Rate, (vi) Initial Interest Rate, (vii) Interest Reset Dates, (viii) Calculation Date, (ix) Interest Determination Dates, (x) Interest Payment Dates, (xi) Regular Record Dates, and (xii) Calculation Agent. 31 13. Authorized denomi-nations of Notes denominated in other than U.S. dollars. 14. All other terms of the Note and all other items necessary to complete the Note. Before accepting any offer to purchase a Certificated Note that will have terms in addi- tion to or different from the terms set forth on any form of Note previously delivered by the Company to, and approved by, the applicable Trustee, other than merely as a result of completing any blanks (other than the "Other Terms" or equivalent blank) on such form, the Company will provide a description of the proposed different or additional terms to the applicable Trustee and its counsel for the purpose of determining whether such terms are consistent with the appli- cable Indenture, are adminis- tratively acceptable to such Trustee and its agents and do not affect such Trustee's or its agents' own rights, duties or immunities under the Notes or the applicable Indenture or otherwise in a manner which is not reasonably acceptable to such Trustee or its agents (all such terms having been author- ized, as of the date of these Administrative Procedures, by or pursuant to a Board Resolution and the applicable Trustee having received, as of the date of these Administrative Procedures, all opinions, certificates and orders required prior to the authentication and issuance of a Note containing such terms). Any offer to purchase such a 32 Certificated Note shall only be accepted by the Company if such terms shall not be disapproved by the applicable Trustee or its counsel on one of the above-mentioned grounds after the foregoing review. In addition, before accepting any offer to purchase any Certificated Note to be settled in fewer than three Business Days, the Company will verify that the Senior Trustee or the Authenticating Agent, as the case may be, will have adequate time to prepare and authenti- cate such Certificated Note. B. The Company will advise the relevant Trustee (and, in the case of the Subordinated Note Trustee, the Authenticating Agent) by telephone (confirmed in writing at any time on the next Business Day) or elec- tronic transmission of the information set forth in Settlement Procedure "A" above and the name of the Agent and shall instruct the relevant Trustee or the Authenticating Agent, as applicable, to authenticate the Note. Each such communication by the Company shall consti-tute a representation and warranty by the Company to each Trustee and each Agent that (i) such Certificated Note is then, and at the time of issuance and sale thereof will be, duly authorized for issuance and sale by the Company, (ii) such Certificated Note will conform with the terms of the Indenture pursuant to which such Certificated Note is issued and (iii) upon authentication and delivery of such Certificated Note and any other Securities 33 to be issued on or prior to the settlement date for such Certificated Note, the aggre- gate amount of Securities which have been issued and sold by the Company will not exceed the amount of Securities registered under the Registration Statements. C. The Company will deliver to Chemical Bank a pre-printed five-ply packet for such Certificated Note, which packet will contain the following documents in forms that have been approved by the Company, the Agents and the Trustees: 1. Certificated Note with customer confirmation. 2. Stub One - For Trustee. 3. Stub Two - For Agent. 4. Stub Three - For the Company. 5. Stub Four - For the Authen- ticating Agent. D. The Senior Trustee (or, in the case of a Subordinated Note, the Authenticating Agent) will complete and authenticate such Certificated Note and deliver it (with the confirmation) and Stubs One, Two and Four to the Agent, and the Agent will acknowledge receipt of the Note by stamping or otherwise marking Stubs One and Four and returning Stub One to the relevant Trustee and Stub Four to the Authenticating Agent in the case of Subordinated Notes. Such delivery will be made only against such acknowl-edgment of receipt. Upon verification by the Agent that a Note has been 34 properly prepared and authen- ticated by the Senior Note Trustee or the Authenticating Agent, payment therefor will be made to the Company by the Agent on the settlement date in immediately available funds in an amount equal to the issue price of such Note less the Agent's commission. Such payment shall be made only upon prior receipt by the Agent of immediately available funds from or on behalf of the purchaser unless the Agent decides, at its option, to advance its own funds for such payment against subsequent receipt of funds from the purchaser. In the event that any Certificated Note is incor- rectly prepared, the applicable Trustee (and, if a Subordinated Note, the Authenticating Agent) will promptly issue a replace- ment Senior Note or Subordinated Note, as the case may be, in exchange for the incorrectly prepared Certificated Note. E. The Agent will deliver such Certificated Note (with the confirmation) to the customer against payment in immediately payable funds. The Agent will obtain the acknowl-edgment of receipt of such Certificated Note by retaining Stub Two. F. The applicable Trustee will send Stub Three to the Company by first-class mail. Notwithstanding the foregoing, the Company, the Agent and the applica- ble Trustee and its agents may decide to issue Certificated Notes which are printed as separate 35 documents and not as part of five-ply plackets and may decide to dispense with the delivery of Stubs and instead to use different forms of receipt. Any such different arrangements must be agreed to prior to the acceptance by the Company of an offer to purchase Notes. Settlement ---------- Procedures ---------- Timetable: For orders of Certificated Notes ---------- solicited by any Agent, as agent, and accepted by the Company, Settlement Procedures "A" through "F" set forth above shall be completed on or before the respective times (New York City time) set forth below: Settlement Procedure Time -------------- A 2:00 P.M. on the Business Day before settlement B-C 3:00 P.M. on the Business Day before settlement D 2:15 P.M. on settlement date E 3:00 P.M. on settlement date F 5:00 P.M. on settlement date Notwithstanding the foregoing, if the settlement date is the date of acceptance of the offer to purchase the Note, Settlement Procedures "A" through "C" shall be completed on or before 11:00 A.M. (New York City time) on the settlement date. Fails: In the event that a purchaser shall ------ fail to accept delivery of and make payment for a Note by 3:00 P.M., New York City time, on the settle- ment date therefor, the Agent will notify the relevant Trustee and, if 36 applicable, the Authenticating Agent and the Company by telephone, confirmed in writing (which may be given by telex or telecopy), and if the Note has been delivered to the Agent, return the Note to the Senior Note Trustee or the Authenticating Agent. The Company will promptly provide such Trustee or the Authenticating Agent with appropriate documentation and instructions to complete the trans- actions hereinafter outlined and will remit to the Agent funds in the amount, if any, it received with respect to such Note. Such payment will be made on the settle- ment date for such Note, if possi- ble, and in any event not later than the Business Day following such settlement date. if such fail shall have occurred for any reason other than the failure of the Agent to provide the Settlement Details to the Company or to provide a con- firmation to the purchaser within a reasonable period of time as described above, the Company will reimburse the Agent on an equitable basis for its loss of the use of funds during the period when they were credited to the account of the Company. Immediately upon receipt of a Note in respect of which a fail occur- red, the Senior Note Trustee or Authenticating Agent will make appropriate entries in its records and cancel such Note. [Draft--8/18/95] Annex B ------- Paine Webber Group Inc. Terms Agreement --------------- , 1995 [PaineWebber Incorporated 1285 Avenue of the Americas New York, New York 10019] [CS First Boston Corporation Park Avenue Plaza New York, New York 10055] Dear Sirs: Paine Webber Group Inc. (the "Company") proposes, subject to the terms and conditions stated herein and in the Distribution Agreement dated [ ], 1995 (the "Distribution Agreement"), among the Company, PaineWebber Incorporated and CS First Boston Corporation, to issue and sell to [PaineWebber Incorporated] [CS First Boston Corporation] (the "Purchaser") the securities specified in the Schedule hereto (the "Purchased Securities"). Each of the provisions of the Distribution Agreement not specifically related to the solicitation by the Agents, as the agents of the Company, of offers to purchase Securities is incorporated herein by reference in its entirety, and shall be deemed to be part of this Terms Agreement to the same extent as if such provisions had been set forth in full herein. Nothing contained herein or in the Distribution Agreement shall make any party hereto an agent of the Company or make such party subject to the provisions therein relating to the solicitation of offers to purchase securities from the Company solely by virtue of such party's execution of this Terms Agreement. Each of the representations and warranties set forth in the Distribution Agreement shall be deemed to have been made at and as of the date of this Terms Agreement, except that each representation and warranty in Section 4 of the Distribution Agreement which makes reference to the Prospectus shall be deemed to be a representation and warranty as of the date of the Distribution Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Terms Agreement in relation to the Prospectus as amended and supplemented to relate to the Purchased Securities. 2 An amendment to one or both of the Registration Statements (as defined in the Distribution Agreement), or a supplement to the Prospectus, as the case may be, relating to the Purchased Securities, in the form heretofore delivered to you is now proposed to be filed with the Commission. Subject to the terms and conditions set forth herein and in the Distribution Agreement incorporated herein by reference, the Company agrees to issue and sell to the Purchaser and the Purchaser agrees to purchase from the Company the Purchased Securities, at the time and place, in the principal amount and at the purchase price set forth in the Schedule hereto. If the foregoing is in accordance with your understanding, please sign and return to us the counterparts hereof, and upon acceptance hereof by you this letter and such acceptance hereof, including those provisions of the Distribution Agreement incorporated herein by reference, shall constitute a binding agreement between you and the Company. PAINE WEBBER GROUP INC. By ________________________ Title: Accepted: [PAINEWEBBER INCORPORATED] [CS FIRST BOSTON CORPORATION] By _________________________ Title: 15N [Draft--8/18/95] SCHEDULE TO ANNEX B Title of Purchased Securities: [ %] Medium-Term [Senior] [Subordinated] Notes, Series [C] [D] Aggregate Principal Amount: $ [Price to Public:] Purchase Price by [PaineWebber Incorporated) [CS First Boston Corporation]: % of the principal amount of the Purchased Securities, plus accrued interest from to [and accrued amortization, if any, from to ] Method of and Specified Funds for Payment of Purchase Price: [By certified or official bank check or checks, payable to the order of the Company, in [[New York] Clearing House] [immediately available] funds] [By wire transfer to a bank account specified by the Company in [next day] [immediately available] funds] Indenture: [Senior] [Subordinated) Note Indenture, as defined in the Distribution Agreement Time of Delivery: Closing Location: Maturity: Interest Rate: [ %] 2 Interest Payment Dates: [months and dates) Other Terms of the Purchased Securities: Documents to be Delivered: The following documents referred to in the Distribution Agreement shall be delivered as a condition to the Closing: [(l) The officers' certificate referred to in Section 7(c)(i).] [(2) The opinion referred to in Section 7(c)(ii).] [(3) The opinion referred to in Section 7(c)(iii).] [(4) The accountants' letter referred to in Section 7(c)(iv).] Other Provisions (including syndicate provisions or Sec- tion 5(l) limitations, if applicable): Annex C ------- (A) The Company 1/ shall furnish to the - Agents an opinion of the General Counsel of the Company, dated the Closing Date, to the effect that: (1) each of the Company and PaineWebber Incorporated, Mitchell Hutchins Asset Management Inc. and PaineWebber Real Estate Securities Inc., wholly owned subsidiaries of the Company (individually a "Subsidiary" and collectively the "Subsidiaries"), has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which the failure to qualify and be in good standing would materially and adversely affect the business or condition of the Company and its consolidated Subsidiaries, considered as a whole; (2) all of the outstanding shares of capital stock of each Subsidiary have been duly and validly authorized and issued and are fully paid and nonassessable, and are owned by the Company either directly or through wholly owned subsidiaries, free and clear of any perfected security interest and, to the best knowledge of such counsel, after due inquiry of appropriate officers of the Company, any other security interests, claims, liens or encumbrances, except for restrictions on sales of capital stock contained in debt instruments; (3) the Notes conform in all material respects to the description thereof contained in the Prospectus (subject to the insertion in the Notes of the maturity dates, the interest rates and other similar terms thereof which will be described in supplements to the Prospectus as contemplated by the Distribution Agreement of which this Annex C is a part (the "Distribution Assessment"); each of the Indentures has - -------------------- 1/ All capitalized terms used herein and not otherwise - defined shall have the respective meanings ascribed to them in the Distribution Agreement of which this Annex C is a part. 2 been duly authorized, executed and delivered by the Company, has been duly qualified under the Trust Indenture Act and constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws affecting creditors' rights generally from time to time in effect, and subject, as to enforceability, to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law); and the Notes have been duly authorized and, when the remaining terms of any Note of either series have been established in accordance with the applicable Indenture and such Note has been duly executed, authenticated, issued and delivered against payment therefor in accordance with the provisions of the applicable Indenture and the Distribution Agreement, will constitute a legal, valid and binding obligation of the Company entitled to the benefits of the applicable Indenture, enforceable in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting creditors' rights generally from time to time in effect, and subject, as to enforceability, to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law); (4) to the best knowledge of such counsel, there is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries of a character required to be disclosed in either of the Registration Statements or the Prospectus; there is no franchise, contract or other document of a character required to be described in either of the Registration Statements or the Prospectus or to be filed as an exhibit which is not described or filed as required; and the statements included or incorporated in the Prospectus describing any legal proceedings or material contracts or agreements relating to the Company fairly summarize such matters; (5) the Registration Statements have become effective under the Securities Act, and, to the best knowledge of such counsel, no stop order suspending the 3 effectiveness of either of the Registration Statements has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act; (6) the Distribution Agreement has been duly authorized, executed and delivered by the Company; (7) the information required to be set forth in each of the Registration Statements in answer to Item 10 (insofar as it relates to such counsel) of Form S-3, to the best knowledge of such counsel, is accurately set forth in such Registration Statement in all material respects or no response is required with respect to such Item; and the authorized equity capitalization of the Company is as described in the documents incorporated by reference in the Prospectus; (8) no consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated in the Distribution Agreement, except such as have been obtained under the Securities Act and the Trust Indenture Act and such as may be required under the "blue sky" laws of any jurisdiction in connection with the sale of Notes; (9) none of the issue and sale of the Notes, the consummation by the Company of any other of the transactions contemplated in the Distribution Agreement and the fulfillment of the terms of the Distribution Agreement will conflict with, result in a breach of, or constitute a default under the Restated Certificate of Incorporation, as amended, or By-laws of the Company, or the terms of any indenture or other agreement or instrument known to such counsel and to which the Company or any of its subsidiaries is bound, or any order or regulation known to such counsel to be applicable to the Company or any of its subsidiaries, of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of its subsidiaries; and (10) to the best knowledge of such counsel, no holder of securities of the Company has rights to the registration of such securities under either of the Registration Statements. 4 In rendering such opinion, such counsel may rely as to matters involving the application of laws of any jurisdiction other than the States of Delaware and New York or the United States, to the extent deemed proper and specified in such opinion, upon the opinion of other counsel of good standing believed to be reliable and who are satisfactory to counsel for the Agents. (B) The Company shall furnish to the Agents a letter from the General Counsel of the Company, dated the Closing Date, to the effect that such counsel has no reason to believe that: (i) either Registration Statement and the Prospectus (except the Statements of Eligibility (Form T-1) included as exhibits to the Registration Statements, as to which he need not express any view) were not appropriately responsive in all material respects to the requirements of the Securities Act and the Trust Indenture Act and the respective applicable rules and regulations of the Commission thereunder and (ii) the Registration Statements, at the respective times they became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus, at the date of the letter, includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. [Draft--8/18/95] Annex D ------- Accountants' Comfort Letter --------------------------- At each Closing Date and at such times as provided in the Distribution Agreement, 1/ Ernst & Young shall - furnish to the Agents or the Purchaser, as the case may be, a letter or letters (which may refer to letters previously delivered to the Agents or the Purchaser, as the case may be), dated as of the Closing Date or such other date, in form and substance satisfactory to the Agents or the Purchaser, as the case may be, confirming that they are independent certified public accountants within the meaning of the Securities Act and the Exchange Act and the respective applicable published rules and regulations thereunder, that the response to Item 10 of each of the Registration Statements is correct insofar as it relates to them and stating in effect that: (a) in their opinion the consolidated financial statements and schedules audited by them and incorporated by reference in the Registration Statements and the Prospectus and reported on by them comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations thereunder; (b) on the basis of a reading of the "Selected Financial Data", if any, included or incorporated in the Registration Statements and the Prospectus and of the latest unaudited consolidated condensed financial statements made available by the Company and its consolidated subsidiaries; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and audit and executive committees of the Company; and inquiries of certain officials of the Company who have responsibility for financial and accounting matters of the Company and its subsidiaries as to transactions and events subsequent -------------------- 1/ All capitalized terms used herein shall have the - meanings ascribed to them in the Distribution Agreement of which this Annex D is a part. 2 to the date of the most recent financial statements included or incorporated in the Registration Statements and the Prospectus, nothing came to their attention which caused them to believe that: (1) the amounts in the unaudited "Summary Financial Information", if any, included in the Prospectus, and the amounts in the "Selected Financial Data", if any, included or incorporated by reference in the Registration Statements and the Prospectus, do not agree with the corresponding amounts in the audited financial statements from which such amounts were derived; (2) any unaudited financial statements included or incorporated in the Registration Statements and the Prospectus do not comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect to financial statements included or incorporated in quarterly reports on Form 10-Q under the Exchange Act or any material modifications should be made to the unaudited financial statements for them to be presented in conformity with such generally accepted accounting principles; (3) with respect to the period subsequent to the date of the most recent financial statements included or incorporated in the Registration Statements and the Prospectus, there were any changes, at a specified date not more than five business days prior to the date of the letter, in the consolidated long-term debt or non-convertible redeemable preferred stock of the Company and its subsidiaries or capital stock of the Company (excluding retained earnings and foreign currency translation adjustment) as compared with the amounts shown on the most recent consolidated balance sheet included or incorporated in the Registration Statements and the Prospectus, except in all instances for changes disclosed in such letter or letters; or (4) if any unaudited pro forma consolidated condensed financial statements are included or incorporated by reference in the Registration 3 Statements and the Prospectus, on the basis of a reading of the unaudited pro forma financial statements, carrying out certain specified procedures, inquiries of certain officials of the Company and the acquired company who have responsibility for financial and accounting matters, and proving the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the pro forma financial statements, nothing came to their attention which caused them to believe that the pro forma financial statements do not comply in form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X or that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements; (c) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company) set forth in the Registration Statements, as amended, and the Prospectus, as amended or supplemented, and in Exhibit 12 to the Registration Statements, including specified information, if any, included or incorporated from the Company's Annual Report on Form 10-K incorporated therein or specified information, if any, included or incorporated from any of the Company's Quarterly Reports on Form 10-Q incorporated therein, agrees with the accounting records of the Company and its subsidiaries, excluding any questions of legal interpretation. EX-3.1 4 Exhibit 3.1 RESTATED CERTIFICATE OF INCORPORATION OF PAINE WEBBER GROUP INC. Paine Webber Group Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is Paine Webber Group Inc. The date of the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was October 30, 1973, under the name Paine Webber Incorporated. 2. This Restated Certificate of Incorporation only restates and integrates and does not further amend the provisions of the Certificate of Incorporation of this corporation as heretofore amended or supplemented and there is no discrepancy between these provisions and the provisions of this Restated Certificate of Incorporation, except that the names and places of residence of the original incorporators of the corporation have, pursuant to Section 245 of the General Corporation Law of the State of Delaware, been omitted, and, accordingly, the provisions of the Certificate of Incorporation have been renumbered. 3. The text of the Certificate of Incorporation as amended or supplemented heretofore is hereby stated without further amendments or changes to read as herein set forth in full: ARTICLE I Name ---- The name of the Corporation is: Paine Webber Group Inc. ARTICLE II Registered Office and Registered Agent -------------------------------------- The registered office of the Corporation in the State of Delaware is to be located at No. 1209 Orange Street, in the City of Wilmington, County of New Castle. The name and address of the Corporation's registered agent is The Corporation Trust - 2 - Company, Corporation Trust Center, No. 1209 Orange Street, in the City of Wilmington, County of New Castle, State of Delaware. ARTICLE III Corporate Purposes and Powers ----------------------------- The purpose of the Corporation is to engage in any part of the world in any capacity whether by itself of by or through any other person, organization, association, partnership, corporation or other entity in which the Corporation may have an interest in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware, and the Corporation shall be authorized to exercise and enjoy all powers, rights and privileges conferred upon corporations by the laws of the State of Delaware as in force from time to time, including without limitation all powers necessary or appropriate to carry out all those acts and activities in which it may lawfully engage. ARTICLE IV Capital Stock ------------- SECTION 1. Shares, Classes and Series Authorized. The ------------------------------------- total number of shares of capital stock which the Corporation shall have authority to issue is 20,000,000 shares of Series Preferred Stock of the par value of $20 each and 100,000,000 shares of Common Stock of the par value of $1 each. Such Series Preferred Stock and Common Stock are sometimes hereinafter collectively called "capital stock." SECTION 2. Designations, Powers, Preferences, Rights, ----------------------------------------- Qualifications, Limitations and Restrictions of Capital Stock. - ------------------------------------------------------------- The following is a statement of the designations and the powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of the classes of the capital stock, and of the authority with respect thereto expressly vested in the Board of Directors of the Corporation: PART I - SERIES PREFERRED STOCK (a) The Series Preferred Stock may be issued from time to time in one or more series, the shares of each series to have such powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as are stated and expressed herein or in a resolution or resolutions providing for the issue of such series, adopted by the Board of Directors as hereinafter provided. - 3 - (b) Authority is hereby expressly granted to the Board of Directors, subject to the provisions of this Section 2, to authorize the issue of one or more series of Series Preferred Stock, and with respect to each such series to fix by resolution or resolutions providing for the issue of such series: (i) the maximum number of shares to constitute such series and the distinctive designation thereof; (ii) whether the shares of such series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights; (iii) the dividend rate, if any, on the shares of such series, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any other class or classes or on any other series of capital stock, and whether such dividends shall be cumulative or noncumulative; (iv) whether the shares of such series shall be subject to redemption by the Corporation, and, if made subject to redemption, the times, prices and other terms and conditions of such redemption; (v) the rights of the holders of shares of such series upon the liquidation, dissolution or winding up of the Corporation; (vi) whether or not the shares of such series shall be subject to the operation of a retirement or sinking fund, and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such series for retirement or to other corporate purposes and the terms and provisions relative to the operation thereof; (vii) whether or not the shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or classes, or of any other series of the same class, and if so convertible or exchangeable, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same; (viii) the limitations and restrictions, if any, to be effective while any shares of such series are outstanding upon the payment of dividends or making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, - 4 - Common Stock or any other class or classes of stock of the Corporation ranking junior to the shares of such series either as to dividends or upon liquidation; (ix) the conditions or restrictions, if any, upon the creation of indebtedness of the Corporation or upon the issue of any additional stock (including additional shares of such series or of any other series or of any other class) ranking on a parity with or prior to the shares of such series as to dividends or distribution of assets on liquidation, dissolution or winding up; and (x) any other preference and relative, participating, optional, or other special rights, and qualifications, limitations or restrictions thereof as shall not be inconsistent with this Section 2. (c) All shares of any one series of Series Preferred Stock shall be identical with each other in all respects, except that shares of any one series issued at different times may differ as to the dates from which dividends, if any, thereon shall be cumulative; and all series shall rank equally and be identical in all respects, except as permitted by the foregoing provisions of Paragraph (b) hereof; and all shares of Series Preferred Stock shall rank senior to the Common Stock both as to dividends and upon liquidation. (d) In the event of any liquidation, dissolution or winding up of the Corporation, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of any class or classes of stock of the Corporation ranking junior to the Series Preferred Stock upon liquidation, the holders of the shares of the Series Preferred Stock shall be entitled to receive payment at the rate fixed herein or in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series, plus (if dividends on shares of such series of Series Preferred Stock shall be cumulative) an amount equal to all dividends (whether or not earned or declared) accumulated to the date of final distribution to such holders; but they shall be entitled to no further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation or proceeds thereof, distributable among the holders of the shares of the Series Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid, then such assets, or the proceeds thereof, shall be distributed among such holders ratably in accordance with the respective amounts which would be payable on such shares if all amounts payable thereon were paid in full. For the purposes of this Paragraph (d), the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities, or other - 5 - 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. (e) Except as shall be otherwise stated and expressed herein or in the resolution or resolutions of the Board of Directors providing for the issue of any series and except as otherwise required by the laws of the State of Delaware, the holders of shares of Series Preferred Stock shall have, with respect to such shares, no right or power to vote on any question or in any proceeding or to be represented at, or to receive notice of, any meeting of stockholders. (f) One series of Series Preferred Stock authorized hereby shall be $1.375 Convertible Exchangeable Preferred Stock (the "Convertible Preferred Stock"). The number of shares of Convertible Preferred Stock shall be 4,600,000. (i) Holders of shares of Convertible Pre- ferred Stock will be entitled to receive, when and as declared by the Board of Directors of the Corporation (the "Board") out of assets of the Corporation legally available for payment, an annual cash dividend of $1.375 per share, payable in quarterly installments on March 15, June 15, September 15 and December 15, commencing June 15, 1987. 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 - 6 - 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 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 $25 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 Convert- ible Preferred Stock to the date of final dis- tribution. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distrib- able among the holders of shares of Parity Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid, then such assets, or the proceeds thereof, shall be distribut- - 7 - able among such holders ratably in accordance with the respective amounts which would be payable on such shares if all amounts payable thereon were payable 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 option, at any time, except that, if such share is called for redemption, not after the close of business on the fifth day next preceding the date fixed for such redemption, to convert such share into that number of fully paid and non-assessable 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) and by surrender of such share so to be converted, such surrender to be made in the manner provided in subsec- tion (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 $44-1/8, as adjusted in accordance with the provi- sions 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 - 8 - Preferred Stock in the Borough of Manhattan, City of New York, appointed for such purpose by the Corporation, with the Notice of Election to Con- vert 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, 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 accumu- lated on the Convertible Preferred Stock surren- dered for conversion or for dividends on Common Stock delivered on such conversion. As promptly as practicable after the surrender of the certifi- cates 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 ness 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 Conver- sion 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 - 9 - 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 non-assessable, free of all liens and charges and not subject to any preemptive rights. (III) No fractional shares or scrip repre- senting 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 subsec- tion (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 Convert- ible Preferred Stock so surrendered. (IV) The Conversion Price shall be adjusted from time to time as follows: (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) sub- divide 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 reclassi- fication 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 - 10 - such action had such share been converted immedi- ately 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 subdivi- sion (a), the holder of any share of Convertible Preferred Stock thereafter surrendered for conver- sion 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 state- ment filed with the conversion agent by the Corporation as soon as practicable) shall deter- mine 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 out- standing shares of Common Stock generally enti- tling them (for a period expiring within 45 days after the record date mentioned below) to sub- scribe for or purchase shares of Common Stock at a price per share less than the current market price per share (as determined pursuant to subdivi- sion (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 - 11 - 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 indebted- ness or assets (excluding any cash dividend paid from retained earnings of the Corporation and dividends or distributions payable in stock for which adjustment is made pursuant to subdivi- sion (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 subsec- tion (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 distribu- tion. (d) For the purpose of any computation under subdivisions (b) and (c) of this subsection (IV), the current market price per share of Common Stock on any date shall be deemed to be the average of the daily market prices for the 30 consecutive days on which the New York Stock Exchange is open for trading commencing 45 trading days before the day in question. The term "daily market price" - 12 - when used with reference to the Common Stock 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 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 immedi- ately 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 subsec- tion (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. (f) No adjustment in the Conversion Price shall be required to be made unless such adjust- ment would require an increase or decrease of at least 1% of such price; provided, however, that -------- ------- any adjustments which by reason of this subdivi- sion (f) are not required to be made shall be - 13 - 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 distri- bution of securities convertible into or exchange- able for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. (g) Whenever the Conversion Price is adjust- ed as herein provided, (i) the Corporation shall promptly file with the conversion agent a certifi- cate 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 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 surren- dered 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). - 14 - (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 reorgani- nization 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), 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 - 15 - 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 deliver- able upon the conversion of all outstanding shares of Convertible Preferred Stock not theretofore converted. For purposes of this subsection (VI), the number of shares of Common Stock which shall be deliverable upon the conversion of all out- standing shares of Convertible Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder. Before taking any action which 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 Convert- ible 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 non-assessable shares of Common Stock at such adjusted Conversion Price. 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 secu- rities exchange, if any, upon which the outstand- ing Common Stock is listed at the time of such delivery. 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 - 16 - with, or any approval of or consent to the deliv- ery 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 Pre- ferred 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 Corpo- ration, that such tax has been paid. (VIII) Notwithstanding any other provision herein to the contrary, in case of any consolida- tion 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 sale or conveyance to another corpor- ation of the property of the Corporation as an entirety or substantially as an entirety, or in the 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, statutory exchange, sale or conveyance 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, statutory exchange, sale or conveyance, 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, statutory exchange, sale or conveyance (provided that if the kind or amount of securi- ties, cash or other property receivable upon such - 17 - consolidation, merger, statutory exchange, sale or conveyance 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, statutory exchange, sale or conveyance for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Thereafter, the holders of the Convertible Pre- ferred 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 reasonably be, in relation to any shares of stock or other securi- ties 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 subsec- tion (VIII) shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. (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 - 18 - 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, then the holders of Parity Preferred Stock shall have, in addition to the other voting rights set forth herein, the exclusive right, voting sepa- rately 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 subse- quent 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, - 19 - 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 practi- cable date upon the notice required for annual meetings of stockholders at the place for holding of annual meetings of stockholders of the Corpora- tion, or, if none, at a place designated by the Secretary of the Corporation. 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 authori- ties), 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 preced- ing 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 Pre- ferred Stock shall be required and be sufficient to constitute a quorum of the Parity Preferred Stock for the election of directors by the Parity Preferred Stock. At any such meeting or adjourn- ment thereof (A) the absence of a quorum of the - 20 - 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 Corpora- tion will not, either directly or indirectly or through merger or consolidation with any other corporation: (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, - 21 - (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 Convertible Preferred Stock is exchangeable in whole at the option only of the Corporation on any dividend payment date beginning June 15, 1989, for the Corporation's 5-1/2% Convertible Subordinated Debentures due June 15, 2017 (the "Debentures") as described in the Corporation's Registration Statement on Form S-3 (Registration No. 33-12264), as filed with the Securities and Exchange Commission. Holders of outstanding shares of Convertible Preferred Stock will be entitled to receive $25 principal amount of Debentures in exchange for each share of Convertible Preferred Stock held by them at the time of exchange. The Corporation will mail to each record holder of the Convertible Preferred Stock written notice of its intention to exchange not less than 20 nor more than 60 days prior to the date of exchange. Prior to giving notice of intention to exchange, the Corporation shall execute and deliver with a bank or trust company selected by the Corporation an Indenture substan- tially in the form filed as an Exhibit to such Registration Statement with such changes as may be required by law, stock exchange rule or usage. The Corporation will cause the Debentures - 22 - to be authenticated on the dividend payment date on which the exchange is effective; at such time the rights of the holders of Convertible Preferred Stock as stockholders of the Company shall cease (except the right to receive accumulated and unpaid dividends to the date of exchange), and the shares of Convertible Preferred Stock shall no longer be deemed outstanding and shall represent only the right to receive the Debentures. The Debentures will be delivered to the persons entitled thereto upon surrender to the Corporation or its agent appointed for that purpose of the certificates for the shares of Convertible Preferred Stock being exchanged therefor. If the Corporation has not paid full cumulative dividends on the Convertible Preferred Stock to the date of exchange (or set aside a sum therefor) the Con- vertible Preferred Stock may not be exchanged for the Debentures. (vii) The shares of the Convertible Preferred Stock may be redeemed at the option of the Corpora- ration as a whole at any time, or from time to time in part, upon not less than 25 nor 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 the following redemption prices, but the shares of the Convertible Preferred Stock may not be redeemed before March 15, 1989, unless the daily market price (as defined in paragraph (iii)(IV)(d)) of the Common Stock for any 20 trading days during a period of 30 consecutive trading days ending within five trading days before the date notice of redemption is mailed to each holder equals or exceeds 140% of the Conversion Price then in effect. If redeemed during the 12-month period beginning March 15, Year Price Year Price 1987 $26.38 1993 $25.55 1988 26.24 1994 25.41 1989 26.10 1995 25.28 1990 25.96 1996 25.14 1991 25.83 1997 1992 25.69 and there- after 25.000 - 23 - in each case together with an amount equal to all dividends (whether or not earned or declared) accumulated and unpaid to the date fixed for redemption. If full cumulative dividends on the Convert- ible Preferred Stock have not been paid, the Convertible Preferred Stock may not be redeemed in part and 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. If less than all the outstanding shares of Convert- ible Preferred Stock are to be redeemed, the Corporation will select those to be redeemed by lot or a substantially equivalent method. Upon such redemption date, holders of shares of Con- vertible Preferred Stock called for redemption shall cease to be stockholders with respect to such shares and thereafter such shares shall no longer be transferable on the books of the Corpo- ration 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 certifi- cates. (viii) No consent of the holders of the Con- vertible 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 of authorized Common Stock or any increase, decrease or change in the par value thereof or in any other terms thereof. (ix) The Board reserves the right by subse- quent amendment of this resolution 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 number of shares thereof then outstanding) and in other respects to amend - 24 - this resolution within the limitations provided by law, this resolution and the Certificate of Incorporation. PART II - COMMON STOCK (g) All shares of Common Stock shall be identical with each other in every respect. The shares of Common Stock shall entitle the holders thereof to one vote for each share upon all matters upon which stockholders have the right to vote. (h) The Common Stock is subject to all the powers, rights, privileges, preferences and priorities of the Series Preferred Stock as are stated and expressed herein and as shall be stated and expressed in any resolution or resolutions adopted by the Board of Directors pursuant to authority expressly granted to and vested in it by the provisions of this Section 2. ARTICLE V Restriction on Dividends ------------------------ No dividend shall be declared or paid which shall impair the capital of the Corporation nor shall any distribution of assets be made to any stockholder unless the value of the assets of the Corporation remaining after such payment or distribution is at least equal to the aggregate of its debts, liabilities and capital. A director shall be fully protected in relying in good faith upon the books of account of the Corporation or statements prepared by any of its officers or by independent public accountants as to the value and amount of the assets, liabilties, net profits, capital stock and surplus of the Corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid. ARTICLE VI Board of Directors ------------------ SECTION 1. Powers of the Board of Directors. In --------------------------------- furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the Corporation is expressly authorized: (a) To authorize and cause to be executed mortgages and liens upon the real and personal property of the Corporation. - 25 - (b) To determine the use and disposition of any surplus and net profits of the Corporation, including the determination of the amount of working capital required, to set apart out of any of the funds of the Corporation, whether or not available for dividends, a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created. (c) To designate, by resolution passed by a majority of the whole Board, one or more committees, each committee to consist of one or more directors of the Corporation, which, to the extent provided in the resolution designating the committee or in the By-Laws of the Corporation, shall have and may exercise subject to the provisions of the General Corporation Law of Delaware the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be provided in the By-Laws of the Corporation or as may be determined from time to time by resolution adopted by the Board of Directors. (d) To grant rights or options entitling the holders thereof to purchase from the Corporation shares of its capital stock of any class or series. The terms upon which, the time or times at or within which, and the price or prices at which any such rights or options may be issued and any such shares may be purchased from the Corporation upon the exercise of any such right or option, shall be determined by the Board of Directors. In the absence of actual fraud in the transaction, the judgment of the Board of Directors as to the consideration for the issuance of such rights or options and for the issuance of shares of capital stock upon exercise thereof and the sufficiency of such consideration shall be conclusive. No such rights or options shall be invalidated or in any way affected by the fact that any director shall be a grantee thereof or shall vote for the issuance of such rights or options to himself or for any plan pursuant to which he may receive any such rights or options. (e) To adopt or assume such plans as may from time to time be approved by it for the purchase by officers or employees of the Corporation of shares of capital stock of the Corporation of any class or series. The terms upon which, the time or times at or within which, and the price or prices at which shares may be purchased from the Corporation pursuant to such a plan shall be determined by the Board of Directors in the plan. In the absence of actual fraud in the transaction, the judgment of the Board - 26 - of Directors as to the consideration for the issuance of such shares and the sufficiency thereof shall be conclusive. No such plan which is not at the time of adoption or assumption unreasonable or unfair shall be invalidated or in any way affected because any director shall be entitled to purchase shares of capital stock of the Corporation thereunder and shall vote for any such plan. (f) To adopt or assume and carry out such plans as may from time to time be approved by it for the distribution among the officers or employees of the Corporation, or any of them, in addition to their regular salaries or wages, of part of the earnings of the Corporation in consideration for or in recognition of the services rendered by such officers or employees or as an inducement to future efforts. No such plan which is not at the time of adoption or assumption unreasonable or unfair shall be invalidated or in any way affected because any director shall be a beneficiary thereunder or shall vote for any plan under which he may benefit or for any distribution thereunder in which he may participate. (g) To adopt or assume and carry out such pension, deferred compensation, profit-sharing or retirement plans as may from time to time be approved by it, providing for pensions, deferred compensation, profit-sharing plan benefits or retirement income for officers or employees of the Corporation, in consideration for or in recognition of the services rendered by such officers or employees or as an inducement to future efforts. No such plan which is not at the time of adoption or assumption unreasonable or unfair shall be invalidated or in any way affected because any director shall be a beneficiary thereunder or shall vote for any plan under which he may benefit or for any distribution thereunder in which he may participate. (h) To exercise, in addition to the powers and authorities hereinbefore or by law conferred upon it, any such powers and authorities and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the laws of the State of Delaware and of this Certificate of Incorporation and to the By-Laws of the Corporation. SECTION 2. Reliance on Books. A director shall be fully ------------------ protected in relying in good faith upon the books of account of the Corporation or statements prepared by any of its officers or by independent public accountants as to the value and amount of the assets, liabilities and/or net profits of the Corporation or any facts pertinent to the existence and amount of surplus or other funds with which the Corporation's capital stock might properly be purchased or redeemed. - 27 - SECTION 3. Classification of the Board of Directors. ----------------------------------------- (a) Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, the number of the directors of the Corporation shall be fixed from time to time by or pursuant to the By-Laws of the Corporation. The directors, other than those who may be elected by the holders of the Preferred Stock or any other class or series of stock having a preference over the Common Stock as to dividends or upon liquidation pursuant to the terms of this Certificate of Incorporation or any resolution or resolutions providing for the issue of such class or series of stock adopted by the Board of Directors, shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, as shall be provided in the By-Laws of the Corporation, one class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1988, another class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1989, and another class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1990, with each class to hold office until its successors are elected and qualified. At each annual meeting of the stockholders of the Corporation, the date of which shall be fixed by or pursuant to the By-Laws of the Corporation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Unless and except to the extent that the By-Laws of the Corporation shall so require, the election of directors need not be by written ballot. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. (b) Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, newly created directorships resulting from any increase in the number of directors may be filled by the Board of Directors, or as otherwise provided in the By-Laws, and any vacancies on the Board of Directors resulting from death, resignation, removal or other cause shall only be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director, or as otherwise provided in the By-Laws. Any director elected in accordance with the preceding sentence of this Paragraph (b) shall hold office for the remainder of the full term of - 28 - the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified. (c) Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, any director may be removed from office only for cause, and in such case, only by the affirmative vote of the holders of a majority of the combined voting power of the then outstanding shares of stock of all classes and series of the Corporation entitled to vote generally in the election of directors ("Voting Stock"), voting together as a single class. For purposes of this Paragraph (c), "cause" shall mean the wilful and continuous failure of a director substantially to perform such director's duties to the Corporation (other than any such failure resulting from incapacity due to physical or mental illness) or the wilful engaging by a director in gross misconduct materially and demonstrably injurious to the Corporation. Any officer of the Corporation may be removed at any time in such manner as provided in the By-Laws of the Corporation. (d) In addition to any requirements of law and any other provisions of this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law or this Certificate of Incorporation or any such resolution or resolutions), the affirmative vote of the holders of 80% or more of the combined voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision inconsistent with, this Section 3. Article VII Meetings of Stockholders ------------------------ SECTION 1. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders. Except as otherwise required by law and subject to the rights of the holders of the Preferred Stock or any other class or series of stock having a preference over the Common Stock as to dividends or upon - 29 - liquidation, special meetings of stockholders of the Corporation may be called only by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors or as otherwise provided in the By-Laws of the Corporation. . SECTION 2. In addition to any requirements of law and any other provisions of this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law or this Certificate of Incorporation or any such resolution or resolutions), the affirmative vote of the holders of 80% or more of the combined voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision inconsistent with, this Article VII. ARTICLE VIII Transactions with Directors or Officers --------------------------------------- No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the - 30 - Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. ARTICLE IX Liability of Directors ---------------------- (a) To the fullest extent that the General Corporation Law of the State of Delaware as it exists on the date hereof or as it may hereafter be amended permits the limitation or elimination of the liability of directors, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. No amendment to or repeal of this Article shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. (b) In addition to any requirements of law and any other provisions of this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law or this Certificate of Incorporation or any such resolution or resolutions), the affirmative vote of the holders of 80% or more of the combined voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision inconsistent with, this Article IX. ARTICLE X Compromise or Arrangement between Corporation --------------------------------------------- and its Creditors or Stockholders --------------------------------- Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this - 31 - Corporation under the provisions of Section 291 of Title 8 of the Delaware Code, or on the application of trustees in dissolution, or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders, of this Corporation, as the case may be, to be summoned in such manner as said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders, of this Corporation as the case may be, agrees to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding upon all the creditors or class of creditors, and/or upon all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. ARTICLE XI Reservation of Right to Amend ----------------------------- Certificate of Incorporation ---------------------------- The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law, and all the provisions of this Certificate of Incorporation and all rights and powers conferred in this Certificate of Incorporation on stockholders, directors and officers are subject to this reserve power. ARTICLE XII Adopting and Amending the By-Laws --------------------------------- SECTION 1. The Board of Directors may adopt, repeal, alter or amend the By-Laws of the Corporation by the vote of a majority of the entire Board of Directors. Without limiting its authority to adopt, repeal, alter or amend the By-Laws of the Corporation, the Board of Directors is expressly authorized to adopt By-Laws which a majority of the entire Board of Directors may deem necessary or desirable for the efficient conduct of the affairs of the Corporation, including, without limitation, provisions governing the conduct of, and the matters which may properly be brought before, meetings of the stockholders and provisions specifying the manner and extent to which prior notice shall be given of the submission of proposals to be considered at any meeting of stockholders or of nominations for the election of directors to be held at any such meeting. - 32 - SECTION 2. In addition to any requirements of law and any other provisions of this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or any such resolution or resolutions), the stockholders may not adopt, amend, alter or repeal any provision of the By-Laws of the Corporation, except by the affirmative vote of the holders of 80% or more of the combined voting power of the then outstanding shares of Voting Stock, voting together as a single class, unless recommended to the stockholders for their approval by two-thirds of the Disinterested Directors as such term is defined in Article XIII of this Certificate of Incorporation. SECTION 3. In addition to any requirements of law and any other provisions of this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law or this Certificate of Incorporation or any such resolution or resolutions), the affirmative vote of the holders of 80% or more of the combined voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision inconsistent with, this Article XII. ARTICLE XIII Approval of Business Combinations --------------------------------- The vote of stockholders of the Corporation required to approve Business Combinations (as hereinafter defined) shall be as set forth in this Article XIII. SECTION 1. In addition to any affirmative vote required by law or by this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation, and except as otherwise expressly provided in Section 3 of this Article XIII: (a) any merger or consolidation of the Corporation or any Subsidiary with (i) any Interested Stockholder or (ii) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate or Associate of an Interested Stockholder; or (b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate or Associate of any Interested - 33 - Stockholder of any assets of the Corporation or of any Subsidiary having an aggregate Fair Market Value equal to 10% or more of the consolidated stockholders' equity of the Corporation and its subsidiaries as shown in the most recent audited consolidated balance sheet of the Corporation and its consolidated subsidiaries; or (c) the issuance, sale or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) to any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder of any securities of the Corporation or any Subsidiary in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value equal to 10% or more of the consolidated stockholders' equity of the Corporation and its subsidiaries, as shown in the most recent audited consolidated balance sheet of the Corporation and its consolidated subsidiaries, other than the issuance of securities upon the conversion of convertible securities of the Corporation or any Subsidiary which were not acquired by such Interested Stockholder (or such Affiliate or Associate) from the Corporation or a Subsidiary; or (d) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; or (e) any reclassification of securities (including any reverse stock split) or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries, or any other transaction (whether or not with or into or otherwise involving any Interested Stockholder), which in any such case has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or series of stock or securities convertible into stock of the Corporation or any Subsidiary which is directly or indirectly beneficially owned by any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; shall not be consummated without (i) the affirmative vote of the holders of at least 80% of the combined voting power of the then outstanding shares of Voting Stock and (ii) the affirmative vote of a majority of the combined voting power of the then outstanding shares of Voting Stock held by Disinterested Stockholders, in each case voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that - 34 - a lesser percentage may be specified, by law or by this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation or in any agreement with any national securities exchange or otherwise. SECTION 2. The term "Business Combination" as used in this Article XIII shall mean any transaction which is referred to in any one or more of Paragraphs (a) through (e) of Section 1 of this Article XIII. SECTION 3. The provisions of Section 1 of this Article XIII shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law and any other provision of this Certificate of Incorporation and any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation, if all the conditions specified in either of the following Paragraphs (a) or (b) are met: (a) such Business Combination shall have been. approved by a majority of the Disinterested Directors; or (b) all the six conditions specified in the following clauses (i) through (vi) shall have been met; (i) the transaction constituting the Business Combination shall provide for a consideration to be received by holders of Common Stock in exchange for all their shares of Common Stock, and the aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of any consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the higher of the following: (A) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid in order to acquire any shares of Common Stock beneficially owned by the Interested Stockholder which were acquired (i) within the two-year period immediately prior to the Announcement Date or (ii) in the transaction in which it became an Interested Stockholder, whichever is higher; and (B) the Fair Market Value per share of Common Stock on the Announcement Date or on the Determination Date, whichever is higher; and (ii) if the transaction constituting the Business Combination shall provide for a consideration to be - 35 - received by holders of any class or series of outstanding Voting Stock other than Common Stock, the aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of any consideration other than cash to be received per share by holders of shares of such Voting Stock shall be at least equal to the highest of the following (it being intended that the requirements of this clause (ii) shall be required to be met with respect to every class and series of such outstanding Voting Stock, whether or not the Interested Stockholder beneficially owns any shares of a particular class or series of Voting Stock): (A) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid in order to acquire any shares of such class or series of Voting Stock beneficially owned by the Interested Stockholder which were acquired (i) within the two-year period immediately prior to the Announcement Date or (ii) in the transaction in which it became an Interested Stockholder, whichever is higher; (B) (if applicable) the highest preferential amount per share to which the holders of shares of such class or series of Voting Stock are entitled in the event of the redemption thereof or of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; and (C) the Fair Market Value per share of such class or series of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher; and (iii) the consideration to be received by holders of a particular class or series of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as was previously paid in order to acquire shares of such class or series of Voting Stock which are beneficially owned by the Interested Stockholder and, if the Interested Stockholder beneficially owns shares of any class or series of Voting Stock which were acquired with varying forms of consideration, the form of consideration to be received by holders of such class or series of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class or series of Voting Stock beneficially owned by it; and (iv) after such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination: -36 - (A) except as approved by a majority of the Disinterested Directors, there shall have been no failure to declare and pay at the regular dates therefor the full amount of any dividends (whether or not cumulative) payable on the Preferred Stock or any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation; (B) there shall have been (x) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Disinterested Directors, and (y) an increase in such annual rate of dividends (as necessary to prevent any such reduction) in the event of any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Disinterested Directors; and (C) such Interested Stockholder shall not have become the beneficial owner of any additional shares of Voting Stock except as part of the transaction in which it became an Interested Stockholder; and (v) after such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise; and (vi) a proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to the stockholders of the Corporation at least 30 calendar days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). SECTION 4. For the purposes of this Article XIII: (a) A "person" shall mean any individual, firm, corporation, partnership, trust or other entity. - 37 - (b) "Interested Stockholder" shall mean any person (other than the Corporation or any Subsidiary) who or which: (1) is the beneficial owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding shares of Voting Stock; or (2) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 20% or more of the combined voting power of the then outstanding shares of Voting Stock; or (3) is an assignee of or has otherwise succeeded to the beneficial ownership of any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Stockholder, if such assignment or succession, shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (c) "Disinterested Stockholder" shall mean a stockholder of the Corporation (other than the Corporation or a Subsidiary) who is not an Interested Stockholder or an Affiliate or an Associate of an Interested Stockholder. (d) A person shall be a "beneficial owner" of any Voting Stock: (1) which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or (2) which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote or to direct the vote pursuant to any agreement, arrangement or understanding; or (3) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. (e) For the purposes of determining whether a person is an Interested Stockholder pursuant to Paragraph (b) of - 38 - this Section 4, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned by such person through application of Paragraph (d) of this Section 4 but shall not include any other shares of Voting Stock which may be issuable to other persons pursuant to any agreement, arrangement or understanding or upon-exercise of conversion rights, exchange rights, warrants or options, or otherwise. (f) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on December 16, 1986. (g) "Subsidiary" shall mean any corporation of which a majority of the outstanding stock having ordinary voting power for the election of directors is owned by the Corporation, by a Subsidiary or by the Corporation and one or more Subsidiaries, provided, however, that for the purposes of the definitions set forth in Paragraphs (b) and (c) of this Section 4, the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned by the Corporation, by a Subsidiary or by the Corporation and one or more Subsidiaries. (h) "Disinterested Director" means any member of the Board of Directors of the Corporation who is unaffiliated with, and not a nominee of, the Interested Stockholder and was a member of the Board of Directors prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor of a Disinterested Director who is unaffiliated with, and not a nominee of, the Interested Stockholder and who is recommended to succeed a Disinterested Director by a majority of the Disinterested Directors then on the Board of Directors. (i) "Fair Market Value" means: (1) in the case of stock, the highest closing sale price during the 30 calendar day period immediately preceding the date in question of a share of such stock on the New York Stock Exchange Composite Tape, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing sales price or bid quotation with respect to a share of such stock during the 30 calendar day period preceding the date in question on the - 39 - National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or, if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Disinterested Directors in good faith; and (2) in the case of stock of any class or series which is not traded on any securities exchange or in the over-the-counter market or in the case of property other than cash or stock, the fair market value of such stock or property, as the case may be, on the date in question as determined by a majority of the Disinterested Directors in good faith. (j) "Announcement Date" means the date of first public announcement of the proposed Business Combination. (k) "Determination Date" means the date on which the Interested Stockholder became an Interested Stockholder. SECTION 5. A majority of the Disinterested Directors of the Corporation shall have the power and duty to determine, on the basis of information known to them after reasonable inquiry, all facts necessary to determine compliance with this Article XIII, including, without limitation, (a) whether a person is an Interested Stockholder, (b) the number of shares of Voting Stock beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another person, (d) whether the requirements of Section 3 of this Article XIII have been met with respect to any Business Combination, and (e) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination, has an aggregate Fair Market Value equal to or in excess of 10% of the consolidated stockholders' equity of the Corporation and its subsidiaries reflected in the Corporation's most recent audited consolidated balance sheet; and the good faith determination of a majority of the Disinterested Directors on such matters shall be conclusive and binding for all purposes of this Article XIII. SECTION 6. Nothing contained in this Article XIII shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. SECTION 7. In addition to any requirements of law and any other provisions of this Certificate of Incorporation or any resolution or resolutions of the Board of Directors adopted pursuant to Article IV of this Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or any such resolution or resolutions), the affirmative vote of the holders - 40 - of 80% or more of the combined voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provision inconsistent with, this Article XIII; provided, however, that the affirmative vote of a majority of the combined voting power of the then outstanding shares of Voting Stock held by the Disinterested Stockholders (as defined in Section 4 of Article XIII) voting together as a single class, shall also be required to amend, alter or repeal, or adopt any provision inconsistent with, this Article XIII. 4. This Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation on April 22, 1987 in accordance with Section 245 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, Paine Webber Group Inc. has caused this certificate to be signed by Donald B. Matron, its Chairman of the Board, President and Chief Executive Officer, and attested by Sam Scott Miller, its Secretary, this 30th day of April, 1987. /s/ Donald B. Marron -------------------------------------- Donald B. Marron, Chairman of the Board, President and Chief Executive Officer [Seal] Attest: /s/ Sam Scott Miller - ------------------------ Sam Scott Miller: Secretary 5511L State of Delaware PAGE 1 Office of the Secretary of State ------------------------------ I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF "PAINE WEBBER GROUP INC.", FILED IN THIS OFFICE ON THE FIFTEENTH DAY OF DECEMBER, A.D. 1987, AT 8:30 O'CLOCK A.M. /s/ Edward J. Freel -------------------------------------- Edward J. Freel, Secretary of State AUTHENTICATION: 0795811 8100 7486524 DATE: 950092621 04-26-95 CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE 7% CUMULATIVE CONVERTIBLE EXCHANGEABLE VOTING PREFERRED STOCK, SERIES A ($20 Par Value) PAINE WEBBER GROUP INC. -------------------------------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware -------------------------------------- The undersigned DOES HEREBY CERTIFY that the fol- lowing resolution was duly adopted on November 30, 1987, by the Board of Directors of Paine Webber Group Inc., a Dela- ware corporation (hereinafter called the "Corporation"), pursuant to authority conferred upon the Board of Directors by the provisions of the Restated Certificate of Incorpora- tion, as amended (the "Certificate of Incorporation"), of the Corporation; RESOLVED, that the issuance of a series of the Series Preferred Stock, par value $20 per share (the "Series Preferred Stock"), which shall consist of 6,741,574 of the 15,400,000 shares of Series Preferred Stock which the Corporation now has authority to issue, be, and the same hereby is, autho- rized, and this Board of Directors hereby fixes the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series (in addition to the powers, designations, preferences and rela- tive, participating, optional or other spe- cial rights, and the qualifications, limita- tions or restrictions thereof, set forth in the Certificate of Incorporation which are applicable to such series of Series Preferred Stock) as follows: (i) Except as otherwise specified herein, defined terms herein, which may be identified by the capitalization of the first letter of each principal word thereof, have the meanings assigned to them in the Investment Agreement, by and between Paine Webber Group Inc. and The Yasuda Mutual Life Insurance Company, dated as of November 30, 1987. (ii) The designation of such series of the Series Preferred Stock authorized by this resolution shall be the 7% Cumu- lative Convertible Exchangeable Voting Preferred Stock, Series A ("Preferred Stock"). The number of shares of Pre- ferred Stock shall be 6,741,574. (iii) (I) Holders of shares of Pre- ferred Stock will be entitled to receive, when and as declared by the Board of Directors of the Corporation (the "Board") out of assets of the Corpora- tion legally available for payment, an annual cash dividend of $3.115 per share, payable in equal quarterly install- ments on March 15, June 15, September 15 and December 15 (or, if any such day is not a Business Day in New York City, then on the next succeeding Business Day) in each year (the "Dividend Payment Dates") commencing the first Dividend Payment Date following the Closing Date. Dividends on the Preferred Stock will be cumulative from the date of initial issuance of any shares of 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 or a duly authorized committee thereof. The Series A Preferred Stock will rank on a parity as to dividends with the Corporation's $1.375 Convert- ible Exchangeable Preferred Stock. When -2- dividends are not paid in full upon the Preferred Stock and any other preferred stock ranking on a parity as to divi- dends with the Preferred Stock (such other preferred stock and the 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 Preferred Stock and such other Parity Preferred Stock shall bear to each other the same ratio that accu- mulated and unpaid dividends per share on the shares of 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 Preferred Stock have been paid, no dividends (other than in Common Stock of the Corporation (as defined in paragraph (v)(I) below) or any other stock of the Corporation ranking junior to the Preferred Stock as to dividends) may be paid or declared and set aside for payment or other dis- tribution made upon the Common Stock or on any other stock of the Corporation ranking junior to or on a parity with the 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 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 Preferred Stock as to dividends). Dividends payable for any partial dividend period shall be calcu- lated on the basis of a 360-day year of twelve (12) 30-day months. (II) In the event that the Company does not pay the cash dividend provided for in subsection (I) on any Dividend Payment Date, the Company shall consult -3- with the holders of the Preferred Stock to discuss what steps might be taken to provide holders of the Preferred Stock with a payment of an equivalent value otherwise than in cash in lieu of such cash dividend. (iv) The shares of 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 liquidation, so that in the event of any liquidation, dissolution or winding up of the Corpo- ration, whether voluntary or involun- tary, the holders of the 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 $44.50 per share (the "Liquidation Preference" of a share of Preferred Stock) plus an amount equal to all dividends (whether or not earned or declared) accumulated and unpaid on the shares of 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 pref- erential amount aforesaid, then such assets, or the proceeds thereof, shall be distributable among such holders ratably in accordance with the respec- tive amounts which would be payable on such shares if all amounts payable thereon were payable 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 substan- tially 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 -4- more other corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. (v) (I) Shares of the Preferred Stock shall not be convertible into Shares of Common Stock prior to the latest of (x) the expiration or early termination of the waiting period under the HSR Act, (y) the earlier of (A) receipt by the Investor of approval under the NJ Act and (B) the taking by the Corporation of such steps as are necessary to render such approval unnec- essary, pursuant to Section 5.1(n) of the Investment Agreement and (z) the earlier of (A) approval by stockholders of the Corporation of the convertibility thereof into Common Stock, (B) the list- ing of the Common Stock on the American Stock Exchange, (C) the commencement of a tender offer or exchange offer or similar proposal for the Corporation's Common Stock and (D) June 30, 1988. Thereafter, subject to and upon compli- ance with the provisions of this para- graph (v), the holder of a share of Preferred Stock shall have the right, at his option, at any time, except that, if such share is called for redemption, not after the close of business on the date fixed for such redemption, unless default shall be made in the payment of the redemption price, to convert such share into that number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/10,000th of a share) obtained by dividing the Liquidation Preference of such share being converted by the Conversion Price (as defined below) and by surrender of such share so to be converted, such surrender to be made in the manner provided in subsection (II) of this paragraph (v). 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 -5- time, except that for the purpose of this paragraph (v), the term "Common Stock" shall include any stock of any class of the Corporation which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Cor- poration and which is not subject to redemption by the Corporation. However, shares issuable on conversion of shares of Preferred Stock shall include only shares of the class designated as Common Stock of the Corporation as of the Clos- ing Date, or shares of any class or classes resulting from any reclassifica- tion or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation and which are not subject to redemption by the Corpora- tion; provided that if at any time there -------- shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclass- ifications. The term "Conversion Price" shall mean the Initial Conversion Price, as adjusted in accordance with the provi- sions of this paragraph (v). (II) In order to exercise the con- version privilege, the holder of each share of Preferred Stock to be converted shall surrender the certificate repre- senting such share at the office of the conversion agent for the Preferred Stock in the Borough of Manhattan, City of New York, appointed for such purpose by the Corporation (the "conversion agent"), with the Notice of Election to Convert on the back of said certificate completed and signed. Such notice shall be sub- stantially in the following form: -6- "NOTICE OF ELECTION TO CONVERT The undersigned, being a holder of the 7% Cumulative Convertible Exchange- able Voting Preferred Stock, Series A ("Preferred Stock") of Paine Webber Group Inc. irrevocably exercises the right to convert _________ outstanding shares of Preferred Stock on ___________, 19__, into shares of Common Stock of Paine Webber Group Inc. in accordance with the terms of the Preferred Stock, and directs that the shares issuable and deliverable upon the conversion, together with any check in payment for fractional shares, be issued and delivered in the denominations indicated below to the registered holder hereof unless a dif- ferent name has been indicated below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Dated: Fill in for registration of shares of Common Stock if to be issued otherwise than to the registered holder: _____________________ Name _____________________ Address _____________________ _____________________ (Please print name (Signature) and address, including postal code number) Denominations:____________________________" -7- Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Preferred Stock is registered, each share surren- dered for conversion shall be accompa- nied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or his duly author- ized attorney and an amount sufficient to pay any transfer or similar tax. A payment shall be made on conversion for dividends accumulated on the Preferred Stock surrendered for conversion but not for dividends on Common Stock delivered on such conversion. As promptly as practicable after the surrender of the certificates for shares of 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 pro- visions of this paragraph (v), 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 para- graph (v). 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 Preferred Stock shall have been surren- dered 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 conver- sion shall be at the Conversion Price in effect at such time on such date. All shares of Common Stock delivered upon conversions of the Preferred Stock will upon delivery be duly and validly issued and fully paid and nonassessable, free -8- 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 con- version of the 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 Preferred Stock, the Corpora- tion shall pay to the holder of such share an amount in cash (computed to the nearest 1/100th of one cent) equal to the Average Market Price of the Common Stock 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 Liquida- tion Preference of the shares of Pre- ferred Stock so surrendered. (IV) The Conversion Price shall be adjusted from time to time as follows: (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 reclassifica- tion 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 Pre- ferred 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 enti- tled to receive immediately following such action had such share been converted immediately prior thereto. The -9- Corporation shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. An adjustment made pursu- ant to this subdivision (a) shall become effective immediately after the record date, in the case of a dividend or dis- tribution, or immediately after the effective date, in the case of a subdi- vision, combination or reclassification. If, as a result of an adjustment made pursuant to this subdivision (a), the holder of any share of 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 and the Investor jointly (if the Investor shall be a holder of any of the Preferred Stock) or an internationally recognized investment banking firm selected by them if they are unable to reach agreement, or the Board in its reasonable discretion (if the Investor shall not be a holder of any of the Preferred Stock) 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. Such determination shall be described in a statement filed with the conversion agent by the Corporation as soon as practicable. (b) In case the Corporation shall hereafter pay or make a dividend or other distribution in shares of Common Stock on any class of capital stock of the Corporation other than the Common Stock, the Conversion Price in effect immediately after the record date men- tioned in the next sentence shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date mentioned in the next sentence by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at -10- the close of business on the record date mentioned in the next sentence and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such reduction shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or other distribution. For the purposes of this subdivision (b), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Cor- poration but shall include shares issu- able in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Corporation shall not pay any dividend or make any distribu- tion on shares of such capital stock held in the treasury of the Corporation. (c) In case the Corporation shall hereafter issue rights or warrants to holders of its outstanding shares of Common Stock generally entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Average Market Price of the Common Stock on the record date men- tioned in the next sentence (other than pursuant to an automatic dividend rein- vestment plan of the Corporation or any substantially similar plan), the Conver- sion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date mentioned in the next sentence by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the record date mentioned in the next sentence plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Average Market Price, and of which the denomina- tor shall be the number of shares of Common Stock outstanding on the record date mentioned in the next sentence plus the number of additional shares of -11- Common Stock offered for subscription or purchase. Such reduction shall become effective immediately after the record date for the determination of stock- holders entitled to receive such rights or warrants. For the purposes of this subdivision (c), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Corporation will not issue any rights or warrants in respect of shares of Common Stock held in the treasury of the Corporation. (d) In case the Corporation shall, by dividend or otherwise, hereafter distribute to holders of its outstanding shares of Common Stock generally evi- dences of its indebtedness or assets (excluding any regular periodic cash dividend paid from retained earnings of the Corporation and dividends or distri- butions payable in stock for which adjust- ment 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 (c) of this subsec- tion (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 record date mentioned in the next sen- tence by a fraction of which the numer- ator shall be the Average Market Price of the Common Stock on the record date mentioned in the next sentence less the then fair market value (as determined by the Board and the Investor jointly (if the Investor shall be a holder of any of the Preferred Stock), or by an interna- tionally recognized investment banking firm selected by them if they are unable to agree or by the Board in its reason- able discretion (if the Investor shall not be a holder of any of the Preferred -12- Stock)), 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 denomina- tor shall be such Average Market Price of the Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. Such determination of fair market value shall be described in a statement filed with the conversion agent by the Corporation as soon as practicable. (e) The reclassification (includ- ing any reclassification upon a merger in which the Corporation is the continu- ing corporation) of Common Stock into securities including other than Common Stock shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the record date for the determi- nation of stockholders entitled to receive such distribution" within the meaning of subdivision (d) of this subsection (IV)), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding imme- diately prior to such reclassification into the number of shares of Common Stock outstanding immediately there- after. (f) In any case in which this paragraph (v) 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 con- version agent of the certificate of independent public accountants required by subdivision (h) of this subsec- tion (IV)) issuing to the holder of any share of Preferred Stock converted after -13- 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 frac- tional share. (g) All calculations under this paragraph (v) shall be made to the near- est 1/100 of one cent or to the nearest 1/10,000th of a share, as the case may be. Anything in this paragraph (v) to the contrary notwithstanding, the Corpo- ration shall be entitled to make such reduction in the Conversion Price, in addition to those required by this para- graph (v), as it considers to be advis- able in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convert- ible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. (h) 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, and (ii) a notice stating that the Conver- sion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be airmailed by the Corporation to the holders of the Pre- ferred Stock at their addresses as shown on the stock books of the Corporation. (i) In the event that any time as a result of an adjustment made pursuant -14- to subdivision (a) of this subsec- tion (IV), the holder of any share of 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 conver- sion 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 re- spect to Common Stock contained in this paragraph (v). (V) In case: (a) the Corporation shall declare a dividend (or any other distribution) on its Common Stock other than a regular periodic cash dividend payable in cash out of its retained earnings; or (b) the Corporation shall author- ize 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 subdi- vision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock), 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 -15- shall cause to be airmailed to the hold- ers of shares of the Preferred Stock at their addresses as shown on the stock books of the Corporation, at least ten days prior to the applicable date here- inafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, 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 dividend, distribution, rights or warrants 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 securi- ties or other property deliverable upon such reorganization, reclassification, consolidation, merger, statutory exchange, sale, transfer, dissolution, liquidation or winding up. (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 pur- pose of effecting conversions of the Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Preferred Stock not theretofore con- verted. For purposes of this subsec- tion (VI), the number of shares of Com- mon Stock which shall be deliverable upon the conversion of all outstanding shares of Preferred Stock shall be compu- ted as if at the time of computation all such outstanding shares were held by a single holder. Before taking any action which would cause an adjustment reducing the -16- Conversion Price below the then par value (if any) of the shares of Common Stock deliverable upon conversion of the 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 non- assessable shares of Common Stock at such adjusted Conversion Price. The Corporation shall use its best efforts to list the shares of Common Stock required to be delivered upon conversion of the Preferred Stock prior to such delivery upon each securities exchange, if any, upon which the out- standing Common Stock is listed at the time of such delivery. Prior to the delivery of any secu- rities which the Corporation shall be obligated to deliver upon conversion of the Preferred Stock, the Corporation shall use its best efforts 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 deliv- ery thereof by, any governmental author- ity. (VII) The Corporation shall pay any and all documentary stamp or similar issue or transfer taxes payable in re- spect of the issue or delivery of shares of Common Stock on conversions of the 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 Preferred Stock to be converted and no such issue or delivery shall be made unless and until the per- son 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. -17- (VIII) In case of any consolidation or merger in which the Corporation is a party (other than a merger in which the Corporation is the continuing corpora- tion), or in case of any sale or convey- ance to another corporation of the prop- erty of the Corporation as an entirety or substantially as an entirety, or in the 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 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, statutory exchange, sale or conveyance by a holder of the number of shares of Common Stock into which such share of Preferred Stock might have been converted immediately prior to such consolidation, merger, statutory exchange, sale or conveyance, assuming such holder of Common Stock failed to exercise his rights of elec- tion, if any, as to the kind or amount of securities, cash or other property receivable upon such consolidation, merger, statutory exchange, sale or conveyance (provided that if the kind or amount of securities, cash or other property receivable upon such consoli- dation, merger, statutory exchange, sale or conveyance 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 subsec- tion (VIII) the kind and amount of secu- rities, cash or other property receiv- able upon such consolidation, merger, statutory exchange, sale or conveyance for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Thereafter, the holders of the Preferred Stock shall be entitled to appropriate adjustments with respect to their conversion rights -18- to the end that the provisions set forth in this paragraph (v) shall correspond- ingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of the Preferred Stock. Any such adjustment shall be approved by a firm of independent public accountants (who may be the regular accountants employed by the Corporation), evidenced by a certificate to that effect deliv- ered to the conversion agent. The above provisions of this sub- section (VIII) shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or convey- ances. (vi) Upon any conversion or redemp- tion of shares of Preferred Stock, the shares of 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 Preferred Stock. (vii) (I) The Shares of Preferred Stock shall not be entitled to vote pursuant to this subsection (I) until the expiration or early termination of the applicable waiting period under the HSR Act. Thereafter, each share of Preferred Stock shall be entitled to one vote (subject to adjustment as provided in subsection (V) of this para- graph (vii)) and the shares of Preferred Stock shall vote together with the shares of Common Stock (and of any other class or series which may similarly be entitled to vote with the shares of Common Stock) as a single class upon all matters upon which holders of Common Stock are entitled to vote. -19- (II) If and whenever at any time or times dividends payable on the 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 peri- ods, then the holders of Parity Pre- ferred 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 accumu- lated 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 indi- cated 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 direc- tors, 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 -20- 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 Pre- ferred 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. 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 Corpo- ration at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authori- ties), then the holders of record of 10% in number of shares of the Parity Pre- ferred Stock then outstanding may desig- nate 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 (II). Any holder of the Parity Preferred Stock shall have access to the stock books of the Corpo- ration for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this para- graph. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called during a period within 90 days immediately pre- ceding the date fixed for the next annual meeting of stockholders. -21- At any meeting held for the purpose of electing directors at which the hold- ers 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 Parity Preferred Stock. At any such meeting or adjourn- ment 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 direc- tors 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 (II) 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 ter- minate, the terms of office of all per- sons so elected by the holders of the Parity Preferred Stock shall terminate, and the number of directors of the Cor- poration shall thereupon be such number as may be provided in the By-laws of the -22- Corporation irrespective of any increase made pursuant to this subsection (II). (III) So long as any shares of the Preferred Stock remain outstanding, the Corporation will not, either directly or indirectly or through merger or consoli- dation with any other corporation: (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 Preferred Stock, (A) create any class or classes of stock ranking equal or prior to the 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 Preferred Stock either as to dividends or upon liquida- tion, (B) amend, alter or repeal any of the provisions of the Certificate of Incorporation so as to affect adversely the preferences, special rights or pow- ers of the Preferred Stock or (C) autho- rize any reclassification of the Pre- ferred 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 Preferred Stock then outstanding, amend, alter or repeal any of the provi- sions hereof so as to affect adversely the preferences, special rights or pow- ers of the 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. (IV) No consent of the holders of the Preferred Stock shall be required for (i) the creation of any indebtedness -23 - of any kind of the Corporation, (ii) the creation of any class of stock of the Corporation ranking junior as to divi- dends or upon liquidation to the Series Preferred Stock or (iii) any increase or decrease in the amount of authorized Common Stock or any increase, decrease or change in the par value thereof or in any other terms thereof. (V) 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 or reclassify its outstanding shares of Common Stock into a greater number of shares or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, then in each such case the number of votes to which a holder of a share of Preferred Stock is entitled pursuant to subsec- tion (I) of this paragraph (vii) shall be adjusted so that, after the happening of any of the events described above, such holder shall be entitled to a num- ber of votes equal to the number of votes to which such holder was entitled pursuant to subsection (I) immediately prior to such happening multiplied by a fraction of which the numerator is the number of shares of Common Stock into which one share of Preferred Stock was convertible immediately after such hap- pening and the denominator is the number of shares of Common Stock into which one share of Preferred Stock was convertible immediately prior to such happening. An adjustment made pursuant to this subsec- tion (V) shall become effective immedi- ately after the date of payment, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. (viii) The Preferred Stock is exchangeable in whole at the option only of the Corporation on any Dividend Pay- ment Date commencing the first Dividend Payment Date following the Closing Date, -24- for the Corporation's 7% Voting Convert- ible Subordinated Debentures Due 2007 (the "Debentures") which shall be issued pursuant to the Indenture and shall be substantially in the form set forth in Article Two thereof. Holders of out- standing shares of Preferred Stock will be entitled to receive a principal amount of Debentures equal to the Liqui- dation Preference in exchange for each share of Preferred Stock held by them at the time of exchange. The Corporation will mail to each record holder of the Preferred Stock written notice of its intention to exchange not less than 30 nor more than 60 days prior to the date of exchange. Prior to giving notice of intention to exchange, the Corporation shall execute and deliver the Indenture substantially in the form set forth in Exhibit 4 to the Agreement and shall adopt a Board Resolution (as such term is defined in the Indenture) incorporat- ing the terms set forth in Article Two thereof, in each case with such changes as may be required by law or usage. The Corporation will cause the Debentures to be authenticated on the Dividend Payment Date on which the exchange is effective; at such time the rights of the holders of Preferred Stock as stockholders of the Company shall cease (except the right to receive accumulated and unpaid dividends to the date of exchange), and the Preferred Stock shall no longer be deemed outstanding and shall represent only the right to receive the Deben- tures. The Debentures will be delivered to the persons entitled thereto upon surrender to the Corporation or its agent appointed for that purpose of the certificates for the shares of Preferred Stock being exchanged therefor. If the Corporation has not paid full cumulative dividends on the Preferred Stock to the date of exchange (or set aside a sum therefor), or if the Corporation has not obtained any required stockholder approval in connection with the granting of voting rights to the holders of Exchange Debentures as set forth in -25- Article Two of, the Indenture, the Pre- ferred Stock may not be exchanged for the Debentures. (ix) (I) Shares of the Preferred Stock may not be redeemed on or prior to the third anniversary of the Closing Date. Thereafter, the shares of the Preferred Stock may be redeemed to the extent specified below, at the option of the Corporation on any Dividend Payment Date upon at least 30 days' and not more than 45 days' prior written notice to the holders of the shares to be redeemed, at an amount equal to the sum of the Liquidation Preference of such shares plus accumulated and unpaid divi- dends (whether or not earned or declared) to the date fixed for redemp- tion: Number of Shares Subject to Redemption ------------------------ to and including the fourth anniversary of the Closing Date ............................. up to 25% of the shares of Preferred Stock initially issued thereafter, to and including the fifth anniversary of the Closing Date ..................... up to 25% of the shares of Preferred Stock initially issued thereafter, to and including the sixth anniversary of the Closing Date .................... up to 50% of the shares of Preferred Stock outstanding at the commencement of such period (the "Reference Period") thereafter, during any 12 month period ......................... up to 50% of the shares of Preferred Stock outstanding at the commencement of the Reference Period -26- provided, however, that the shares of -------- ------- Preferred Stock shall not be redeemable by the Corporation on or prior to the fifth anniversary of the Closing Date unless the Average Market Price of the Common Stock on the date upon which notice of redemption is first given is greater than the product of 1.20 times ----- the Conversion Price (as defined in paragraph (v) hereof) then in effect, or after the fifth anniversary of the Closing Date, unless the Average Market Price of the Common Stock on the date upon which notice of redemption is first given is greater than the Conversion Price (as defined in paragraph (v) hereof) then in effect. For purposes of this subsection (I), the number of shares of Preferred Stock at any time outstanding shall not include shares held in the treasury of the Corporation but shall include shares issuable in respect of scrip certifi- cates issued in lieu of fractions of shares of Preferred Stock. (II) Holders of shares of Preferred Stock which have been called for redemp- tion may elect to receive the redemption price for such shares in the form of securities which are direct obligations of the United States of America and have a fair market value (as determined jointly by the Board and the Investor (if the Investor shall be a holder of any shares of Preferred Stock) on the date notice of such redemption is given, or by an internationally recognized investment banking firm selected by them if they are unable to agree, or by the Board in its reasonable discretion (if the Investor shall not be a holder of any shares of Preferred Stock on the date notice of such redemption is given)) equal to the redemption price otherwise payable by the Corporation upon redemption of such shares. Any such election may specify a requested -27- coupon rate or range of rates, maturity or range of maturities and denominations of such securities. Such requests with respect to coupon rate, maturity and denomination shall be satisfied by the Corporation to the extent reasonably practicable. Any such election shall be effective upon the giving of receipt of written notice of such election to the Corporation not later than 20 days prior to the date fixed for redemption. (III) Notice of any proposed redemp- tion of shares of Preferred Stock shall be given by the Corporation by airmail- ing a copy of such notice to holders of record of the shares of such Preferred Stock to be redeemed at their respective addresses appearing on the stock books of the Corporation. Said notice shall specify the shares called for redemp- tion, the redemption price and the price at which and the date on which the shares called for redemption will, upon presentation and surrender of the certificates of stock evidencing such shares, be redeemed and the redemption price therefor paid. From and after the date fixed in any such notice as the date of redemption of shares of Pre- ferred Stock, unless default shall be made by the Corporation in providing monies at the time and place specified for the payment of the redemption price pursuant to said notice, all dividends on the Preferred Stock thereby called for redemption shall cease to accrue and all rights of the holders thereof as stockholders of the Corporation, except the right to receive the redemption price upon surrender of the certifi- cates, shall cease and terminate. (x) The Preferred Stock shall be subject to the provisions of the Invest- ment Agreement and may not be sold or transferred except in accordance there- with. (xi) Certificates representing shares of the Preferred Stock shall be -28- exchangeable, at the option of the holder, for a new certificate or certif- icates of the same or different denomi- nations representing in the aggregate the same number of shares. (xii) Subject to conversion as set forth in paragraph (v), to exchange as set forth in paragraph (viii) or to redemption as set forth in para- graph (ix), and to the respective rights and obligations of the Investor and the Company set forth in Sections 5.1(d) and 6.2 of the Investment Agreement (which provisions are incorporated by reference herein), the Preferred Stock shall be perpetual. In the case of exchanges pursuant to Section 6.2 of the Invest- ment Agreement, a payment shall be made upon exchange for dividends accumulated on the shares of Preferred Stock surren- dered for exchange but not for dividends on shares of preferred stock delivered upon such exchange. IN WITNESS WHEREOF, Paine Webber Group Inc. has caused this Certificate to be made under the seal of the Corporation and signed by Donald B. Marron, its Chairman of the Board of Directors, President and Chief Executive Officer, and attested by Dorothy F. Haughey, its Assistant Secretary, this 11th day of December 1987. PAINE WEBBER GROUP INC. /s/ Donald B. Marron -------------------------------------- Donald B. Marron Chairman of the Board of Directors, President and Chief Executive Officer [Seal] Attest: /s/ Dorothy F. Haughey - ------------------------------ Dorothy F. Haughey Assistant Secretary -29- STATE OF NEW YORK, ) ) SS.: COUNTY OF NEW YORK,) This instrument was acknowledged before me this 11th day of December 1987 by Donald B. Marron, as Chairman of the Board of Directors, President and Chief Executive Officer, and Dorothy F. Haughey, as Assistant Secretary, of Paine Webber Group Inc., a Delaware Corporation, each being authorized so to do on its behalf. IN WITNESS WHEREOF, I hereunto set my hand and official seal. /s/ John T. Cooper ----------------------------- Notary Public JOHN T. COOPER Notary Public, State of New York No. 31-4398531 Qualified in New York County Commission Expires 6/15/89 --------- -30- CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF PAINE WEBBER GROUP INC. Pursuant to Section 242 of the General Corporation Law ------------------------------------------------------ of the State of Delaware ------------------------ Paine Webber Group Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (hereinafter sometimes called the "Corporation"), DOES HEREBY CERTIFY as follows: 1. At a meeting of the Board of Directors of the Corporation, duly called and held on February 16, 1988, resolutions were duly adopted setting forth proposed amendments to the Restated Certificate of Incorporation of the Corporation, declaring said amendments to be advisable, and directing that the amendments be submitted to the stockholders of the Corporation at the next annual meeting of stockholders for consideration thereof. The resolutions setting forth the proposed amendments are as follows: RESOLVED, that each of the proposed amendments to the Restated Certificate of Incorporation of the corporation set forth below be, and it hereby is, approved and adopted in all respects and declared advisable; that such proposed amendments be submitted to the stockholders of the corporation for their consideration at the next annual meeting of stockholders; and that, if such proposed amendments are approved and adopted by the stockholders of the corporation, the proper officers of the corporation be, and they hereby are, authorized to execute and acknowledge and cause to be filed and recorded in accordance with Section 103 of the General Corporation Law of the State of Delaware a certificate setting forth such amendments and certifying that such amendments have been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware: That Article IV be amended by inserting the following new Article: ARTICLE IV(A) Voting Debentures The holders of the Corporation's 7% Convertible Subordinated Voting Debentures Due 2007 ("Exchange Debentures") which may be issued from time to time pursuant to the Investment Agreement dated as of November 30, 1987, between the Corporation and The Yasuda Mutual Life Insurance Company, in - 2 - exchange for the Corporation's 7% Cumulative Convertible Exchangeable Voting Preferred Stock, Series A, shall be entitled to vote together with the shares of Common Stock (and of any other class of series of capital stock which may, now or in the future, similarly be entitled to vote with shares of Common Stock) as a single class upon all matters upon which holders of Common Stock are entitled to vote, as follows: each $1,000 aggregate principal amount of Exchange Debentures shall be entitled to a number of votes equal to the product of (x) the number or votes to which each share of the Series A Preferred was entitled on the effective date of the exchange of such share of Series A Preferred for any Exchange Debenture times (y) the quotient of $1,000 divided by $44.50. That Article IV, be amended further by inserting the following new Article: ARTICLE IV(B) Preemptive Rights The Yasuda Mutual Life Insurance Company ("Yasuda") shall be entitled, subject to the conditions set forth in Section 5.1(c) of the Investment Agreement dated as of Novermber 30, 1987, between the Corporation and Yasuda (the "Investment Agreement"), to (1) equity purchase rights that are no less favorable than the preemptive or equity purchase rights, if any, that might be granted by the Corporation to any other person or (2) if the Corporation has no class or series of voting securities which is registered under the Securities Exchange Act of 1934 and broadly held and actively traded or if permitted by the rules of any national stock exchange on which any such class or series of voting securities is listed, or the over-the-counter market in which any such class or series of voting securities is traded if no longer listed, equity purchase rights which allow Yasuda a preemptive right to purchase the amount of voting securities of the Corporation or any securities convertible into or exchangeable for voting securities of the Corporation or any options, warrants or rights exercisable for voting securities of the Corporation ("Equity Purchase Shares") equal to the product of (A) the quotient of (x) the number of voting securities of the Corporation owned by Yasuda immediately prior to the issuance of Equity Purchase Shares divided by (y) the aggregate number of outstanding voting securities owned by persons other than Yasuda immediately prior to the issuance of Equity Purchase Shares (for purposes of this calculation, treating all securities of the Corporation convertible into voting securities as though they have been so converted), multiplied by (B) the aggregate number of Equity Purchase Shares being issued by the Corporation to persons other than Yasuda, rounded up to the nearest whole Equity Purchase Share. If, at the time of the determination of the amount of Equity Purchase Shares - 3 - which Yasuda shall be entitled to purchase, any other person has preemptive or other equity purchase rights similar to those granted to Yasuda, the amount Yasuda is entitled to purchase shall be recalculated to take into account the amount of voting securities to be sold to such persons, rounding up the amount of Equity Purchase Shares which Yasuda shall be entitled to purchase to the nearest whole Equity Purchase Share. The terms upon which, the time or times at or within which, and the price or prices at which any such preemptive rights or equity purchase rights may be exercised shall, if applicable, be as set forth in the Investment Agreement or, if not applicable, as determined by the Board of Directors. 2. That, thereafter, at an Annual Meeting of Stockholders of the Corporation, duly noticed and held on May 3, 1988, the stockholders of the Corporation voted the necessary number of shares as required by statute in favor of the amendments. 3. That said amendments were duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, Paine Webber Group Inc. has caused this Certificate to be signed by James C. Treadway, Jr., its Vice President and Secretary and attested by Dorothy F. Haughey, its Assistant Secretary, this 31st day of May, 1988. PAINE WEBBER GROUP INC. /s/ James C. Treadway, Jr. -------------------------- James C. Treadway, Jr., Vice President and Secretary Attest: /s/ Dorothy F. Haughey -------------------------- Dorothy F. Haughey, Assistant Secretary 7585L CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE 7.5% CONVERTIBLE PREFERRED STOCK ($20 Par Value) PAINE WEBBER GROUP INC. ------------------------------ Pursuant to Section 151 of the General Corporation Law of the State of Delaware ------------------------------ The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted on December 15, 1988, by the Special Committee of the Board of Directors of Paine Webber Group Inc., a Delaware corporation (hereinafter called the "Corporation"), pursuant to provisions of Section 141(c) of the General Corporation Law of the State of Delaware and Article IV, Section 1 of the By-laws of the Corporation; RESOLVED, that pursuant to authority expressly granted to and vested in the Board of Directors of the Corporation by provisions of the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), the issuance of a series of the Series Preferred Stock, par value $20 per share (the "Series Preferred Stock"), which shall consist of up to 2,200,000 of the 20,000,000 shares of Series Preferred Stock which the Corporation now has authority to issue, be, and the same hereby is, authorized, and this Board of Directors hereby fixes the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series (in addition to the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which are applicable to the Series Preferred Stock) as follows: The designation of such series of the Series Preferred Stock authorized by this resolution shall be the 7.5% Convertible Preferred Stock (the "Convertible Preferred Stock"). The number of shares of Convertible Preferred Stock shall be 2,200,000. 2 (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 $1.875 per share, payable in semi-annual installments on June 30 and December 31, commencing June 30, 1989. 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 l0 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 3 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 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 $25 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 4 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 option, at any time, except that, if such share is called for redemption, not after the close of business on the fifth day next preceding 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 $20.475, 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 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 5 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. 6 (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: (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 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 7 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 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 8 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 be deemed to be the average of the daily market prices for the 30 consecutive days on which the New York Stock Exchange is open for trading commencing 45 trading days before the day in question. The term "daily market price" when used with reference to the Common Stock 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 9 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 Conmnon 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. (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 10 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), 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 11 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 8% Convertible Debentures Due 1998 (the "1998 Debentures"). For purposes of this subsection (VI), the number of shares of Common Stock which 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 which 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 12 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. 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 13 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 non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing 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 reasonably be, 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. (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. 14 (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 15 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. 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 16 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: (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; 17 (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, upon not less than 25 nor 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 $25.00 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 of authorized Common Stock or any increase, decrease or 18 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 1998 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. IN WITNESS WHEREOF, Paine Webber Group Inc. has caused this Certificate to be made under the seal of the Corporation and signed by James Treadway, its Vice President, and attested by Dorothy F. Haughey, its Assistant Secretary, this 14th day of January, 1992. ---- PAINE WEBBER GROUP INC. /s/ James Treadway -------------------------------------- James Treadway Vice President [Sea1] Attest: /s/ Dorothy F. Haughey - -------------------------------------- Dorothy F. Haughey Assistant Secretary STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) This instrument was acknowledged before me this 14th ---- day of January, 1992 by JAMES TREADWAY and DOROTHY F. HAUGHEY, as Vice President and Assistant Secretary, respectively, of PAINE WEBBER GROUP INC., a Delaware corporation, being authorized so to do on its behalf. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ELISA B. BELL NOTARY PUBLIC, State of New York /s/ Elisa A. Bell No. 03-4818330 ------------------------------ Qualified in Bronx County Notary Public Commission Expires June 30 1992 - 1 CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE 7.5% CONVERTIBLE PREFERRED STOCK, SERIES B ($20 Par Value) PAINE WEBBER GROUP INC. ------------------------------ Pursuant to Section 151 of the General Corporation Law of the State of Delaware ------------------------------ The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted on February 11, 1991, by the Special Committee of the Board of Directors of Paine Webber Group Inc., a Delaware corporation (hereinafter called the "Corporation"), pursuant to provisions of Section 141(c) of the General Corporation Law of the State of Delaware and Article IV, Section 1 of the By-laws of the Corporation; RESOLVED, that pursuant to authority expressly granted to and vested in the Board of Directors of the Corporation by provisions of the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), the issuance of a series of the Series Preferred Stock, par value $20 per share (the "Series Preferred Stock"), which shall consist of up to 240,000 of the 20,000,000 shares of Series Preferred Stock which the Corporation now has authority to issue, be, and the same hereby is, authorized, and this Board of Directors hereby fixes the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series (in addition to the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which are applicable to the Series Preferred Stock) as follows: The designation of such series of the Series Preferred Stock authorized by this resolution shall be the 7.5% Convertible Preferred Stock, Series B (the "Convertible Preferred Stock"). The number of shares of Convertible Preferred Stock shall be 240,000. 2 (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 $1.275 per share, payable in semi-annual installments on June 30 and December 31, commencing June 30, 1991. 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 3 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 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 $25 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 distributeble 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 4 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 option, at any time, except that, if such share is called for redemption, not after the close of business on the fifth day next preceding 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 $20.80 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 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 5 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 conversion 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. 6 (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: (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 7 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 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 8 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 be deemed to be the average of the daily market prices for the 30 consecutive days on which the New York Stock Exchange is open for trading commencing 45 trading days before the day in question. The term "daily market price" when used with reference to the Common Stock 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 9 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. (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 10 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), 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 11 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 8% Convertible Debentures Due 2000 (the "2000 Debentures"). For purposes of this subsection (VI), the number of shares of Common Stock which 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 which 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 12 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. 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 13 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 non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing 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 reasonably be, 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. (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. 14 (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 15 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. 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 constitutes 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 16 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: (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; 17 (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 adverse1y 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, upon not less than 25 nor 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 $25.00 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 of authorized Common Stock or any increase, decrease or 18 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 2000 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. IN WITNESS WHEREOF, Paine Webber Group Inc. has caused this Certificate to be made under the seal of the Corporation and signed by James Treadway, its Vice President, and attested by Dorothy F. Haughey, its Assistant Secretary, this 14th day of January, 1992. PAINE WEBBER GROUP INC. /s/ James Treadway -------------------------------------- James Treadway Vice President [Sea1] Attest: /s/ Dorothy F. Haughey - -------------------------------------- Dorothy F. Haughey Assistant Secretary STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) This instrument was acknowledged before me this 14th ---- day of January, 1992 by JAMES TREADWAY and DOROTHY F. HAUGHEY, as Vice President and Assistant Secretary, respectively, of PAINE WEBBER GROUP INC., a Delaware corporation, being authorized so to do on its behalf. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ELISA B. BELL NOTARY PUBLIC, State of New York /s/ Elisa A. Bell No. 03-4818330 ------------------------------ Qualified in Bronx County Notary Public Commission Expires June 30 1992 - STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 10:30 AM 11/05/1992 722310100 - 795811 CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE CUMULATIVE PARTICIPATING CONVERTIBLE VOTING PREFERRED STOCK, SERIES A ($20 Par Value) PAINE WEBBER GROUP INC. -------------------------------------- Pursuant to Section 151 of the General Corporation Law of the State of Delaware -------------------------------------- The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted on November 5, 1992, by the Board of Directors of Paine Webber Group Inc., a Delaware corporation (hereinafter called the "Corporation"), pursuant to authority conferred upon the Board of Directors by the provisions of the Restated Certificate of Incorpora- tion, as amended (the "Certificate of Incorporation"), of the Corporation; RESOLVED, that the issuance of a series of the Series Preferred Stock, par value $20 per share (the "Series Preferred Stock"), which shall consist of 7,758,632 of the shares of the Series Preferred Stock which the Corporation now has authority to issue, be, and the same hereby is, authorized, and this Board of Directors hereby fixes the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series (in addition to the powers, designations, preferences and rela- tive, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which are applicable to such series of Series Preferred Stock) as follows: (i) Except as otherwise specified herein, defined terms herein, which may be identified by the capitalization of the first letter of each principal word thereof, have the meanings assigned to them in the Amended and Restated Investment Agreement, by and between Paine Webber Group Inc. and The Yasuda Mutual Life Insurance Company, dated as of November 5, 1992 (the "Agreement"). (ii) The designation of such series of the Series Preferred Stock authorized by this resolution shall be the Cumula- tive Participating Convertible Voting Preferred Stock, Series A (the "Preferred Stock" and sometimes referred to in the Agreement as the "Participat- ing Preferred Shares"). The number of shares of Preferred Stock shall be 7,758,632. (iii) (I) Holders of shares of Preferred Stock will be entitled to receive, when and as declared by the Board of Directors of the Corporation (the "Board") out of assets of the Corporation legally available for pay- ment, an annual cash dividend of $0.48 per share ("Regular Dividends"), payable in equal quarterly installments on March 15, June 15, September 15 and December 15 (or, if any such day is not a Business Day in New York City, then on the next succeeding Business Day) in each year (the "Dividend Payment Dates") plus, for any calendar quarter in which the Board declares a dividend or dividends on Common Stock of the Corporation (as defined in para- graph (v)(I) below) in excess of the Participation Threshold (as defined in paragraph (iii)(II) below), an amount per share equal to the product of (x) the amount in excess of the Participation Threshold paid as a dividend on any share of Common Stock times (y) the number of shares of Common Stock into which one share of Preferred Stock is convertible on the date or dates, as the case may be, on which such -2- dividend or dividends on Common Stock are paid ("Participating Dividends"). Concurrently with paying or declaring and setting aside for payment any dividend or other distribution in excess of the Participation Threshold upon any share of the Common Stock (other than a dividend or distribution that gives rise to an adjustment of the Conversion Price pursuant to paragraph (v)(IV) below) the Corporation shall pay or declare and set aside for payment, as the case may be, an amount per share determined pursuant to the immediately preceding sentence, such amount in respect of the Preferred Stock to be paid in priority to the payment of any dividend or other distribution upon the Common Stock. Except as set forth in the preceding sentence, payment of dividends on the Preferred Stock shall commence the first Dividend Payment Date following the Closing Date. Regular Dividends will be cumulative from and including the date of initial issuance of any shares of Preferred Stock. Participating Dividends will be cumulative from the first dividend payment date for the Common Stock giving rise to the right of holders of the Preferred Stock to receive a Participating Dividend. 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 or a duly authorized committee thereof. The Preferred Stock will rank on a parity as to dividends with the Corpora- tion's $1.375 Convertible Exchangeable Preferred Stock. When dividends are not paid in full upon the Preferred Stock (including any dividends in excess of the Participation Threshold required to be paid or declared pursuant to this paragraph (iii)(I)) and any other preferred stock ranking on a parity as to dividends with the Preferred Stock (such other preferred stock and the -3- 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 Preferred Stock and such other Parity Preferred Stock shall bear to each other the same ratio that accumulated and unpaid divi- dends per share on the shares of Preferred Stock and such other Parity Preferred Stock bear to each other. Except as set forth in the preceding sentence, unless full cumulative divi- dends on the Preferred Stock have been paid (including any dividends in excess of the Participation Threshold required to be paid or declared pursuant to this paragraph (iii)(I)), no dividends (other than in Common Stock of the Corporation (as defined in paragraph (v)(I) below) or any other stock of the Corporation ranking junior to the 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 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 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 Preferred Stock as to dividends). Dividends payable for any partial dividend period shall be calcu- lated on the basis of a 360-day year of twelve (12) 30-day months. (II) The term "Participation Threshold" shall mean $0.12, as adjusted in accordance with this paragraph (iii)(II). In case the Corporation shall hereafter (i) pay a dividend or -4- make a distribution on the Common Stock in shares of Common Stock, (ii) sub- divide or reclassify its outstanding shares of Common Stock into a greater number of shares or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, then in each such case the Participation Threshold then in effect shall be adjusted so that, after the happening of any of the events described above in this sentence the Participation Threshold shall equal a number equal to the Participation Threshold in effect immediately prior to such happening multiplied by a fraction of which the numerator is the number of shares of Common Stock into which one share of Preferred Stock was convertible immediately prior to such happening and the denominator is the number of shares of Common Stock into which one share of Preferred Stock was convertible immedi- ately after such happening. An adjust- ment to the Participation Threshold made pursuant to this subsection (II) shall become effective immediately after the date of payment, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. (III) In the event the Corporation does not pay the cash dividend provided for in subsection (I) on any Dividend Payment Date, the Corporation shall consult with the holders of the Preferred Stock to discuss what steps might be taken to provide holders of the Preferred Stock with a payment of an equivalent value otherwise than in cash in lieu of such cash dividend. (iv) The shares of 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 liquidation, so that in the event of any liquidation, dissolution or winding up of the -5- Corporation, whether voluntary or invol- untary, the holders of the Preferred Stock shall be entitled to receive out of the assets of the Corporation avail- able for distribution to its stock- holders, 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 $19.3333 per share (the "Liquidation Preference" of a share of Preferred Stock) plus an amount equal to all dividends (whether or not earned or declared) accumulated and unpaid on the shares of Preferred Stock to the date of final distribution. If, upon any liqui- ation, dissolution or winding up of the Corporation, the assets of the Corpora- tion, or proceeds thereof, distributable among the holders of shares of Parity Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid, 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 payable 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. (v) (I) Subject to and upon compliance with the provisions of this paragraph (v), the holder of a share of Preferred Stock shall have the right, at his option, at any time, except that, if such share is called for redemption, not after the close of business on the date fixed for such redemption, unless default shall be made in the payment of -6- the redemption price, to convert such share into that number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/10,000th of a share) obtained by dividing the Liquidation Preference of such share being converted by the Conversion Price (as defined below) and by surrender of such share so to be converted, such surrender to be made in the manner provided in subsection (II) of this paragraph (v). 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 this paragraph (v), the term "Common Stock" shall include any stock of any class of the Corporation which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Cor- poration and which is not subject to redemption by the Corporation. However, shares issuable on conversion of shares of Preferred Stock shall include only shares of the class designated as Common Stock of the Corporation as of the Closing Date, or shares of any class or classes resulting from any reclassifica- tion or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation and which are not subject to redemption by the Corpora- tion; provided that if at any time there -------- shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclass- ifications. -7- The term "Conversion Price" shall mean the Initial Conversion Price, as adjusted in accordance with the provi- sions of this paragraph (v). (II) In order to exercise the conversion privilege, the holder of each share of Preferred Stock to be converted shall surrender the certificate repre- senting such share at the office of the conversion agent for the Preferred Stock in the Borough of Manhattan, City of New York, appointed for such purpose by the Corporation (the "conversion agent"), with the Notice of Election to Convert on the back of said certificate com- pleted and signed. Such notice shall be substantially in the following form: "NOTICE TO ELECTION TO CONVERT The undersigned, being a holder of the Cumulative Participating Convertible Voting Preferred Stock, Series A ("Pre- ferred Stock") of Paine Webber Group Inc. irrevocably exercises the right to convert outstanding shares of ---------- Preferred Stock on , , ---------- ---- into shares of Common Stock of Paine Webber Group Inc. in accordance with the terms of the Preferred Stock, and directs that the shares issuable and deliverable upon the conversion, together with any check in payment for fractional shares, be issued and delivered in the denominations indicated below to the registered holder hereof unless a different name has been indi- cated below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Dated: -8- Fill in for registration of shares of Common Stock if to be issued otherwise than to the registered holder: _____________________ Name _____________________ Address _____________________ _____________________ (Please print name (Signature) and address, including postal code number) Denominations: _____________________________" -9- Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or his duly authorized attorney and an amount sufficient to pay any transfer or similar tax. A payment shall be made on conversion for dividends accumulated on the Preferred Stock surrendered for conversion but not for dividends on Common Stock delivered on such conver- sion. As promptly as practicable after the surrender of the certificates for shares of 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 para- graph (v), 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 (v). 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 Preferred Stock shall have been surrend- ered 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 conver- sion shall be at the Conversion Price in effect at such time on such date. All shares of Common Stock delivered upon conversions of the Preferred Stock will upon delivery be duly and validly issued and fully paid and non-assessable, free -10- 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 con- version of the 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 Preferred Stock, the Corpora- tion shall pay to the holder of such share an amount in cash (computed to the nearest 1/100th of one cent) equal to the Average Market Price of the Common Stock 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 Preferred Stock so surrendered. (IV) The Conversion Price shall be adjusted from time to time as follows: (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 reclassifica- tion 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 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 -11- thereto. The Corporation shall not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. An adjustment made pursuant to this sub- division (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, combina- tion or reclassification. If, as a result of an adjustment made pursuant to this subdivision (a), the holder of any share of 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 and the Investor jointly (if the Investor shall be a holder of any of the Preferred Stock) or an internationally recognized investment banking firm selected by them if they are unable to reach agreement, or the Board in its reasonable discre- tion (if the Investor shall not be a holder of any of the Preferred Stock) 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. Such determination shall be described in a statement filed with the conversion agent by the Corporation as soon as practicable. (b) In case the Corporation shall hereafter pay or make a dividend or other distribution in shares of Common Stock on any class of capital stock of the Corporation other than the Common Stock, the Conversion Price in effect immediately after the record date mentioned in the next sentence shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date mentioned in the next sentence by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at -12- the close of business on the record date mentioned in the next sentence and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such reduction shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or other distribution. For the purposes of this subdivision (b), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation but shall include shares issuable in respect of script certifi- cates issued in lieu of fractions of shares of Common Stock. The Corporation shall not pay any dividend or make any distribution on shares of such capital stock held in the treasury of the Corporation. (c) In case the Corporation shall hereafter issue rights or warrants to holders of its outstanding shares of Common Stock generally entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the Average Market Price of the Common Stock on the record date men- tioned in the next sentence (other than pursuant to an automatic dividend rein- vestment plan of the Corporation or any substantially similar plan), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the record date mentioned in the next sentence by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the record date mentioned in the next sentence plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Average Market Price, and of which the denominator shall be the number of shares of Common Stock outstanding on the record date mentioned -13 - in the next sentence plus the number of additional shares of Common Stock offered for subscription or purchase. Such reduction shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights or warrants. For the purposes of this subdivision (c), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation but shall include shares issuable in respect of script certificates issued in lieu of fractions of shares of Common Stock. The Corporation will not issue any rights or warrants in respect of shares of Common Stock held in the treasury of the Corporation. (d) In case the Corporation shall, by dividend or otherwise, hereafter distribute to holders of its outstanding shares of Common Stock generally evidences of its indebtedness or assets (excluding any regular periodic cash dividend paid from retained earnings of the Corporation and dividends or distributions payable in 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 (c) 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 record date mentioned in the next sentence by a fraction of which the numerator shall be the Average Market Price of the Common Stock on the record date mentioned in the next sen- tence less the then fair market value (as determined by the Board and the Investor jointly (if the Investor shall be a holder of any of the Preferred Stock), or by an internationally recog- nized investment banking firm selected by them if they are unable to agree or -14- by the Board in its reasonable discre- tion (if the Investor shall not be a holder of any of the Preferred Stock)), 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 denomina- tor shall be such Average Market Price of the Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. Such determination of fair market value shall be described in a statement filed with the conversion agent by the Corporation as soon as practicable. (e) The reclassification (including any reclassification upon a merger in which the Corporation is the continuing corporation) of Common Stock into securities including other than Common Stock shall be deemed to involve (i) a distribution of such securities other than Common Stock to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the record date for the determi- nation of stockholders entitled to receive such distribution" within the meaning of subdivision (d) of this sub- section (IV)), and (ii) a subdivision or combination, as the case may be, of the number of shares of Common Stock out- standing immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter. (f) In any case in which this paragraph (v) 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 -15- by subdivision (h) of this subsec- tion (IV)) issuing to the holder of any share of 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 frac- tional share. (g) All calculations under this paragraph (v) shall be made to the near- est 1/100 of one cent or to the nearest 1/10,000th of a share, as the case may be. Anything in this paragraph (v) 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 (v), as it considers to be advisable in order that any stock dividend, subdivision of shares, distri- bution of rights to purchase stock or securities, or distribution of securi- ties convertible into or exchangeable for stock hereafter made by the Corpora- tion to its stockholders shall not be taxable to the recipients. (h) 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, and (ii) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be airmailed by the Corporation to the holders of the Preferred Stock at their addresses as -16- shown on the stock books of the Corporation. (i) In the event that any time as a result of an adjustment made pursuant to subdivision (a) of this subsec- tion (IV), the holder of any share of Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of the Corporation other than shares of Common Stock, there- after 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 practica- ble to the provisions with respect to Common Stock contained in this paragraph (v). (V) In case: (a) the Corporation shall declare a dividend (or any other distribution) on its Common Stock other than a regular periodic cash dividend payable in cash out of its retained earnings; 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), 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 -17- (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 airmailed to the holders of shares of the Preferred Stock at their addresses as shown on the stock books of the Corporation, at least ten days prior to the applicable date here- inafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, 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 dividend, distribution, rights or warrants 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. (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 pur- pose of effecting conversions of the Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Preferred Stock not theretofore converted. For purposes of this sub- section (VI), the number of shares of Common Stock which shall be deliverable upon the conversion of all outstanding shares of Preferred Stock shall be -18- computed as if at the time of computa- tion all such outstanding shares were held by a single holder. Before taking any action which 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 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 non-assessable shares of Common Stock at such adjusted Conversion Price. The Corporation shall use its best efforts to list the shares of Common Stock required to be delivered upon conversion of the Preferred Stock prior to such delivery upon each securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery. Prior to the delivery of any securities which the Corporation shall be obligated to deliver upon conversion of the Preferred Stock, the Corporation shall use its best efforts 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 shall 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 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 Preferred Stock to be converted and -19- 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) In case of any consolidation or merger in which the Corporation is a party (other than a merger in which the Corporation is the continuing cor- poration), or in case of any sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially as an entirety, or in the case of any statu- tory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Corpora- tion), the holder of each share of 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, statutory exchange, sale or conveyance by a holder of the number of shares of Common Stock into which such share of Preferred Stock might have been converted immediately prior to such consolidation, merger, statutory exchange, sale or conveyance, 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, statutory exchange, sale or conveyance (provided that if the kind or amount of securi- ties, cash or other property receivable upon such consolidation, merger, statutory exchange, sale or conveyance 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 -20- consolidation, merger, statutory exchange, sale or conveyance for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Thereafter, the holders of the Preferred Stock shall be entitled to appropriate adjustments with respect to their conversion rights to the end that the provisions set forth in this para- graph (v) shall correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property there- after deliverable on the conversion of the Preferred Stock. Any such adjust- ment shall be approved by a firm of independent public accountants (who may be the regular accountants employed by the Corporation), evidenced by a certificate to that effect delivered to the conversion agent. The above provisions of this subsection (VIII) shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or convey- ances. (vi) Upon any conversion or redemp- tion of shares of Preferred Stock, the shares of 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 Preferred Stock. (vii) (I) Each holder of shares of Preferred Stock shall be entitled to one vote for each share held with respect to all matters upon which holders of Common Stock are entitled to vote, voting with the holders of outstanding shares of Common Stock (and with any other holders of any other class or series which may similarly be entitled to vote with the shares of Common Stock) as a single class. -21- (II) If and whenever at any time or times dividends payable on the 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, 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 stock- holders held for the purpose of electing directors. Such voting right shall continue until such time as all cumula- tive 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 direc- tors, 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 -22- right shall not already have been ini- tially 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 Pre- ferred 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 stock- holders 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. 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 Corpora- tion, 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 (II). 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 para- graph. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called during a period within 90 days immediately -23- 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 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 direc- tors 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 (II) 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, -24- 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 (II). (III) So long as any shares of the Preferred Stock remain outstanding, the Corporation will not, either directly or indirectly or through merger or consoli- dation with any other corporation: (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 Preferred Stock, (A) create any class or classes of stock ranking equal or prior to the 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 Preferred Stock either as to dividends or upon liquida- tion, (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 Preferred Stock or (C) authorize any reclassification of the 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 Preferred Stock then outstanding, amend, alter or repeal any of the provi- sions hereof so as to affect adversely the preferences, special rights or powers of the 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. -25- (IV) No consent of the holders of the 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 of authorized Common Stock or any increase, decrease or change in the par value thereof or in any other terms thereof. (V) 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 or reclassify its outstanding shares of Common Stock into a greater number of shares or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, then in each such case the number of votes to which a holder of a share of Preferred Stock is entitled pursuant to subsec- tion (I) of this paragraph (vii) shall be adjusted so that, after the happening of any of the events described above, such holder shall be entitled to a number of votes equal to the number of votes to which such holder was entitled pursuant to subsection (I) immediately prior to such happening multiplied by a fraction of which the numerator is the number of shares of Common Stock into which one share of Preferred Stock was convertible immediately after such hap- pening and the denominator is the number of shares of Common Stock into which one share of Preferred Stock was convertible immediately prior to such happening. An adjustment made pursuant to this subsec- tion (V) shall become effective immediately after the date of payment, in the case of a dividend or distribu- tion, or immediately after the effective date, in the case of a subdivision, combination or reclassification. (viii) (I) The shares of the Preferred Stock may be redeemed to the -26- extent specified below, at the option of the Corporation on any date beginning March 15, 1993 upon at least 30 days' and not more than 45 days' prior written notice to the holders of the shares to be redeemed, at an amount equal to the sum of the Liquidation Preference of such shares plus accumulated and unpaid dividends (whether or not earned or declared) to the date fixed for redemp- tion: Number of Shares Subject to Redemption ------------------------ to and including March 31, 1993 . . up to 50% of the shares of Preferred Stock initially issued; provided, that on -------- the date the notice of redemption is given, the Average Trading Price of the Common Stock is greater than the Trigger Price; thereafter, to and including March 31, 1994 . . . . . . . all of the shares of Preferred Stock outstanding; provided, -------- that on the date the notice of redemption is given, the Average Trading Price of the Common Stock is greater than the Trigger Price; thereafter, . . . . . all of the shares of Preferred Stock outstanding; provided, -------- that on the date notice of redemption is given, the Average Trading Price of the Common Stock is greater than $24.00. For purposes of this subsection (I), the number of shares of Preferred Stock at any time outstanding shall not include shares -27- held in the treasury of the Corporation but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Preferred Stock. (II) Holders of shares of Preferred Stock which have been called for redemption may elect to receive the redemption price for such shares in the form of securities which are direct obligations of the United States of America and have a fair market value (as determined jointly by the Board and the Investor (if the Investor shall be a holder of any shares of Preferred Stock) on the date notice of such redemption is given, or by an internationally recognized investment banking firm selected by them if they are unable to agree, or by the Board in its reasonable discretion (if the Investor shall not be a holder of any shares of Preferred Stock on the date notice of such redemption is given)) equal to the redemption price otherwise payable by the Corporation upon redemption of such shares. Any such election may specify a requested coupon rate or range of rates, maturity or range of maturities and denominations of such securities. Such requests with respect to coupon rate, maturity and denomination shall be satisfied by the Corporation to the extent reasonably practicable. Any such election shall be effective upon the giving of receipt of written notice of such election to the Corporation not later than 20 days prior to the date fixed for redemption. (III) Notice of any proposed redemption of shares of Preferred Stock shall be given by the Corporation by airmailing a copy of such notice to holders of record of the shares of such Preferred Stock to be redeemed at their respective addresses appearing on the stock books of the Corporation. Said notice shall specify the shares called for redemption, the redemption price and the price at which and the date on which the shares called for redemption will, upon presentation and surrender of the certifi- cates of stock evidencing such shares, be redeemed and the redemption price therefor paid. From and after the date fixed in any -28- such notice as the date of redemption of shares of Preferred Stock, unless default shall be made by the Corporation in providing monies at the time and place specified for the payment of the redemption price pursuant to said notice, all dividends on the Preferred Stock thereby called for redemption shall cease to accrue and all rights of the holders thereof as stockholders of the Corporation, except the right to receive the redemption price upon surrender of the certificates, shall cease and terminate. (ix) The Preferred Stock shall be subject to the provisions of the Agreement and may not be sold or transferred except in accordance therewith. (x) Certificates representing shares of the Preferred Stock shall be exchangeable, at the option of the holder, for a new certifi- cate or certificates of the same or different denominations representing in the aggregate the same number of shares. (xi) Subject to conversion as set forth in paragraph (v) and redemption as set forth -29- in paragraph (viii), the Preferred Stock shall be perpetual. IN WITNESS WHEREOF, PAINE WEBBER GROUP INC. has caused this Certificate to be made under the seal of the Corporation and signed by Donald B. Marron, its Chairman of the Board and Chief Executive Officer, and attested by Dorothy F. Haughey, its Assistant Secretary, this 5th day of November 1992. PAINE WEBBER GROUP INC. /s/ Donald B. Marron ----------------------------- Name: Donald B. Marron Title: Chairman of the Board and Chief Executive Officer Attest: /s/ Dorothy F. Haughey - --------------------------- Dorothy F. Haughey Assistant Secretary -30- STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 10:31 AM 11/05/1992 722310101 - 795811 CERTIFICATE OF ELIMINATION of PAINE WEBBER GROUP INC. Paine Webber Group Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of the Corporation, resolutions were duly adopted setting forth the proposed elimination of the 7% Cumulative Convertible Exchangeable Voting Preferred Stock, Series A, of the Corporation as set forth herein: RESOLVED, that upon repurchase or replacement by the Corporation of all shares of the 7% Cumulative Convertible Exchangeable Voting Preferred Stock, Series A, of the Corporation in accordance with the amended and restated investment agreement between the Corporation and The Yasuda Mutual Life Insurance Company, such shares shall be cancelled, and, upon cancellation, none will remain outstanding and none will be issued; RESOLVED, that a Certificate of Elimination be prepared, which shall have the effect when filed with the Secretary of State of the State of Delaware of eliminating from the Restated Certificate of Incorporation of the Corporation all matters set forth in the Certificate of Designations previously filed with respect to the 7% Cumulative Convertible Exchangeable Voting Preferred Stock, Series A, of the Corporation, and that the appropriate officers of the Corporation be, and they hereby are, authorized to execute and file, on behalf of the Corporation and under its corporate seal, such Certificate of Elimination with the Secretary of State of the State of Delaware. SECOND, That none of the authorized shares of the 7% Cumulative Convertible Exchangeable Voting Preferred Stock, Series A, of the Corporation remain outstanding and none will be issued. 2 THIRD: That in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Restated Certificate of Incorporation of the Corporation is hereby amended to eliminate all matters set forth in the Certificate of Designations previously filed with respect to the 7% Cumulative Convertible Exchangeable Voting Preferred Stock, Series A, of the Corporation. IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by Donald B. Marron, its Chairman of the Board of Directors, President and Chief Executive Officer, and attested by Dorothy F. Haughey, its Assistant Secretary, this 5th day of November 1992. PAINE WEBBER GROUP INC. /s/ Donald B. Marron ----------------------------- Donald B. Marron Chairman of the Board of Directors, President and Chief Executive Officer [SEAL] Attest: By /s/ Dorothy F. Haughey ----------------------------- Dorothy F. Haughey Assistant Secretary CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE 6% CONVERTIBLE PREFERRED STOCK ($20 Per Value) PAINE WEBBER GROUP INC. ------------------------------ Pursuant to Section 151 of the General Corporation Law of the State of Delaware ------------------------------ The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted on February 2, 1994 by the Special Committee of the Board of Directors of Paine Webber Group Inc., a Delaware corporation (hereinafter called the "Corporation"), pursuant to provisions of Section 141(c) of the General Corporation Law of the State of Delaware and Article IV, Section 1 of the By-laws of the Corporation; RESOLVED, that pursuant to authority expressly granted to and vested in the Board of Directors of the Corporation by provisions of the Certificate of Incorporation of the Corporation (the "Certificate of Incorporation"), the issuance of a series of the Series Preferred Stock, par value $20 per share (the "Series Preferred Stock"), which shall consist of up to 2,200,000 of the 20,000,000 shares of Series Preferred Stock which the Corporation now has authority to issue, be, and the same hereby is, authorized, and this Board of Directors hereby fixes the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series (in addition to the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which are applicable to the Series Preferred Stock) as follows: The designation of such series of the Series Preferred Stock authorized by this resolution shall be the 6% Convertible Preferred Stock (the "Convertible Preferred Stock"). The number of shares of Convertible Preferred Stock shall be 2,200,000. (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 $1.50 per share, payable in semi-annual installments on June 30 and December 31, commencing December 31, 1992. 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) maybe 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 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 $25 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 option, at any time, except that, if such share is called for redemption, not after the close of business on the fifth day next preceding 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 $22.125 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 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 nonassesable, 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: (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 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. (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 priced 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 book 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), 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 treasure, 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 6.5% Convertible Debentures Due 2002 (the "2002 Debentures"). For purposes of this subsection (VI), the number of shares of Common Stock which 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 which would cause an adjustment reducing the Conversion Price below the then per 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. 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 non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing 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 reasonably be, 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. (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. 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: (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, upon not less than 25 nor 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 $25.00 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 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 2002 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. IN WITNESS WHEREOF, Paine Webber Group Inc. has caused this Certificate to be made under the seal of the Corporation and signed by Theodore A. Levine, its Vice President, and attested by Dorothy F. Haughey, its Assistant Secretary, this 8 day of February, 1994. --- PAINE WEBBER GROUP INC. /s/ ----------------------- Vice President [Seal] Attest: /s/ Dorothy F. Haughey - ---------------------- Dorothy F. Haughey Assistant Secretary STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) This instrument was acknowledged before me this 8th day of February, 1994 by THEODORE A. LEVINE and - --- DOROTHY F. HAUGHEY, as Vice President and Assistant Secretary, respectively, of PAINE WEBBER GROUP INC., a Delaware corporation, being authorized so to do on its behalf. IN WITNESS WHEREOF, I hereunto set my hand and official seal. --------------------------- Notary Public ELISA A. BELL NOTARY PUBLIC, State of New York No. 03-4818330 Qualified in Bronx County Commission Expires June 30, 1994 - CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF PAINE WEBBER GROUP INC. Pursuant to Section 242 of the General Corporation Law ------------------------------------------------------ of the State of Delaware ------------------------ Paine Webber Group Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY as follows: 1. At a meeting of the Board of Directors of the Corporation duly called and held on February 22, 1994, a resolution was duly adopted setting forth a proposed amendment to the Restated Certificate of Incorporation of the Corporation, declaring such amendment to be advisable and directing that such amendment be submitted to the stockholders of the Corporation at the next annual meeting of stockholders for approval thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the board of directors deems it advisable that the restated certificate of incorporation of the corporation be amended by amending the first sentence of Section 1 of Article IV to read as follows: "The total number of shares of capital stock which the Corporation shall have the authority to issue is 20,000,000 shares of Series Preferred Stock of the par value of $20 each and 200,000,000 shares of Common Stock of the par value of $1 each. Such Series Preferred Stock and Common Stock are sometimes hereinafter collectively called 'capital stock'." 2 and that such amendment be, and it hereby is, adopted subject to requisite approval by the stockholders of the Corporation at the next annual meeting of the Corporation; and that if such amendment to the restated certificate of Incorporation shall be approved by the requisite vote of the stockholders of the Corporation, the chairman of the board, the president or any vice president of the Corporation be, and each of them hereby is, authorized to prepare, execute, file and record in accordance with section 103 of the General Corporation Law of the State of Delaware such amendment to the restated certificate of incorporation with such changes therein as may be approved by the officer executing the same, the execution and delivery thereof with such changes to be conclusive evidence of his approval thereof; 2. Thereafter, at the Annual Meeting of Stockholders of the Corporation, duly called and held on May 5, 1994, the Stockholders of the Corporation voted the necessary number of shares, as required by statute, in favor of the proposed amendment. 3. Said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, this Certificate of Amendment has been made under the seal of the Corporation and has been signed by the undersigned, Theodore A. Levine, Vice President of the Corporation, and attested by 3 Dorothy F. Haughey, Assistant Secretary of the Corporation, this 3rd day of June, 1994. PAYNE WEBBER GROUP INC. By: /s/ Theodore A. Levine ----------------------------- Theodore A. Levine Vice President [Corporate Seal] Attest: /s/ Dorothy F. Haughey - ----------------------- Dorothy F. Haughey Assistant Secretary CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE 9% CUMULATIVE REDEEMABLE PREFERRED STOCK, SERIES C ($100 Stated Value) PAINE WEBBER GROUP INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware The undersigned, Theodore A. Levine, Vice President, of Paine Webber Group Inc., a Delaware corporation (hereinafter called the "Corporation"), pursuant to the provisions of Sections 103 and 151 of the General Corporation Law of the State of Delaware, does hereby make this Certificate of Designations and does hereby state and certify that pursuant to the authority expressly vested in the Board of Directors of the Corporation by the Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), the Board of Directors duly adopted the following resolution: RESOLVED, that, pursuant to Article IV of the Certificate of Incorporation (which authorizes 20,000,000 shares of preferred stock, $20 par value ("Preferred Stock"), of which (i) up to 2,200,000 shares of a series of 7.5% Convertible Preferred Stock, (ii) 240,000 shares of a series of 7.5% Convertible Preferred Stock, Series B and (iii) up to 2,200,000 shares of a series of 6% Convertible Preferred Stock have been authorized for issuance, the Board of Directors hereby fixes the powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of a series of Preferred Stock (in addition to the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which are applicable to such series of Preferred Stock). 2 RESOLVED, that each share of such series of Preferred Stock shall rank equally in all respects and shall be subject to the following provisions: (1) Number and Designation. 2,500,000 shares of ---------------------- the Preferred Stock of the Corporation shall be designated as 9% Cumulative Redeemable Preferred Stock, Series C (the "Series C Preferred Stock"). (2) Rank. The shares of Series C Preferred Stock ---- shall rank prior to the shares of the Corporation's common stock, $1 par value (the "Common Stock"), and any other class of stock of the Corporation ranking Junior to the Series C Preferred Stock (whether with respect to dividends or upon liquidation, dissolution, winding up or otherwise). All equity securities of the Corporation to which the Series C Preferred Stock ranks prior (whether with respect to dividends or upon liquidation, dissolution, winding up or otherwise), including the Common Stock, are collectively referred to herein as the "Junior Securities." All equity securities of the Corporation with which the Series C Preferred Stock ranks on a parity (whether with respect to dividends or upon liquidation, dissolution, winding up or otherwise), including the Corporation's 7.5% Convertible Preferred Stock, 7.5% Convertible Preferred Stock, Series B, 6% Convertible Preferred Stock and 6% Cumulative Convertible Redeemable Preferred Stock, Series A, are collectively referred to herein as the "Parity Securities." The respective definitions of Junior Securities and Parity Securities shall also include any rights or options exercisable for or convertible into any of the Junior Securities and Parity Securities, as the case may be. (3) Dividends. (a) The holders of shares of --------- Series C Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, cash dividends at the annual rate of $9 per share. Such dividends shall be payable in arrears in equal amounts quarterly on March 15, June 15, September 15 and December 15 of each year (unless such day is not a Business Day, in which event on the next succeeding Business Day) (each of such dates being a "Dividend Payment Date" and each such quarterly period being a "Dividend Period") commencing on the Dividend Payment Date which next follows the issuance of such shares of Series C Preferred Stock. Such dividends (i) shall be cumulative from the date of issue, whether or not declared and whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally 3 available for the payment of such dividends and (ii) shall compound quarterly, to the extent they are unpaid, at the rate of 9% per annum computed on the basis of a 360-day year and twelve 30-day months. Each such dividend shall be payable to the holders of record of shares of the Series C Preferred Stock, as they appear on the stock records of the Corporation at the close of business on such record dates, not more than 60 days, or less than 10 days, preceding the payment dates thereof, as shall be fixed by the Board of Directors or a duly authorized committee thereof. Accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date, not more than 45 days preceding the payment date thereof, as may be fixed by the Board of Directors. As used herein, the term "Business Day" shall mean any day other than a Saturday, Sunday, a day on which the New York Stock Exchange does not conduct regular trading or a day on which is or is declared a national or New York State holiday. (b) The amount of dividends payable for each full Dividend Period for the Series C Preferred Stock shall be computed by dividing the annual dividend rate by four. The amount of dividends payable for the initial Dividend Period, or any other period shorter or longer than a full Dividend Period, on the Series C Preferred Stock shall be computed on the basis of twelve 30-day months and a 360-day year. Holders of shares of Series C Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Series C Preferred Stock. (c) So long as any shares of the Series C Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on Parity Securities, for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series C Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividend on such class or series of parity stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon shares of the Series C Preferred Stock and all dividends declared upon any other Parity Security shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Series C Preferred Stock and accumulated and unpaid on such Parity Security. 4 (d) So long as any shares of the Series C Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Securities) shall be declared or paid or set apart for payment or other distribution declared or made upon Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired (all such dividends, distributions, redemptions or purchases being hereinafter referred to as a "Junior Securities Distribution") for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Junior Securities), unless in each case (i) the full cumulative dividends on all outstanding shares of the Series C Preferred Stock and any other Parity Securities shall have been paid or set apart for payment for all past Dividend Periods with respect to the Series C Preferred Stock and all past dividend periods with respect to such Parity Securities and (ii) sufficient funds shall have been paid or set apart for the payment of the dividend for the current Dividend Period with respect to the Series C Preferred Stock and the current dividend period with respect to such Parity Securities. (4) Liquidation Preference. (a) In the event of ---------------------- any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Securities, the holders of the shares of Series C Preferred Stock shall be entitled to receive $100 per share of Series C Preferred Stock plus an amount equal to all dividends (whether or not earned or declared) accrued end unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Series C Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any Parity Securities, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series C Preferred Stock and any such other Parity Securities ratably in accordance with the respective amounts that would be payable on such shares of Series C Preferred Stock and any such other stock if all amounts payable thereon were paid in 5 full. For the purposes of this paragraph (4), a sale or transfer of all or substantially all of the Corporation's assets, shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation, but a consolidation or merger of the Corporation with one or more corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Subject to the rights of the holders of any Parity Securities, after payment shall have been made in full to the holders of the Series C Preferred Stock, as provided in this paragraph (4), any other series or class or classes of Junior Securities shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series C Preferred Stock shall not be entitled to share therein. (5) Redemption. (a) To the extent the ---------- Corporation shall have funds legally available for such payment, the Corporation may redeem at its option at any time on or after December 16, 1999 or from time to time thereafter, in whole or in part, the shares of Series C Preferred Stock, at a redemption price of $100 per share in cash, together with accrued and unpaid dividends thereon to the date fixed for redemption. (b) To the extent the Corporation shall have funds legally available for such payment, on December 15, 2014, if any shares of the Series C Preferred Stock shall be outstanding, the Corporation shall redeem all outstanding shares of the Series C Preferred Stock, at a redemption price of $100 per share in cash, together with accrued and unpaid dividends thereon to such date. (c) Immediately prior to authorizing or making any redemption pursuant to this paragraph (5) the Corporation, by resolution of its Board of Directors, shall, to the extent of any funds legally available therefor, declare a dividend on the Series C Preferred Stock payable on the redemption date in an amount equal to any accrued and unpaid dividends on the Series C Preferred Stock as of such redemption date. (d) If the Corporation is unable or shall fail to discharge its obligation to redeem all outstanding shares of Series C Preferred Stock pursuant to paragraph (5)(b) (the "Mandatory Redemption Obligation"), the Mandatory Redemption 6 Obligation shall be discharged as soon as the Corporation is able to discharge such Mandatory Redemption Obligation. If and so long as any Mandatory Redemption Obligation with respect to the Series C Preferred Stock shall not be fully discharged, the Corporation shall not (i) directly or indirectly, redeem, purchase, or otherwise acquire any Parity Security or discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of any Parity Securities (except in connection with a redemption, sinking fund or other similar obligation to be satisfied pro rata with the Series C Preferred Stock) or (ii) in accordance with paragraph (3)(d), declare or make any Junior Securities Distribution, or, directly or indirectly, discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of the Junior Securities. (e) Shares of Series C Preferred Stock which have been issued and reacquired in any manner, including shares purchased or redeemed, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of the class of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of the Preferred Stock; provided that no such issued and reacquired -------- shares of Series C Preferred Stock shall be reissued or sold as Series C Preferred Stock. (6) Procedure for Redemption. (a) In the event ------------------------ that fewer than all the outstanding shares of Series C Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be selected pro rata (with any fractional shares being rounded to the nearest whole share) as nearly as practicable or by lot, or by such other method as the Board of Directors may determine to be equitable. (b) In the event the Corporation shall redeem shares of Series C Preferred Stock, notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation; provided that neither the failure to give such notice nor - -------- any defect therein shall affect the validity of the giving of notice for the redemption of any share of Series C Preferred Stock to be redeemed except as to the holder to 7 whom the Corporation has failed to give said notice or except as to the holder whose notice was defective. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Series C Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. (c) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price of the shares called for redemption), dividends on the shares of Series C Preferred Stock so called for redemption shall cease to accrue, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. Upon surrender in accordance with said notice of the certificates for the shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. (7) Voting Rights. (a) The holders of record of ------------- shares of Series C Preferred Stock shall not be entitled to any voting rights except as hereinafter provided in this paragraph (7) or as otherwise provided by law. (b) If and whenever six quarterly dividends (whether or not consecutive) payable on the Series C Preferred Stock have not been paid in full or if the Corporation shall have failed to discharge its Mandatory Redemption Obligation, the number of directors then constituting the Board of Directors shall be increased by two and the holders of shares of Series C Preferred Stock, together with the holders of shares of every other series of preferred stock upon which like rights to vote for the election of two additional directors have been conferred and are exercisable (resulting from either the failure to pay dividends or the failure to redeem)(any such other series is referred to as the "Preferred Shares"), voting as a single 8 class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Series C Preferred Stock and the Preferred Shares called as hereinafter provided. Whenever all arrears in dividends on the Series C Preferred Stock and the Preferred Shares then outstanding shall have been paid and dividends thereon shall have been paid regularly for at least one year, or the Corporation shall have fulfilled its Mandatory Redemption Obligation, as the case may be, then the right of the holders of the Series C Preferred Stock and the Preferred Shares to elect such additional two directors shall cease (but subject always to the same provisions for the vesting of such voting rights in the case of any similar future arrearages in six quarterly dividends or failure to fulfill any Mandatory Redemption Obligation), and the terms of office of all persons elected as directors by the holders of the Series C Preferred Stock and the Preferred Shares shall forthwith terminate and the number of the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of shares of Series C Preferred Stock and the Preferred Shares, the secretary of the Corporation may, and upon the written request of any holder of Series C Preferred Stock (addressed to the secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Series C Preferred Stock and of the Preferred Shares for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the secretary within 20 days after receipt of any such request, then any holder of shares of Series C Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Series C Preferred Stock and the Preferred Shares, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Series C Preferred Stock and the Preferred Shares or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special 9 meeting held in place thereof if such office shall not have previously terminated as provided above. (c) Without the written consent of a majority of the outstanding shares of Series C Preferred Stock or the vote of holders of a majority of the outstanding shares of Series C Preferred Stock at a meeting of the holders of Series C Preferred Stock called for such purpose, the Corporation will not (i) amend, alter or repeal any provision hereof or of the Certificate of Incorporation (by merger or otherwise) so as to affect the preferences, rights or powers of the Series C Preferred Stock; provided that any -------- such amendment that changes the dividend payable on or the liquidation preference of the Series C Preferred Stock shall require the affirmative vote at a meeting of holders of Series C Preferred Stock called for such purpose or written consent of the holder of each share of Series C Preferred Stock; or (ii) create any class or classes of stock ranking equal or prior to the Series C Preferred Stock either as to dividends or upon liquidation, dissolution or winding up or increase the number of authorized number of shares of any class or classes of stock ranking equal or prior to the Series C Preferred Stock either as to dividends or upon liquidation, dissolution or winding up. Notwithstanding the foregoing, no consent of the holders of the Series C 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 Junior Securities or (iii) any increase or decrease in the amount of authorized Common Stock or any increase, decrease or change in the par value thereof or in any other terms thereof. (d) In exercising the voting rights set forth in this paragraph (7) each share of Series C Preferred Stock shall have one vote per share, except that when any other series of preferred stock shall have the right to vote with the Series C Preferred Stock as a single class on any matter, then the Series C Preferred Stock and such other series shall have with respect to such matters one vote per $100 of stated liquidation preference. Except as set forth herein, the shares of Series C Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action. (8) Stockholders Agreement. The Series C ---------------------- Preferred Stock shall be subject to the provisions of the Stockholders Agreement among the Corporation, Kidder, 10 Peabody Group Inc. and General Electric Company dated December 16, 1994. (9) General Provisions. (a) The term "Person" as ------------------ used herein means any corporation, limited liability company, partnership, trust, organization, association, other entity or individual. (b) The term "outstanding", when used with reference to shares of stock, shall mean issued shares, excluding shares held by the Corporation or a subsidiary. (c) The headings of the paragraphs of this Certificate of Designations are for convenience of reference only and shall not define, limit or affect any of the provisions hereof. IN WITNESS WHEREOF, Paine Webber Group Inc. has caused this Certificate of Designations to be signed and attested by the undersigned this 15th day of December, 1994. PAINE WEBBER GROUP INC. By /s/ Theodore A. Levine ------------------------ Name: Theodore A. Levine Title: Vice President ATTEST: /s/ Dorothy F. Haughey - --------------------------- Name : Dorothy F. Haughey Assistant Secretary CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE RESTATED CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE 6% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK, SERIES A ($100 Stated Value) PAINE WEBBER GROUP INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware The undersigned, Theodore A. Levine, Vice President, of Paine Webber Group Inc., a Delaware corporation (hereinafter called the "Corporation"), pursuant to the provisions of Sections 103 and 151 of the General Corporation Law of the State of Delaware, does hereby make this Certificate of Designations and does hereby state and certify that pursuant to the authority expressly vested in the Board of Directors of the Corporation by the Restated Certificate of Incorporation, as amended (the "Certificate of Incorporation"), the Board of Directors duly adopted the following resolution: RESOLVED, that, pursuant to Article IV of the Certificate of Incorporation (which authorizes 20,000,000 shares of preferred stock, $20 par value ("Preferred Stock"), of which (i) up to 2,200,000 shares of a series of 7.5% Convertible Preferred Stock, (ii) 240,000 shares of a series of 7.5% Convertible Preferred Stock, Series B and (iii) up to 2,200,000 shares of a series of 6% Convertible Preferred Stock have been authorized for issuance, the Board of Directors hereby fixes the powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of a series of Preferred Stock (in addition to the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which are applicable to such series of Preferred Stock). 2 RESOLVED, that each share of such series of Preferred Stock shall rank equally in all respects and shall be subject to the following provisions: (1) Number and Designation. 1,000,000 shares of ---------------------- the Preferred Stock of the Corporation shall be designated as 6% Cumulative Convertible Redeemable Preferred Stock, Series A (the "Series A Convertible Preferred Stock"). (2) Rank. The shares of Series A Convertible ---- Preferred Stock shall rank prior to the shares of the Corporation's common stock, $1 par value (the "Common Stock"), and any other class of stock of the Corporation ranking junior to the Series A Convertible Preferred Stock (whether with respect to dividends or upon liquidation, dissolution, winding up or otherwise). All equity securities of the Corporation to which the Series A Convertible Preferred Stock ranks prior (whether with respect to dividends or upon liquidation, dissolution, winding up or otherwise), including the Common Stock, are collectively referred to herein as the "Junior Securities." All equity securities of the Corporation with which the Series A Convertible Preferred Stock ranks on a parity (whether with respect to dividends or upon liquidation, dissolution, winding up or otherwise), including the Corporation's 7.5% Convertible Preferred Stock, 7.5% Convertible Preferred Stock, Series B, 6% Convertible Preferred Stock and 9% Cumulative Redeemable Preferred Stock, Series C, are collectively referred to herein as the "Parity Securities." The respective definitions of Junior Securities and Parity Securities shall also include any rights or options exercisable for or convertible into any of the Junior Securities and Parity Securities, as the case may be. (3) Dividends. (a) The holders of shares of --------- Series A Convertible Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, cash dividends at the annual rate of $6 per share. Such dividends shall be payable in arrears in equal amounts quarterly on March 15, June 15, September 15 and December 15 of each year (unless such day is not a Business Day, in which event on the next succeeding Business Day) (each of such dates being a "Dividend Payment Date" and each such quarterly period being a "Dividend Period") commencing on the Dividend Payment Date which next follows the issuance of such shares of Series A Convertible Preferred Stock. Such dividends (i) shall be cumulative from the date of issue, 3 whether or not declared end whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends and (ii) shall compound quarterly, to the extent they are unpaid, at the rate of 6% per annum computed on the basis of a 360-day year and twelve 30-day months. Each such dividend shall be payable to the holders of record of shares of the Series A Convertible Preferred Stock, as they appear on the stock records of the Corporation at the close of business on such record dates, not more than 60 days, or less than 10 days, preceding the payment dates thereof, as shall be fixed by the Board of Directors or a duly authorized committee thereof. Accrued and unpaid dividends for any past Dividend Periods may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such date, not more than 45 days preceding the payment date thereof, as may be fixed by the Board of Directors. As used herein, the term "Business Day" shall mean any day other than a Saturday, Sunday, a day on which the New York Stock Exchange does not conduct regular trading or a day on which is or is declared a national or New York State holiday. (b) The amount of dividends payable for each full Dividend Period for the Series A Convertible Preferred Stock shall be computed by dividing the annual dividend rate by four. The amount of dividends payable for the initial Dividend Period, or any other period shorter or longer than a full Dividend Period, on the Series A Convertible Preferred Stock shall be computed on the basis of twelve 30- day months and a 360-day year. Holders of shares of Series A Convertible Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the Series A Convertible Preferred Stock. (c) So long as any shares of the Series A Convertible Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on Parity Securities, for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series A Convertible Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividend on such class or series of parity stock. When dividends are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon shares of the Series 4 A Convertible Preferred Stock and all dividends declared upon any other Parity Security shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Series A Convertible Preferred Stock and accumulated and unpaid on such Parity Security. (d) So long as any shares of the Series A Convertible Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Securities) shall be declared or paid or set apart for payment or other distribution declared or made upon Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired (all such dividends, distributions, redemptions or purchases being hereinafter referred to as a "Junior Securities Distribution") for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Junior Securities), unless in each case (i) the full cumulative dividends on all outstanding shares of the Series A Convertible Preferred Stock and any other Parity Securities shall have been paid or set apart for payment for all past Dividend Periods with respect to the Series A Convertible Preferred Stock and all past dividend periods with respect to such Parity Securities and (ii) sufficient funds shall have been paid or set apart for the payment of the dividend for the current Dividend Period with respect to the Series A Convertible Preferred Stock and the current dividend period with respect to such Parity Securities. (4) Liquidation Preference. (a) In the event of ---------------------- any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Securities, the holders of the shares of Series A Convertible Preferred Stock shall be entitled to receive $100 per share of Series A Convertible Preferred Stock plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of Series A Convertible Preferred Stock shall be insufficient to pay in full the preferential amount 5 aforesaid and liquidating payments on any Parity Securities, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series A Convertible Preferred Stock and any such other Parity Securities ratably in accordance with the respective amounts that would be payable on such shares of Series A Convertible Preferred Stock and any such other stock if all amounts payable thereon were paid in full. For the purposes of this paragraph (4), a sale or transfer of all or substantially all of the Corporation's assets, shall be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation, but a consolidation or merger of the Corporation with one or more corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Subject to the rights of the holders of any Parity Securities, after payment shall have been made in full to the holders of the Series A Convertible Preferred Stock, as provided in this paragraph (4), any other series or class or classes of Junior Securities shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series A Convertible Preferred Stock shall not be entitled to share therein. (5) Redemption. (a) To the extent the ---------- Corporation shall have funds legally available for such payment, at any time or from time to time prior to the fifth anniversary of the date of issuance of the shares of Series A Convertible Preferred Stock, the Corporation may redeem at its option, in whole or in part, shares of Series A Convertible Preferred Stock at a redemption price per share in cash equal to the greater of (i) $140 and (ii) the average of (A) $140 and (B) the Current Market Price Per Common Share (as defined in paragraph (7) (g) (vi)) as of the date of notice of redemption multiplied by the number obtained by dividing 100 by the Conversion Price (as defined in paragraph 7(a)) then in effect, in each case, together with any accrued and unpaid dividends thereon to the redemption date. (b) To the extent the Corporation shall have funds legally available for such payment, at any time or from time to time on or after the fifth anniversary of the date of issuance of the shares of Series A Convertible Preferred Stock, the Corporation may redeem at its option, in whole or in part, shares of Series A Convertible 6 Preferred Stock at a redemption price in cash (subject to subparagraph (d) below) equal to the sum of (i) the redemption price per share indicated below and (ii) any accrued and unpaid dividends to the redemption date. The amount of the redemption price per share, if redeemed during- the 12-month period commencing on the December 16th of the years indicated below, is: Year Amount ---- ------ 1999 $105 2000 $104 2001 $103 2002 $102 2003 $101 2004 and thereafter $100 (c) To the extent the Corporation shall have funds legally available for such payment, on December 15, 2014, if any shares of the Series A Convertible Preferred Stock shall be outstanding, the Corporation shall redeem all outstanding shares of the Series A Convertible Preferred Stock, at a redemption price of $100 per share in cash (subject to paragraph (d) below) together with accrued and unpaid dividends thereon to such date. (d) In lieu of a cash payment of the redemption price per share due upon any redemption of shares of Series A Convertible Preferred Stock pursuant to paragraph 5(b) or (c), the Corporation may issue shares of Common Stock to the holders of record of such shares of Series A Convertible Preferred Stock in full payment of such amount, by giving written notice (in the manner described in paragraph (6)) to such holders. If such notice is so given, the Corporation shall issue and deliver or cause to be delivered to each such holder of shares of Series A Convertible Preferred Stock being redeemed out of its authorized but unissued Common Stock or Common Stock held in treasury that number of shares of Common Stock determined by dividing the aggregate redemption price payable in respect of all such shares of Series A Convertible Preferred Stock owned by such holder being redeemed by the Current Market Price Per Common Share as of the redemption date. The Corporation shall, in lieu of issuing any fractional shares of Common Stock to any such holder, pay to such holder cash in an amount equal to such fractional interest multiplied by the Current Market Price Per Common Share as of the redemption date. 7 (e) Immediately prior to authorizing or making any redemption pursuant to this paragraph (5), the Corporation, by resolution of its Board of Directors, shall, to the extent of any funds legally available therefor, declare a dividend on the Series A Convertible Preferred Stock payable on the redemption date in an amount equal to any accrued and unpaid dividends on the Series A Convertible Preferred Stock as of such redemption date. (f) If the Corporation is unable or shall fail to discharge its obligation to redeem all outstanding shares of Series A Convertible Preferred Stock pursuant to paragraph (5) (c) (the "Mandatory Redemption Obligation"), the Mandatory Redemption Obligation shall be discharged as soon as the Corporation is able to discharge such Mandatory Redemption Obligation. If and so long as any Mandatory Redemption Obligation with respect to the Series A Convertible Preferred Stock shall not be fully discharged, the Corporation shall not (i) directly or indirectly, redeem, purchase, or otherwise acquire any Parity Security or discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of any Parity Securities (except in connection with a redemption, sinking fund or other similar obligation to be satisfied pro rata with the Series A Convertible Preferred Stock) or (ii) in accordance with paragraph (3)(d), declare or make any Junior Securities Distribution, or, directly or indirectly, discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of the Junior Securities. (g) Shares of Series A Convertible Preferred Stock which have been issued and reacquired in any manner, including shares purchased or redeemed, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of the class of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of the Preferred Stock; provided that no such -------- issued and reacquired shares of Series A Convertible Preferred Stock shall be reissued or sold as Series A Convertible Preferred Stock. (6) Procedure for Redemption. (a) In the event ------------------------ that fewer than all the outstanding shares of Series A Convertible Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be selected pro rata (with any fractional shares being rounded to the 8 nearest whole share) as nearly as practicable or by lot, or by such other method as the Board of Directors may determine to be equitable. (b) In the event the Corporation shall redeem shares of Series A Convertible Preferred Stock, notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation; provided that neither the failure to give such notice nor - -------- any defect therein shall effect the validity of the giving of notice for the redemption of any share of Series A Convertible Preferred Stock to be redeemed except as to the holder to whom the Corporation has failed to give said notice or except as to the holder whose notice was defective. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Series A Convertible Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date; and (vi) whether the redemption price will be paid in cash or shares of Common Stock. (c) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price of the shares called for redemption), dividends on the shares of Series A Convertible Preferred Stock so called for redemption shall cease to accrue, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. Upon surrender in accordance with said notice of the certificates for the shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. (d) All shares of Common Stock delivered pursuant 9 to this paragraph (6) 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, and free from all documentary, stamp, transfer or other similar taxes. If the shares of Common Stock to be delivered pursuant to this paragraph (6) are to be issued in the name of a person other than the registered holder of the shares of Series A Convertible Preferred Stock being redeemed, such registered holder shall pay all transfer or other similar taxes with respect thereto. (7) Conversion. (a)(i) Subject to the ---------- provisions of this paragraph (7), the holders of the shares of Series A Convertible Preferred Stock shall have the right, at any time and from time to time, at such holder's option, to convert any or all outstanding shares (and fractional shares) of Series A Convertible Preferred Stock, in whole or in part, into that number of fully paid and non-assessable shares of Common Stock (calculated as to each conversion to the nearest 1/10,000th of a share) obtained by dividing 100 by the Conversion Price (as defined below), and by surrender of such shares so to be converted, such surrender to be made in the manner provided in this paragraph (7). The term "Conversion Price" shall mean $18.13 per share, as adjusted in accordance with the provisions of paragraph 7(g). (ii) Notwithstanding any other provision hereof, the right to convert shares of Series A Convertible Preferred Stock called for redemption pursuant to paragraph (5) shall terminate (A) if the date of redemption is prior to the fifth anniversary of the date of issuance of the shares of Series A Convertible Preferred Stock, at the close of business on the day immediately preceding the date on which the Corporation gives a notice of redemption with respect to such shares in accordance with paragraph (6) and (B) if the date of redemption is on or after the fifth anniversary of such date of issuance, at the close of business on the day immediately preceding the redemption date, in each case, unless the Corporation shall default in making payment of the amount payable upon such redemption. (b)(i) In order to exercise the conversion privilege, the holder of the shares of Series A Convertible Preferred Stock to be converted shall surrender the certificate representing such shares at the office of the Corporation, or at the office of the conversion agent for the Series A Convertible Preferred Stock appointed for such purpose by the Corporation, with a written notice of 10 election to convert completed and signed, specifying the number of shares to be converted. Such notice shall be substantially in the following form: NOTICE OF ELECTION TO CONVERT The undersigned, being a holder of the 6% Cumulative Convertible Redeemable Preferred Stock, Series A ("Preferred Stock"), of Paine Webber Group Inc. (the "Corporation"), irrevocably exercises the right to convert ________ outstanding shares of Preferred Stock on _________, ____, into shares of Common Stock of the Corporation in accordance with the terms of the Preferred Stock, and directs that the shares issuable and deliverable upon the conversion, together with any check in payment for fractional shares, be issued and delivered in the denominations indicated below to the registered holder hereof unless a different name has been indicated below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Dated: Fill in for registration of shares of Common Stock if to be issued otherwise than to the registered holder: - --------------------------------- Name - --------------------------------- Address - --------------------------------- --------------------------------- (Please print name (Signature) and address, including postal code number) 11 Denominations: _______________________ Unless the shares issuable on conversion are to be issued in the same name as the name in which such shares of Series A Convertible Preferred Stock are registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or the holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax. (ii) As promptly as practicable after the surrender by the holder of the certificates for shares of Series A Convertible Preferred Stock as aforesaid, the Corporation shall issue and shall deliver to such holder, or on the holder's written order to the holder's transferee, a certificate or certificates for the whole number of shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions of this paragraph (7) and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in paragraph (7)(f). (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 Series A Convertible Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the person 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 of record of the shares of Common Stock represented thereby at such time on such date. All shares of Common Stock delivered upon conversion of the Series A Convertible Preferred Stock will upon delivery be duly and validly issued and fully paid and non-assessable, free of all liens and charges and not subject to any preemptive rights. Upon the surrender of certificates representing shares of Series A Convertible Preferred Stock, such shares shall no longer be deemed to be outstanding and all rights of a holder with respect to such shares surrendered for conversion shall immediately terminate except the right to receive the Common Stock and other amounts payable pursuant to this paragraph (7). (c) (i) Subject to paragraph (7)(a)(ii), upon delivery to the Corporation by a holder of shares of Series A Convertible Preferred Stock of a notice of election to 12 convert, the right of the Corporation to redeem such shares of Series A Convertible Preferred Stock shall terminate. (ii) Subject to paragraph (7)(a)(ii), from the date of delivery by a holder of shares of Series A Convertible Preferred Stock of such notice of election to convert, in lieu of dividends on such Series A Convertible Preferred Stock pursuant to paragraph (3), such Series A Convertible Preferred Stock shall participate equally and ratably with the holders of shares of Common Stock in all dividends paid on the Common Stock as if such shares of Series A Convertible Preferred Stock had been converted to shares of Common Stock at the time of such delivery. (iii) If, after receipt by a holder of shares of Series A Convertible Preferred Stock of a notice of redemption pursuant to paragraph (5) with a redemption date for such shares on or after the fifth anniversary of the issuance of the Series A Convertible Preferred Stock, such holder delivers to the Corporation a notice of election to convert, such Series A Convertible Preferred Stock shall cease to accrue dividends pursuant to paragraph (3) but such shares shall continue to be entitled to receive all accrued dividends which such holder is entitled to receive pursuant to paragraph (3) through the date of delivery of such notice of election to convert (including pro rata dividends for the period from the last Dividend Payment Date to the date of delivery of the notice of election to convert) in preference to and in priority over any dividends on the Common Stock. Such accrued dividends shall be payable to such holder when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, as provided in paragraph (3) above. (iv) Except as provided above and in paragraph (7)(g), the Corporation shall make no payment or adjustment for accrued and unpaid dividends on shares of Series A Convertible Preferred Stock, whether or not in arrears, on conversion of such shares or for dividends in cash on the shares of Common Stock issued upon such conversion. (d) (i) The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, such number of its authorized but unissued shares of Common Stock as shall be required for the purpose of effecting conversions of the Series A Convertible Preferred Stock. For purposes of this paragraph (d)(i), the number of shares of Common Stock which shall be deliverable upon the conversion of all outstanding shares of Series A Convertible 13 Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder. (ii) Prior to the delivery of any securities which the Corporation shall be obligated to deliver upon conversion of the Series A Convertible Preferred Stock, the Corporation shall use its best efforts to comply with all applicable federal and state laws and regulations which require action to be taken by the Corporation. (e) 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 conversion of the Series A Convertible Preferred Stock pursuant hereto; provided 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 Series A 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. (f) In connection with the conversion of any shares of Series A Convertible Preferred Stock, no fractions of shares of Common Stock shall be issued, but in lieu thereof the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal to such fractional interest multiplied by the Current Market Price Per Common Share on the Business Day on which such shares of Series A Convertible Preferred Stock are deemed to have been converted. 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 number of the shares of Series A Convertible Preferred Stock so surrendered. All calculations under this paragraph (7) shall be made to the nearest 1/100 of one cent or to the nearest 1/10,000 of a share, as the case may be. (g) The Conversion Price shall be adjusted from time to time as follows: (i) In case the Corporation shall at any time after the date of issue of the Series A Convertible Preferred Stock (I) declare a dividend or make a 14 distribution on Common Stock payable in Common Stock, (II) subdivide or split the outstanding Common Stock into a greater number of shares, (III) combine or reclassify the outstanding Common Stock into a smaller number of shares, (IV) issue any shares of its capital stock in a reclassification of Ccmmom Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing corporation), or (V) consolidate with, or merge with or into, any other Person (unless the Corporation shall be the surviving corporation in such merger and the holders of Common Stock of the Corporation are not entitled to receive any consideration in connection therewith), the Conversion Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination, consolidation, merger or reclassification shall be proportionately adjusted so that the conversion of the Series A Convertible Preferred Stock after such time shell entitle the holder to receive the aggregate number of shares of Common Stock or other securities of the Corporation (or shares of any security into which such shares of Common Stock have been combined, consolidated, merged or reclassified pursuant to clause (III), (IV) or (V) above) which, if this Series A Convertible Preferred Stock had been converted immediately prior to such time, such holder would have owned upon such conversion and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination, consolidation, merger or reclassification, assuming such holder of Common Stock of the Corporation (x) is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such recapitalization, sale or transfer was made, as the case may be ("constituent person"), or an affiliate of a constituent person and (y) failed to exercise any rights of election as to the kind or amount of securities, cash and other property receivable upon such reclassification, change, consolidation, merger, recapitalization, sale or transfer (provided, that if the kind or amount of securities, cash and other property receivable upon such reclassification, change, consolidation, merger, recapitalization, sale or transfer is not the same for each share of Common Stock of the Corporation held immediately prior to such reclassification, change, consolidation, merger, recapitalization, sale or transfer by other than a constituent person or an affiliate thereof and in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this paragraph (g) (i) the kind and 15 amount of securities, Cash and other property receivable upon such reclassification, change, consolidation, merger, recapitalization, sale or transfer by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Such adjustment shall be made successively whenever any event listed above shall occur. (ii) In case the Corporation shall issue or sell any Common Stock (other than Excluded Stock (as defined below)) without consideration or for a consideration per share less than the then Current Market Price Per Common Share, the Conversion Price to be in effect after such issuance or sale shall be determined by multiplying the Conversion Price in effect immediately prior to such issuance or sale by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately prior to such issuance or sale plus the number of shares which the aggregate offering price of the total number of shares so issued or sold would purchase at such Current Market Price Per Common Share, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after giving effect to such issuance or sale. In case any portion of the consideration to be received by the Corporation shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined by the Board of Directors of the Corporation. Such adjustment shall be made effective immediately after such issuance or sale. For purposes of paragraphs (g)(ii), (iii) and (iv), "Excluded Stock" shall mean any shares of Common Stock, or any shares of stock or other securities convertible or exercisable into or exchangeable for shares of Common Stock (such convertible, exercisable or exchangeable stock or securities being herein called "Convertible Securities") or any rights to subscribe for or purchase, or options or warrants for the purchase of shares of the Common Stock or any Convertible Securities issued, granted or sold (I) as payment of all or any portion of the cost of acquiring assets or stock or securities of any other corporation or of assets of or interests in any noncorporate entity or in any other transaction (other than a distribution without consideration to holders of the then outstanding shares of Common Stock) in which the consideration for such shares of the Common Stock, Convertible Securities or rights or options is other than cash, obligations of the United States Government or Federal funds; (II) pursuant to any employee plan or employee contract approved or otherwise authorized by the Board of 16 Directors of the Corporation, including without limitation, any employee stock option plan, employee restricted stock plan or other employee incentive plan or any share purchase plan; (III) pursuant to any shareholder dividend reinvestment plan; (IV) upon the conversion or exchange of any Convertible Securities outstanding on December 16, 1994 or the Series A Convertible Preferred Stock, or pursuant to any other contractual obligation in existence on such date or any Convertible Securities issued after such date provided that the "conversion price" for the Common Stock underlying such Convertible Security is greater than the Current Market Price Per Common Share on the date such Convertible Security is issued, granted or sold; (v) upon the conversion or exchange of any Convertible Securities, or the exercise of any rights or options, in either case, issued, granted or sold in the circumstances described in any of the foregoing clauses (I) through (IV) or upon the conversion or exchange of Convertible Securities acquired upon the exercise of any such rights or options; or (VI) pursuant to the exercise of any rights or options, or upon conversion or exchange of any Convertible Securities, if with respect to such rights, options or Convertible Securities no adjustment to the Conversion Price was required pursuant to this paragraph (g)(ii). (iii) In case the Corporation shall fix a record date for the issue (other than pursuant to an automatic dividend reinvestment plan of the Corporation or any similar plan or any customary shareholders rights plan of the Corporation) of rights, options or warrants (other than Excluded Stock) to the holders of its Common Stock or other securities entitling such holders to subscribe for or purchase shares of Common Stock (or securities convertible into shares of Common Stock) at a price per share of Common Stock (or having a conversion price per share of Common Stock, if a security convertible into shares of Common Stock) less than the then Current Market Price Per Common Share on Such record date, the maximum number of shares of Common Stock issuable upon exercise of such rights, options or warrants (or conversion of such convertible securities) shall be deemed to have been issued and outstanding as of such record date, and the Conversion Price shall be adjusted pursuant to paragraph (g)(ii) hereof as though such maximum number of shares of Common Stock had been so issued for an aggregate consideration equal to the aggregate consideration payable for such rights, options, warrants or convertible securities and the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such shares of Common 17 Stock. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (g)(ii) hereof. Such adjustment shall be made effective on the day immediately after the record date; and in the event that such rights, options or warrants are not so issued or expire unexercised or such convertible securities are redeemed or otherwise retired prior to conversion thereof, or in the event of a change in the number of shares of Common Stock to which the holders of such rights, options, warrants or convertible securities are entitled (other than pursuant to adjustment provisions therein comparable to those contained in this paragraph (g)), the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such record date had not been fixed, in the former event, or the Conversion Price which would then be in effect if such holders had initially been entitled to such changed number of shares of Common Stock, in the latter event. (iv) In case the Corporation shall issue rights, options or warrants (other than Excluded Stock) entitling the holders thereof to subscribe for or purchase Common Stock (or securities convertible into shares of Common Stock) or shall issue convertible securities, at a price per share of Common Stock (or having a conversion price per share of Common Stock, if a security convertible into shares of Common Stock) (including, in the case of rights, options or warrants, the price at which they may be exercised) is less than the then Current Market Price Per Common Share, the maximum number of shares of Common Stock issuable upon exercise of such rights, options or warrants or upon conversion of such convertible securities shall be deemed to have been issued and outstanding as of the date of such sale or issuance, and the Conversion Price shall be adjusted pursuant to paragraph (g)(ii) hereof as though such maximum number of shares of Common Stock had been so issued for an aggregate consideration equal to the aggregate consideration paid for such rights, options, warrants or convertible securities and the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such shares of Common Stock. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (g)(ii) hereof. Such adjustment shall be made effective immediately after such rights, options, warrants or convertible securities are issued; and in the event that such rights, options or warrants expire unexercised or such 18 convertible securities are redeemed or otherwise retired prior to conversion thereof, or in the event of a change in the number of shares of Common Stock to which the holders of such rights, options, warrants or convertible securities are entitled (other than pursuant to adjustment provisions therein comparable to those contained in this paragraph (g)), the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such rights, options, warrants or convertible securities had not been issued, in the former event, or the Conversion Price which would then be in effect if such holders had initially been entitled to such changed number of shares of Common Stock, in the latter event. No adjustment of the Conversion Price shall be made pursuant to this paragraph (g)(iv) to the extent that the Conversion Price shall have been adjusted pursuant to paragraph (g)(iii) upon the setting of any record date relating to such rights, options, warrants or convertible securities and such adjustment fully reflects the number of shares of Common Stock to which the holders of such rights, options, warrants or convertible securities are entitled and the price payable therefor. (v) In case the Corporation shall fix a record date for the making of a distribution to holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Corporation is the continuing corporation) of evidences of indebtedness, assets or other property (other than regular periodic cash dividends or dividends payable in Common Stock or rights, options or warrants referred to in, and for which an adjustment is made pursuant to, paragraph (g)(iii) hereof), the Conversion Price to be in effect after such record date shall be determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction, (A) the numerator of which shall be the Current Market Price Per Common Share on such record date, less the fair market value (determined as set forth in paragraph (g)(ii) hereof) of the portion of the assets, other property or evidence of indebtedness so to be distributed which is applicable to one share of Common Stock and (B) the denominator of which shall be the Current Market Price Per Common Share on such record date. Such adjustments shall be made effective on the day immediately after the record date; and in the event that such distribution is not so made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such record date had not been fixed. (vi) On any date, the "Current Market Price Per Common Share" shall be deemed to be the average of the Daily 19 Prices (as defined below) per share of the applicable class of Common Stock for the ten consecutive trading days immediately prior to such date. "Daily Price" means (1) if the shares of such class of Common Stock then are listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing price on such day as reported on the NYSE Composite Transactions Tape; (2) if the shares of such class of Common Stock then are not listed and traded on the NYSE, the closing price on such day as reported by the principal national securities exchange on which the shares are listed and traded; (3) if the shares of such class of Common Stock then are not listed and traded on any such securities exchange, the last reported sale price on such day on the National Market of the National Association of Securities Dealers, Inc. Automated Quotation System ( "NASDAQ" ); or (4) if the shares of such class of Common Stock then are not traded on the NASDAQ National Market, the average of the highest reported bid and lowest reported asked price on such day as reported by NASDAQ. "Trading day" means, with respect to any exchange or market, each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are not traded on such exchange or in such market. For purposes of any computation under this paragraph (g), the number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation. (vii) To the extent that the Conversion Price shall have been adjusted pursuant to any of paragraph (g)(ii), (iii), (iv) or (v) as a result of a particular event, no additional adjustment shall be made pursuant to any other of such paragraphs (g)(ii), (iii), (iv) or (v) as a result of such event. No adjustment to the Conversion Price pursuant to paragraphs (g)(ii), (iii), (iv) and (v) above shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price; provided that any adjustments which by reason of this -------- paragraph (g)(vii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph (g) shall be made to the nearest four decimal points. (viii) In the event that, at any time as a result of the provisions of this paragraph (g), the holder of this Series A Convertible Preferred Stock upon subsequent conversion shall become entitled to receive any shares of capital stock of the Corporation other than Common Stock, the number of such other shares so receivable upon conversion of this Series A Convertible Preferred Stock 20 shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein. (h) Whenever the Conversion Price is adjusted pursuant to this paragraph (7), (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, and (ii) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall promptly be sent by first class mail, postage prepaid, by the Corporation to the holders of the Series A Convertible Preferred Stock at their addresses as the same appear on the stock register of the Corporation. (i) Notwithstanding any provision of this paragraph (7), to the extent the Corporation shall have funds legally available for such purpose, the Corporation shall have the option, upon receipt from any holder of notice of election to convert shares of Series A Convertible Preferred Stock pursuant to paragraph (7)(b), to deliver, in lieu of the shares of Common Stock into which such shares of Series A Convertible Preferred Stock would otherwise be convertible, cash in an amount equal to the product of (A) such number of shares of Common Stock into which such shares of Series A Convertible Preferred Stock would otherwise be convertible multiplied by (B) the Current Market Price Per Common Share, together with all accrued and unpaid dividends on such shares of Series A Convertible Preferred Stock; provided that (i) if the Corporation has not received any - -------- required approval under the 1986 Supplement to The Banking Act of 1948 of New Jersey, 17 N.J. Stat. Ann. Sec. 376 et seq., -- --- concerning the change of control of banks, or (ii) if the shareholders of the Corporation have not voted to approve the issuance of the Common Stock required to be delivered upon a conversion of the Series A Convertible Preferred Stock, in each case, the Corporation shall have the obligation to deliver cash pursuant to this paragraph (7)(i) upon any exercise of the conversion privilege. (8) Voting Rights. (a) The holders of record of ------------- shares of Series A Convertible Preferred Stock shall not be entitled to any voting rights except as hereinafter provided in this paragraph (8} or as otherwise provided by law. 21 (b) If and whenever six quarterly dividends (whether or not consecutive) payable on the Series A Convertible Preferred Stock have not been paid in full or if the Corporation shall have failed to discharge its Mandatory Redemption Obligation, the number of directors then constituting the Board of Directors shall be increased by two and the holders of shares of Series A Convertible Preferred Stock, together with the holders of shares of every other series of preferred stock upon which like rights to vote for the election of two additional directors have been conferred and are exercisable (resulting from either the failure to pay dividends or the failure to redeem) (any such other series is referred to as the "Preferred Shares"), voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Series A Convertible Preferred Stock and the Preferred Shares called as hereinafter provided. Whenever all arrears in dividends on the Series A Convertible Preferred Stock and the Preferred Shares then outstanding shall have been paid and dividends thereon shall have been paid regularly for at least one year, or the Corporation shall have fulfilled its Mandatory Redemption Obligation, as the case may be, then the right of the holders of the Series A Convertible Preferred Stock and the Preferred Shares to elect such additional two directors shall cease (but subject always to the same provisions for the vesting of such voting rights in the case of any similar future arrearages in six quarterly dividends or failure to fulfill any Mandatory Redemption Obligation), and the terms of office of all persons elected as directors by the holders of the Series A Convertible Preferred Stock and the Preferred Shares shall forthwith terminate and the number of the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of shares of Series A Convertible Preferred Stock and the Preferred Shares, the secretary of the Corporation may, and upon the written request of any holder of Series A Convertible Preferred Stock (addressed to the secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the Series A Convertible Preferred Stock and of the Preferred Shares for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the secretary within 20 days after 22 receipt of any such request, then any holder of shares of Series A Convertible Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the Series A Convertible Preferred Stock and the Preferred Shares, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the Series A Convertible Preferred Stock and the Preferred Shares or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (c) Without the written consent of a majority of the outstanding shares of Series A Convertible Preferred Stock or the vote of holders of a majority of the outstand- ing shares of Series A Convertible Preferred Stock at a meeting of the holders of Series A Convertible Preferred Stock called for such purpose. the Corporation will not (i) amend, alter or repeal any provision hereof or of the Certificate of Incorporation (by merger or otherwise) so as to affect the preferences, rights or powers of the Series A Convertible Preferred Stock; provided that any such -------- amendment that changes the dividend payable on or the liquidation preference of the Series A Convertible Preferred Stock shall require the affirmative vote at a meeting of holders of Series A Convertible Preferred Stock called for such purpose or written consent of the holder of each share of Series A Convertible Preferred Stock; or (ii) create any class or classes of stock ranking equal or prior to the Series A Convertible Preferred Stock either as to dividends or upon liquidation, dissolution or winding up or increase the number of authorized number of shares of any class or classes of stock ranking equal or prior to the Series A Convertible Preferred Stock either as to dividends or upon liquidation, dissolution or winding up. Notwithstanding the foregoing, no consent of the holders of the Series A 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 Junior Securities or (iii) any increase or decrease in the amount of authorized Common Stock or any increase, decrease or change in the par value thereof or in any other terms thereof. 23 (d) In exercising the voting rights set forth in this paragraph (8), each share of Series A Convertible Preferred Stock shall have one vote per share, except that when any other series of preferred stock shall have the right to vote with the Series A Convertible Preferred Stock as a single class on any matter, then the Series A Convertible Preferred Stock and such other series shall have with respect to such matters one vote per $100 of stated liquidation preference. Except as set forth herein, the shares of Series A Convertible Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action. (9) Stockholders Agreement. The Series A ---------------------- Convertible Preferred Stock shall be subject to the provisions of the Stockholders Agreement among the Corporation, Kidder, Peabody Group Inc. and General Electric Company dated December 16, 1994. (10) General Provisions. (a) The term "Person" as ------------------ used herein means any corporation, limited liability company, partnership, trust, organization, association, other entity or individual. (b) The term "outstanding", when used with reference to shares of stock, shall mean issued shares, excluding shares held by the Corporation (including treasury shares) or a subsidiary. (c) The headings of the paragraphs of this Certificate of Designations are for convenience of reference only and shall not define, limit or affect any of the provisions hereof. IN WITNESS WHEREOF, Paine Webber Group Inc. has caused this Certificate of Designations to be signed and attested by the undersigned this 15th day of December, 1994. PAINE WEBBER GROUP INC. By /s/ Theodore A. Levine -------------------------- Name: Theodore A. Levine Title: Vice President 24 ATTEST: /s/ Dorothy F. Haughey - --------------------------- Name: Dorothy F. Haughey Assistant Secretary EX-3.2 5 ================================================================================ BY-LAWS OF PAINE WEBBER GROUP INC. Incorporated under the laws of the State of Delaware As Amended on March 1, 1988 ================================================================================ TABLE OF CONTENTS PAGE ARTICLE I -OFFICES ....................................... 1 ARTICLE II -MEETINGS OF STOCKHOLDERS ...................... 1 SECTION 1. Purpose of Annual Meetings ..................... 1 SECTION 2. Special Meetings ............................... 2 SECTION 3. Place of Meetings .............................. 2 SECTION 4. Notice of Meetings ............................. 2 SECTION 5. Waiver of Notice ............................... 2 SECTION 6. Organization ................................... 3 SECTION 7 Stockholders Entitled to Vote .................. 3 SECTION 8. Quorum and Adjournment ......................... 4 SECTION 9. Order of Business ............................. 4 SECTION 10. Vote of Stockholders ........................... 4 SECTION 11. Proxies ........................................ 5 SECTION 12. Attendance at Stockholders' Meetings ........... 5 ARTICLE III -BOARD OF DIRECTORS ............................ 6 SECTION 1. Number, Qualification and Election ............. 6 SECTION 2. Number ......................................... 7 SECTION 3. General Powers ................................. 7 SECTION 4. Place of Meetings .............................. 7 SECTION 5. Organization Meeting ........................... 7 SECTION 6. Regular Meetings ............................... 7 SECTION 7. Special Meetings; Notice and Waiver of Notice ........................................ 8 SECTION 8. Organization ................................... 8 SECTION 9. Quorum and Adjournment; Manner of Acting ....... 8 ii PAGE SECTION 10. Voting ........................................ 9 SECTION 11. Acting Without a Meeting ...................... 9 SECTION 12. Resignations................................... 9 SECTION 13. Removal of Directors .......................... 9 SECTION 14. Senior Advisor ............................... 10 ARTICLE IV -COMMITTEES OF THE BOARD ....................... 10 SECTION 1. Appointing Committees of the Board ............. 10 SECTION 2. Place and Time of Meetings; Notice and Waiver of Notice; Records .................... 11 ARTICLE V -THE OFFICERS .................................. 11 SECTION 1. Officers ....................................... 11 SECTION 2. Terms of Office; Vacancies ..................... 12 SECTION 3. Removal of Officers ............................ 12 SECTION 4. Resignations ..... ............................. 12 SECTION 5. Officers Holding More Than One Office .......... 12 SECTION 6. The Chairman of the Board ...................... 12 SECTION 7. The President .................................. 13 SECTION 8. The Vice Presidents ............................ 12 SECTION 9. The Secretary .................................. 13 SECTION 10. The Treasurer .................................. 13 SECTION 11. Additional Powers and Duties ................... 13 ARTICLE VI -STOCK AND TRANSFERS OF STOCK .................. 14 SECTION 1. Stock Certificates ............................. 14 SECTION 2. Registration of Transfers of Stock ............. 14 SECTION 3. Lost Certificates .............................. 15 SECTION 4. Determination of Stockholders of Record for Certain Purposes ............................. 15 iii ARTICLE VII -INDEMNIFICATION ............................... 15 SECTION 1. Right to Indemnification ....................... 15 SECTION 2. Insurance, Contracts and Funding ............... 16 SECTION 3. Indemnification; Not Exclusive Right ........................................ 16 SECTION 4. Advancement of Expenses; Procedures; Presumptions and Effect of Certain Proceedings; Remedies ..................................... 16 SECTION 5. Severability ................................... 20 SECTION 6. Indemnification of Employees and Agents ................................... 21 ARTICLE VIII -MISCELLANEOUS ................................. 21 SECTION 1. Seal ........................................... 21 SECTION 2. Fiscal Year .................................... 21 SECTION 3. References to Article and Section Numbers 21 and to the By-Laws and the Certificate of Incorporation ................................ 21 SECTION 4. Books of the Corporation ...................... 21 ARTICLE IX -AMENDMENTS .................................... 22 BY-LAWS of PAINE WEBBER GROUP INC. ARTICLE I Offices The registered office of Paine Webber Group Inc. (hereinafter referred to as the "Corporation") in the State of Delaware shall be located in the City of Wilmington, County of New Castle. The Corporation's principal place of business shall be in the City, County and State of New York. The Corporation may establish and discontinue, from time to time, such offices and places of business within or without the State of Delaware as may be deemed proper for the conduct of the Corporation's business. ARTICLE IX Meetings of Stockholders Section 1. Purpose of Annual Meeting. An annual meeting of stockholders shall be held on such date and at such time and place as may be designated by the Board of Directors. At each annual meeting, the stockholders shall elect the members of the Board of Directors for the succeeding year. At any such annual meeting any proper business properly brought before the meeting may be transacted. To be properly brought before an annual meeting, business must be (i) specified in the notice if the meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors or (iii) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given written notice thereof, either by personal delivery or by United States mail, postage pre-paid, to the Secretary of the Corporation, not later than 90 days in advance of such meeting. Any such notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting and, in the event that such business includes a proposal to amend either the Certificate of Incorporation or By-laws of the Corporation, the language of the proposed amendment, (ii) the name and address of the -2- stockholder proposing such business, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business, and (iv) any material interest of the stockholder in such business. No business shall be conducted at an annual meeting of stockholders except in accordance with this paragraph, and the chairman of any annual meeting of stockholders may refuse to permit any business to be brought before an annual meeting without compliance with the foregoing procedures. Section 2. Special Meetings. In addition to such special meetings as are provided for by law or by the Certificate of Incorporation, special meetings of the holders of any class or series or of all classes or series of the Corporation's capital stock may be called at any time by the Board of Directors. Special meetings shall be called by means of a notice as provided for in Section 4 of this Article I. Section 3. Place of Meetings. All meetings of the stockholders shall be held at such place within or without the State of Delaware as shall be designated by the Board of Directors. Section 4. Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called. The notice of annual meeting of stockholders shall identify each matter intended to be acted upon at such meeting. If mailed, the notice shall be addressed to the stockholder in a postage-prepaid envelope at his address as it appears on the records of the Corporation unless, prior to the time of mailing, the Secretary shall have received from any such stockholder a written request that notices intended for him be mailed to some other address, in which case notices intended for such stockholder shall be mailed to the address designated in such request. Notice of each meeting of stockholders shall be delivered personally or mailed not less than ten nor more than 60 days before the day of the meeting to each stockholder entitled to vote at such meeting. Section 5, Waiver of Notice. Whenever notice is required to be given, a written waiver thereof signed by the person entitled to notice or by his proxy or attorney duly authorized, whether before or after the time stated thereon, shall be deemed equivalent to notice. Attendance of a person at a meeting of stockholders shall constitute a waiver of notice of such meeting, except as otherwise provided by law. -3- Neither the business to be transacted at nor the purpose of any regular or special meeting of the stockholders need be specified in any written waiver of notice. Section 6. Organization. The Chairman of the Board shall act as chairman at all meetings of stockholders at which he is present, and as such chairman shall call such meetings of stockholders to order and preside thereat. If the Chairman of the Board shall be absent from any meeting of stockholders, the duties otherwise provided in this Section 6 to be performed by him at such meeting shall be performed at such meeting by the President. If neither of such officers is present at such meeting, such duties shall be performed by an officer designated by the Chairman of the Board. If no such designated officer is present at such meeting, any stockholder or the proxy of any stockholder entitled to vote at the meeting may call the meeting to order and a chairman to preside thereat shall be elected by a majority of those present and entitled to vote. The Secretary of the Corporation shall act as secretary at all meetings of the stockholders, but in his absence the chairman of the meeting may appoint any person present to act as secretary of the meeting. Section 7. Stockholders Entitled to Vote. The Board of Directors may fix a date not more than 60 nor less than ten days preceding the date of any meeting of stockholders, or preceding the last day on which the consent of stockholders may be effectively expressed for any purpose without a meeting, as a record date for the determination of the stockholders entitled (a) to notice of, and to vote at, such meeting and any adjournment thereof or (b) to express such consent and in such case such stockholders, and only such stockholders as shall be stockholders of record on the date so fixed, shall be entitled to notice of, and to vote at, such meeting and any adjournment thereof, or to express such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. The Secretary shall prepare and make or cause to be prepared and made, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each such stockholder as it appears on the records of the Corporation and the number of shares registered in the name of each such stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting. If the meeting is to be held in the City of New York, such list will be open to examination at the principal place of business of the Corporation, and, unless the meeting is to be held at such principal place of business, the notice of meeting shall -4- specify that the list is so located. If the meeting is to be held in a city other than New York, the list shall be open to examination either at a place, specified in the notice of meeting, within the city where the meeting is to be held, or, if not so specified, at the place where the meeting is to be held, and a duplicate list shall be similarly open to examination at the principal place of business of the Corporation. Such list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 8. Quorum and Adjournment. Except as otherwise provided by law, the holders of a majority of the shares of capital stock entitled to vote at the meeting shall constitute a quorum at all meetings of the stockholders. Where more than one class or series of capital stock is entitled to vote as such class or series at such a meeting, a majority of the shares of each such class or series of capital stock entitled to vote at such meeting shall constitute a quorum at such meeting. In the absence of a quorum, the holders of a majority of all such shares of capital stock present in person or by proxy may adjourn any meeting, from time to time, until a quorum shall attend. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. No notice of any adjourned meeting need be given if the time and place thereof are announced at the meeting at which the adjournment is taken. If the adjournment is for more than 30 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 9. Order of Business. The order of business at all meetings of stockholders shall be as determined by the chairman of the meeting. Section 10. Vote of Stockholders. Except as otherwise permitted by law, by the Certificate of Incorporation or by Section 12 of this Article II, all action by stockholders shall be taken at a stockholders' meeting. Except as otherwise provided by law or by the Certificate of Incorporation, every stockholder of record, as determined pursuant to Section 7 of this Article II, who is entitled to vote, shall at every meeting of the stockholders be entitled to one vote for each share of stock entitled to vote held by such stockholder on the record date. Every stockholder entitled to vote shall have the right to vote in person or by proxy. Except as otherwise provided by law, no vote on any question upon which a vote of the stockholders may be taken need be by ballot unless the chairman of the meeting shall determine that it shall be by -5- ballot or the holders of a majority of the shares of capital stock present in person or by proxy and entitled to participate in such vote shall so demand. In a vote by ballot each ballot shall state the number of shares voted and the name of the stockholder or proxy voting. Unless otherwise provided by law by the Certificate of Incorporation or by Section 13 of Article III hereof, each director shall be elected and all other questions shall be decided by the vote of the holders of a majority of the shares of capital stock present in person or proxy at the meeting and entitled to vote on the question; provided, however, that the Board of Directors may require on any question a vote of a majority of the shares of capital stock outstanding and entitled to vote thereon. Section 11. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy. A proxy acting for any stockholder shall be duly appointed by an instrument in writing subscribed by such stockholder. Section 12. Attendance at Stockholders' Meetings. Any stockholder of the Corporation not entitled to notice of the meeting or to vote at such meeting shall nevertheless be entitled to attend any meeting of stockholders of the Corporation. ARTICLE III Board of Directors Section 1. Number, Qualification and Election. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation, the number of directors which shall constitute the whole Board shall be 11, but by vote of a majority of the entire Board of Directors, the number thereof may be increased without limit, or decreased to not less than three, by amendment of this Section 1. The directors, other than those who may be elected by the holders of shares of any class or series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation pursuant to Article IV of the Certificate of Incorporation, shall be classified with respect to the time for which they severally hold office, into three classes as follows: one class of three directors shall be originally elected for a term expiring at the annual meeting of stockholders to be held in 1988, another class of four directors shall be originally elected for a term expiring at the annual meeting of stockholders to be held in 1989, and another class of four directors shall be originally elected for -6- a term expiring at the annual meeting of stockholders to be held in 1990, with each class to hold office until its successors are elected and qualified. At each annual meeting of the stockholders of the Corporation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation, at each annual meeting of the stockholders there shall be elected the directors of the class the term of office of which shall then expire. In any election of directors, the persons receiving a plurality of the votes cast, up to the number of directors to be elected in such election, shall be deemed elected. Nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Any Stockholder entitled to vote for the election of directors at a meeting may nominate a person or persons for election as directors only if written notice of such stockholder's intent to make such nomination is given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders, 90 days in advance of such meeting, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given stockholders. Each such notice shall set forth: (a) the name and address of the stockholder who intends to make the nomination and the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by the stockholder as would have been required to be included in a proxy statement filing pursuant to the proxy rules of the Securities and Exchange Commission had each nominee been nominated, or intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a Director of the Corporation if so elected. The -7- chairman of any meeting of stockholders to elect directors and the Board of Directors may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Section 2. Number. The number of directors may be fixed from time to time by resolution of the Board of Directors but shall not be less than three. Section 3. General Powers. The business, properties and affairs of the Corporation shall be managed by the Board of Directors which, without limiting the generality of the foregoing, shall have power to appoint the officers and agents of the Corporation, to fix and alter the salaries of officers, employees and agents of the Corporation, to grant general or limited authority (including authority to delegate and sub-delegate) to officers, employees and agents of the Corporation to make, execute, affix the corporate seal to, and deliver contracts and other instruments and documents, including bills, notes, checks or other instruments for the payment of money, in the name and on behalf of the Corporation without specific authority in each case, and to appoint committees, in addition to those provided for in Article IV hereof, with such powers and duties as the Board of Directors may duly determine. The membership of such committees shall consist of such persons as are designated by the Board of Directors whether or not any of such persons is then a director of the Corporation. In addition, the Board of Directors may exercise all the powers of the Corporation and do all lawful acts and things which are not reserved to the stockholders by law, by the Certificate of Incorporation or by the By-Laws. Section 4. Place of Meetings. Meetings of the Board of Directors may be held at the principal place of business of the Corporation in the City of New York or at any other place, within or without the State of Delaware, from time to time designated by the Board of Directors. Section 5. Organization Meeting. A newly elected Board of Directors shall meet and organize without notice and as soon as practicable after each annual meeting of stockholders, at the place at which such meeting of stockholders took place. If a quorum is not present, such organization meeting may be held at any other time or place which may be specified in a notice given in the manner provided in Section 7 of this Article III for special meeting of the Board of Directors, or in a waiver of notice thereof. Section 6. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times as may be determined by resolution of the Board of Directors and no -8- notice shall be required for any regular meeting. Except as otherwise provided by law, any business may be transacted at any regular meeting of the Board of Directors. Section 7. Special Meetings; Notice and Waiver of Notice. Special meetings of the Board of Directors shall be called by the Secretary or an Assistant Secretary on the request of the Chairman of the Board or the President, or on the request in writing of one-third of the whole Board of Directors stating the purpose or purposes of such meeting. Notices of special meetings shall be mailed to each director, addressed to him at his residence or usual place of business, not later than three days before the day on which the meeting is to be held, or shall be sent to him at either of such places by telegraph, or be communicated to him personally or by telephone, not later than the day before such day of meeting. Notice of any meeting of the Board of Directors need not be given to any director if he shall sign a written waiver thereof either before or after the time stated therein for such meeting. Attendance if a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose if objecting, at the beginning if the meeting, to the transaction of any business because the meeting is not lawfully called or covened. Unless limited by law, the Certificate of Incorporation, the By-Laws, or by the terms of the notice thereof, any and all business may be transacted at any special meeting without the notice thereof having so specifically enumerated the matters to be acted upon. Only such business as is specified in the notice of any special meeting of the stockholders shall come before such meeting. Section 8. Organization. The Chairman of the Board shall preside at all meetings of the Board of Directors at which he is present. If the Chairman of the Board snail be absent from any meeting of the Board of Directors, the duties otherwise provided in this Section 8 to be performed by him at such meeting shall be performed at such meeting by the President. If neither of such officers is present at such meeting, such duties shall be performed by a director designated by the Chairman of the Board. If no such designated officer or director is present at such meeting, one of the directors present shall be chosen by the members of the Board of Directors present to preside at such meeting. The Secretary of the Corporation shall act as the secretary at all meetings of the Board of Directors and in his absence a temporary secretary shall be appointed by the chairman of the meeting. Section 9. Quorum and Adjournment; Manner of Acting. Except as otherwise provided by Section 14 of this Article III, at every meeting of the Board of Directors a majority of the -9- total number of directors shall constitute a quorum but in no event shall a quorum be constituted by less than two directors. Except as otherwise provided by law, or by Section 14 of this Article III, by Section 1 of Article IV, or by Section 3 of Article V, or by Article VIII, the vote of a majority of the directors present at any such meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, any meeting may be adjourned, from time to time, until a quorum is present. No notice of any adjourned meeting need be given other than by announcement at the meeting that is being adjourned. Members of the Board of Directors may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting, Section 10. Voting. On any question on which the Board of Directors shall vote, the names of those voting and their votes shall be entered in the minutes of the meeting when any member of the Board of Directors present at the meeting so requests. Section 11. Acting Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if (a) all members of the Board of Directors consent thereto in writing and such written consents are filed with the minutes of proceedings of the Board of Directors, or (b) a quorum of members of the Board of Directors participate in such action by means of conference telephone or similar communications equipment by means of which all such members participating in such action can hear each other. Section 12. Resignations. Any director may resign at any time either by oral tender of resignation at any meeting of the Board of Directors or by oral tender to the Chairman of the Board or the President or by written notice thereof to the Corporation. Any resignation shall be effective immediately unless some other time is specified for it to take effect. Acceptance of any resignation shall not be necessary to make it effective unless such resignation is tendered subject to such acceptance. Section 13. Removal of Directors. Directors may only be removed as provided in Section 3(c) of Article VI of the Certificate of Incorporation of the Corporation. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation, any vacancies on the Board of Directors resulting from death, - 10 - resignation, removal or other cause shall only be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director, and newly created directorships resulting from any increase in the number of directors shall be filled by the Board, or if not so filled, by the stockholders at the next annual meeting thereof or at a special meeting called for that purpose in accordance with Section 2 of Article II of these By-Laws. Any director elected in accordance with the preceding sentence of this paragraph shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified. Section 14. Senior Advisor. The Corporation may appoint a Senior Advisor to the Board of Directors of the Corporation. The Senior Advisor shall be entitled, but not required, to attend all meetings of the Board of Directors of the Corporation. The Senior Advisor will not have voting rights on any matters on which the Board of Directors of the Corporation shall vote. ARTICLE IV Committees of the Board Section 1. Appointing Committees of the Board. The Board of Directors may from time to time, by resolution adopted by affirmative vote of a majority of the whole Board of Directors, appoint committees of the Board of Directors which shall have such powers of the Board of Directors and such duties as the Board of Directors may properly determine. The Board of Directors may designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of such - 11 - committee. In the absence or disqualification of any member of such committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Except as may be otherwise provided by the resolution designating any such committee, at all meetings of any such committee the presence of members (or alternative members, if any) consisting of a majority of the total authorized membership of such committee, but in no event less than two, shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of the majority of the members (or such alternates) present at any meeting at which a quorum is present, but in no event less than two, shall be the act of such committee. Section 2. Place and Time of Meetings; Notice and Waiver of Notice; Records. Meetings of such committees of the Board of Directors may be held at any place, within or without the State of Delaware, from time to time designated by the Board of Directors or the committee in question. Regular meetings of any such committee shall be held at such times as may be determined by resolution of the Board of Directors or the committee in question, and no notice shall be required for any regular meeting. A special meeting of any such committee shall be called by resolution of the Board of Directors, or by the Secretary or an Assistant Secretary upon the request of any member of the committee. The provisions of Section 7 of Article III with respect to notice and waiver of notice of special meetings of the Board of Directors shall also apply to all special meetings, and the provisions of Section 11 of Article III with respect to action taken without a meeting and with respect to participation in meetings of the Board of Directors by means of telephone or similar communications equipment shall apply to all meetings, of committees of the Board of Directors. Any such committee may make rules for holding and conducting its meetings and shall keep minutes of all meetings. ARTICLE V The Officers Section 1. Officers. The officers of the Corporation shall be a Chairman of the Board, a President, a Secretary, a Treasurer and, in the discretion of the Board of Directors, one or more Vice Presidents. The officers shall be appointed by the Board of Directors. The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers and other officers and agents as in their judgment may be - 12 - necessary or desirable. The Board of Directors may appoint persons as officers of divisions of the Corporation who shall not for any purpose be considered officers of the Corporation. The Chairman of the Board and the President shall be selected from the directors. Section 2. Terms of Office; Vacancies. So far as is practicable, all officers shall be appointed at the organization meeting of the Board of Directors in each year, and, except as otherwise provided in Sections 3 and 4 of this Article V, Shall hold office until the organization meeting of the Board of Directors in the next subsequent year and until their respective successors are elected and qualify, or until they sooner die, retire, resign or are removed. If any vacancy shall occur in any office, the Board of Directors may appoint a successor to fill such vacancy for the remainder of the term. Section 3. Removal of Officers. Any officer may be removed at any time, either for or without cause, by affirmative vote of a majority of the whole Board of Directors, at any regular meeting or at any special meeting called for that purpose. Section 4. Resignations. Any officer may resign at any time, either by oral tender of resignation to the Chairman of the Board or the President or by giving written notice thereof to the Corporation. Any resignation shall be effective immediately unless some other time is specified for it to take effect and acceptance of any resignation shall not be necessa to make it effective unless such resignation is tendered subject to such acceptance. Section 5. Officers Molding More Than One Office. Any officer may hold two or more offices, the duties of which can be consistently performed by the same person. Section 6. The Chairman Of The Board. The Chairman of the Board shall be a member of the Board of Directors. He shall be the Chief Executive Officer of the Corporation and, subject to the control of the Board of Directors, shall have general and active charge of all the policies and affairs of the Corporation. As provided in Section 6 of Article II, and Section 8 of Article III, he shall preside at the various meetings at which he is present. The Chairman of the Board shall also perform such other duties and have such other powers as are described in Section 7 of this Article V and as may from time to time be assigned to him by the Board of Directors. In the absence or disability of the Chairman of the Board his duties shall be performed and his powers may be exercised by the President. In the absence or disability of both aforementioned officers, the powers of the Chairman of the - 13 - Board may be exercised by such member of the Board of Directors as may be designated by the Board of Directors. Section 7. The President. The President shall be a member of the Board of Directors. As provided in Section 6 of Article II, and Section 8 of Article III, the President shall preside at the various meetings under the circumstances described in such Sections. If such officer is not available the duties of the President shall be performed and his powers may be exercised by such member of the Board of Directors as may be designated by the Chairman of the Board, and failing such designation or in the absence of the person so designated, by such member of the Board of Directors as may be designated by the Board of Directors. The President shall also perform such other duties and have such other powers as may from time to time be assigned to him by the Board of Directors. Section 8. The Vice Presidents. The Vice Presidents shall perform such duties and have such powers as may, from time to time, be assigned to them by the Board of Directors, the Chairman of the Board or the President. Section 9. The Secretary. The Secretary shall attend to the giving of notice of all meetings of stockholders and of the Board of Directors and committees thereof, and, as provided in Section 6 of Article II, and Section 8 of Article III, shall act as secretary at all meetings of stockholders and directors, and keep minutes of all proceedings at such meetings, as well as of all proceedings at all meetings of such committees of the Board of Directors as shall designate him to so serve. The Secretary shall have charge of the corporate seal and he or any Assistant Secretary shall have authority to attest any and all instruments or writings to which the same may be affixed. He shall keep and account for all books, documents, papers and records of the Corporation, except those for which some other officer or agent is properly accountable. He shall generally perform all the duties usually appertaining to the office of secretary of a corporation. In the absence of the Secretary such person as shall be designated by the chairman of any meeting shall perform his duties. Section 10. The Treasurer. The Treasurer shall have the care and custody of all the funds of the Corporation and shall deposit the same in such banks or other depositories as the Board of Directors, or any officer or officers thereunto duly authorized by the Board of Directors, shall, from time to time, direct or approve. He shall generally perform all the duties usually appertaining to the affairs of the treasurer of a corporation. When required by the Board of Directors, he shall give bonds for the faithful discharge of his duties in such sums and with such sureties as the Board of Directors - 14 - shall approve. In the absence of the Treasurer, such person as shall be designated by the Chairman of the Board shall perform his duties. Section 11. Additional Powers and Duties. In addition to the foregoing especially enumerated duties and powers, the several officers of the Corporation shall perform such other duties and exercise such further powers as the Board of Directors may, from time to time, determine, or as may be assigned to them by any superior officer. ARTICLE VI Stock and Transfers of Stock Section 1. Stock Certificates. The capital stock of the Corporation shall be represented by certificates signed by two officers of the Corporation, one being the Chairman of the Board, the President or a Vice President and the other being the Secretary or an Assistant Secretary, and sealed with a seal of the Corporation. Stock certificates may, in the discretion of the Board of Directors, also be countersigned by a Transfer Agent or Agents, and registered by a Registrar of transfers, to be appointed by the Board. Any of or all signatures on a stock certificate, may, if the Board of Directors so determines, be a facsimile. The seal may be a facsimile, engraved or printed. In case any such officer who has signed any such certificate shall have ceased to be such officer before such certificate is issued, it may nevertheless be issued by the Corporation with the same effect as if he were such officer at the date of issue. The certificates representing the voting capital stock of the Corporation shall be in such form as shall be approved by the Board of Directors and shall bear the following legend: "The Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof of the Corporation and the qualifications, limitations or restrictions of such preference and/or rights. Such request may be made to the Corporation or to the Transfer Agent or Registrar." Section 2. Registration of Transfers of Stock. Registration of a transfer of stock shall be made on the books of the Corporation only upon presentation by the person named in the certificate evidencing such stock, or by an attorney lawfully constituted in writing, and upon surrender and cancellation of such certificate, with duly executed assignment and power of transfer endorsed thereon or attached thereto, and - 15 - with such proof of the authenticity of the signature thereon as the Corporation or its agents may reasonably require. Section 3. Lost Certificates. In case any certificate of stock shall be lost, stolen or destroyed, the Board of Directors, in its discretion, or any officer or officers thereunto duly authorized by the Board of Directors, may authorize the issuance of a substitute certificate in the place of the certificate so lost, stolen or destroyed; provided, however, that, in each such case, the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation evidence which the Corporation determines in its discretion is satisfactory of the loss, theft or destruction of such certificate and of the ownership thereof, and may also require a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. Section 4. Determination of Stockholders of Record for Certain Purposes. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 or less than ten days prior to any such action. ARTICLE VII Indemnification Section 1. Right to Indemnification. The Corporation shall to the fullest extent permitted by applicable law as then in effect, indemnify any person (the "Indemnitee") who is or was a director or officer of the Corporation or is or was involved in any manner (including, without limitation, as a party or a witness) or is threatened tO be made so involved in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, any action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor) (a "Proceeding") by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan) against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and - 16 - reasonably incurred by such person in connection with such Proceeding. Such indemnification shall be a contract right and shall include the right to receive payment in advance of any expenses incurred by the Indemnitee in connection with such Proceeding, consistent with the provisions of applicable law as then in effect. Section 2. Insurance, Contracts and Funding. The Corporation may purchase and maintain insurance to protect itself and any person entitled to indemnity under this Article VII against any expenses, judgments, fines and amounts paid in settlement as specified in the first section of this Article or incurred by any such person in connection with any Proceeding referred to in this Article VII, to the fullest extent permitted by applicable law as then in effect. The Corporation may enter into contracts with any person entitled to indemnity under this Article VII in furtherance of the provisions of this Article VII and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification as provided in this Article. Section 3. Indemnification; Not Exclusive Right. The right of indemnification provided in this Article VII shall not be exclusive of any other rights to which those seeking indemnification may otherwise be entitled, and the provisions of this Article VII shall inure to the benefit of the heirs and legal representatives of any person entitled to indemnity under this Article VII and shall be applicable to Proceedings commenced or continuing after the adoption of this Article VII, whether arising from acts or omissions occurring before or after such adoption. Section 4. Advancement of Expenses; Procedures; Presumptions and Effect of Certain Proceedings; Remedies. In furtherance, but not in limitation of the foregoing provisions, the following procedures, presumptions and remedies shall apply with respect to advancement of expenses and the right to indemnification under this Article VII: (a) Advancement of Expenses. All reasonable expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding shall be advanced to the Indemnitee by the Corporation within 20 days after the receipt by the Corporation of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the expenses incurred by the Indemnitee and, if required by law at the time of such advance, shall include or be accompanied by an undertaking by - 17 - or on behalf of the Indemnitee to repay the amounts advanced if it should ultimately be determined that the Indemnitee is not entitled to be indemnified against such expenses pursuant to this Article VII. (b) Procedure for Determination of Entitlement to Indemnification. (i) to obtain indemnification under this Article VII, an Indemnitee shall submit to the Secretary of the Corporation a written request, including such documentation and information as is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification (the "Supporting Documentation"). The determination of the Indemnitee's entitlement to indemnification shall be made not later than 60 days after receipt by the Corporation of the written request for indemnification together with the Supporting Documentation. The Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the Indemnitee has requested indemnification. (ii) The Indemnitee's entitlement to indemnification under this Article VII shall be determined in one of the following ways: (A) by a majority vote of the Disinterested Directors (as hereinafter defined), if they constitute a quorum of the Board of directors; (B) by a written opinion of Independent Counsel (as hereinafter defined) if (x) a Change of Control (as hereinafter defined) shall have occurred and the Indemnitee so requests or (y) a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, a majority of such Disinterested Directors so directs; (C) by the stockholders of the Corporation (but only if a majority of the Disinterested Directors, if they constitute a quorum of the Board of Directors, presents the issue of entitlement to indemnification to the stockholders for their determination); or (D) as provided in Section 4(c). (iii) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 4(b)(ii), a majority of the Disinterested Directors shall select the Independent Counsel, but only an Independent Counsel to which the Indemnitee does not reasonably object; provided, however, that if a Change of Control shall have occurred, the Indemnitee shall select such Independent Counsel, but only an Independent Counsel to which the Board of Directors does not reasonable object. If no Independent Counsel is so selected to act as provided in Section 4(b)(ii), the Indemnitee shall be entitled to seek adjudication to indemnification in an appropriate court of the State of Delaware or any other court of competent jurisdiction. - 18 - (c) Presumptions and Effect of Certain Proceedings. Except as otherwise expressly provided in this Article VII, if a Change of Control shall have occurred, the Indemnitee shall be presumed to be entitled to indemnification under this Article VII upon submission of a request for indemnification together with the Supporting Documentation in accordance with Section 4(b)(i), and thereafter the Corporation shall have the burden of proof to overcome that presumption in reaching a contrary determination. In any event, if the person or persons empowered under Section 4(b) to determine entitlement to indemnification shall not have been appointed or shall not have made a determination within 60 days after receipt by the Corporation of the request therefor together with the Supporting Documentation, the Indemnitee shall be deemed to be entitled to indemnification and the Indemnitee shall be entitled to such indemnification unless (A) the Indemnitee misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (B) such indemnification is prohibited by law. The termination of any Proceeding described in Section 1, or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or ---- ---------- its equivalent, shall not, of itself, adversely affect the right the Indemnitee to indemnification or create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful. (d) Remedies of Indemnitee. (i) In the event that a determination is made pursuant to Section 4(b) that the Indemnitee is not entitled to indemnification under this Article VII, (A) the Indemnitee shall be entitled to seek an adjudication of his entitlement to such indemnification either, at the Indemnitee's sole option, in an appropriate court of the State of Delaware or any other court of competent jurisdiction; (B) any such judicial proceeding shall de novo and the -- ---- Indemnitee shall not be prejudiced by reason of such adverse determination; and (C) if a Change of Control shall have occurred, in any such judicial proceeding the Corporation shall have the burden of proving that the Indemnitee is not entitled to indemnification under this Article VII. (ii) If a determination shall have been made or deemed to have been made, pursuant to Section 4(b) or (c), that the Indemnitee is entitled to indemnification, the Corporation shall be obligated to pay the amounts constituting such indemnification within five days after such determination has been made or deemed to have been made and shall be conclusively - 19 - bound by such determination unless (A) the Indemnitee misrepresented or failed to disclose a material fact in making the request for indemnification or in the Supporting Documentation or (B) such indemnification is prohibited by law. In the event that (x) advancement of expenses is not timely made pursuant to Section 4(a) or (y) payment of indemnification is not made within five days after a determination of entitlement to indemnification has been made or deemed to have been made pursuant to section 4(b) or (c), the Indemnitee shall be entitled to seek judicial enforcement of the Corporation's obligation to pay to the Indemnitee such advancement of expenses or indemnification. Notwithstanding the foregoing, the Corporation may bring an action, in an appropriate court in the State of Delaware or any other court of competent jurisdiction, contesting the right of the Indemnitee to receive indemnification hereunder due to the occurrence of an event described in subclause (A) or (B) of this clause (ii) (a "Disqualifying Event"); provided, however, that in any such action the Corporation shall have the burden of proving the occurrence of such Disqualifying Event. (iii) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 4(d) that the procedures and presumptions of this Article VII are not valid, binding and enforceable and shall stipulate in any such court that the Corporation is bound by all the provisions of this Article VII. (iv) In the event that the Indemnitee, pursuant to this Section 4(d), seeks a judicial adjudication to enforce his rights under, or to recover damages for breach of, this Article VII, the Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any expenses actually and reasonably incurred by the Indemnitee if the Indemnitee prevails in such judicial adjudication. If it shall be determined in such judicial adjudication that the Indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by the Indemnitee in connection with such judicial adjudication shall be prorated accordingly. (e) Definitions. For purposes of this Section 4: (i) "Change in Control" means a change in control of the Corporation of a nature that would be required to be reported in response to Item 6(e) (or any successor provision) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange ACt of 1934 (the "Act"), whether or not the Corporation is then subject to such reporting requirement; provided that, without limitation, such a change in control shall be deemed to have occurred if (A) any "person" [(as such term is defined in Sections 4 of Article XIII of the - 20 - Certificate of Incorporation)]* is or becomes an "Interested Stockholder" [as defined therein)]*; (B) the Corporation is a party to any merger or consolidation in which the Corporation is not the continuing or surviving corporation or pursuant to which shares of the Corporation's Common Stock would be converted into cash, securities or other property, other than a merger of the Corporation in which the holders of the Corporation's Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger; (C) there is a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Corporation, or a liquidation or dissolution of the Corporation; or (D) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Corporation's stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors. (ii) "Disinterested Director" means a director of the Corporation who is not or was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee. (iii) "Independent Counsel" means a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent: (i) the Corporation or the Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification under this Article VII. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing under the,law of the State of Delaware, would have conflict of interest in representing either the Corporation or the Indemnitee in an action to determine the Indemnitee's rights under this Article VII. Section 5. Severability. If any provision or provisions of this Article VII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article VII containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VII (including, without limitation, all portions of any section of this Article VII containing any such provision held to be invalid, illegal - 21 - or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. Section 6. Indemnification of Employees and Agents. Notwithstanding any other provision or provisions of this Article VII, the Corporation may indemnify (including, without limitation, by direct payment) any person (other than a director or officer of the Corporation) who is or was involved in any manner (including, without limitation, as a party or witness) or is threatened to be made so involved in any Proceeding by reason of the fact that such person is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, Joint venture, trust or other enterprise (including, without limitation, any employee benefit plan), against any or all expenses (including attorneys' fees), judgments, fines amounts paid in settlement incurred in connection with such Proceeding. ARTICLE VIII Miscellaneous Section 1. Seal. The Seal of the Corporation shall have inscribed thereon the name of the Corporation, the year of its organization and the state of its incorporation. Section 2. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors. Section 3. References to Article and Section Numbers and to the By-Laws and the Certificate of Incorporation. Whenever in the By-Laws reference is made to an Article or Section number, such reference is to the number of an Article or Section of the By-Laws. Whenever in the By-Laws reference is made to the By-Laws, such reference is to these By-Laws of the Corporation, as the same may from time to time be amended, and whenever reference is made to the Certificate of Incorporation, such reference is to the Certificate of Incorporation of the Corporation, as the same may from time to time be amended. Section 4. Books of the Corporation. Except as otherwise provided by law, the books of the Corporation shall be kept at the principal place of business of the Corporation and at such other locations as the Board of Directors may from time to time determine. - 22 - ARTICLE Amendments The By-Laws may be altered, amended or repealed, from time to time, in accordance with the provisions of Article XII of the Certificate of Incorporation. ---------- 6751L EX-4.1(A) 6 Exhibit 4.1(a) NOTE NUMBER AGENT'S NAME PAINE WEBBER GROUP INC. _____________________________________________________ PRINCIPAL AMOUNT SETTLEMENT DATE TRADE DATE U.S.$ (ORIGINAL ISSUE DATE) ________________________________________________________________________________ MATURITY DATE TRUSTEE'S CUST. NO. INTEREST RATE TAXPAYER ID OR TRANSFERRED SOC. SEC. NO. OF PURCHASER ________________________________________________________________________________ NAME AND ADDRESS OF REGISTERED OWNER MEDIUM-TERM NOTE PROGRAM CHEMICAL BANK TRUSTEE ________________________________________________________________________________ CUSTMER'S RETAIN FOR THE TIME OF THE PLEASE SIGN AND SEE COPY TAX PURPOSES TRANSACTION WILL RETURN ENCLOSED REVERSE SIDE BE FURNISHED UPON RECEIPT REQUEST OF THE CUSTOMER ________________________________________________________________________________ - -------------------------------------------------------------------------------- REGISTERED REGISTERED PAINE WEBBER GROUP INC. MEDIUM-TERM SENIOR NOTE, SERIES C Due from Nine Months to 30 Years from Date of Issue (Fixed Rate) No. U.S.$ CUSIP NO. IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE COMPLETED SOLELY FOR PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. ORIGINAL ISSUE DATE: INTEREST RATE: MATURITY DATE: ISSUE PRICE: ORIGINAL ISSUE BUSINESS DAY DISCOUNT SECURITY: CENTERS: [ ] YES [ ] NO REGULAR RECORD DATES: OPTIONAL PAYMENT OF REDEMPTION: ADDITIONAL AMOUNTS: [ ] YES [ ] NO [ ] YES [ ] NO 2 INTEREST PAYMENT REDEMPTION DATES: OPTION TO ELECT DATES: REPAYMENT: [ ] YES [ ] NO TOTAL AMOUNT OF OID: REDEMPTION PRICES: REPAYMENT DATES: YIELD TO MATURITY: GLOBAL SECURITY: REPAYMENT PRICES: [ ] YES [ ] NO INITIAL ACCRUAL PERIOD DEPOSITARY: OID: OTHER TERMS: PAINE WEBBER GROUP INC., a Delaware corporation (herein called the "Company", which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to , or registered assigns, the principal sum of U.S. DOLLARS, on the Maturity Date specified above, and to pay interest thereon from and including the Original Issue Date shown above or from and including the last date in respect of which interest has been paid or provided for, as the case may be. Interest will be paid on the Interest Payment Dates shown above, commencing with the first such Interest Payment Date following the Original Issue Date shown above, at the Interest Rate per annum specified above until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date specified above (whether or not a Business Day) next preceding such Interest Payment Date, except that in the case of a Security with an Original Issue Date that is after a Regular Record Date and before the next following Interest Payment Date, interest payable on such Interest Payment Date will be paid to the Person in whose name such Security was initially registered on the Original Issue Date; provided, however, that interest -------- ------- payable at Maturity shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in 3 the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof to be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. If this Security is not a Global Security, payments of interest on this Security (other than interest payable at Maturity) will be made by mailing a check to the person entitled thereto at its address appearing in the Security Register for the Securities on the applicable Regular Record Date. Notwithstanding the foregoing, at the option of the Company such payments may be made by wire transfer of immediately available funds to an account with a bank located in the continental United States (or other jurisdiction acceptable to the Company and the Trustee), but only if appropriate payment instructions have been received in writing by the Trustee not less than 5 Business Days prior to the applicable Interest Payment Date. Payments of principal of, premium, if any, and interest will be made in immediately available funds, if at maturity or upon earlier redemption, then on the Maturity Date or the date fixed for redemption, as applicable, upon surrender of this Security at the principal corporate trust office of the Trustee in the Borough of Manhattan, The City of New York, or such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York (the "Notes Office"), provided that this Security is presented to such office in time for the Trustee to make such payments in such funds in accordance with its normal procedures, and if upon early repayment, then on the applicable Repayment Date, provided that the Holder shall have complied with the requirements for repayment set forth on the reverse hereof. If this Security is a Global Security, the Depositary will be paid as agreed by the Company, the Trustee and the Depositary and beneficial owners hereof will be paid in accordance with the Depositary's and its participants' procedures in effect from time to time. "Maturity" shall mean the date on which the principal of this Security or an installment of principal 4 becomes due, whether on the Maturity Date specified above, upon redemption or early repayment or otherwise. If the registered owner of this Security (as indicated above) is the Depositary or a nominee of the Depositary, this Security is a Global Security and the following legend is applicable: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. If the registered owner of this Security is The Depository Trust Company or a nominee of The Depository Trust Company, then unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized officer, this Security 5 shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: PAINE WEBBER GROUP INC. By_________________________ Title: [Seal] Attest: ________________________ Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the Series designated therein referred to in the within-mentioned Indenture. Dated: CHEMICAL BANK As Trustee By_____________________________ Authorized Officer 6 PAINE WEBBER GROUP, INC. MEDIUM-TERM SENIOR NOTE, SERIES C Due from Nine Months to 30 Years from Date of Issue (Fixed Rate) This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of March 15, 1988, as amended by a First Supplemental Indenture dated as of September 22, 1989, and by a Second Supplemental Indenture dated as of March 22, 1991 (such Indenture, as so supplemented, is herein called the "Indenture"), between the Company and Chemical Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof. If so specified on the face hereof, the Company will, subject to the limitations and exceptions set forth below, pay to a Holder of this Security who is a United States Alien (as defined below) such additional amounts ("Additional Amounts") as may be necessary in order that every net payment of the principal of, premium, if any, and interest on this Security, after deduction or withholding by the Company, the Trustee or any of the Company's paying agents for or on account of any present or future tax, assessment or other governmental charge imposed upon such Holder with respect to or as a result of such payment by the United States or any political subdivision or taxing authority thereof or therein, will not be less than the amount provided herein to be then due and payable. However, the Company shall not be required to make any such payment of Additional Amounts for or on account of: (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor or 7 beneficiary of, or a person holding a power over, such Holder, if such Holder is an estate or a trust, or between a member or shareholder of such Holder, if such Holder is a partnership or corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, person holding a power, member or shareholder) being or having been a citizen or resident or treated as a resident thereof or being or having been engaged in a trade or business therein or being or having been present therein or having or having had a permanent establishment therein, or (ii) such Holder's present or former status as a domestic or foreign personal holding company, a passive foreign investment company or a controlled foreign corporation, a private foundation or other tax-exempt organization for United States Federal income tax purposes or a corporation that accumulates earnings to avoid United States Federal income tax; (b) any tax, assessment or other governmental charge that would not have been so imposed but for the presentation by the Holder of this Security for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof was duly provided for, whichever occurs later; (c) any estate, inheritance, gift, sales, transfer, excise or personal property tax or any similar tax, assessment or other governmental charge; (d) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Security, if such compliance is required by statute or by regulation of the United States or any taxing authority thereof as a precondition to relief or exemption from such tax, assessment or other governmental charge; (e) any tax, assessment or other governmental charge that is (i) payable otherwise than by deduction or withholding from payments of principal of or premium, if any, or interest on this Security or (ii) required to be deducted or withheld by any paying agent 8 from any such payment, if (and only if) such payment can be made without such deduction or withholding by any other paying agent; (f) any tax, assessment or other governmental charge imposed on interest received by a person holding, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of the Company entitled to vote (taking into account the applicable attribution of ownership rules under Section 871(h)(3) of the Internal Revenue Code of 1986, as amended (the "Code")) or that is a controlled foreign corporation related to the Company (directly or indirectly) through stock ownership; or (g) any combination of items (a), (b), (c), (d), (e) and (f); nor will Additional Amounts be paid with respect to payment of the principal of or premium, if any, or interest on this Security to any United States Alien that is a fiduciary or partnership or to a person other than the sole beneficial owner of this Security to the extent that a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of this Security. The Company, at its option, may redeem this Security as a whole, but not in part, at any time that this Security is Registered in the name of a United States Alien, on giving not less than 30 nor more than 45 days' notice to the registered Holder hereof by mail in accordance with the provisions of the Indenture (which notice shall be irrevocable), at a redemption price equal to the principal amount hereof (or, in the case of an Original Issue Discount Security, the amount specified on the face hereof), together with accrued interest to the redemption date, if the Company determines that the Company has or will become obligated to pay Additional Amounts on this Security on the next succeeding Interest Payment Date as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in the application or official interpretation of such laws, regulations or rulings by a taxing authority, court or regulatory agency, whether 9 or not rendered or taken with respect to the Company, or any action taken by any taxing authority, court or regulatory agency (including any change in administrative policy or enforcement practice of such taxing authority), whether or not taken with respect to the Company, which change or amendment becomes effective, or action is taken, on or after the Original Issue Date, and such obligation cannot be avoided by the Company taking reasonable measures available to it. Prior to giving any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee an Officers' Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred, and an opinion of independent legal counsel addressed to the Company and the Trustee to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of such change or amendment. Notice of the intention of the Company to redeem this Security shall not be given earlier than 90 days prior to the earliest date that the obligation to pay Additional Amounts would arise were a payment in respect of this Security due on such date. From and after any redemption date, if monies for the redemption of this Security pursuant to this paragraph shall have been made available for redemption on such redemption date, this Security shall cease to bear interest and the only right of the Holder of this Security shall be to receive payment of the redemption price of this Security and all unpaid interest accrued to such redemption date. For purposes of this paragraph, the Trustee may rely on an Officers' Certificate as to whether the registered Holder hereof is a United States Alien. The term "United States Alien" means any person who, for United States Federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership, one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust. If so specified on the face hereof, the Company may at its option redeem this Security in whole or from time to time in part on the date or dates designated as Redemption Dates on the face hereof at the Redemption Price or Redemption Prices designated on the face hereof, together with accrued interest to the date of redemption. The 10 Company may exercise such option by mailing or causing the Trustee to mail a notice of such redemption at least 30 but not more than 45 days prior to the date of redemption. In the event of redemption of this Security in part only, a new Security or Securities of like tenor and with the same terms and conditions for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If less than all of the Securities having the same terms (except as to principal amount and date of issuance) as this Security are to be redeemed, the Securities to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate and otherwise as provided under the Indenture. If so specified on the face hereof, this Security will be repayable prior to the Maturity Date at the option of the Holder on the date or dates or under the circumstances designated as Repayment Dates on the face hereof at the Repayment Price or Repayment Prices designated on the face hereof together with accrued interest to the date of repayment. In order for this Security to be repaid, the Trustee must receive at the Notes Office at least 30 but not more than 45 days prior to the applicable Repayment Date (a) appropriate wire instructions and (b) either (i) this Security with the form below entitled "Option to Elect Repayment" duly completed or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or trust company in the United States or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended) setting forth the name of the Holder of this Security, the principal amount of this Security, the portion of the principal amount of this Security to be repaid, the certificate number or a description of the tenor and terms of this Security, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Security with the form below entitled "Option to Elect Repayment" duly completed will be received by the Trustee not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter. If the procedure described in clause (ii) of the preceding sentence is followed, this Security with such form duly completed must be received by the Trustee by such fifth Business Day. Any tender of this Security for repayment shall be irrevocable. The repayment option may be exercised by the Holder of this Security for less than the entire principal 11 amount of this Security provided that the principal amount of the Security remaining outstanding after repayment is an authorized denomination. Upon such partial repayment this Security shall be cancelled and a new Security or Securities of like tenor and with the same terms and conditions for the remaining principal amount hereof shall be issued in the name of the Holder of this Security or as otherwise specified in the form entitled "Option to Elect Repayment". After exercise of the repayment option, no transfer or exchange of this Security (or, if this Security is to be repaid in part, the portion hereof to be repaid) will be permitted. All questions as to the validity, eligibility (including time of receipt) and acceptance of this Security for repayment will be determined by the Company, whose determination will be final, binding and non-appealable. The Indenture provides that, with certain limited exceptions, the Company will not, nor will it permit any Restricted Subsidiary (as defined in the Indenture) to, pledge as security for any loan the capital stock or indebtedness of any Restricted Subsidiary or create, incur, assume or permit to exist any Lien on any property or asset of the Company. Interest payments on each Interest Payment Date for this Security and at Maturity will include interest accrued from and including the later of the Original Issue Date or the most recent date to which interest has been paid or provided for to but excluding such Interest Payment Date or to but excluding Maturity. Interest payments for this Security shall be computed and paid on the basis of a 360- day year of twelve 30-day months. Notwithstanding anything herein to the contrary, the interest rate on this Security will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general applicability. Any payment of principal of (and premium, if any) or interest required to be made on this Security on a day which is not a Business Day need not be made on such day, but may be made on the next day which is such a Business Day with the same force and effect as if made on such day, and no interest shall accrue as a result of such delayed payment. "Business Day" means each day, other than a Saturday or Sunday, that is not a day on which banking institutions in the Business Day Centers specified on the 12 face hereof are authorized or obligated by law or executive order to close. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Any terms or conditions of this Security ("Other Terms") specified on the face hereof under "Other Terms" shall apply to this Security. In the event of any conflict between any Other Terms and any other terms or conditions of this Security, the Other Terms shall control. Notwithstanding anything herein to the contrary, if this Security is an Original Issue Discount Security, the amount payable in the event of acceleration following an Event of Default prior to the Maturity Date hereof in lieu of the principal amount due at the Maturity Date hereof shall be the Amortized Face Amount of this Security as of the date of declaration of acceleration. The "Amortized Face Amount" of this Security shall be an amount equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Maturity (as set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount of this Security exceed its principal amount. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66-2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security 13 shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Security of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the Holders of not less than 25% in principal amount of the Outstanding Securities of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, the Trustee shall not have received from the Holders of a majority in principal amount of the Outstanding Securities of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do -------- ------- not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (and premium, if any) or interest on this Security on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register upon surrender of this Security for registration of transfer to the Security Registrar at the Notes Office duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and having the same terms and conditions and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 14 The Securities of this series are issuable only in registered form, without coupons, in denominations of U.S.$100,000 and any integral multiple of U.S.$1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of different authorized denominations and having the same terms and conditions, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Security which are defined in the Indenture and are not otherwise defined herein shall have the meanings assigned to them in the Indenture. 15 OPTION TO ELECT REPAYMENT The undersigned owner of this Security hereby irrevocably elects to have the Company repay the principal amount of this Security or portion hereof below designated at the applicable Repayment Price indicated on the face hereof plus interest accrued to the applicable Repayment Date. Dated:______________ ____________________ Signature Sign exactly as name appears on the front of this Security [SIGNATURE GUARANTEE - required only if Securities are to be issued and delivered to other than the registered holder] Principal amount to be Fill in for repaid, if amount to be registration of repaid is less than the Securities if to be principal amount of this issued otherwise than Security (principal amount to registered holder: remaining must be an authorized denomination) Name:_________________ U.S.$______________ Address:______________ ______________ (Please print name and address including zip code) SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER ______________________ 16 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: UNIF GIFT MIN ACT... TEN COM - as tenants in .........Custodian.......... common (Cust) (Minor) TEN ENT - as tenants by Under Uniform Gifts to the entireties Minors Act JT TEN - as joint tenants with right of survivorship and ............................ not as tenants in (State) common Additional abbreviations may also be used though not in the above list. ____________________ FOR VALUED RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Other Identifying Number of Assignee ________________________________ / / /______________________________ /__________________________ ___________________________________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE 17 ____________________________________________________________ the within Security and all rights thereunder, hereby irrevocably constituting and appointing __________________ _______________________ attorney to transfer said Security on the books of the Company, with full power of substitution in the premises. Dated:______________ ______________________________ Signature EX-4.1(B) 7 Exhibit 4.1(b) NOTE NUMBER AGENT'S NAME PAINE WEBBER GROUP INC. - ---------------------------------------------------- PRINCIPAL AMOUNT SETTLEMENT DATE TRADE DATE U.S.$ (ORIGINAL ISSUE DATE) - -------------------------------------------------------------------------------- MATURITY DATE TRUSTEE'S CUST. NO. INTEREST RATE TAXPAYER ID OR TRANSFERRED SOC. SEC. NO. OF PURCHASER - -------------------------------------------------------------------------------- NAME AND ADDRESS OF REGISTERED OWNER MEDIUM-TERM NOTE PROGRAM CHEMICAL BANK DELAWARE TRUSTEE CHEMICAL BANK AUTHENTICATING AGENT
- ---------------------------------------------------------------------------------------------------- CUSTOMER'S RETAIN FOR THE TIME OF THE TRANSACTION WILL BE PLEASE SIGN AND RETURN SEE COPY TAX PURPOSES FURNISHED UPON REQUEST OF THE CUSTOMER ENCLOSED RECEIPT REVERSE SIDE - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- REGISTERED REGISTERED
PAINE WEBBER GROUP INC. MEDIUM-TERM SUBORDINATED NOTE, SERIES D Due from Nine Months to 30 Years from Date of Issue (Fixed Rate) No. U.S.$ CUSIP NO. IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE COMPLETED SOLELY FOR PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. ORIGINAL ISSUE DATE: INTEREST RATE: MATURITY DATE: ISSUE PRICE: ORIGINAL ISSUE DISCOUNT BUSINESS DAY CENTERS: SECURITY: [ ] YES [ ] NO REGULAR RECORD DATES: OPTIONAL REDEMPTION: PAYMENT OF ADDITIONAL [ ] YES [ ] NO AMOUNTS: [ ] YES [ ] NO 2 INTEREST PAYMENT DATES: REDEMPTION DATES: OPTION TO ELECT REPAYMENT: [ ] YES [ ] NO TOTAL AMOUNT OF OID: REDEMPTION PRICES: REPAYMENT DATES: YIELD TO MATURITY: GLOBAL SECURITY: REPAYMENT PRICES: [ ] YES [ ] NO INITIAL ACCRUAL PERIOD OID: DEPOSITARY: OTHER TERMS: PAINE WEBBER GROUP INC., a Delaware corporation (herein called the "Company", which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to , or registered assigns, the principal sum of U.S. DOLLARS, on the Maturity Date specified above, and to pay interest thereon from and including the Original Issue Date shown above or from and including the last date in respect of which interest has been paid or provided for, as the case may be. Interest will be paid on the Interest Payment Dates shown above, commencing with the first such Interest Payment Date following the Original Issue Date shown above, at the Interest Rate per annum specified above until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date specified above (whether or not a Business Day) next preceding such Interest Payment Date, except that in the case of a Security with an Original Issue Date that is after a Regular Record Date and before the next following Interest Payment Date, interest payable on such Interest Payment Date will be paid to the Person in whose name such Security was initially registered on the Original Issue Date; provided, however, that interest -------- ------- payable at Maturity shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to 3 the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof to be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. If this Security is not a Global Security, payments of interest on this Security (other than interest payable at Maturity) will be made by mailing a check to the person entitled thereto at its address appearing in the Security Register for the Securities on the applicable Regular Record Date. Notwithstanding the foregoing, at the option of the Company such payments may be made by wire transfer of immediately available funds to an account with a bank located in the continental United States (or other jurisdiction acceptable to the Company and Chemical Bank, as Paying Agent), but only if appropriate payment instructions have been received in writing by the Paying Agent not less than 5 Business Days prior to the applicable Interest Payment Date. Payments of principal of, premium, if any, and interest will be made in immediately available funds, if at maturity or upon earlier redemption, then on the Maturity Date or the date fixed for redemption, as applicable, upon surrender of this Security at the principal corporate trust office of the Paying Agent in the Borough of Manhattan, The City of New York, or such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York (the "Notes Office"), provided that this Security is presented to such office in time for the Paying Agent to make such payments in such funds in accordance with its normal procedures, and if upon early repayment, then on the applicable Repayment Date, provided that the Holder shall have complied with the requirements for repayment set forth on the reverse hereof. If this Security is a Global Security, the Depositary will be paid as agreed by the Company, the Trustee, the Paying Agent and the Depositary and beneficial owners hereof will be paid in accordance with the Depositary's and its participants' procedures in effect from time to time. "Maturity" shall mean the date on which the principal of this Security or an installment of principal becomes due, whether on the Maturity Date specified above, upon redemption or early repayment or otherwise. If the registered owner of this Security (as indicated above) is the Depositary or a nominee of the Depositary, this Security is a Global Security and the following legend is applicable: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. If the registered owner of this Security is The Depository Trust Company or a nominee of The Depository Trust Company, then unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized officer, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: PAINE WEBBER GROUP INC. By ------------------------------- Title: [Seal] Attest: ------------------------------- Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the Series designated therein referred to in the within-mentioned Indenture. Dated: CHEMICAL BANK DELAWARE CHEMICAL BANK DELAWARE As Trustee As Trustee By OR -------------------------- By Chemical Bank Authorized Officer As Authenticating Agent By -------------------------- Authorized Officer PAINE WEBBER GROUP, INC. MEDIUM-TERM SUBORDINATED NOTE, SERIES D Due from Nine Months to 30 Years from Date of Issue (Fixed Rate) This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of March 15, 1988, as amended by a First Supplemental Indenture dated as of September 22, 1989, by a Second Supplemental Indenture dated as of March 22, 1991, and by a Third Supplemental Indenture dated as of November 30, 1993 (such Indenture, as so supplemented, is herein called the "Indenture"), between the Company and Chemical Bank Delaware, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof. If so specified on the face hereof, the Company will, subject to the limitations and exceptions set forth below, pay to a Holder of this Security who is a United States Alien (as defined below) such additional amounts ("Additional Amounts") as may be necessary in order that every net payment of the principal of, premium, if any, and interest on this Security, after deduction or withholding by the Company, the Trustee or any of the Company's paying agents for or on account of any present or future tax, assessment or other governmental charge imposed upon such Holder with respect to or as a result of such payment by the United States or any political subdivision or taxing authority thereof or therein, will not be less than the amount provided herein to be then due and payable. However, the Company shall not be required to make any such payment of Additional Amounts for or on account of: (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the 7 existence of any present or former connection between such Holder (or between a fiduciary, settlor or beneficiary of, or a person holding a power over, such Holder, if such Holder is an estate or a trust, or between a member or shareholder of such Holder, if such Holder is a partnership or corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, person holding a power, member or shareholder) being or having been a citizen or resident or treated as a resident thereof or being or having been engaged in a trade or business therein or being or having been present therein or having or having had a permanent establishment therein, or (ii) such Holder's present or former status as a domestic or foreign personal holding company, a passive foreign investment company or a controlled foreign corporation, a private foundation or other tax-exempt organization for United States Federal income tax purposes or a corporation that accumulates earnings to avoid United States Federal income tax; (b) any tax, assessment or other governmental charge that would not have been so imposed but for the presentation by the Holder of this Security for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof was duly provided for, whichever occurs later; (c) any estate, inheritance, gift, sales, transfer, excise or personal property tax or any similar tax, assessment or other governmental charge; (d) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Security, if such compliance is required by statute or by regulation of the United States or any taxing authority thereof as a precondition to relief or exemption from such tax, assessment or other governmental charge; (e) any tax, assessment or other governmental charge that is (i) payable otherwise than by deduction or withholding from payments of principal of or 8 premium, if any, or interest on this Security or (ii) required to be deducted or withheld by any paying agent from any such payment, if (and only if) such payment can be made without such deduction or withholding by any other paying agent; (f) any tax, assessment or other governmental charge imposed on interest received by a person holding, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of the Company entitled to vote (taking into account the applicable attribution of ownership rules under Section 871(h)(3) of the Internal Revenue Code of 1986, as amended (the "Code")) or that is a controlled foreign corporation related to the Company (directly or indirectly) through stock ownership; or (g) any combination of items (a), (b), (c), (d), (e) and (f); nor will Additional Amounts be paid with respect to payment of the principal of or premium, if any, or interest on this Security to any United States Alien that is a fiduciary or partnership or to a person other than the sole beneficial owner of this Security to the extent that a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of this Security. The Company, at its option, may redeem this Security as a whole, but not in part, at any time that this Security is Registered in the name of a United States Alien, on giving not less than 30 nor more than 45 days' notice to the registered Holder hereof by mail in accordance with the provisions of the Indenture (which notice shall be irrevocable), at a redemption price equal to the principal amount hereof (or, in the case of an Original Issue Discount Security, the amount specified on the face hereof), together with accrued interest to the redemption date, if the Company determines that the Company has or will become obligated to pay Additional Amounts on this Security on the next succeeding Interest Payment Date as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in the application or 9 official interpretation of such laws, regulations or rulings by a taxing authority, court or regulatory agency, whether or not rendered or taken with respect to the Company, or any action taken by any taxing authority, court or regulatory agency (including any change in administrative policy or enforcement practice of such taxing authority), whether or not taken with respect to the Company, which change or amendment becomes effective, or action is taken, on or after the Original Issue Date, and such obligation cannot be avoided by the Company taking reasonable measures available to it. Prior to giving any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee an Officers' Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred, and an opinion of independent legal counsel addressed to the Company and the Trustee to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of such change or amendment. Notice of the intention of the Company to redeem this Security shall not be given earlier than 90 days prior to the earliest date that the obligation to pay Additional Amounts would arise were a payment in respect of this Security due on such date. From and after any redemption date, if monies for the redemption of this Security pursuant to this paragraph shall have been made available for redemption on such redemption date, this Security shall cease to bear interest and the only right of the Holder of this Security shall be to receive payment of the redemption price of this Security and all unpaid interest accrued to such redemption date. For purposes of this paragraph, the Trustee may rely on an Officers' Certificate as to whether the registered Holder hereof is a United States Alien. The term "United States Alien" means any person who, for United States Federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership, one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust. If so specified on the face hereof, the Company may at its option redeem this Security in whole or from time to time in part on the date or dates designated as Redemption Dates on the face hereof at the Redemption Price or 10 Redemption Prices designated on the face hereof, together with accrued interest to the date of redemption. The Company may exercise such option by mailing or causing the Trustee to mail a notice of such redemption at least 30 but not more than 45 days prior to the date of redemption. In the event of redemption of this Security in part only, a new Security or Securities of like tenor and with the same terms and conditions for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If less than all of the Securities having the same terms (except as to principal amount and date of issuance) as this Security are to be redeemed, the Securities to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate and otherwise as provided under the Indenture. If so specified on the face hereof, this Security will be repayable prior to the Maturity Date at the option of the Holder on the date or dates or under the circumstances designated as Repayment Dates on the face hereof at the Repayment Price or Repayment Prices designated on the face hereof together with accrued interest to the date of repayment. In order for this Security to be repaid, Chemical Bank, as Paying Agent, must receive at the Notes Office at least 30 but not more than 45 days prior to the applicable Repayment Date (a) appropriate wire instructions and (b) either (i) this Security with the form below entitled "Option to Elect Repayment" duly completed or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or trust company in the United States or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended) setting forth the name of the Holder of this Security, the principal amount of this Security, the portion of the principal amount of this Security to be repaid, the certificate number or a description of the tenor and terms of this Security, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Security with the form below entitled "Option to Elect Repayment" duly completed will be received by the Paying Agent not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter. If the procedure described in clause (ii) of the preceding sentence is followed, this Security with such form duly completed must be received by the Paying Agent by such fifth Business Day. Any tender of this Security for 11 repayment shall be irrevocable. The repayment option may be exercised by the Holder of this Security for less than the entire principal amount of this Security provided that the principal amount of the Security remaining outstanding after repayment is an authorized denomination. Upon such partial repayment this Security shall be cancelled and a new Security or Securities of like tenor and with the same terms and conditions for the remaining principal amount hereof shall be issued in the name of the Holder of this Security or as otherwise specified in the form entitled "Option to Elect Repayment". After exercise of the repayment option, no transfer or exchange of this Security (or, if this Security is to be repaid in part, the portion hereof to be repaid) will be permitted. All questions as to the validity, eligibility (including time of receipt) and acceptance of this Security for repayment will be determined by the Company, whose determination will be final, binding and non-appealable. The indebtedness evidenced by this Security is expressly subordinated in right of payment, to the extent and in the manner set forth in the Indenture, to the prior payment in full of all Superior Indebtedness (as defined in the Indenture) and this Security is issued subject to such provisions of the Indenture, and each Holder of this Security by accepting the same agrees to and shall be bound by such provisions and authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate such subordination as provided in the Indenture and appoints the Trustee his attorney-in-fact for any and all such purposes. Interest payments on each Interest Payment Date for this Security and at Maturity will include interest accrued from and including the later of the Original Issue Date or the most recent date to which interest has been paid or provided for to but excluding such Interest Payment Date or to but excluding Maturity. Interest payments for this Security shall be computed and paid on the basis of a 360- day year of twelve 30-day months. Notwithstanding anything herein to the contrary, the interest rate on this Security will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general applicability. 12 Any payment of principal of (and premium, if any) or interest required to be made on this Security on a day which is not a Business Day need not be made on such day, but may be made on the next day which is such a Business Day with the same force and effect as if made on such day, and no interest shall accrue as a result of such delayed payment. "Business Day" means each day, other than a Saturday or Sunday, that is not a day on which banking institutions in the Business Day Centers specified on the face hereof are authorized or obligated by law or executive order to close. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Any terms or conditions of this Security ("Other Terms") specified on the face hereof under "Other Terms" shall apply to this Security. In the event of any conflict between any Other Terms and any other terms or conditions of this Security, the Other Terms shall control. Notwithstanding anything herein to the contrary, if this Security is an Original Issue Discount Security, the amount payable in the event of acceleration following an Event of Default prior to the Maturity Date hereof in lieu of the principal amount due at the Maturity Date hereof shall be the Amortized Face Amount of this Security as of the date of declaration of acceleration. The "Amortized Face Amount" of this Security shall be an amount equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Maturity (as set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount of this Security exceed its principal amount. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66-2/3% in 13 principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Security of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the Holders of not less than 25% in principal amount of the Outstanding Securities of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, the Trustee shall not have received from the Holders of a majority in principal amount of the Outstanding Securities of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do -------- ------- not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (and premium, if any) or interest on this Security on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, places and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register upon surrender of this Security for registration of transfer to the Security Registrar at the Notes Office duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly 14 executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and having the same terms and conditions and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form, without coupons, in denominations of U.S.$100,000 and any integral multiple of U.S.$1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of different authorized denominations and having the same terms and conditions, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Security which are defined in the Indenture and are not otherwise defined herein shall have the meanings assigned to them in the Indenture. 15 OPTION TO ELECT REPAYMENT The undersigned owner of this Security hereby irrevocably elects to have the Company repay the principal amount of this Security or portion hereof below designated at the applicable Repayment Price indicated on the face hereof plus interest accrued to the applicable Repayment Date. Dated: ---------------------- - ----------------------------- Signature Sign exactly as name appears on the front of this Security [SIGNATURE GUARANTEE - required only if Securities are to be issued and delivered to other than the registered holder] Principal amount to be Fill in for repaid, if amount to be registration of repaid is less than the Securities if to be principal amount of this issued otherwise than Security (principal amount to registered holder: remaining must be an authorized denomination) Name: --------------------- U.S.$ --------------------- Address: ------------------ ------------------ (Please print name and address including zip code) SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER --------------------------- 16 --------------------- ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: UNIF GIFT MIN ACT... TEN COM - as tenants in ......... Custodian .......... common (Cust) (Minor) TEN ENT - as tenants by Under Uniform Gifts to the entireties Minors Act JT TEN - as joint tenants with right of survivorship and .............................. not as tenants in (State) common Additional abbreviations may also be used though not in the above list. --------------------- FOR VALUED RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Other Identifying Number of Assignee ---------------------------- / / ----------------------------- ----------------------------- ------------------------------------------------------------- PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE 17 - ------------------------------------------------------------- the within Security and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Security - ----------------------- on the books of the Company, with full power of substitution in the premises. Dated: - -------------------------- ---------------------------- Signature EX-4.1(C) 8 NOTE NUMBER AGENT'S NAME PAINE WEBBER GROUP INC. ____________________________________________________________ PRINCIPAL AMOUNT SETTLEMENT DATE TRADE DATE U.S.$ (ORIGINAL ISSUE DATE)
_______________________________________________________________________________________ MATURITY DATE TRUSTEE'S CUST. NO. INTEREST RATE BASIS TAXPAYER ID OR TRANSFERRED SOC. SEC. NO. OF PURCHASER
________________________________________________________________________________ NAME AND ADDRESS OF REGISTERED OWNER MEDIUM-TERM NOTE PROGRAM CHEMICAL BANK TRUSTEE ________________________________________________________________________________ CUSTOMER'S RETAIN FOR THE TIME OF THE PLEASE SIGN AND SEE COPY TAX PURPOSES TRANSACTION WILL RETURN ENCLOSED REVERSE SIDE BE FURNISHED UPON RECEIPT REQUEST OF THE CUSTOMER ________________________________________________________________________________ - -------------------------------------------------------------------------------- REGISTERED REGISTERED PAINE WEBBER GROUP INC. MEDIUM-TERM SENIOR NOTE, SERIES C Due from Nine Months to 30 Years from Date of Issue (Floating Rate) No. U.S.$ CUSIP NO. IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE COMPLETED SOLELY FOR PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. ORIGINAL ISSUE DATE: INITIAL INTEREST RATE: MATURITY DATE: ISSUE PRICE: ORIGINAL ISSUE BUSINESS DAY DISCOUNT SECURITY: CENTERS: [ ] YES [ ] NO REGULAR RECORD DATES: OPTIONAL PAYMENT OF REDEMPTION: ADDITIONAL AMOUNTS: [ ] YES [ ] NO [ ] YES [ ] NO 2 INTEREST PAYMENT REDEMPTION DATES: OPTION TO ELECT DATES: REPAYMENT: [ ] YES [ ] NO TOTAL AMOUNT OF OID: REDEMPTION PRICES: REPAYMENT DATES: YIELD TO MATURITY: GLOBAL SECURITY: REPAYMENT PRICES: [ ] YES [ ] NO INITIAL ACCRUAL PERIOD DEPOSITARY: CALCULATION AGENT: OID: INTEREST RATE BASIS: MAXIMUM RATE: MINIMUM RATE: SPREAD: SPREAD MULTIPLIER: INDEX MATURITY: INTEREST RESET DATES: INTEREST DETERMINA- LIBOR BASIS: TION DATES (IF OTHER [ ] Telerate Screen THAN AS SPECIFIED ON Page 3750 THE REVERSE HEREOF): [ ] Reuters Screen LIBO Page OTHER TERMS: PAINE WEBBER GROUP INC., a Delaware corporation (herein called the "Company", which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to , or registered assigns, the principal sum of U.S. DOLLARS, on the Maturity Date specified above, and to pay interest thereon from and including the Original Issue Date shown above or from and including the last date in respect of which interest has been paid or provided for, as the case may be. Interest will be paid on the Interest Payment Dates shown above, commencing with the first such Interest Payment Date following the Original Issue Date shown above, at a rate determined in accordance with the provisions on the reverse hereof until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date specified above (whether or not a Business Day) next preceding such Interest Payment Date, except that in the case of a Security with an Original Issue Date that is after a Regular Record Date and before the next following Interest Payment Date, interest payable 3 on such Interest Payment Date will be paid to the Person in whose name such Security was initially registered on the Original Issue Date; provided, however, that interest -------- ------- payable at Maturity shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof to be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. If this Security is not a Global Security, payments of interest on this Security (other than interest payable at Maturity) will be made by mailing a check to the person entitled thereto at its address appearing in the Security Register for the Securities on the applicable Regular Record Date. Notwithstanding the foregoing, at the option of the Company such payments may be made by wire transfer of immediately available funds to an account with a bank located in the continental United States (or other jurisdiction acceptable to the Company and the Trustee), but only if appropriate payment instructions have been received in writing by the Trustee not less than 5 Business Days prior to the applicable Interest Payment Date. Payments of principal of, premium, if any, and interest will be made in immediately available funds, if at maturity or upon earlier redemption, then on the Maturity Date or the date fixed for redemption, as applicable, upon surrender of this Security at the principal corporate trust office of the Trustee in the Borough of Manhattan, The City of New York, or such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City of New York (the "Notes Office"), provided that this Security is presented to such office in time for the Trustee to make such payments in such funds in accordance with its normal procedures, and if upon early repayment, then on the applicable Repayment Date, provided that the Holder shall have complied with the requirements for repayment set forth on the reverse hereof. If this Security is a Global Security, the Depositary will be paid as agreed by the 4 Company, the Trustee and the Depositary and beneficial owners hereof will be paid in accordance with the Depositary's and its participants' procedures in effect from time to time. "Maturity" shall mean the date on which the principal of this Security or an installment of principal becomes due, whether on the Maturity Date specified above, upon redemption or early repayment or otherwise. If the registered owner of this Security (as indicated above) is the Depositary or a nominee of the Depositary, this Security is a Global Security and the following legend is applicable: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. If the registered owner of this Security is The Depository Trust Company or a nominee of The Depository Trust Company, then unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized officer, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. 5 Dated: PAINE WEBBER GROUP INC. By___________________________ Title: [Seal] Attest: ________________________ Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the Series designated therein referred to in the within-mentioned Indenture. Dated: CHEMICAL BANK As Trustee By_____________________________ Authorized Officer 6 PAINE WEBBER GROUP INC. MEDIUM-TERM SENIOR NOTE, SERIES C Due from Nine Months to 30 Years from Date of Issue (Floating Rate) This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of March 15, 1988, as amended by a First Supplemental Indenture dated as of September 22, 1989, and by a Second Supplemental Indenture dated as of March 22, 1991 (such Indenture, as so supplemented, is herein called the "Indenture"), between the Company and Chemical Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof. If so specified on the face hereof, the Company will, subject to the limitations and exceptions set forth below, pay to a Holder of this Security who is a United States Alien (as defined below) such additional amounts ("Additional Amounts") as may be necessary in order that every net payment of the principal of, premium, if any, and interest on this Security, after deduction or withholding by the Company, the Trustee or any of the Company's paying agents for or on account of any present or future tax, assessment or other governmental charge imposed upon such Holder with respect to or as a result of such payment by the United States or any political subdivision or taxing authority thereof or therein, will not be less than the amount provided herein to be then due and payable. However, the Company shall not be required to make any such payment of Additional Amounts for or on account of: (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the existence of any present or former connection between 7 such Holder (or between a fiduciary, settlor or beneficiary of, or a person holding a power over, such Holder, if such Holder is an estate or a trust, or between a member or shareholder of such Holder, if such Holder is a partnership or corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, person holding a power, member or shareholder) being or having been a citizen or resident or treated as a resident thereof or being or having been engaged in a trade or business therein or being or having been present therein or having or having had a permanent establishment therein, or (ii) such Holder's present or former status as a domestic or foreign personal holding company, a passive foreign investment company or a controlled foreign corporation, a private foundation or other tax-exempt organization for United States Federal income tax purposes or a corporation that accumulates earnings to avoid United States Federal income tax; (b) any tax, assessment or other governmental charge that would not have been so imposed but for the presentation by the Holder of this Security for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof was duly provided for, whichever occurs later; (c) any estate, inheritance, gift, sales, transfer, excise or personal property tax or any similar tax, assessment or other governmental charge; (d) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Security, if such compliance is required by statute or by regulation of the United States or any taxing authority thereof as a precondition to relief or exemption from such tax, assessment or other governmental charge; (e) any tax, assessment or other governmental charge that is (i) payable otherwise than by deduction or withholding from payments of principal of or premium, if any, or interest on this Security or 8 (ii) required to be deducted or withheld by any paying agent from any such payment, if (and only if) such payment can be made without such deduction or withholding by any other paying agent; (f) any tax, assessment or other governmental charge imposed on interest received by a person holding, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of the Company entitled to vote (taking into account the applicable attribution of ownership rules under Section 871(h)(3) of the Internal Revenue Code of 1986, as amended (the "Code")) or that is a controlled foreign corporation related to the Company (directly or indirectly) through stock ownership; or (g) any combination of items (a), (b), (c), (d), (e) and (f); nor will Additional Amounts be paid with respect to payment of the principal of or premium, if any, or interest on this Security to any United States Alien that is a fiduciary or partnership or to a person other than the sole beneficial owner of this Security to the extent that a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of this Security. The Company, at its option, may redeem this Security as a whole, but not in part, at any time that this Security is registered in the name of a United States Alien, on giving not less than 30 nor more than 45 days' notice to the registered Holder hereof by mail in accordance with the provisions of the Indenture (which notice shall be irrevocable), at a redemption price equal to the principal amount hereof (or, in the case of an Original Issue Discount Security, the amount specified on the face hereof), together with accrued interest to the redemption date, if the Company determines that the Company has or will become obligated to pay Additional Amounts on this Security on the next succeeding Interest Payment Date as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in the application or official interpretation of such laws, regulations or rulings 9 by a taxing authority, court or regulatory agency, whether or not rendered or taken with respect to the Company, or any action taken by any taxing authority, court or regulatory agency (including any change in administrative policy or enforcement practice of such taxing authority), whether or not taken with respect to the Company, which change or amendment becomes effective, or action is taken, on or after the Original Issue Date, and such obligation cannot be avoided by the Company taking reasonable measures available to it. Prior to giving any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee an Officers' Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred, and an opinion of independent legal counsel addressed to the Company and the Trustee to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of such change or amendment. Notice of the intention of the Company to redeem this Security shall not be given earlier than 90 days prior to the earliest date that the obligation to pay Additional Amounts would arise were a payment in respect of this Security due on such date. From and after any redemption date, if monies for the redemption of this Security pursuant to this paragraph shall have been made available for redemption on such redemption date, this Security shall cease to bear interest and the only right of the Holder of this Security shall be to receive payment of the redemption price of this Security and all unpaid interest accrued to such redemption date. For purposes of this paragraph, the Trustee may rely on an Officers' Certificate as to whether the registered Holder hereof is a United States Alien. The term "United States Alien" means any person who, for United States Federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership, one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust. If so specified on the face hereof, the Company may at its option redeem this Security in whole or from time to time in part on the date or dates designated as Redemption Dates on the face hereof at the Redemption Price or Redemption Prices designated on the face hereof, together 10 with accrued interest to the date of redemption. The Company may exercise such option by mailing or causing the Trustee to mail a notice of such redemption at least 30 but not more than 45 days prior to the date of redemption. In the event of redemption of this Security in part only, a new Security or Securities of like tenor and with the same terms and conditions for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If less than all of the Securities having the same terms (except as to principal amount and date of issuance) as this Security are to be redeemed, the Securities to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate and otherwise as provided under the Indenture. If so specified on the face hereof, this Security will be repayable prior to the Maturity Date at the option of the Holder on the date or dates or under the circumstances designated as Repayment Dates on the face hereof at the Repayment Price or Repayment Prices designated on the face hereof together with accrued interest to the date of repayment. In order for this Security to be repaid, the Trustee must receive at the Notes Office at least 30 but not more than 45 days prior to the applicable Repayment Date (a) appropriate wire instructions and (b) either (i) this Security with the form below entitled "Option to Elect Repayment" duly completed or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or trust company in the United States or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended) setting forth the name of the Holder of this Security, the principal amount of this Security, the portion of the principal amount of this Security to be repaid, the certificate number or a description of the tenor and terms of this Security, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Security with the form below entitled "Option to Elect Repayment" duly completed will be received by the Trustee not later than five Business Days after the date of such telegram, telex, facsimile, transmission or letter. If the procedure described in clause (ii) of the preceding sentence is followed, this Security with such form duly completed must be received by the Trustee by such fifth Business Day. Any tender of this Security for repayment shall be irrevocable. The repayment option may be exercised by the 11 Holder of this Security for less than the entire principal amount of this Security provided that the principal amount of the Security remaining outstanding after repayment is an authorized denomination. Upon such partial repayment this Security shall be cancelled and a new Security or Securities of like tenor and with the same terms and conditions for the remaining principal amount hereof shall be issued in the name of the Holder of this Security or as otherwise specified in the form entitled "Option to Elect Repayment". After exercise of the repayment option, no transfer or exchange of this Security (or, if this Security is to be repaid in part, the portion hereof to be repaid) will be permitted. All questions as to the validity, eligibility (including time of receipt) and acceptance of this Security for repayment will be determined by the Company, whose determination will be final, binding and non-appealable. The Indenture provides that, with certain limited exceptions, the Company will not, nor will it permit any Restricted Subsidiary (as defined in the Indenture) to, pledge as security for any loan the capital stock or indebtedness of any Restricted Subsidiary or create, incur, assume or permit to exist any lien on any property or asset of the Company. The interest rate in effect with respect to this Security from and including the Original Issue Date to but excluding the first Interest Reset Date specified on the face hereof following the Original Issue Date will be the Initial Interest Rate specified on the fact hereof; provided, however, that if the interest rate hereon is reset - -------- ------- daily or weekly and this Security was originally issued between a Regular Record Date and an Interest Payment Date, the Initial Interest Rate shall be the rate for the period from and including the Original Issue Date to but excluding the first Interest Reset Date on or after the first Interest Payment Date specified above following the Original Issue Date. Commencing with the first Interest Reset Date following the Original Issue Date or the first Interest Reset Date on or after the first Interest Payment Date, as applicable, the rate at which interest on this Security is payable shall be adjusted on each Interest Reset Date; provided, however, that the interest rate in effect hereon - -------- ------- for the 10 days immediately prior to Maturity shall be that in effect on the 10th day preceding such Maturity. Each such adjusted rate shall be applicable on and after the Interest Reset Date to which it relates to but excluding the next succeeding Interest Reset Date or until Maturity. If 12 any Interest Reset Date specified on the face hereof would otherwise be a day that is not a Business Day (as hereinafter defined), such Interest Reset Date shall be postponed to the next day that is a Business Day, except that, if the Interest Rate Basis specified on the face hereof is LIBOR, then if such next Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the next preceding Business Day. Subject to applicable provisions of law and except as specified herein, if the Interest Rate Basis specified on the face hereof is the Commercial Paper Rate, Prime Rate, Federal Funds Rate, LIBOR or the Treasury Rate, then the rate of interest on this Security on and after each Interest Reset Date on which an adjustment is made shall be the rate determined in accordance with the provisions of the applicable heading below. DETERMINATION OF COMMERCIAL PAPER RATE. If the Interest Rate Basis specified on the face hereof is the Commercial Paper Rate, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be the Commercial Paper Rate on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "Commercial Paper Rate" means, with respect to each such Interest Determination Date, the Money Market Yield (calculated as described below) of the rate on such date for commercial paper having the Index Maturity specified on the face hereof as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15(519)") under the heading "Commercial Paper". In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date (as defined below) pertaining to such Interest Determination Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate on such Interest Determination Date for commercial paper having the Index Maturity specified on the face hereof as published by the Federal Reserve Bank of New York in its daily statistical release, "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any successor publication of the Federal Reserve Bank of New York ("Composite Quotations") under the heading "Commercial Paper". If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in Composite Quotations, the rate for that 13 Interest Determination Date shall be calculated by the Calculation Agent and shall be the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 A.M., New York City time, on that Interest Determination Date, of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the Index Maturity specified on the face hereof placed for an industrial issuer whose bond rating is "AA", or the equivalent, from at least one nationally recognized rating agency; provided, however, that if the dealers selected as -------- ------- aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate will be the Commercial Paper Rate in effect on such Interest Determination Date. "Money Market Yield" means a yield (expressed as a percentage) calculated in accordance with the following formula: D x 360 Money Market Yield = ------------- x 100 360 - (D x M) where "D" refers to the per annum rate for commercial paper, quoted on a bank discount basis and expressed as a decimal; and "M" refers to the actual number of days in the interest period for which interest is being calculated. DETERMINATION OF PRIME RATE. If the Interest Rate Basis specified on the face hereof is the Prime Rate, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be the Prime Rate on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "Prime Rate" means, with respect to each such Interest Determination Date, the arithmetic mean of the prime or base rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Interest Determination Date by three major money center banks in The City of New York selected by the Calculation Agent. If fewer than three such quotations are provided, the Prime Rate shall be determined on the basis of the quotations provided, if any, together with the rates furnished on such date in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of 14 at least U.S.$750 million and being subject to supervision or examination by Federal or State authority, selected by the Calculation Agent to provide such rate or rates; provided, however, that if the banks or trust companies - -------- ------- selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate will be the Prime Rate in effect on such Interest Determination Date. DETERMINATION OF FEDERAL FUNDS RATE. If the Interest Rate Basis specified on the face hereof is the Federal Funds Rate, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be the Federal Funds Rate on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "Federal Funds Rate" means, with respect to each such Interest Determination Date, the rate on such date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Rate will be the interest rate on such Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If such rate is not yet published in Composite Quotations by 3:00 P.M., New York City time, on such Calculation Date, the Federal Funds Rate for such Interest Determination Date will be the rate on such date made publicly available by the Federal Reserve Bank of New York which is equivalent to the rate which appears in H.15(519) under the heading "Federal Funds (Effective)"; provided, however, that if such rate is -------- ------- not made publicly available by the Federal Reserve Bank of New York by 9:00 A.M., New York City time, on such Calculation Date, the Federal Funds Rate will be the Federal Funds Rate in effect on such Interest Determination Date. DETERMINATION OF LIBOR. If the Interest Rate Basis specified on the face hereof is LIBOR, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be LIBOR on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "LIBOR" will be determined with respect to each such Interest Determination Date by the Calculation Agent in accordance with the following provisions: 15 LIBOR will be determined on the basis of either (a) if the LIBOR Basis specified on the face hereof is Telerate Screen Page 3750, the rate for deposits in U.S. dollars having the Index Maturity specified on the face hereof, commencing on the second London Banking Day (as defined below) immediately following such Interest Determination Date, which appears on Telerate Screen Page 3750 (as defined below) as of 11:00 A.M., London time, on such Interest Determination Date, if such rate appears on Telerate Screen Page 3750, or (b) if the LIBOR Basis specified on the face hereof is the Reuters Screen LIBO Page, the arithmetic mean, as determined by the Calculation Agent, of the offered rates for deposits in U.S. dollars of not less than $1,000,000 having the Index Maturity specified on the face hereof, commencing on the second London Banking Day immediately following such Interest Determination Date, which appear on the Reuters Screen LIBO Page (as defined below) as of 11:00 A.M., London time, on such Interest Determination Date, if at least two such offered rates appear on the Reuters Screen LIBO Page. "Telerate Screen Page 3750" means the display designated as page "British Bankers Assoc. Interest Settlement Rates" on the Telerate system, page 3750 (or such other page or pages as may replace such page on the system for the purpose of displaying such rates). "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page or pages as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). If no rate appears on Telerate Page 3750 or if fewer than two offered rates appear on the Reuters Screen LIBO Page, as applicable, LIBOR for such Interest Determination Date will be determined as described in the following paragraph. If neither Telerate Screen Page 3750 nor the Reuters Screen LIBO Page is specified on the face hereof as the LIBOR Basis, LIBOR will be determined as if Telerate Screen Page 3750 had been specified. With respect to an Interest Determination Date on which no rate appears on Telerate Page 3750 as described in (a) in the preceding paragraph, if the LIBOR Basis specified on the face hereof is Telerate Screen Page 3750, or on which fewer than two offered rates appear on the Reuters Screen LIBO Page as described in (b) in the preceding paragraph, if the LIBOR Basis specified on the face hereof is the Reuters 16 Screen LIBO Page, LIBOR will be determined on the basis of the rates at approximately 11:00 A.M., London time, on such Interest Determination Date at which deposits in U.S. dollars having the Index Maturity specified on the face hereof commencing on the second London Banking Day immediately following such Interest Determination Date and in a principal amount equal to an amount of not less than U.S.$1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time, are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Calculation Agent. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR for such Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York City time, on such Interest Determination Date by three major banks in The City of New York, selected by the Calculation Agent, for loans in U.S. dollars to leading European banks having the specified Index Maturity commencing on the second London Banking Day immediately following such Interest Determination Date and in a principal amount equal to an amount of not less than U.S.$1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time; provided, however, that if the banks selected as -------- ------- aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR with respect to such Interest Determination Date will be LIBOR in effect on such Interest Determination Date. DETERMINATION OF TREASURY RATE. If the Interest Rate Basis specified on the face hereof is the Treasury Rate, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be the Treasury Rate on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "Treasury Rate" means, with respect to each such Interest Determination Date, the rate for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on 17 the face hereof as published in H.15(519) under the heading "U.S. Government Securities--Treasury Bills--Auction Average (Investment)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the auction average rate (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) for such auction as otherwise made available by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the Index Maturity specified on the face hereof are not published or made available as provided above by 3:00 P.M., New York City time, on such Calculation Date, or if no such auction is held in a particular week (or on the preceding Friday, if applicable), then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates as of approximately 3:30 P.M., New York City time, on such Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent, for the issue of Treasury bills with a remaining maturity closest to the specified Index Maturity; provided, however, that if the dealers selected as -------- ------- aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate will be the Treasury Rate in effect on such Interest Determination Date. Unless otherwise specified on the face hereof, the Interest Determination Date pertaining to an Interest Reset Date for this Security will be, if the Interest Rate Basis for this Security is the Commercial Paper Rate or the Prime Rate, the second New York Business Day (as defined below) preceding such Interest Reset Date; if the Interest Rate Basis for this Security is LIBOR, the second London Banking Day preceding such Interest Reset Date; if the Interest Rate Basis for this Security is the Federal Funds Rate, the first New York Business Day preceding such Interest Reset Date; and if the Interest Rate Basis for this Security is the Treasury Rate, the day of the week in which such Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will 18 be the Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week. If an auction date shall fall on any Interest Reset Date for such a Note, then such Interest Reset Date shall instead be the first New York Business Day immediately following such auction date. The "Calculation Date" pertaining to any Interest Determination Date will be the earlier of (i) the tenth day after such Interest Determination Date or, if any such day is not a New York Business Day, the next succeeding New York Business Day and (ii) the New York Business Day next preceding the relevant Interest Payment Date or Maturity, as the case may be. All percentages resulting from any calculations on this Security will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with five one- millionths of a percentage point being rounded upward) and all currency amounts used in or resulting from such calculations will be rounded, if necessary, to the nearest one-hundredth of a unit (with .005 of a unit being rounded upward). Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum Rate, if any, or less than the Minimum Rate, if any, shown on the face hereof. In addition, the interest rate on this Security will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general applicability. The Calculation Agent shall calculate the interest rate on this Security in accordance with the foregoing on or before each Calculation Date and shall promptly thereafter notify the Company and the Trustee of such interest rate. Any such calculation by the Calculation Agent shall be conclusive and binding on the Company, the Trustee and the Holder of this Security, absent manifest error. The Calculation Agent will, upon the request of the Holder of this Security, provide to such Holder the interest rate hereon then in effect and, if determined, the interest rate which will become effective as of the next Interest Reset Date. Interest payments on each Interest Payment Date for this Security and at Maturity will include interest accrued from and including the later of the Original Issue Date or the most recent date to which interest has been paid or provided for to but excluding such Interest Payment Date 19 or to but excluding Maturity. Notwithstanding the foregoing, if the interest rate hereon is reset daily or weekly, interest payable on any Interest Payment Date or at Maturity will include interest accrued from and including the later of the Original Issue Date hereof and the day following the most recent Regular Record Date to which interest hereon has been paid or provided for to and including the next preceding Regular Record Date or Maturity except that, if this Security was issued between a Regular Record Date and the next succeeding Interest Payment Date, interest paid on such Interest Payment Date will include interest accrued from and including such Original Issue Date to but excluding such Interest Payment Date, and interest paid on the Interest Payment Date following such Interest Payment Date will include interest accrued from and including such Interest Payment Date (or from and including such Original Issue Date, if interest was not paid or provided for on such Interest Payment Date) to and including the Regular Record Date following such Interest Payment Date. Accrued interest hereon from the Original Issue Date or from the last date to which interest hereon has been paid or provided for, as the case may be, shall be an amount calculated by multiplying the face amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day from the Original Issue Date or from the last date to which interest shall have been paid or provided for, as the case may be, to the date for which accrued interest is being calculated. The interest factor (expressed as a decimal) for each such day shall be computed by dividing the interest rate (expressed as a decimal) applicable to such day by 360, if the Interest Rate Basis specified on the face hereof is a Commercial Paper Rate, Prime Rate, Federal Funds Rate or LIBOR, or the actual number of days in the year, if the Interest Rate Basis specified on the face hereof is the Treasury Rate. Any payment of principal of (and premium, if any) or interest required to be made on this Security on a day which is not a Business Day need not be made on such day, but may be made on the next day which is such a Business Day with the same force and effect as if made on such day, and no interest shall accrue as a result of such delayed payment, except that, if the Interest Rate Basis specified on the face hereof is LIBOR, then if such next Business Day is in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day. "Business Day" means each day, other than a Saturday or 2O Sunday, that is (i) not a day on which banking institutions in the Business Day Centers specified on the face hereof are authorized or obligated by law or executive order to close and (ii) if the Interest Rate Basis specified on the face hereof is LIBOR, a London Banking Day. As used herein, "London Banking Day" shall mean any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. "New York Business Day", as used herein, shall mean each day, other than a Saturday or Sunday, that is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Any terms or conditions of this Security ("Other Terms") specified on the face hereof under "Other Terms" shall apply to this Security. In the event of any conflict between any Other Terms and any other terms or conditions of this Security, the Other Terms shall control. Notwithstanding anything herein to the contrary, if this Security is an Original Issue Discount Security, the amount payable in the event of acceleration following an Event of Default prior to the Maturity Date hereof in lieu of the principal amount due at the Maturity Date hereof shall be the Amortized Face Amount of this Security as of the date of declaration of acceleration. The "Amortized Face Amount" of this Security shall be an amount equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Maturity (as set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount of this Security exceed its principal amount. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and 21 the Trustee with the consent of the Holders of 66-2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Security of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the Holders of not less than 25% in principal amount of the Outstanding Securities of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, the Trustee shall not have received from the Holders of a majority in principal amount of the Outstanding Securities of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do -------- ------- not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (and premium, if any) or interest on this Security on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, places and rates, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register upon surrender of this Security for registration of transfer to the Security Registrar at the Notes Office duly endorsed by, 22 or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and having the same terms and conditions and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form, without coupons, in denominations of U.S. $100,000 and any integral multiple of U.S.$1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of different authorized dominations and having the same terms and conditions, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Security which are defined in the Indenture and are not otherwise defined herein shall have the meanings assigned to them in the Indenture. 23 OPTION TO ELECT REPAYMENT The undersigned owner of this Security hereby irrevocably elects to have the Company repay the principal amount of this Security or portion hereof below designated at the applicable Repayment Price indicated on the face hereof plus interest accrued to the applicable Repayment Date. Dated:______________ ____________________ Signature Sign exactly as name appears on the front of this Security [SIGNATURE GUARANTEE - required only if Securities are to be issued and delivered to other than the registered holder] Principal amount to be Fill in for repaid, if amount to be registration of repaid is less than the Securities if to be principal amount of this issued otherwise than Security (principal amount to registered holder: remaining must be an authorized denomination) Name:_________________ U.S.$______________ Address:______________ ______________ (Please print name and address including zip code) SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER ______________________ 24 --------------------- ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: UNIF GIFT MIN ACT... TEN COM - as tenants in .........Custodian.......... common (Cust) (Minor) TEN ENT - as tenants by Under Uniform Gifts to the entireties Minors Act JT TEN - as joint tenants with right of survivorship and ............................ not as tenants in (State) common Additional abbreviations may also be used though not in the above list. ____________________ FOR VALUED RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Other Identifying Number of Assignee ________________________________ / / /______________________________ /__________________________ ___________________________________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE 25 ____________________________________________________________ the within Security and all rights thereunder, hereby irrevocably constituting and appointing _______________________ attorney to transfer said Security on the books of the Company, with full power of substitution in the premises. Dated:______________ ______________________________ Signature EX-4.1(D) 9 NOTE NUMBER AGENT'S NAME PAINE WEBBER GROUP INC. - ---------------------------------------------------- PRINCIPAL AMOUNT SETTLEMENT DATE TRADE DATE U.S.$ (ORIGINAL ISSUE DATE) - -------------------------------------------------------------------------------- MATURITY DATE TRUSTEE'S CUST. NO. INTEREST RATE TAXPAYER ID OR TRANSFERRED BASIS SOC. SEC. NO. OF PURCHASER - -------------------------------------------------------------------------------- NAME AND ADDRESS OF REGISTERED OWNER MEDIUM-TERM NOTE PROGRAM CHEMICAL BANK DELAWARE TRUSTEE CHEMICAL BANK AUTHENTICATING AGENT
- ---------------------------------------------------------------------------------------------------- CUSTOMER'S RETAIN FOR THE TIME OF THE TRANSACTION WILL BE PLEASE SIGN AND RETURN SEE COPY TAX PURPOSES FURNISHED UPON REQUEST OF THE CUSTOMER ENCLOSED RECEIPT REVERSE SIDE - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- REGISTERED REGISTERED
PAINE WEBBER GROUP INC. MEDIUM-TERM SUBORDINATED NOTE, SERIES D Due from Nine Months to 30 Years from Date of Issue (Floating Rate) No. U.S.$ CUSIP NO. IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE COMPLETED SOLELY FOR PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. ORIGINAL ISSUE DATE: INITIAL INTEREST MATURITY DATE: RATE: ISSUE PRICE: ORIGINAL ISSUE BUSINESS DAY DISCOUNT SECURITY: CENTERS: [ ] YES [ ] NO 2 REGULAR RECORD DATES: OPTIONAL PAYMENT OF REDEMPTION: ADDITIONAL AMOUNTS: [ ] YES [ ] NO [ ] YES [ ] NO INTEREST PAYMENT DATES: REDEMPTION DATES: OPTION TO ELECT REPAYMENT: [ ] YES [ ] NO TOTAL AMOUNT OF OID: REDEMPTION PRICES: REPAYMENT DATES: YIELD TO MATURITY: GLOBAL SECURITY: REPAYMENT PRICES: [ ] YES [ ] NO INITIAL ACCRUAL DEPOSITARY: CALCULATION AGENT: PERIOD OID: INTEREST RATE BASIS: MAXIMUM RATE: MINIMUM RATE: SPREAD: SPREAD MULTIPLIER: INDEX MATURITY: INTEREST RESET DATES: INTEREST LIBOR BASIS: DETERMINATION DATES [ ] Telerate (IF OTHER THAN AS Screen SPECIFIED ON THE Page 3750 REVERSE HEREOF): [ ] Reuters Screen LIBO Page OTHER TERMS: PAINE WEBBER GROUP INC., a Delaware corporation (herein called the "Company", which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to , or registered assigns, the principal sum of U.S. DOLLARS, on the Maturity Date specified above, and to pay interest thereon from and including the Original Issue Date shown above or from and including the last date in respect of which interest has been paid or provided for, as the case may be. Interest will be paid on the Interest Payment Dates shown above, commencing with the first such Interest Payment Date following the Original Issue Date shown above, at a rate determined in accordance with the provisions on the reverse hereof until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest 3 Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date specified above (whether or not a Business Day) next preceding such Interest Payment Date, except that in the case of a Security with an Original Issue Date that is after a Regular Record Date and before the next following Interest Payment Date, interest payable on such Interest Payment Date will be paid to the Person in whose name such Security was initially registered on the Original Issue Date; provided, however, that interest -------- ------- payable at Maturity shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof to be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. If this Security is not a Global Security, payments of interest on this Security (other than interest payable at Maturity) will be made by mailing a check to the person entitled thereto at its address appearing in the Security Register for the Securities on the applicable Regular Record Date. Notwithstanding the foregoing, at the option of the Company such payments may be made by wire transfer of immediately available funds to an account with a bank located in the continental United States (or other jurisdiction acceptable to the Company and Chemical Bank, as Paying Agent), but only if appropriate payment instructions have been received in writing by the Paying Agent not less than 5 Business Days prior to the applicable Interest Payment Date. Payments of principal of, premium, if any, and interest will be made in immediately available funds, if at maturity or upon earlier redemption, then on the Maturity Date or the date fixed for redemption, as applicable, upon surrender of this Security at the principal corporate trust office of the Paying Agent in the Borough of Manhattan, The City of New York, or such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, The City 4 of New York (the "Notes Office"), provided that this Security is presented to such office in time for the Paying Agent to make such payments in such funds in accordance with its normal procedures, and if upon early repayment, then on the applicable Repayment Date, provided that the Holder shall have complied with the requirements for repayment set forth on the reverse hereof. If this Security is a Global Security, the Depositary will be paid as agreed by the Company, the Trustee, the Paying Agent and the Depositary and beneficial owners hereof will be paid in accordance with the Depositary's and its participants' procedures in effect from time to time. "Maturity" shall mean the date on which the principal of this Security or an installment of principal becomes due, whether on the Maturity Date specified above, upon redemption or early repayment or otherwise. If the registered owner of this Security (as indicated above) is the Depositary or a nominee of the Depositary, this Security is a Global Security and the following legend is applicable: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. If the registered owner of this Security is The Depository Trust Company or a nominee of The Depository Trust Company, then unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. 5 Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized officer, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: PAINE WEBBER GROUP INC. By ------------------------- Title: [Seal] Attest: ------------------------- Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the Series designated therein referred to in the within-mentioned Indenture. Dated: CHEMICAL BANK DELAWARE OR CHEMICAL BANK DELAWARE As Trustee As Trustee By -------------------------- By Chemical Bank Authorized Officer As Authenticating Agent By -------------------------- Authorized Officer 6 PAINE WEBBER GROUP INC. MEDIUM-TERM SUBORDINATED NOTE, SERIES D Due from Nine Months to 30 Years from Date of Issue (Floating Rate) This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of March 15, 1988, as amended by a First Supplemental Indenture dated as of September 22, 1989, by a Second Supplemental Indenture dated as of March 22, 1991, and by a Third Supplemental Indenture dated as of November 30, 1993 (such Indenture, as so supplemented, is herein called the "Indenture"), between the Company and Chemical Bank Delaware, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof. If so specified on the face hereof, the Company will, subject to the limitations and exceptions set forth below, pay to a Holder of this Security who is a United States Alien (as defined below) such additional amounts ("Additional Amounts") as may be necessary in order that every net payment of the principal of, premium, if any, and interest on this Security, after deduction or withholding by the Company, the Trustee or any of the Company's paying agents for or on account of any present or future tax, assessment or other governmental charge imposed upon such Holder with respect to or as a result of such payment by the United States or any political subdivision or taxing authority thereof or therein, will not be less than the amount provided herein to be then due and payable. However, the Company shall not be required to make any such payment of Additional Amounts for or on account of: 7 (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor or beneficiary of, or a person holding a power over, such Holder, if such Holder is an estate or a trust, or between a member or shareholder of such Holder, if such Holder is a partnership or corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, person holding a power, member or shareholder) being or having been a citizen or resident or treated as a resident thereof or being or having been engaged in a trade or business therein or being or having been present therein or having or having had a permanent establishment therein or (ii) such Holder's present or former status as a domestic or foreign personal holding company, a passive foreign investment company or a controlled foreign corporation, a private foundation or other tax-exempt organization for United States Federal income tax purposes or a corporation that accumulates earnings to avoid United States Federal income tax; (b) any tax, assessment or other governmental charge that would not have been so imposed but for the presentation by the Holder of this Security for payment on a date more than 15 days after the date on which such payment became due and payable or the date on which payment thereof was duly provided for, whichever occurs later; (c) any estate, inheritance, gift, sales, transfer, excise or personal property tax or any similar tax, assessment or other governmental charge; (d) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Security, if such compliance is required by statute or by regulation of the United States or any taxing authority thereof as a precondition to relief or exemption from such tax, assessment or other governmental charge; 8 (e) any tax, assessment or other governmental charge that is (i) payable otherwise than by deduction or withholding from payments of principal of or premium, if any, or interest on this Security or (ii) required to be deducted or withheld by any paying agent from any such payment, if (and only if) such payment can be made without such deduction or withholding by any other paying agent; (f) any tax, assessment or other governmental charge imposed on interest received by a person holding, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of the Company entitled to vote (taking into account the applicable attribution of ownership rules under Section 871(h)(3) of the Internal Revenue Code of 1986, as amended (the "Code")) or that is a controlled foreign corporation related to the Company (directly or indirectly) through stock ownership; or (g) any combination of items (a), (b), (c), (d), (e) and (f); nor will Additional Amounts be paid with respect to payment of the principal of or premium, if any, or interest on this Security to any United States Alien that is a fiduciary or partnership or to a person other than the sole beneficial owner of this Security to the extent that a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of this Security. The Company, at its option, may redeem this Security as a whole, but not in part, at any time that this Security is registered in the name of a United States Alien, on giving not less than 30 nor more than 45 days' notice to the registered Holder hereof by mail in accordance with the provisions of the Indenture (which notice shall be irrevocable), at a redemption price equal to the principal amount hereof (or, in the case of an Original Issue Discount Security, the amount specified on the face hereof), together with accrued interest to the redemption date, if the Company determines that the Company has or will become obligated to pay Additional Amounts on this Security on the next succeeding Interest Payment Date as a result of any change in, or amendment to, the laws (or any regulations or rulings 9 promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in the application or official interpretation of such laws, regulations or rulings by a taxing authority, court or regulatory agency, whether or not rendered or taken with respect to the Company, or any action taken by any taxing authority, court or regulatory agency (including any change in administrative policy or enforcement practice of such taxing authority), whether or not taken with respect to the Company, which change or amendment becomes effective, or action is taken, on or after the Original Issue Date, and such obligation cannot be avoided by the Company taking reasonable measures available to it. Prior to giving any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee an Officers' Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred, and an opinion of independent legal counsel addressed to the Company and the Trustee to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of such change or amendment. Notice of the intention of the Company to redeem this Security shall not be given earlier than 90 days prior to the earliest date that the obligation to pay Additional Amounts would arise were a payment in respect of this Security due on such date. From and after any redemption date, if monies for the redemption of this Security pursuant to this paragraph shall have been made available for redemption on such redemption date, this Security shall cease to bear interest and the only right of the Holder of this Security shall be to receive payment of the redemption price of this Security and all unpaid interest accrued to such redemption date. For purposes of this paragraph, the Trustee may rely on an Officers' Certificate as to whether the registered Holder hereof is a United States Alien. The term "United States Alien" means any person who, for United States Federal income tax purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien fiduciary of a foreign estate or trust, or a foreign partnership, one or more of the members of which is, for United States Federal income tax purposes, a foreign corporation, a nonresident alien individual or a nonresident alien fiduciary of a foreign estate or trust. 10 If so specified on the face hereof, the Company may at its option redeem this Security in whole or from time to time in part on the date or dates designated as Redemption Dates on the face hereof at the Redemption Price or Redemption Prices designated on the face hereof, together with accrued interest to the date of redemption. The Company may exercise such option by mailing or causing the Trustee to mail a notice of such redemption at least 30 but not more than 45 days prior to the date of redemption. In the event of redemption of this Security in part only, a new Security or Securities of like tenor and with the same terms and conditions for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If less than all of the Securities having the same terms (except as to principal amount and date of issuance) as this Security are to be redeemed, the Securities to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate and otherwise as provided under the Indenture. If so specified on the face hereof, this Security will be repayable prior to the Maturity Date at the option of the Holder on the date or dates or under the circumstances designated as Repayment Dates on the face hereof at the Repayment Price or Repayment Prices designated on the face hereof together with accrued interest to the date of repayment. In order for this Security to be repaid, Chemical Bank, as Paying Agent, must receive at the Notes Office at least 30 but not more than 45 days prior to the applicable Repayment Date (a) appropriate wire instructions and (b) either (i) this Security with the form below entitled "Option to Elect Repayment" duly completed or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or trust company in the United States or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended) setting forth the name of the Holder of this Security, the principal amount of this Security, the portion of the principal amount of this Security to be repaid, the certificate number or a description of the tenor and terms of this Security, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Security with the form below entitled "Option to Elect Repayment" duly completed will be received by the Paying Agent not later than five Business Days after the date of such telegram, telex, facsimile, transmission or 11 letter. If the procedure described in clause (ii) of the preceding sentence is followed, this Security with such form duly completed must be received by the Paying Agent by such fifth Business Day. Any tender of this Security for repayment shall be irrevocable. The repayment option may be exercised by the Holder of this Security for less than the entire principal amount of this Security provided that the principal amount of the Security remaining outstanding after repayment is an authorized denomination. Upon such partial repayment this Security shall be cancelled and a new Security or Securities of like tenor and with the same terms and conditions for the remaining principal amount hereof shall be issued in the name of the Holder of this Security or as otherwise specified in the form entitled "Option to Elect Repayment". After exercise of the repayment option, no transfer or exchange of this Security (or, if this Security is to be repaid in part, the portion hereof to be repaid) will be permitted. All questions as to the validity, eligibility (including time of receipt) and acceptance of this Security for repayment will be determined by the Company, whose determination will be final, binding and non-appealable. The indebtedness evidenced by this Security is expressly subordinated in right of payment, to the extent and in the manner set forth in the Indenture, to the prior payment in full of all Superior Indebtedness (as defined in the Indenture) and this Security is issued subject to such provisions of the Indenture, and each Holder of this Security by accepting the same agrees to and shall be bound by such provisions and authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate such subordination as provided in the Indenture and appoints the Trustee his attorney-in-fact for any and all such purposes. The interest rate in effect with respect to this Security from and including the Original Issue Date to but excluding the first Interest Reset Date specified on the face hereof following the Original Issue Date will be the Initial Interest Rate specified on the face hereof; provided, however, that if the interest rate hereon is reset - -------- ------- daily or weekly and this Security was originally issued between a Regular Record Date and an Interest Payment Date, the Initial Interest Rate shall be the rate for the period from and including the Original Issue Date to but excluding the first Interest Reset Date on or after the first Interest Payment Date specified above following the Original Issue 12 Date. Commencing with the first Interest Reset Date following the Original Issue Date or the first Interest Reset Date on or after the first Interest Payment Date, as applicable, the rate at which interest on this Security is payable shall be adjusted on each Interest Reset Date; provided, however, that the interest rate in effect hereon - -------- ------- for the 10 days immediately prior to Maturity shall be that in effect on the 10th day preceding such Maturity. Each such adjusted rate shall be applicable on and after the Interest Reset Date to which it relates to but excluding the next succeeding Interest Reset Date or until Maturity. If any Interest Reset Date specified on the face hereof would otherwise be a day that is not a Business Day (as hereinafter defined), such Interest Reset Date shall be postponed to the next day that is a Business Day, except that, if the Interest Rate Basis specified on the face hereof is LIBOR, then if such next Business Day is in the next succeeding calendar month, each Interest Reset Date shall be the next preceding Business Day. Subject to applicable provisions of law and except as specified herein, if the Interest Rate Basis specified on the face hereof is the Commercial Paper Rate, Prime Rate, Federal Funds Rate, LIBOR or the Treasury Rate, then the rate of interest on this Security on and after such Interest Reset Date on which an adjustment is made shall be the rate determined in accordance with the provisions of the applicable heading below. DETERMINATION OF COMMERCIAL PAPER RATE. If the Interest Rate Basis specified on the face hereof is the Commercial Paper Rate, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be the Commercial Paper Rate on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "Commercial Paper Rate" means, with respect to each such Interest Determination Date, the Money Market Yield (calculated as described below) of the rate on such date for commercial paper having the Index Maturity specified on the face hereof as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15(519)") under the heading "Commercial Paper". In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date (as defined below) pertaining to such 13 Interest Determination Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate on such Interest Determination Date for commercial paper having the Index Maturity specified on the face hereof as published by the Federal Reserve Bank of New York in its daily statistical release, "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any successor publication of the Federal Reserve Bank of New York ("Composite Quotations") under the heading "Commercial Paper". If by 3:00 P.M., New York City time, on such Calculation Date such rate is not yet published in Composite Quotations, the rate for that Interest Determination Date shall be calculated by the Calculation Agent and shall be the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 A.M., New York City time, on that Interest Determination Date, of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the Index Maturity specified on the face hereof placed for an industrial issuer whose bond rating is "AA", or the equivalent, from at least one nationally recognized rating agency; provided, however, that if the dealers selected as -------- ------- aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate will be the Commercial Paper Rate in effect on such Interest Determination Date. "Money Market Yield" means a yield (expressed as a percentage) calculated in accordance with the following formula: Money Market Yield = D x 360 x 100 ------------- 360 - (D x M) where "D" refers to the per annum rate for commercial paper, quoted on a bank discount basis and expressed as a decimal; and "M" refers to the actual number of days in the interest period for which interest is being calculated. DETERMINATION OF PRIME RATE. If the Interest Rate Basis specified on the face hereof is the Prime Rate, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be the Prime Rate on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "Prime Rate" means, with respect to each such Interest Determination Date, the arithmetic mean of the prime or base 14 rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Interest Determination Date by three major money center banks in The City of New York selected by the Calculation Agent. If fewer than three such quotations are provided, the Prime Rate shall be determined on the basis of the quotations provided, if any, together with the rates furnished on such date in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of at least U.S.$750 million and being subject to supervision or examination by Federal or State authority, selected by the Calculation Agent to provide such rate or rates; provided, however, that if the banks or trust companies - -------- ------- selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate will be the Prime Rate in effect on such Interest Determination Date. DETERMINATION OF FEDERAL FUNDS RATE. If the Interest Rate Basis specified on the face hereof is the Federal Funds Rate, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be the Federal Funds Rate on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "Federal Funds Rate" means, with respect to each such Interest Determination Date, the rate on such date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the Federal Funds Rate will be the interest rate on such Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If such rate is not yet published in Composite Quotations by 3:00 P.M., New York City time, on such Calculation Date, the Federal Funds Rate for such Interest Determination Date will be the rate on such date made publicly available by the Federal Reserve Bank of New York which is equivalent to the rate which appears in H.15(519) under the heading "Federal Funds (Effective)"; provided, however, that if such rate is -------- ------- not made publicly available by the Federal Reserve Bank of New York by 9:00 A.M., New York City time, on such Calculation Date, the Federal Funds Rate will be the Federal Funds Rate in effect on such Interest Determination Date. 15 DETERMINATION OF LIBOR. If the Interest Rate Basis specified on the face hereof is LIBOR, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be LIBOR on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "LIBOR" will be determined with respect to each such Interest Determination Date by the Calculation Agent in accordance with the following provisions: LIBOR will be determined on the basis of either (a) if the LIBOR Basis specified on the face hereof is Telerate Screen Page 3750, the rate for deposits in U.S. dollars having the Index Maturity specified on the face hereof, commencing on the second London Banking Day (as defined below) immediately following such Interest Determination Date, which appears on Telerate Screen Page 3750 (as defined below) as of 11:00 A.M., London time, on such Interest Determination Date, if such rate appears on Telerate Screen Page 3750, or (b) if the LIBOR Basis specified on the face hereof is the Reuters Screen LIBO Page, the arithmetic mean, as determined by the Calculation Agent, of the offered rates for deposits in U.S. dollars of not less than $1,000,000 having the Index Maturity specified on the face hereof, commencing on the second London Banking Day immediately following such Interest Determination Date, which appear on the Reuters Screen LIBO Page (as defined below) as of 11:00 A.M., London time, on such Interest Determination Date, if at least two such offered rates appear on the Reuters Screen LIBO Page. "Telerate Screen Page 3750" means the display designated as page "British Bankers Assoc. Interest Settlement Rates" on the Telerate system, page 3750 (or such other page or pages as may replace such page on the system for the purpose of displaying such rates). "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page or pages as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). If no rate appears on Telerate Page 3750 or if fewer than two offered rates appear on the Reuters Screen LIBO Page, as applicable, LIBOR for such Interest Determination Date will be determined as described in the following paragraph. If neither Telerate Screen Page 3750 nor 16 the Reuters Screen LIBO Page is specified on the face hereof as the LIBOR Basis, LIBOR will be determined as if Telerate Screen Page 3750 had been specified. With respect to an Interest Determination Date on which no rate appears on Telerate Page 3750 as described in (a) in the preceding paragraph, if the LIBOR Basis specified on the face hereof is Telerate Screen Page 3750, or on which fewer than two offered rates appear on the Reuters Screen LIBO Page as described in (b) in the preceding paragraph, if the LIBOR Basis specified on the face hereof is the Reuters Screen LIBO Page, LIBOR will be determined on the basis of the rates at approximately 11:00 A.M., London time, on such Interest Determination Date at which deposits in U.S. dollars having the Index Maturity specified on the face hereof commencing on the second London Banking Day immediately following such Interest Determination Date and in a principal amount equal to an amount of not less than U.S.$1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time, are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Calculation Agent. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR for such Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York City time, on such Interest Determination Date by three major banks in The City of New York, selected by the Calculation Agent, for loans in U.S. dollars to leading European banks having the specified Index Maturity commencing on the second London Banking Day immediately following such Interest Determination Date and in a principal amount equal to an amount of not less than U.S.$1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time; provided, however, that if the banks selected as -------- ------- aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR with respect to such Interest Determination Date will be LIBOR in effect on such Interest Determination Date. 17 DETERMINATION OF TREASURY RATE. If the Interest Rate Basis specified on the face hereof is the Treasury Rate, then the interest rate on this Security with respect to each Interest Reset Date shall be calculated by the Calculation Agent and shall be the Treasury Rate on the Interest Determination Date pertaining to such Interest Reset Date, plus or minus the Spread, if any, or multiplied by the Spread Multiplier, if any, specified on the face hereof. "Treasury Rate" means, with respect to each such Interest Determination Date, the rate for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on the face hereof as published in H.15(519) under the heading "U.S. Government Securities--Treasury Bills--Auction Average (Investment)" or, if not so published by 9:00 A.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, the auction average rate (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) for such auction as otherwise made available by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the Index Maturity specified on the face hereof are not published or made available as provided above by 3:00 P.M., New York City time, on such Calculation Date, or if no such auction is held in a particular week (or on the preceding Friday, if applicable), then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates as of approximately 3:30 P.M., New York City time, on such Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent, for the issue of Treasury bills with a remaining maturity closest to the specified Index Maturity; provided, however, that if the dealers selected as -------- ------- aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate will be the Treasury Rate in effect on such Interest Determination Date. Unless otherwise specified on the face hereof, the Interest Determination Date pertaining to an Interest Reset Date for this Security will be, if the Interest Rate Basis for this Security is the Commercial Paper Rate or the Prime Rate, the second New York Business Day (as defined below) preceding such Interest Reset Date; if the Interest Rate Basis for this Security is LIBOR, the second London Banking 18 Day preceding such Interest Reset Date; if the Interest Rate Basis for this Security is the Federal Funds Rate, the first New York Business Day preceding such Interest Reset Date; and if the Interest Rate Basis for this Security is the Treasury Rate, the day of the week in which such Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week. If an auction date shall fall on any Interest Reset Date for such a Note, then such Interest Reset Date shall instead be the first New York Business Day immediately following such auction date. The "Calculation Date" pertaining to any Interest Determination Date will be the earlier of (i) the tenth day after such Interest Determination Date or, if any such day is not a New York Business Day, the next succeeding New York Business Day and (ii) the New York Business Day next preceding the relevant Interest Payment Date or Maturity, as the case may be. All percentages resulting from any calculations on this Security will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with five one- millionths of a percentage point being rounded upward) and all currency amounts used in or resulting from such calculations will be rounded, if necessary, to the nearest one-hundredth of a unit (with .005 of a unit being rounded upward). Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum Rate, if any, or less than the Minimum Rate, if any, shown on the face hereof. In addition, the interest rate on this Security will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general applicability. The Calculation Agent shall calculate the interest rate on this Security in accordance with the foregoing on or before each Calculation Date and shall promptly thereafter notify the Company and the Trustee of such interest rate. Any such calculation by the Calculation Agent shall be conclusive and binding on the Company, the Trustee and the Holder of this Security, absent manifest error. 19 The Calculation Agent will, upon the request of the Holder of this Security, provide to such Holder the interest rate hereon then in effect and, if determined, the interest rate which will become effective as of the next Interest Reset Date. Interest payments on each Interest Payment Date for this Security and at Maturity will include interest accrued from and including the later of the Original Issue Date or the most recent date to which interest has been paid or provided for to but excluding such Interest Payment Date or to but excluding Maturity. Notwithstanding the foregoing, if the interest rate hereon is reset daily or weekly, interest payable on any Interest Payment Date or at Maturity will include interest accrued from and including the later of the Original Issue Date hereof and the day following the most recent Regular Record Date to which interest hereon has been paid or provided for to and including the next preceding Regular Record Date or Maturity except that, if this Security was issued between a Regular Record Date and the next succeeding Interest Payment Date, interest paid on such Interest Payment Date will include interest accrued from and including such Original Issue Date to but excluding such Interest Payment Date, and interest paid on the Interest Payment Date following such Interest Payment Date will include interest accrued from and including such Interest Payment Date (or from and including such Original Issue Date, if interest was not paid or provided for on such Interest Payment Date) to and including the Regular Record Date following such Interest Payment Date. Accrued interest hereon from the Original Issue Date or from the last date to which interest hereon has been paid or provided for, as the case may be, shall be an amount calculated by multiplying the face amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day from the Original Issue Date or from the last date to which interest shall have been paid or provided for, as the case may be, to the date for which accrued interest is being calculated. The interest factor (expressed as a decimal) for each such day shall be computed by dividing the interest rate (expressed as a decimal) applicable to such day by 360, if the Interest Rate Basis specified on the face hereof is a Commercial Paper Rate, Prime Rate, Federal Funds Rate or LIBOR, or the actual number of days in the year, if the Interest Rate Basis specified on the face hereof is the Treasury Rate. 20 Any payment of principal of (and premium, if any) or interest required to be made on this Security on a day which is not a Business Day need not be made on such day, but may be made on the next day which is such a Business Day with the same force and effect as if made on such day, and no interest shall accrue as a result of such delayed payment, except that, if the Interest Rate Basis specified on the face hereof is LIBOR, then if such next Business Day is in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day. "Business Day" means each day, other than a Saturday or Sunday, that is (i) not a day on which banking institutions in the Business Day Centers specified on the face hereof are authorized or obligated by law or executive order to close and (ii) if the Interest Rate Basis specified on the face hereof is LIBOR, a London Banking Day. As used herein, "London Banking Day" shall mean any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. "New York Business Day", as used herein, shall mean each day, other than a Saturday or Sunday, that is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Any terms or conditions of this Security ("Other Terms") specified on the face hereof under "Other Terms" shall apply to this Security. In the event of any conflict between any Other Terms and any other terms or conditions of this Security, the Other Terms shall control. Notwithstanding anything herein to the contrary, if this Security is an Original Issue Discount Security, the amount payable in the event of acceleration following an Event of Default prior to the Maturity Date hereof in lieu of the principal amount due at the Maturity Date hereof shall be the Amortized Face Amount of this Security as of the date of declaration of acceleration. The "Amortized Face Amount" of this Security shall be an amount equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Maturity (as set forth on the face hereof) 21 (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount of this Security exceed its principal amount. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of 66-2/3% in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Security of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the Holders of not less than 25% in principal amount of the Outstanding Securities of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, the Trustee shall not have received from the Holders of a majority in principal amount of the Outstanding Securities of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; provided, however, that such limitations do -------- ------- not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (and premium, if any) or interest on this Security on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter 22 or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, places and rates, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register upon surrender of this Security for registration of transfer to the Security Registrar at the Notes Office duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and having the same terms and conditions and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form, without coupons, in denominations of U.S. $100,000 and any integral multiple of U.S.$1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of different authorized dominations and having the same terms and conditions, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. 23 All terms used in this Security which are defined in the Indenture and are not otherwise defined herein shall have the meanings assigned to them in the Indenture. 24 OPTION TO ELECT REPAYMENT The undersigned owner of this Security hereby irrevocably elects to have the Company repay the principal amount of this Security or portion hereof below designated at the applicable Repayment Price indicated on the face hereof plus interest accrued to the applicable Repayment Date. Dated: ------------------- - -------------------------- Signature Sign exactly as name appears on the front of this Security [SIGNATURE GUARANTEE - required only if Securities are to be issued and delivered to other than the registered holder] Principal amount to be Fill in for repaid, if amount to be registration of repaid is less than the Securities if to be principal amount of this issued otherwise than Security (principal amount to registered holder: remaining must be an authorized denomination) Name: --------------------- U.S.$ --------------------- Address: ------------------ ------------------ (Please print name and address including zip code) SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER --------------------------- 25 --------------------- ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: UNIF GIFT MIN ACT... TEN COM - as tenants in ......... Custodian .......... common (Cust) (Minor) TEN ENT - as tenants by Under Uniform Gifts to the entireties Minors Act JT TEN - as joint tenants with right of survivorship and .............................. not as tenants in (State) common Additional abbreviations may also be used though not in the above list. ------------------- FOR VALUED RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Other Identifying Number of Assignee ------------------------------ / / / / - ------------------------------- ----------------------------------- ------------------------------------------------------------------- PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE 26 ------------------------------------------------------------------- the within Security and all rights thereunder, hereby irrevocably constituting and appointing attorney to transfer said Security -------------------------- on the books of the Company, with full power of substitution in the premises. Dated: ------------------------------ -------------------------------- Signature EX-4.2(B) 10 ======================================================================== PAINE WEBBER GROUP INC. to CHEMICAL BANK ---------------- Senior Debt Securities ---------------- First Supplemental Indenture ---------------- Dated as of September 22, 1989 Supplementing the Indenture Dated as of March 15, 1988 ---------------- ======================================================================== 1 FIRST SUPPLEMENTAL INDENTURE dated as of September 22, 1989, between PAINE WEBBER GROUP INC., a corporation duly organized and existing under the laws of Delaware (herein called the "Company"), having its principal office at 1285 Avenue Of the Americas, New York, New York 10019, and Chemical Bank a corporation duly organized and existing under the laws of the State of New York, as Trustee (herein called the "Trustee"). RECITALS The Company and the Trustee are parties to an Indenture dated as of March 15, 1988 (the "Indenture") relating to the issuance from time to time by the Company of its Securities. Capitalized terms used herein, not other- wise defined, shall have the same meanings given them in the Indenture. The Company has requested the Trustee to join with it in the execution and delivery of this first supplemental indenture (the "First Supplemental Indenture") in order to supplement and amend the Indenture, by amending and adding certain provisions thereof, to permit the Company to re- quire, if it shall so elect, that Registered Securities of any series be issued, in whole or in part, in the form of one or more Global Securities (as defined herein). Section 901 of the Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee, without the consent of any Holders of the Securities, to make any provisions with respect to matters or questions arising under the Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect. The Company has determined that this First Supple- mental Indenture complies with said Section 901 and does not require the consent of any Holders of Securities. At the request of the Trustee, the Company has furnished the Trustee with an Opinion of Counsel complying with the requirements of Section 903 of the Indenture, stating, among other things, that the execution of this First Supplemental Indenture is authorized or permitted by the Indenture, and an Officers' Certificate and Opinion of Counsel complying with the requirements of Section 102 of 2 the Indenture, and has delivered to the Trustee a Board Resolution as required by Section 901 of the Indenture authorizing the execution by the Company of this First Supplemental Indenture and its delivery by the Company to the Trustee. All things necessary to make this First Supplemen- tal Indenture a valid agreement of the Company and the Trustee, in accordance with the terms of the Indenture, and a valid amendment of and supplement to the Indenture have been done. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: I. AMENDMENTS TO THE INDENTURE A. Section 101 of the Indenture is amended (i) to add new definitions thereto in the appropriate alphabetical sequence, as follows: "Depositary" means, unless otherwise specified by the Company pursuant to either Section 301 or 312, with respect to the Securities of any series issuable or issued in whole or in part as one or more Global Security, The Depository Trust Company, New York, New York, or any successor thereto registered as a clearing agency under the Securities and Exchange Act Of 1934, as amended, and any other applicable statute or regula- tion. "Global Security" means, unless otherwise speci- fied by the Company pursuant to either Section 301 or 312, with respect to any series of Securities issued hereunder, a Registered Security which is executed by the Company and authenticated and delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction, all in accordance with this Indenture and an indenture supplemental hereto, if any, or a Board Resolution and pursuant to a Company Order, which shall be registered in the name of the Depositary or its nominee and which shall represent, and shall be 3 denominated in an amount equal to the aggregate princi- pal amount of, all the Outstanding Securities of such series or any portion thereof, in either case having the same terms, including, without limitation, the same original issue date, date or dates on which principal is due, and interest rate or method of determining interest. The term "global form" or "definitive global registered form" when used in this Indenture shall include Global Securities. and (ii) to delete the word "Fully" from the phrase "Fully Registered Securities" in the definition of "Regular Record Date". B. Section 301 of the Indenture is amended to (i) add Section 312 to the sections referred to in the parenthetical exception to subparagraph (2) of the second paragraph of Section 301, (ii) redesignate subparagraph (18) as subparagraph (19) and subparagraph (19) as subpara- graph (20) and (iii) add a new subparagraph (18) which reads as follows: "(18) whether the Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities; the terms and conditions, if any, upon which such Global Security or Securities may be exchanged in whole or in part for other individual Securities, and the Depositary for such Global Security or Securities;" C. Each of the second paragraph and the third paragraph of Section 305 of the Indenture is amended to add the words "Subject to Section 312," before the first word cf the first sentence of such paragraph. D. A new paragraph is added at the end of Section 307 of the Indenture, which reads in its entirety as follows: "None of the Company, the Trustee, any Paying Agent, any Authenticating Agent Or the Security Regis- trar will have any responsibility or liability for any aspect of the records relating to or payments made on account of any beneficial ownership interest in a Global Security or any other Security issued in global form or for maintaining, supervising or reviewing any records relating to such beneficial ownership inter- est." 4 E. Article Three of the Indenture is amended to add a new Section 312, which reads in its entirety as follows: "Section 312. Certain Provisions Relating to Global Securities. If the Company shall establish pursuant to subparagraph (18) of Section 301 that the Registered Securities of a particular series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with Section 303 and the Company Order delivered to the Trustee thereunder with respect to such series, authenticate and deliver such Global Security or Securities, which (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by such Global Security or Securities, (ii) shall be registered in the name of the Depositary for such Global Security or Securities or its nominee, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instruction and (iv) unless otherwise specified by the Company pursuant to Section 301, shall bear a legend substan- tially to the following effect: 'Unless and until it is exchanged in whole or in part for the individual Securities represented hereby, this Global Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.' Notwithstanding any other provision of Section 203, of Section 305 or of this Section 312, subject to the provisions of the following paragraph, unless otherwise specified by the Company pursuant to Section 301 or unless the terms of a Global Security expressly permit such Global Security to be exchanged in whole or in part for individual Securities, a Global Security may be transferred, in whole but not in part in the manner provided in Section 305, only to a nominee of the Depositary for such Global Security, or to the Depositary, or to a successor Depositary for such Global Security selected or approved by the Company, or to a nominee of such successor Depositary. 5 If at any time the Depositary for the Global Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities of such series or if at any time the Depositary for the Global Securities of such series shall no longer be eligible or in good standing under the Securities Exchange Act of 1934, as amended, or any other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to such Global Security. If a successor Depositary for the Global Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligi- bility, the Company's election pursuant to Section 301 shall no longer be effective with respect to the Global Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Securi- ties of such series in exchange for the Global Securi- ties of such series, will authenticate and deliver individual Securities of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Global Securities of such series in exchange for such Global Security or Global Securities. The Company may at any time and in its sole discretion determine that the Securities of any series issued or issuable in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Request for the authentication and delivery of individual Securities of such series in exchange in whole or in part for such Global Security, will authen- ticate and deliver individual Securities of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Security Or Securities of such series in exchange for such Global Security or Securi- ties. If specified by the Company pursuant to Sec- tion 301 with respect to a series of Securities issued or issuable in the form of one or more Global Securi- ties, the Depositary for any such Global Security may at its option surrender such Global Security in exchange in whole or in part for individual Securities of such series of like tenor and terms in definitive 6 form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver, without service charge, (A) to each Person specified by such Depositary a new Security or Securities of the same series of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (B) to such Depositary a new Global Security of like tenor and terms and in an authorized denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities delivered to Holders thereof. In any exchange provided for in any of the preced- ing three paragraphs, the Company will execute and the Trustee will authenticate and deliver individual Securities in definitive registered form in authorized denominations. Upon the exchange of the entire princi- pal amount of a Global Security for individual Securi- ties, such Global Security shall be cancelled by the Trustee. Securities issued in exchange for a Global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or the Security Registrar. Provided that the Company and the Trustee or the Security Registrar have so agreed, the Trustee shall deliver such Registered Securities to the persons in whose names the Registered Securities are registered. Until such time as the Depositary notifies the Company that it is willing and able to make any elec- tion on behalf of the Persons with a beneficial inter- est in a Security entitled to be made by the Holder of such Security relating to the payment of principal and interest, Securities denominated in a Foreign Currency will not be issued in the form of a Global Security. Notwithstanding the provisions of Section 203 and of Article XIII, with respect to any Global Security, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as 7 between a Depositary and holders of beneficial inter- ests in any Global Security, the operation of customary practices governing the exercise of the rights of the Depositary as Holder of such Global Security." II. GENERAL PROVISIONS A. The recitals contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representation as to the validity of this First Supplemental Indenture. The Indenture, as supplemented and amended by this First Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. B. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. C. This First Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF the parties hereto have caused this First Supplemental Indenture to be duly executed, and 8 their corporate seals to be hereunto affixed and attested, all as of the day and year first above written. PAINE WEBBER GROUP INC. by /s/ ----------------------- Title: Attorney-in-Fact (SEAL) Attest: /s/ Dorothy Haughey - ----------------------- CHEMICAL BANK, as Trustee by /s/ --------------------------- Title: Senior Trust Officer (SEAL) Attest: /s/ - ----------------------- EX-4.2(C) 11 EXECUTION COPY ============================================================ PAINE WEBBER GROUP INC. to CHEMICAL BANK ________________ Senior Debt Securities ________________ Second Supplemental Indenture ________________ Dated as of March 22, 1991 Supplementing the Indenture Dated as of March 15, 1988 and Supplemented as of September 22, 1989 ________________ ============================================================ SECOND SUPPLEMENTAL INDENTURE dated as of March 22, 1991, between PAINE WEBBER GROUP INC., a corporation duly organized and existing under the laws of Delaware (herein called the "Company"), having its principal office at 1285 Avenue of the Americas, New York, New York 10019, and CHEMICAL BANK, a corporation duly organized and existing under the laws of the State of New York, as Trustee (herein called the "Trustee"). RECITALS The Company and the Trustee are parties to an Indenture dated as of March 15, 1988, as supplemented as of September 22, 1989 (the "Indenture"), relating to the issu- ance from time to time by the Company of its Securities. Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Indenture. The Company has requested the Trustee to join with it in the execution and delivery of this second supplemental indenture (the "Second Supplemental Indenture") in order to supplement and amend the Indenture by amending and restating certain provisions thereof to cause the Indenture to comply with amendments to the Trust Indenture Act of 1939 effected by the Trust Indenture Reform Act of 1990 and to take account of recent changes in United States tax rules as a result of the promulgation of Treasury Regula- tion 1.163-5(c)(2)(i)(D) (the "D Rules"). Section 901 of the Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee, without the consent of any Holders of the Securities, to cure any ambiguity, to correct or supplement any provision therein which may be defective or inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect. Section 107 of the Indenture provides that if any provision thereof limits, qualifies or conflicts with another provision thereof which is required to be included therein by the Trust Indenture Act, such required provision shall control. 2 The Company has determined that this Second Supplemental Indenture complies with said Section 901 and does not require the consent of any Holders of Securities. At the request of the Trustee, the Company has furnished the Trustee with an Opinion of Counsel complying with the requirements of Section 903 of the Indenture, stating, among other things, that the execution of this Second Supplemental Indenture is authorized or permitted by the Indenture, and an Officers' Certificate and Opinion of Counsel complying with the requirements of Section 102 of the Indenture, and has delivered to the Trustee a Board Resolution as required by Section 901 of the Indenture authorizing the execution by the Company of this Second Supplemental Indenture and its delivery by the Company to the Trustee. All things necessary to make this Second Supple- mental Indenture a valid agreement of the Company and the Trustee, in accordance with the terms of the Indenture, and a valid amendment of and supplement to the Indenture have been done. NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: I. AMENDMENTS TO THE INDENTURE TO INCORPORATE CHANGES UNDER THE TRUST INDENTURE REFORM ACT OF 1990 A. The definition of "Trust Indenture Act" in Section 101 of the Indenture is amended to add to such definition the phrase ", as amended by the Trust Indenture Reform Act of 1990 and" after the date "1939" in the second line of such definition. B. Section 102 of the Indenture is amended to add to such Section: (i) the parenthetical phrase "(including any covenants compliance with which constitutes a condition precedent)" following the words "precedent" in each of the sixth and tenth lines, respectively, of the first paragraph of such Section; and 3 (ii) the parenthetical phrase "(other than annual certificates provided pursuant to Section 1004)" following the word "Indenture" in the third line of the second paragraph of such Section. C. Section 104(g) of the Indenture is amended to read in its entirety as follows: "If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, or for the purpose of determining the identity of Holders entitled to vote or consent to any action authorized or permitted by Sections 512 or 513 of this Indenture, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. For the purpose of determining the identity of Holders entitled to vote or consent to any action authorized or permitted by Sections 512 or 513 of this Indenture, the record date shall be the later of 15 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee pursuant to Section 701 of this Indenture prior to such solicitation. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, -------- agreement or consent by the holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date." D. Section 107 of the Indenture is amended to read in its entirety as follows: "If any provision hereof limits, qualifies or conflicts with the duties imposed by any of Sections 310 4 through 317, inclusive, of the Trust Indenture Act through the operation of Section 318(c) thereof, such imposed duties shall control." E. Section 608 of the Indenture is amended to read in its entirety as follows: "The Trustee for the Securities of any series issued hereunder shall be subject to the provisions of Sec- tion 310(b) of the Trust Indenture Act during the period of time provided for therein. In determining whether the Trustee has a conflicting interest as defined in Section 310(b) of the Trust Indenture Act with respect to the Securities of any series, there shall be excluded this Indenture with respect to Securities of any particular series of Securities other than that series. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the penultimate paragraph of Sec- tion 310(b) of the Trust Indenture Act." F. Section 609 of the Indenture is amended to read in its entirety as follows: "There shall at all times be a Trustee hereunder for each series of Securities, which shall be at all times either (i) a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by Federal, State or District of Columbia authority, or (ii) a corporation or other Person organized and doing business under the laws of a foreign govern- ment that is permitted to act as Trustee pursuant to a rule, regulation or order of the Commission, authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by authority of such foreign govern- ment or a political subdivision thereof substan- tially equivalent to supervision or examination applicable to United States institutional trustees, 5 in either case having a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to require- ments of the aforesaid supervising or examining authority, then for the purposes of this Section 609, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither the Company nor any Person directly or indirectly controlling, controlled by, or under common control with the Company shall serve as Trustee for the Securities of any series issued hereunder. If at any time the Trustee for the Securities of any series shall cease to be eligible in accordance with the provisions of this Section 609, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six." G. Section 610(d)(1) of the Indenture is amended to: (i) delete the phrase "Section 608(a)" after the word "with" in the first line thereof and to add the phrase "Section 310(b) of the Trust Indenture Act" in substitution for such deleted phrase; and (ii) to add immediately after the word "months" in the fourth line thereof the phrase ", unless the Trustee's duty to resign is stayed in accordance with the provisions of Section 310(b) of the Trust Indenture Act". H. Section 613 of the Indenture is hereby amended to: (i) substitute the word "three" for the word "four" in the fourth line of subsection (a) thereof; (ii) substitute the word "three" for the word "four" in the fourth line of subsection (a)(1) thereof; (iii) substitute the word "three" for the word "four" in the fifth line of subsection (a)(2) thereof; (iv) substitute the word "three" for the word "four" in the fourth line of paragraph (B) thereof; (v) substitute the word "three" for the word "four" in the fifth and eleventh lines, respectively, of paragraph (C) thereof; 6 (vi) substitute the word "three" for the word "four" in the second line of the first full paragraph immediately after paragraph (D) thereof; (vii) substitute the word "three" for the word "four" in the second and sixth lines, respectively, of the third full paragraph after paragraph (D) thereof; and (viii) substitute the word "three" for the word "four" in subparagraphs (i) and (ii) of the third full paragraph after paragraph (D) thereof. I. Section 703(a) of the Indenture is amended to: (i) add the phrase "any of the following events which may have occurred during the twelve months preceding the date of such report (but if no such event has occurred within such period, no report need be transmitted)" immediately after the word "to" on the fifth line of subsection (a) of Section 703; (ii) add the phrase "any change to" immediately after (1) of Section 703(a)(1) and delete from Section 703(a)(1) the phrase ", or in lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified under said Sections, a written statement to such effect"; (iii) add a new subsection (2) thereto, which will read in its entirety as follows: "(2) the creation of or any material change to a relationship specified in Section 310(b)(1) through Section 310(b)(10) of the Trust Indenture Act;" (iv) change subsection number "(2)" to "(3)"; (v) change subsection numbers "(3)" and "(4)" to "(4)" and "(5)", respectively, and add the phrase "any change to" immediately after such subsection numbers; and (vi) change subsection numbers "(5)" and "(6)" to "(6)" and "(7)", respectively. 7 J. Section 1004 of the Indenture is amended to read in its entirety as follows: "The Company will furnish to the Trustee, within 120 days after the end of each fiscal year of the Company (which as of the date hereof ends on December 31 of each year) ending after the date hereof so long as any Security is Outstanding hereunder, a certificate of the principal executive officer, the principal financial officer or the principal accounting officer of the Company, stating that in the course of the performance by the signer of his or her duties as such officer of the Company he or she would normally obtain knowledge of any default by the Company in the performance, observance or fulfillment of any covenant, agreement or condition contained in this Indenture, and stating whether or not, to the knowledge of the signer, the Company has complied with all conditions, agreements and covenants on its part contained in this Indenture, and if the signer has obtained knowledge of any default by the Company in the performance, observance or fulfillment of any such condition, agreement or covenant, specifying each such default and the nature thereof (provided that, for purposes of this -------- Section 1004, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture)." K. The Table of Contents of the Indenture is amended to reflect the additions and deletions described in this Second Supplemental Indenture. II. AMENDMENTS TO THE INDENTURE AS A RESULT OF THE ADOPTION OF THE D RULES A. Section 303 of the Indenture is amended to replace the third paragraph of such Section with the follow- ing paragraph: "At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series, together with any Coupons appertaining thereto, executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authen- ticate and deliver such Securities; provided, however, that, -------- ------- in connection with its original issuance, no Bearer Security 8 (including any temporary Bearer Security issued pursuant to Section 304 which is not a global Security) shall be mailed or otherwise delivered to any location in the United States; and provided further that a Bearer Security may be delivered ---------------- outside the United States in connection with its original issuance only if the Person entitled to receive such Bearer Security (including any temporary Bearer Security issued pursuant to Section 304 which is not a global Security) shall have furnished a certificate in the form set forth in Exhibit A.1 to this Indenture, dated the date of delivery of such Bearer Security or, in the case of a Bearer Security to be received in exchange for all or a portion of a temporary global Security, no earlier than 15 days prior to the date on which Euroclear or CEDEL S.A., as the case may be, furnishes to the Common Depositary (as defined in Section 304), in accordance with the procedures set forth in Section 304, a certificate in the form set forth in Exhibit A.2 to this Indenture relating to all or such portion of such temporary global Security. If any Security shall be represented by a definitive global Security in bearer form, then, for purposes of this Section and Sec- tion 304, the notation of a beneficial owner's interest therein upon original issuance of such Security or upon exchange of a portion of a temporary global Security shall be deemed to be delivery in connection with its original issuance of such beneficial owner's interest in such defini- tive global Security in bearer form. Except as permitted by Section 306, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant Coupons for interest then matured have been detached and canceled." B. Section 304 of the Indenture is amended to read in its entirety as follows: "Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in registered form or, if authorized, in bearer form with one or more Coupons or without Coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced conclusively by their execution of such Securities. Such temporary Securities may be in global form. 9 Except in the case of temporary global Securities in bearer form (which shall be exchanged in accordance with the provisions of the following two paragraphs), if temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company maintained pursuant to Section 1002 in a Place of Payment for such series for the purpose of exchanges of Securities of such series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series (accompanied by any unmatured Coupons appertaining thereto) the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like aggregate principal amount of definitive Securities of the same series and of like tenor or authorized denominations and having the same terms and conditions; provided, however, that no definitive Bearer -------- ------- Security shall be delivered in exchange for a temporary Registered Security; and provided further that a definitive ---------------- Bearer Security shall be delivered in exchange for a temporary Bearer Security only in compliance with the conditions set forth in Section 303. If temporary global Securities of any series are issued in bearer form, any such temporary global Securities in bearer form shall, unless otherwise provided therein, be delivered to the London office of a depositary or common depositary (the "Common Depositary"), for the benefit of Euroclear and CEDEL S.A., for credit to the respective accounts of the beneficial owners of such Securities (or to such other accounts as they may direct). Without unnecessary delay but in any event not later than the date specified in, or determined pursuant to the terms of, any such temporary global Security in bearer form (the "Exchange Date"), the Company shall deliver to the Trustee definitive Securities, in aggregate principal amount equal to the principal amount of such temporary global Security, executed by the Company. On or after the Exchange Date such temporary global Security shall be surrendered by the Common Depositary to the Trustee or an Authenticating Agent, as the Company's agent for such purpose, to be exchanged, in whole or from time to time in part, for definitive Securities without charge and the Trustee shall authenticate and deliver, in exchange for each portion of such temporary global Security, an equal aggregate 10 principal amount of definitive Securities of the same series of authorized denominations and of like tenor as the portion of such temporary global Security to be exchanged. The definitive Securities to be delivered in exchange for any such temporary global Security in bearer form shall be in bearer form, registered form, definitive global form (registered or bearer), or any combination thereof, as specified as contemplated by Section 301, and, if any combination thereof is so specified, as requested by the beneficial owner thereof; provided, however, that, -------- ------- unless otherwise specified in such temporary global Security in bearer form, upon such presentation by the Common Deposi- tary, such temporary global Security in bearer form shall be accompanied by a certificate dated the Exchange Date or a subsequent date and signed by Euroclear as to the portion of such temporary global Security in bearer form held for its account then to be exchanged and a certificate dated the Exchange Date or a subsequent date and signed by CEDEL S.A. as to the portion of such temporary global Security in bearer form held for its account then to be exchanged, each in the form set forth in Exhibit A.2 to this Indenture; and provided further that definitive Bearer Securities shall be - ---------------- delivered in exchange for a portion of a temporary global Security in bearer form only in compliance with the require- ments of Section 303. Unless otherwise specified in such temporary global Security in bearer form, the interest of a beneficial owner of Securities of a series in a temporary global Security in bearer form shall be exchanged for definitive Securities of the same series and of like tenor following the Exchange Date when the beneficial owner instructs Euroclear or CEDEL S.A., as the case may be, to request such exchange on his behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A.1 to this Indenture, dated no earlier than 15 days prior to the date on which Euroclear or CEDEL S.A., as the case may be, furnishes to the Common Depositary in accordance with the preceding paragraph a certificate in the form set forth in Exhibit A.2 to this Indenture that relates to the interest to be exchanged for definitive Securities. Copies of the certificate in the form set forth in Exhibit A.1 to this Indenture in blank shall be available from the offices of Euroclear, CEDEL S.A., the Trustee, any Authenticating Agent appointed for such series of Securities and any Paying Agent appointed for such series of Securities. Unless otherwise specified in such temporary global Security in bearer form, any such exchange shall be made free of charge to the beneficial 11 owners of such temporary global Security in bearer form, except that a Person receiving definitive Securities must bear the cost of insurance, postage, transportation and the like in the event that such Person does not take delivery of such definitive Securities in person at the offices of Euroclear or CEDEL S.A. The definitive Securities in bearer form to be delivered in exchange for any portion of a temporary global Security in bearer form shall be delivered only outside the United States. Until exchanged in full as hereinabove provided, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of the same series and of like tenor authenticated and delivered hereunder, except that, unless otherwise specified as contemplated by Section 301, no interest shall be payable on a temporary global Security in bearer form on an Interest Payment Date occurring after the applicable Exchange Date, and any interest payable on a temporary global Security in bearer form on an Interest Payment Date for Securities of such series occurring prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL S.A. on such Interest Payment Date only upon delivery by Euroclear and CEDEL S.A. to the Trustee of a certificate or certificates in the form set forth in Exhibit A.3 to this Indenture, for credit without further interest on or after such Interest Payment Date to the respective accounts of the Persons who are the beneficial owners of such temporary global Security in bearer form (or to such other accounts as they may direct) on such Interest Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A.4 to this Indenture. Any interest so received by Euroclear and CEDEL S.A. and not paid as herein provided shall be returned to the Trustee immediately prior to the expiration of two years after such Interest Payment Date in order to be repaid to the Company in accordance with Section 1003." C. Exhibit A.1 to this Second Supplemental Indenture replaces Exhibit A.1 to the Indenture. D. Exhibit A.4 to this Second Supplemental Indenture replaces Exhibit A.4 to the Indenture. 12 III. GENERAL PROVISIONS A. The recitals contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representation as to the validity of this Second Supplemental Indenture. The Indenture, as supplemented and amended by this Second Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. B. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. C. This Second Supplemental Indenture shall be deemed to be a contract under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of said State. IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, and their corporate seals to be hereunto affixed and attested, all as of the day and year first above written. PAINE WEBBER GROUP INC., by /s/ --------------------------- Title: By Power of Attorney (SEAL) Attest: /s/ - --------------------- CHEMICAL BANK, as Trustee by --------------------------- Title: Senior Trust Officer (SEAL) Attest: /s/ - --------------------- EXHIBIT A [FORMS OF CERTIFICATION] EXHIBIT A.1 [FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO RECEIVE BEARER SECURITY] CERTIFICATE PAINE WEBBER GROUP INC. [Insert title or sufficient description of Securities to be delivered] This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities (i) are owned by a person that is not a United States person, (ii) are owned by a United States person that is (A) the foreign branch of a United States financial institu- tion (as defined in U.S. Treasury Regulations Sec- tion 1.165-12(c)(1)(v)) (a "financial institution") purchas- ing for its own account or for resale, or (B) a United States person who acquired the Securities through the foreign branch of a United States financial institution and who holds the Securities through the financial institution on the date hereof (and in either case (A) or (B), the financial institution hereby agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regula- tions thereunder), or (iii) are owned by a financial insti- tution for purposes of resale during the Restricted Period (as defined in U.S. Treasury Regulations Sec- tion 1.163-5(c)(2)(i)(D)(7)). In addition, financial institutions described in clause (iii) of the preceding sentence (whether or not also described in clause (i) or (ii)) certify that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of 2 Columbia), its territories, its possessions, the Commonwealth of Puerto Rico and other areas subject to its jurisdiction. We undertake to advise you by telex if the above statement as to beneficial ownership is not correct on the date of delivery of the above-captioned Securities in bearer form as to all of such Securities. We understand that this certificate may be required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably author- ize you to produce this certificate or a copy thereof to any interested party in such proceedings. Dated: ___________ 19__ [To be dated on or after the date determined as provided in the Indenture] [Name of Person Entitled to Receive Bearer Security] ______________________________ (Authorized Signature) Name: Title: EXHIBIT A.4 [FORM OF CERTIFICATE TO BE GIVEN BY BENEFICIAL OWNERS TO OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE] CERTIFICATE PAINE WEBBER GROUP INC. [Insert title or sufficient description of Securities] This is to certify that as of the Interest Payment Date on [Insert Date] and except as provided in the third paragraph hereof, the above-captioned Securities held by you for our account are beneficially owned by (i) a person that is not a United States person, (ii) a United States person that is (A) the foreign branch of a United States financial institution (as defined in U.S. Treasury Regulations Sec- tion 1.165-12(c)(1)(v)) (a "financial institution") purchas- ing for its own account or for resale, or (B) a United States person who acquired the Securities through the foreign branch of a United States financial institution and who holds the Securities through the financial institution on the date hereof (and in either case (A) or (B), the financial insti- tution hereby agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) a financial institution for purposes of resale during the Restricted Period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)). In addition, if the beneficial owner is a financial institution described in clause (iii) of the preceding sentence (whether or not also described in clause (i) or (ii)) it certifies that it has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Colum- bia), its territories, its possessions, the Commonwealth of Puerto Rico and other areas subject to its jurisdiction. 2 This certificate excepts and does not relate to U.S. $___________ principal amount of the above-captioned Securities appearing in your books as being held for our account as to which we are not yet able to certify and as to which we understand interest cannot be credited unless and until we are able to so certify. We understand that this certificate may be required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably author- ize you to produce this certificate or a copy thereof to any interested party in such proceedings. Dated: ___________ 19__ [To be dated on or after the 15th day before the relevant Interest Payment Date] [Name of Person Entitled to Receive interest] ______________________________ (Authorized Signature) Name: Title: EX-4.2(E) 12 ============================================================ PAINE WEBBER GROUP INC. to CHEMICAL BANK DELAWARE ________________ Subordinated Debt Securities ________________ First Supplemental Indenture ________________ Dated as of September 22, 1989 Supplementing the Indenture Dated as of March 15, 1988 ________________ ============================================================ FIRST SUPPLEMENTAL INDENTURE dated as of September 22, 1989, between PAINE WEBBER GROUP INC., a corporation duly organized and existing under the laws of Delaware (herein called the "Company"), having its principal office at 1285 Avenue of the Americas, New York, New York 10019, and Chemical Bank Delaware, a corporation duly organized and existing under the laws of the State of Delaware, as Trustee (herein called the "Trustee"). RECITALS The Company and the Trustee are parties to an Indenture dated as of March 15, 1988 (the "Indenture") relating to the issuance from time to time by the Company of its Securities. Capitalized terms used herein, not other- wise defined, shall have the same meanings given them in the Indenture. The Company has requested the Trustee to join with it in the execution and delivery of this first supplemental indenture (the "First Supplemental Indenture") in order to supplement and amend the Indenture, by amending and adding certain provisions thereof, to permit the Company to re- quire, if it shall so elect, that Registered Securities of any series be issued, in whole or in part, in the form of one or more Global Securities (as defined herein). Section 901 of the Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee, without the consent of any Holders of the Securities, to make any provisions with respect to matters or questions arising under the Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect. The Company has determined that this First Supple- mental Indenture complies with said Section 901 and does not require the consent of any Holders of Securities. At the request of the Trustee, the Company has furnished the Trustee with an Opinion of Counsel complying with the requirements of Section 903 of the Indenture, stating, among other things, that the execution of this 2 First Supplemental Indenture is authorized or permitted by the Indenture, and an Officers' Certificate and Opinion of Counsel complying with the requirements of Section 102 of the Indenture, and has delivered to the Trustee a Board Resolution as required by Section 901 of the Indenture authorizing the execution by the Company of this First Supplemental Indenture and its delivery by the Company to the Trustee. All things necessary to make this First Supplemen- tal Indenture a valid agreement of the Company and the Trustee, in accordance with the terms of the Indenture, and a valid amendment of and supplement to the Indenture have been done. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: I. AMENDMENTS TO THE INDENTURE A. Section 101 of the Indenture is amended (i) to add new definitions thereto in the appropriate alphabetical sequence, as follows: "Depositary" means, unless otherwise specified by the Company pursuant to either Section 301 or 312, with respect to the Securities of any series issuable or issued in whole or in part as one or more Global Security, The Depository Trust Company, New York, New York, or any successor thereto registered as a clearing agency under the Securities and Exchange Act of 1934, as amended, and any other applicable statute or regula- tion. "Global Security" means, unless otherwise speci- fied by the Company pursuant to either Section 301 or 312, with respect to any series of Securities issued hereunder, a Registered Security which is executed by the Company and authenticated and delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction, all in accordance with this Indenture and an indenture supplemental hereto, if any, 3 or a Board Resolution and pursuant to a Company Order, which shall be registered in the name of the Depositary or its nominee and which shall represent, and shall be denominated in an amount equal to the aggregate princi- pal amount of, all the Outstanding Securities of such series or any portion thereof, in either case having the same terms, including, without limitation, the same original issue date, date or dates on which principal is due, and interest rate or method of determining interest. The term "global form" or "definitive global registered form" when used in this Indenture shall include Global Securities. and (ii) to delete the word "Fully" from the phrase "Fully Registered Securities" in the definition of "Regular Record Date". B. Section 301 of the Indenture is amended to (i) add Section 312 to the sections referred to in the parenthetical exception to subparagraph (2) of the second paragraph of Section 301, (ii) redesignate subparagraph (18) as subparagraph (19) and subparagraph (19) as subparagraph (20) and (iii) add a new subparagraph (18) which reads as follows: "(18) whether the Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities; the terms and conditions, if any, upon which such Global Security or Securities may be exchanged in whole or in part for other individual Securities, and the Depositary for such Global Security or Securities;" C. Each of the second paragraph and the third paragraph of Section 305 of the Indenture is amended to add the words "Subject to Section 312," before the first word of the first sentence of such paragraph. D. A new paragraph is added at the end of Section 307 of the Indenture, which reads in its entirety as follows: "None of the Company, the Trustee, any Paying Agent, any Authenticating Agent or the Security Regis- trar will have any responsibility or liability for any aspect of the records relating to or payments made on account of any beneficial ownership interest in a Global Security or any other Security issued in global form or for maintaining, supervising or reviewing any 4 records relating to such beneficial ownership inter- est." E. Article Three of the Indenture is amended to add a new Section 312, which reads in its entirety as follows: "Section 312. Certain Provisions Relating to ------------------------------ Global Securities. If the Company shall establish ----------------- pursuant to subparagraph (18) of Section 301 that the Registered Securities of a particular series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee shall, in accordance with Section 303 and the Company Order delivered to the Trustee thereunder with respect to such series, authenticate and deliver such Global Security or Securities, which (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by such Global Security or Securities, (ii) shall be registered in the name of the Depositary for such Global Security or Securities or its nominee, (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instruction and (iv) unless otherwise specified by the Company pursuant to Section 301, shall bear a legend substan- tially to the following effect: 'Unless and until it is exchanged in whole or in part for the individual Securities represented hereby, this Global SeCurity may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.' Notwithstanding any other provision of Section 203, of Section 305 or of this Section 312, subject to the provisions of the following paragraph, unless otherwise specified by the Company pursuant to Section 301 or unless the terms of a Global Security expressly permit such Global Security to be exchanged in whole or in part for individual Securities, a Global Security may be transferred, in whole but not in part in the manner provided in Section 305, only to a nominee of the Depositary for such Global Security, or to the Depositary, or to a successor Depositary for 5 such Global Security selected or approved by the Company, or to a nominee of such successor Depositary. If at any time the Depositary for the Global Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities of such series or if at any time the Depositary for the Global Securities of such series shall no longer be eligible or in good standing under the Securities Exchange Act of 1934, as amended, or any other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to such Global Security. If a successor Depositary for the Global Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligi- bility, the Company's election pursuant to Section 301 shall no longer be effective with respect to the Global Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Securi- ties of such series in exchange for the Global Securi- ties of such series, will authenticate and deliver individual Securities of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Global Securities of such series in exchange for such Global Security or Global Securities. The Company may at any time and in its sole discretion determine that the Securities of any series issued or issuable in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Request for the authentication and delivery of individual Securities of such series in exchange in whole or in part for such Global Security, will authen- ticate and deliver individual Securities of such series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Security or Securities of such series in exchange for such Global Security or Securi- ties. If specified by the Company pursuant to Section 301 with respect to a series of Securities issued or issuable in the form of one or more Global Securi- ties, the Depositary for any such Global Security may 6 at its option surrender such Global Security in exchange in whole or in part for individual Securities of such series of like tenor and terms in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver, without service charge, (A) to each Person specified by such Depositary a new Security or Securities of the same series of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (B) to such Depositary a new Global Security of like tenor and terms and in an authorized denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities delivered to Holders thereof. In any exchange provided for in any of the preced- ing three paragraphs, the Company will execute and the Trustee will authenticate and deliver individual Securities in definitive registered form in authorized denominations. Upon the exchange of the entire principal amount of a Global Security for individual Securities, such Global Security shall be cancelled by the Trustee. Securities issued in exchange for a Global Security pursuant to this Section shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or the Security Registrar. Provided that the Company and the Trustee or the Security Registrar have so agreed, the Trustee shall deliver such Registered Securities to the persons in whose names the Registered Securities are registered. Until such time as the Depositary notifies the Company that it is willing and able to make any elec- tion on behalf of the Persons with a beneficial inter- est in a Security entitled to be made by the Holder of such Security relating to the payment of principal and interest, Securities denominated in a Foreign Currency will not be issued in the form of a Global Security. Notwithstanding the provisions of Section 203 and of Article XIII, with respect to any Global Security, 7 nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and holders of beneficial inter- ests in any Global Security, the operation of customary practices governing the exercise of the rights of the Depositary as Holder of such Global Security." II. GENERAL PROVISIONS A. The recitals contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representation as to the validity of this First Supplemental Indenture. The Indenture, as supplemented and amended by this First Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. B. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. C. This First Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and 8 their corporate seals to be hereunto affixed and attested, all as of the day and year first above written. PAINE WEBBER GROUP INC. by /s/ ------------------------ Title: Attorney-in-Fact (SEAL) Attest: /s/ - ----------------------- CHEMICAL BANK DELAWARE, as Trustee by /s/ ------------------------ Title: SENIOR TRUST OFFICER (SEAL) Attest: /s/ - ----------------------- Assistant Secretary EX-4.2(F) 13 EXECUTION COPY ======================================================================== PAINE WEBBER GROUP INC. to CHEMICAL BANK DELAWARE ---------------- Subordinated Debt Securities ---------------- Second Supplemental Indenture ---------------- Dated as of March 22, 1991 Supplementing the Indenture Dated as of March 15, 1988 and Supplemented as of September 22, 1989 ---------------- ======================================================================== SECOND SUPPLEMENTAL INDENTURE dated as of March 22, 1991, between PAINE WEBBER GROUP INC., a corporation duly organized and existing under the laws of Delaware (herein called the "Company"), having its principal office at 1285 Avenue of the Americas, New York, New York 10019, and CHEMICAL BANK, a corporation duly organized and existing under the laws of the State of Delaware, as Trustee (herein called the "Trustee"). RECITALS The Company and the Trustee are parties to an Indenture dated as of March 15, 1988, as supplemented as of September 22, 1989 (the "Indenture"), relating to the issu- ance from time to time by the Company of its Securities. Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Indenture. The Company has requested the Trustee to join with it in the execution and delivery of this second supplemental indenture (the "Second Supplemental Indenture") in order to supplement and amend the Indenture by amending and restating certain provisions thereof to cause the Indenture to comply with amendments to the Trust Indenture Act of 1939 effected by the Trust Indenture Reform Act of 1990 and to take account of recent changes in United States tax rules as a result of the promulgation of Treasury Regula- tion 1.163-5(c)(2)(i)(D) (the "D Rules"). Section 901 of the Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee, without the consent of any Holders of the Securities, to cure any ambiguity, to correct or supplement any provision therein which may be defective or inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect. Section 107 of the Indenture provides that if any provision thereof limits, qualifies or conflicts with another provision thereof which is required to be included therein by the Trust Indenture Act, such required provision shall control. 2 The Company has determined that this Second Supplemental Indenture complies with said Section 901 and does not require the consent of any Holders of Securities. At the request of the Trustee, the Company has furnished the Trustee with an Opinion of Counsel complying with the requirements of Section 903 of the Indenture, stating, among other things, that the execution of this Second Supplemental Indenture is authorized or permitted by the Indenture, and an Officers' Certificate and Opinion of Counsel complying with the requirements of Section 102 of the Indenture, and has delivered to the Trustee a Board Resolution as required by Section 901 of the Indenture authorizing the execution by the Company of this Second Supplemental Indenture and its delivery by the Company to the Trustee. All things necessary to make this Second Supple- mental Indenture a valid agreement of the Company and the Trustee, in accordance with the terms of the Indenture, and a valid amendment of and supplement to the Indenture have been done. NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: I. AMENDMENTS TO THE INDENTURE TO INCORPORATE CHANGES UNDER THE TRUST INDENTURE REFORM ACT OF 1990 A. The definition of "Trust Indenture Act" in Section 101 of the Indenture is amended to add to such definition the phrase ", as amended by the Trust Indenture Reform Act of 1990 and" after the date "1939" in the second line of such definition. B. Section 102 of the Indenture is amended to add to such Section: (i) the parenthetical phrase "(including any covenants compliance with which constitutes a condition precedent)" following the words "precedent" in each of the sixth and tenth lines, respectively, of the first paragraph of such Section; and 3 (ii) the parenthetical phrase "(other than annual certificates provided pursuant to Section 1004)" following the word "Indenture" in the third line of the second paragraph of such Section. C. Section 104(g) of the Indenture is amended to read in its entirety as follows: "If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, or for the purpose of determining the identity of Holders entitled to vote or consent to any action authorized or permitted by Sections 512 or 513 of this Indenture, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. For the purpose of determining the identity of Holders entitled to vote or consent to any action authorized or permitted by Sections 512 or 513 of this Indenture, the record date shall be the later of 15 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee pursuant to Section 701 of this Indenture prior to such solicitation. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, -------- agreement or consent by the holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date." D. Section 107 of the Indenture is amended to read in its entirety as follows: "If any provision hereof limits, qualifies or conflicts with the duties imposed by any of Sections 310 4 through 317, inclusive, of the Trust Indenture Act through the operation of Section 318(c) thereof, such imposed duties shall control." E. Section 608 of the Indenture is amended to read in its entirety as follows: "The Trustee for the Securities of any series issued hereunder shall be subject to the provisions of Sec- tion 310(b) of the Trust Indenture Act during the period of time provided for therein. In determining whether the Trustee has a conflicting interest as defined in Section 310(b) of the Trust Indenture Act with respect to the Securities of any series, there shall be excluded this Indenture with respect to Securities of any particular series of Securities other than that series. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the penultimate paragraph of Sec- tion 310(b) of the Trust Indenture Act." F. Section 609 of the Indenture is amended to read in its entirety as follows: "There shall at all times be a Trustee hereunder for each series of Securities, which shall be at all times either (i) a corporation organized and doing business under the laws of the United States of America or of any State or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by Federal, State or District of Columbia authority, or (ii) a corporation or other Person organized and doing business under the laws of a foreign govern- ment that is permitted to act as Trustee pursuant to a rule, regulation or order of the Commission, authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by authority of such foreign govern- ment or a political subdivision thereof substan- tially equivalent to supervision or examination applicable to United States institutional trustees, 5 in either case having a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to require- ments of the aforesaid supervising or examining authority, then for the purposes of this Section 609, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Neither the Company nor any Person directly or indirectly controlling, controlled by, or under common control with the Company shall serve as Trustee for the Securities of any series issued hereunder. If at any time the Trustee for the Securities of any series shall cease to be eligible in accordance with the provisions of this Section 609, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six." G. Section 610(d)(1) of the Indenture is amended to: (i) delete the phrase "Section 608(a)" after the word "with" in the first line thereof and to add the phrase "Section 310(b) of the Trust Indenture Act" in substitution for such deleted phrase; and (ii) to add immediately after the word "months" in the fourth line thereof the phrase ", unless the Trustee's duty to resign is stayed in accordance with the provisions of Section 310(b) of the Trust Indenture Act". H. Section 613 of the Indenture is hereby amended to: (i) substitute the word "three" for the word "four" in the fourth line of subsection (a) thereof; (ii) substitute the word "three" for the word "four" in the fourth line of subsection (a)(1) thereof: (iii) substitute the word "three" for the word "four" in the fifth line of subsection (a)(2) thereof; (iv) substitute the word "three" for the word "four" in the fourth line of paragraph (B) thereof; (v) substitute the word "three" for the word "four" in the fifth and eleventh lines, respectively, of paragraph (C) thereof; 6 (vi) substitute the word "three" for the word "four" in the second line of the first full paragraph immediately after paragraph (D) thereof; (vii) substitute the word "three" for the word "four" in the second and sixth lines, respectively, of the third full paragraph after paragraph (D) thereof; and (viii) substitute the word "three" for the word "four" in subparagraphs (i) and (ii) of the third full paragraph after paragraph (D) thereof. I. Section 703(a) of the Indenture is amended to: (i) add the phrase "any of the following events which may have occurred during the twelve months preceding the date of such report (but if no such event has occurred within such period, no report need be transmitted)" immediately after the word "to" on the fifth line of subsection (a) of Section 703; (ii) add the phrase "any change to" immediately after (1) of Section 703(a)(1) and delete from Section 703(a)(1) the phrase ", or in lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified under said Sections, a written statement to such effect"; (iii) add a new subsection (2) thereto, which will read in its entirety as follows: "(2) the creation of or any material change to a relationship specified in Section 310(b)(1) through Section 310(b)(10) of the Trust Indenture Act;" (iv) change subsection number "(2)" to "(3)"; (v) change subsection numbers "(3)" and "(4)" to "(4)" and "(5)", respectively, and add the phrase "any change to" immediately after such subsection numbers; and (vi) change subsection numbers "(5)" and "(6)" to "(6)" and "(7)", respectively. 7 J. Section 1004 of the Indenture is amended to read in its entirety as follows: "The Company will furnish to the Trustee, within 120 days after the end of each fiscal year of the Company (which as of the date hereof ends on December 31 of each year) ending after the date hereof so long as any Security is Outstanding hereunder, a certificate of the principal executive officer, the principal financial officer or the principal accounting officer of the Company, stating that in the course of the performance by the signer of his or her duties as such officer of the Company he or she would normally obtain knowledge of any default by the Company in the performance, observance or fulfillment of any covenant, agreement or condition contained in this Indenture, and stating whether or not, to the knowledge of the signer, the Company has complied with all conditions, agreements and covenants on its part contained in this Indenture, and if the signer has obtained knowledge of any default by the Company in the performance, observance or fulfillment of any such condition, agreement or covenant, specifying each such default and the nature thereof (provided that, for purposes of this -------- Section 1004, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture)." K. The Table of Contents of the Indenture is amended to reflect the additions and deletions described in this Second Supplemental Indenture. II. AMENDMENTS TO THE INDENTURE AS A RESULT OF THE ADOPTION OF THE D RULES A. Section 303 of the Indenture is amended to replace the third paragraph of such Section with the follow- ing paragraph: "At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series, together with any Coupons appertaining thereto, executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authen- ticate and deliver such Securities; provided, however, that, -------- ------- in connection with its original issuance, no Bearer Security 8 (including any temporary Bearer Security issued pursuant to Section 304 which is not a global Security) shall be mailed or otherwise delivered to any location in the United States; and provided further that a Bearer Security may be delivered ---------------- outside the United States in connection with its original issuance only if the Person entitled to receive such Bearer Security (including any temporary Bearer Security issued pursuant to Section 304 which is not a global Security) shall have furnished a certificate in the form set forth in Exhibit A.1 to this Indenture, dated the date of delivery of such Bearer Security or, in the case of a Bearer Security to be received in exchange for all or a portion of a temporary global Security, no earlier than 15 days prior to the date on which Euroclear or CEDEL S.A., as the case may be, furnishes to the Common Depositary (as defined in Section 304), in accordance with the procedures set forth in Section 304, a certificate in the form set forth in Exhibit A.2 to this Indenture relating to all or such portion of such temporary global Security. If any Security shall be represented by a definitive global Security in bearer form, then, for purposes of this Section and Sec- tion 304, the notation of a beneficial owner's interest therein upon original issuance of such Security or upon exchange of a portion of a temporary global Security shall be deemed to be delivery in connection with its original issuance of such beneficial owner's interest in such defini- tive global Security in bearer form. Except as permitted by Section 306, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant Coupons for interest then matured have been detached and canceled." B. Section 304 of the Indenture is amended to read in its entirety as follows: "Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in registered form or, if authorized, in bearer form with one or more Coupons or without Coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced conclusively by their execution of such Securities. Such temporary Securities may be in global form. 9 Except in the case of temporary global Securities in bearer form (which shall be exchanged in accordance with the provisions of the following two paragraphs), if temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company maintained pursuant to Section 1002 in a Place of Payment for such series for the purpose of exchanges of Securities of such series, without charge to the Holder. Upon surrender for cancelation of any one or more temporary Securities of any series (accompanied by any unmatured Coupons appertaining thereto) the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like aggregate principal amount of definitive Securities of the same series and of like tenor or authorized denominations and having the same terms and conditions; provided, however, that no definitive Bearer -------- ------- Security shall be delivered in exchange for a temporary Registered Security; and provided further that a definitive ---------------- Bearer Security shall be delivered in exchange for a temporary Bearer Security only in compliance with the conditions set forth in Section 303. If temporary global Securities of any series are issued in bearer form, any such temporary global Securities in bearer form shall, unless otherwise provided therein, be delivered to the London office of a depositary or common depositary (the "Common Depositary"), for the benefit of Euroclear and CEDEL S.A., for credit to the respective accounts of the beneficial owners of such Securities (or to such other accounts as they may direct). Without unnecessary delay but in any event not later than the date specified in, or determined pursuant to the terms of, any such temporary global Security in bearer form (the "Exchange Date"), the Company shall deliver to the Trustee definitive Securities, in aggregate principal amount equal to the principal amount of such temporary global Security, executed by the Company. On or after the Exchange Date such temporary global Security shall be surrendered by the Common Depositary to the Trustee or an Authenticating Agent, as the Company's agent for such purpose, to be exchanged, in whole or from time to time in part, for definitive Securities without charge and the Trustee or an Authenticating Agent shall authenticate and deliver, in exchange for each portion of such temporary global Security, an equal aggregate principal amount of definitive Securities of the 10 same series of authorized denominations and of like tenor as the portion of such temporary global Security to be exchanged. The definitive Securities to be delivered in exchange for any such temporary global Security in bearer form shall be in bearer form, registered form, definitive global form (registered or bearer), or any combination thereof, as specified as contemplated by Section 301, and, if any combination thereof is so specified, as requested by the beneficial owner thereof; provided, however, that, unless -------- ------- otherwise specified in such temporary global Security in bearer form, upon such presentation by the Common Deposi- tary, such temporary global Security in bearer form shall be accompanied by a certificate dated the Exchange Date or a subsequent date and signed by Euroclear as to the portion of such temporary global Security in bearer form held for its account then to be exchanged and a certificate dated the Exchange Date or a subsequent date and signed by CEDEL S.A. as to the portion of such temporary global Security in bearer form held for its account then to be exchanged, each in the form set forth in Exhibit A.2 to this Indenture; and provided further that definitive Bearer Securities shall be ---------------- delivered in exchange for a portion of a temporary global Security in bearer form only in compliance with the require- ments of Section 303. Unless otherwise specified in such temporary global Security in bearer form, the interest of a beneficial owner of Securities of a series in a temporary global Security in bearer form shall be exchanged for definitive Securities of the same series and of like tenor following the Exchange Date when the beneficial owner instructs Euroclear or CEDEL S.A., as the case may be, to request such exchange on his behalf and delivers to Euroclear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A.1 to this Indenture, dated no earlier than 15 days prior to the date on which Euroclear or CEDEL S.A., as the case may be, furnishes to the Common Depositary in accordance with the preceding paragraph a certificate in the form set forth in Exhibit A.2 to this Indenture that relates to the interest to be exchanged for definitive Securities. Copies of the certificate in the form set forth in Exhibit A.1 to this Indenture in blank shall be available from the offices of Euroclear, CEDEL S.A., the Trustee, any Authenticating Agent appointed for such series of Securities and any Paying Agent appointed for such series of Securities. Unless otherwise specified in such temporary global Security in bearer form, any such exchange shall be made free of charge to the beneficial owners of such temporary global Security in bearer form, 11 except that a Person receiving definitive Securities must bear the cost of insurance, postage, transportation and the like in the event that such Person does not take delivery of such definitive Securities in person at the offices of Euroclear or CEDEL S.A. The definitive Securities in bearer form to be delivered in exchange for any portion of a temporary global Security in bearer form shall be delivered only outside the United States. Until exchanged in full as hereinabove provided, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of the same series and of like tenor authenticated and delivered hereunder, except that, unless otherwise specified as contemplated by Section 301, no interest shall be payable on a temporary global Security in bearer form on an Interest Payment Date occurring after the applicable Exchange Date, and any interest payable on a temporary global Security in bearer form on an Interest Payment Date for Securities of such series occurring prior to the applicable Exchange Date shall be payable to Euroclear and CEDEL S.A. on such Interest Payment Date only upon delivery by Euroclear and CEDEL S.A. to the Trustee or principal Paying Agent and Authenticating Agent of a certificate or certificates in the form set forth in Exhibit A.3 to this Indenture, for credit without further interest on or after such Interest Payment Date to the respective accounts of the Persons who are the beneficial owners of such temporary global Security in bearer form (or to such other accounts as they may direct) on such Interest Payment Date and who have each delivered to Euroclear or CEDEL S.A., as the case may be, a certificate in the form set forth in Exhibit A.4 to this Indenture. Any interest so received by Euroclear and CEDEL S.A. and not paid as herein provided shall be returned to the Trustee or principal Paying Agent immediately prior to the expiration of two years after such Interest Payment Date in order to be repaid to the Company in accordance with Section 1003." C. Exhibit A.1 to this Second Supplemental Indenture replaces Exhibit A.1 to the Indenture. D. Exhibit A.4 to this Second Supplemental Indenture replaces Exhibit A.4 to the Indenture. III. GENERAL PROVISIONS A. The recitals contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of same. The Trustee 12 makes no representation as to the validity of this Second Supplemental Indenture. The Indenture, as supplemented and amended by this Second Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. B. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. C. This Second Supplemental Indenture shall be deemed to be a contract under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of said State. IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, and their corporate seals to be hereunto affixed and attested, all as of the day and year first above written. PAINE WEBBER GROUP INC. by /s/ ------------------ Title: (SEAL) Attest: /s/ Dorothy F. Haughey - ---------------------- CHEMICAL BANK DELAWARE, as Trustee by /s/ ------------------------ Senior Trust Officer (SEAL) Attest: /s/ - -------------------------- Assistant Secretary EXHIBIT A [FORMS OF CERTIFICATION] EXHIBIT A.1 [FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED TO RECEIVE BEARER SECURITY] CERTIFICATE PAINE WEBBER GROUP INC. [Insert title or sufficient description of Securities to be delivered] This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities (i) are owned by a person that is not a United States person, (ii) are owned by a United States person that is (A) the foreign branch of a United States financial institu- tion (as defined in U.S. Treasury Regulations Sec- tion 1.165-12(c)(1)(v)) (a "financial institution") purchas- ing for its own account or for resale, or (B) a United States person who acquired the Securities through the foreign branch of a United States financial institution and who holds the Securities through the financial institution on the date hereof (and in either case (A) or (B), the financial institution hereby agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regula- tions thereunder), or (iii) are owned by a financial insti- tution for purposes of resale during the Restricted Period (as defined in U.S. Treasury Regulations Sec- tion 1.163-5(c)(2)(i)(D)(7)). In addition, financial institutions described in clause (iii) of the preceding sentence (whether or not also described in clause (i) or (ii)) certify that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of 2 Columbia), its territories, its possessions, the Commonwealth of Puerto Rico and other areas subject to its jurisdiction. We undertake to advise you by telex if the above statement as to beneficial ownership is not correct on the date of delivery of the above-captioned Securities in bearer form as to all of such Securities. We understand that this certificate may be required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably author- ize you to produce this certificate or a copy thereof to any interested party in such proceedings. Dated: 19 ----------- -- [To be dated on or after the - ---------------------------- date determined as provided in - ------------------------------ the Indenture] - ------------- [Name of Person Entitled to Receive Bearer Security] -------------------------------- (Authorized Signature) Name: Title: EXHIBIT A.4 [FORM OF CERTIFICATE TO BE GIVEN BY BENEFICIAL OWNERS TO OBTAIN INTEREST PRIOR TO AN EXCHANGE DATE] CERTIFICATE PAINE WEBBER GROUP INC. [Insert title or sufficient --------------------------- description of Securities] -------------------------- This is to certify that as of the Interest Payment Date on [Insert Date] and except as provided in the third paragraph hereof, the above-captioned Securities held by you for our account are beneficially owned by (i) a person that is not a United States person, (ii) a United States person that is (A) the foreign branch of a United States financial institution (as defined in U.S. Treasury Regulations Sec- tion 1.165-12(c)(1)(v)) (a "financial institution") purchas- ing for its own account or for resale, or (B) a United States person who acquired the Securities through the foreign branch of a United States financial institution and who holds the Securities through the financial institution on the date hereof (and in either case (A) or (B), the financial insti- tution hereby agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) a financial institution for purposes of resale during the Restricted Period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)). In addition, if the beneficial owner is a financial institution described in clause (iii) of the preceding sentence (whether or not also described in clause (i) or (ii)) it certifies that it has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Colum- bia), its territories, its possessions, the Commonwealth of Puerto Rico and other areas subject to its jurisdiction. 2 This certificate excepts and does not relate to U.S. $ principal amount of the above-captioned Securities appearing in your books as being held for our account as to which we are not yet able to certify and as to which we understand interest cannot be credited unless and until we are able to so certify. We understand that this certificate may be required in connection with certain tax legislation in the United States. If administrative or legal proceedings are commenced or threatened in connection with which this certificate is or would be relevant, we irrevocably author- ize you to produce this certificate or a copy thereof to any interested party in such proceedings. Date: 19 --------- -- [To be dated on or after - ------------------------ the 15th day before the - ----------------------- relevant Interest Payment Date] - ------------------------------- [Name of Person Entitled to Receive interest] ------------------------------- (Authorized Signature) Name: Title: EX-4.2(G) 14 =========================================================================== PAINE WEBBER GROUP INC. to CHEMICAL BANK DELAWARE ------------------ Subordinated Debt Securities ------------------ Third Supplemental Indenture ------------------ Dated as of November 30, 1993 Supplementing the Indenture Dated as of March 15, 1988 ------------------ =========================================================================== THIRD SUPPLEMENTAL INDENTURE dated as of November 30, 1993, between PAINE WEBBER GROUP INC., a corporation duly organized and existing under the laws of Delaware (herein called the "Company"), having its principal office at 1285 Avenue of the Americas, New York, New York 10019, and CHEMICAL BANK DELAWARE, a corporation duly organized and existing under the laws of the State of Delaware, as Trustee (herein called the "Trustee"). RECITALS The Company and the Trustee are parties to an Indenture dated as of March 15, 1988, as supplemented by a First Supplemental Indenture dated as of September 22, 1989, and by a Second Supplemental Indenture dated as of March 22, 1991 (the "Indenture"), relating to the issuance from time to time by the Company of its Securities. Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Indenture. The Company has requested the Trustee to join with it in the execution and delivery of this third supplemental indenture (the "Third Supplemental Indenture") in order to supplement and amend the Indenture by amending and restating certain provisions thereof for the purpose of redesignating the officers authorized and required to execute the Securities on behalf of the Company. Section 901 of the Indenture provides that a supplemental indenture may be entered into by the Company and the Trustee, without the consent of any Holders of the Securities, to cure any ambiguity, to correct or supplement any provision therein which may be defective or inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Indenture, provided such action shall not adversely affect the interests of the Holders of Securities of any series in any material respect. The Company has determined that this Third Supplemental Indenture complies with said Section 901 and does not require the consent of any Holders of Securities. 2 At the request of the Trustee, the Company has furnished the Trustee with an Opinion of Counsel complying with the requirements of Section 903 of the Indenture, stating, among other things, that the execution of this Third Supplemental Indenture is authorized or permitted by the Indenture, and an Officers' Certificate and Opinion of Counsel complying with the requirements of Section 102 of the Indenture, and has delivered to the Trustee a Board Resolution as required by Section 901 of the Indenture authorizing the execution by the Company of this Third Supplemental Indenture and its delivery by the Company to the Trustee. All things necessary to make this Third Supplemental Indenture a valid agreement of the Company and the Trustee, in accordance with the terms of the Indenture, and a valid amendment of and supplement to the Indenture have been done. NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: I. AMENDMENT TO THE INDENTURE The first sentence of Section 303 of the Indenture is amended to read in its entirety as follows: "The Securities shall be executed on behalf of the Company by manual or facsimile signatures of its Chairman, its President or any of its Vice Presidents or its Treasurer, under its corporate seal reproduced thereon attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries." II. GENERAL PROVISIONS A. The recitals contained herein shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correcthess of the same. The Trustee makes no representation as to the validity of this Third Supplemental Indenture. The Indenture, as supplemented and 3 amended by this Third Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. B. This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. C. This Third Supplemental Indenture shall be deemed to be a contract under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of said State. IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, and their corporate seals to be hereunto affixed and attested, all as of the day and year first above written. PAINE WEBBER GROUP INC., by ------------------------- Name: Title: [Seal] Attest: - -------------------- CHEMICAL BANK DELAWARE, as Trustee, by ------------------------- Name: Title: [Seal] Attest: - ------------------------- 4 amended by this Third Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. B. This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. C. This Third Supplemental Indenture shall be deemed to be a contract under the laws of the State of New York and for all purposes shall be governed by and construed in accordance with the laws of said State. IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, and their corporate seals to be hereunto affixed and attested, all as of the day and year first above written. PAINE WEBBER GROUP INC., by ------------------------- Name: Title: [Seal] Attest: - ---------------------------- CHEMICAL BANK DELAWARE, as Trustee, by ------------------------- Name: Title: [Seal] Attest: - ---------------------------- EX-5 15 EXHIBIT 5 ____________, 1995 Paine Webber Group Inc. 1285 Avenue of the Americas New York, NY 10019 $400,000,000 ------------ Paine Webber Group Inc. ----------------------- Debt Securities --------------- Dear Sirs: I have examined and am familiar with the Certificate of Incorporation of Paine Webber Group Inc., a Delaware corporation (the "Company"), and the By-Laws of the Company. I am also familiar with the corporate proceedings taken by the Company to authorize the issuance by the Company of additional debt securities in an aggregate principal amount of up to $400,000,000 (the "Debt Securities") or higher if original issue discount. I have examined copies of the proposed forms of Debt Securities filed with the Registration Statement (the "Registration Statement") on Form S-3 relating to the Debt Securities. I have also examined originals, or copies certified or otherwise identified to my satisfaction, of such documents, corporate records and other instruments as I have deemed necessary or appropriate for the purposes of this opinion. On the basis of the foregoing, I am of opinion that: 1. The Company is a duly organized and validly existing corporation under the laws of the State of Delaware. 2. The issuance and sale of the Debt Securities have been validly authorized; and such principal amount of Debt Securities, when duly executed and authenticated on behalf of the Company and issued and sold in accordance with such corporate proceedings, will be validly authorized and issued and will constitute legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws affecting creditors' rights generally from time to time and subject, as to enforceability, to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law). I know that I am referred to under the heading "Legal Matters" in the Prospectus forming a part of the Registration Statement on Form S-3 relating to the Debt Securities and I hereby consent to such use of my name in the Registration Statement. Very truly yours /s/ Theodore A. Levine EX-23.1 16 Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in Amendment No. 1 to the Registration Statement (Form S-3) and related Prospectus of Paine Webber Group Inc. for the registration of $400,000,000 of debt securities and to the incorporation by reference therein of our reports dated January 31, 1995, with respect to the consolidated financial statements of Paine Webber Group Inc. incorporated by reference in its Annual Report (Form 10-K) for the year ended December 31, 1994 and the related financial statement schedules included therein, filed with the Securities and Exchange Commission. ERNST & YOUNG LLP New York, New York October 13, 1995 EX-23.2 17 The Board of Directors Paine Webber Group, Inc. We consent to the incorporation by reference in the registration statement dated October 13, 1995 (Nos. 33-52695-0 and 33-52695) on Amendment No. 1 to Form S-3 filed by Paine Webber Group Inc. to the use of our report dated February 8, 1995, with respect to the combined statement of assets acquired and liabilities assumed of the Real Estate, Eurobond, Retail Brokerage and Asset Management Businesses ("Purchased Businesses") of Kidder, Peabody Group Inc. as of December 26, 1994 or date prior to transfer (the Real Estate and Eurobond Businesses are combined on their respective closing dates - December 9 and December 16, 1994), and with respect to the combined statement of operations of the Purchased Businesses for the years ended December 27, 1993, December 28, 1992 and December 30, 1991, which report appears in the Form 8-K/A of Paine Webber Group Inc. dated February 22, 1995. /s/ KPMG Peat Marwick LLP New York, New York October 13, 1995 EX-25.1 18 _______________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _________________________ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ___________________________________________ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ ________________________________________ CHEMICAL BANK (Exact name of trustee as specified in its charter) New York 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 Park Avenue New York, New York 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) _____________________________________________ PAINE WEBBER GROUP INC. (Exact name of obligor 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) (Zip Code) ___________________________________________ Debt Securities (Title of the indenture securities) _____________________________________________________ GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 33-84460, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, Chemical Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 2nd day of October, 1995. CHEMICAL BANK By /s/ Gregory McFarlane --------------------------- Gregory McFarlane Vice President - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF Chemical Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business June 30, 1995, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS in Millions Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin .................................. $ 5,573 Interest-bearing balances .......................... 2,681 Securities: ............................................ Held to maturity securities............................. 6,027 Available for sale securities........................... 18,304 Federal Funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's: Federal funds sold ................................. 1,516 Securities purchased under agreements to resell .... 287 Loans and lease financing receivables: Loans and leases, net of unearned income $73,829 Less: Allowance for loan and lease losses 1,885 Less: Allocated transfer risk reserve ... 104 ------- Loans and leases, net of unearned income, allowance, and reserve ............................. 71,840 Trading Assets ......................................... 25,315 Premises and fixed assets (including capitalized leases)............................................. 1,395 Other real estate owned ................................ 69 Investments in unconsolidated subsidiaries and associated companies................................ 158 Customer's liability to this bank on acceptances outstanding ........................................ 1,120 Intangible assets ...................................... 484 Other assets ........................................... 7,254 ------- TOTAL ASSETS ........................................... $142,023 ========= - 4 - LIABILITIES Deposits In domestic offices ................................ $46,128 Noninterest-bearing .........................$16,282 Interest-bearing ............................ 29,846 ------- In foreign offices, Edge and Agreement subsidiaries, and IBF's .......................................... 30,833 Noninterest-bearing ............................. $ 199 Interest-bearing ............................ 30,634 ------ Federal funds purchased and securities sold under agree- ments to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's Federal funds purchased ............................. 16,779 Securities sold under agreements to repurchase ...... 810 Demand notes issued to the U.S. Treasury ................ 1,001 Trading liabilities ..................................... 20,888 Other Borrowed money: With original maturity of one year or less .......... 6,505 With original maturity of more than one year ........ 602 Mortgage indebtedness and obligations under capitalized leases .............................................. 18 Bank's liability on acceptances executed and outstanding 1,126 Subordinated notes and debentures ...................... 3,411 Other liabilities ...................................... 6,287 TOTAL LIABILITIES ...................................... 134,388 ------- EQUITY CAPITAL Common stock ............................................ 620 Surplus ................................................. 4,524 Undivided profits and capital reserves .................. 2,724 Net unrealized holding gains (Losses) on available-for-sale securities ........................ (241) Cumulative foreign currency translation adjustments ..... 8 TOTAL EQUITY CAPITAL .................................... 7,635 ______ TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK AND EQUITY CAPITAL ............................ $142,023 ========== I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) EDWARD D. MILLER )DIRECTORS WILLIAM B. HARRISON ) - 5 - EX-25.2 19 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _________________________ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ___________________________________________ CHEMICAL BANK DELAWARE (Exact name of trustee as specified in its charter) DELAWARE 51-0266457 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 1201 Market Street, Wilmington, Delaware 19801 (Address of principal executive offices) (Zip Code) David J. Clark Counsel 1201 Market Street Wilmington, DE 19801 (302) 428-3330 (Name, address and telephone number of agent for service) _____________________________________________ PAINE WEBBER GROUP INC. (Exact name of obligor 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) (Zip Code) ___________________________________________ Subordinated Debt Securities (Title of the indenture securities) GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Office of The State Bank Commissioner, 555 East Lockerman Street Suite 210, Dover, DE 19901 Federal Deposit Insurance Corporation, New York Regional Office 452 Fifth Avenue, 21st Floor, New York, New York 10018-2796 (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Item 16. List of Exhibits. List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 25, 1988 and June 22, 1992 (see Exhibit to Form T-1 filed in connection with Registration Statement No. 33-58124, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Transact Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-33595, which is incorporated by reference). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 33-58124, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-33595, which is incorporated by reference). 7. A copy of the latest report of condition of Chemical Bank Delaware, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, Chemical Bank Delaware, a corporation organized and existing under the laws of the State of Delaware, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of Wilmington and State of Delaware, on the 2nd day of October, 1995. Chemical Bank Delaware By: John J. Cashin --------------------- John J. Cashin Senior Trust Officer Exhibit 7 REPORT OF CONDITION Consolidated Report of Condition of CHEMICAL BANK DELAWARE of Wilmington, Delaware and Foreign and Domestic Subsidiaries, at the close of business on June 30, 1995, published in accordance with a call made by the State Bank Commissioner under Title 5, Delaware Code, Section 904. Statement of Resources and Liabilities Thousands of Dollars ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin . $ 15,670 Interest-bearing balances .......................... 162,627 Securities: Held to maturity securities............................. 55,422 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFS: Federal funds sold ................................. 178,500 Loans and lease financing receivables: Loans and leases, net of unearned income 8,185 Less: Allowance for loan and lease losses 6,487 Loans and leases, net of unearned income, allowance, and reserve ........................... 1,698 Premises and fixed assets (including capitalized leases)............................................. 39,039 Customers' liability to this bank on acceptances outstanding ........................................ 2,758 Other assets ........................................... 18,115 --------- TOTAL ASSETS ........................................... $473,829 ========= LIABILITIES Deposits In domestic offices ................................... $259,768 Noninterest-bearing ..........................47,516 Interest-bearing ............................212,252 In foreign offices, Edge and Agreement subsidiaries, and IBF's .......................................... 53,296 Interest-bearing ............................ 53,296 Federal funds purchased and securities sold under agree- ments to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFS: Federal funds purchased ............................. 4 Demand notes issued to the U.S. Treasury ................ 5,337 Other borrowed money: With original maturity of one year or less .......... 267 Mortgage indebtedness and obligations under capitalized leases .............................................. 845 Bank's liability on acceptances executed and outstanding 2,758 Other liabilities ...................................... 32,545 -------- TOTAL LIABILITIES ...................................... $354,822 -------- EQUITY CAPITAL Common stock ............................................ $ 25,000 Surplus ................................................. 51,002 Undivided profits and capital reserves .................. 43,005 -------- Total equity capital .................................... 119,007 -------- Total liabilities, limited-life preferred stock, and equity capital ...................................... $473,829 ======== I, Christopher M. Marini, Controller, of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal Regulatory authority and is true and correct to the best of my knowledge and belief. Christopher M. Marini July 31, 1995 -----END PRIVACY-ENHANCED MESSAGE-----