-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, QgBT2xL0pF4OGGzyLuu78AFjQ7UUIUyPLGeuMe+HX6KEemJv4Zt+EMhvhVkM29I5 5mqD3US5hBaEfxCAcBCQmg== 0000950123-94-000980.txt : 19940526 0000950123-94-000980.hdr.sgml : 19940526 ACCESSION NUMBER: 0000950123-94-000980 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19940525 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAINE WEBBER GROUP INC CENTRAL INDEX KEY: 0000075754 STANDARD INDUSTRIAL CLASSIFICATION: 6211 IRS NUMBER: 132760086 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 033-33613 FILM NUMBER: 94530391 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 POS AM 1 POST-EFFECTIVE AMENDMENT NO. 1 TO FORM S-3 1 Registration No. 33-33613 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- POST-EFFECTIVE 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 offices) ----------------------- THEODORE A. LEVINE, ESQ. Vice President, General Counsel and Secretary Paine Webber Group Inc. 1285 Avenue of the Americas New York, New York 10019 (212) 713-2000 (Name, address, including zip code, and telephone number, including area code, of agent for service) ----------------------- PLEASE SEND COPIES OF ALL COMMUNICATIONS TO: DAVID G. ORMSBY, ESQ. Cravath, Swaine & Moore 825 Eighth Avenue New York, New York 10019 (212) 474-1000 ----------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the Registration Statement becomes effective as determined by market conditions. ----------------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than Securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] 2 PROSPECTUS PAINE WEBBER GROUP INC. STOCK INDEX WARRANTS ------------------ Paine Webber Group Inc. (the "Company") intends to issue from time to time warrants ("Warrants") entitling the holders to receive, upon exercise, an amount in cash determined by reference to decreases (such Warrants, "Put Warrants") or increases (such Warrants, "Call Warrants") in the level of a specified stock index (the "Stock Index") which may be based on United States or foreign stocks or a combination thereof (the "Underlying Stocks"). No shares of any Underlying Stock will be delivered upon exercise of the Warrants. Unless otherwise specified in the accompanying Prospectus Supplement (the "Prospectus Supplement"), the Stock Index will be an established, broadly-based index related to a major domestic or foreign equity trading market. The Warrants will have an aggregate initial public offering price or purchase price of up to U.S. $288,854,500 or the equivalent thereof if the offering price or purchase price of the Warrants is denominated in a foreign currency or composite currency. Unless otherwise specified in the Prospectus Supplement, payments, if any, on the Warrants will be made in U.S. dollars. The Warrants will be offered on terms to be determined at the time of sale. With regard to the Warrants in respect of which this Prospectus is being delivered, the Prospectus Supplement sets forth the aggregate amount and offering price of such Warrants, certain information regarding the applicable Stock Index and the Underlying Stocks, whether such Warrants are Put Warrants or Call Warrants, the date on which the right to exercise such Warrants commences and the expiration date of such Warrants, the manner in which such Warrants may be exercised and any restrictions on, or other special provisions relating to, the exercise of such Warrants, whether and under what circumstances such Warrants may be cancelled by the Company prior to their expiration date, the method of determining the amount payable in connection with the exercise or cancellation of such Warrants, including the predetermined amount to which the level of the Stock Index upon exercise of such Warrants is compared, the method of translating movements in the Stock Index into a cash amount in the currency in which such Warrants are payable, including, for Warrants relating to a Stock Index for which the trading prices of Underlying Stocks are expressed in a foreign currency (a "Foreign Stock Index"), the method of converting amounts in such foreign currency into U.S. dollars (or such other currency in which such Warrants are payable), the amount payable on cancellation of such Warrants, if applicable (the "Cancellation Amount"), and the predetermined sum or range of sums (the "Minimum Expiration Value"), if any, payable in certain circumstances upon expiration or exercise of such Warrants, any national securities exchange on which such Warrants will be listed, certain U.S. federal income tax consequences relating to such Warrants and any other specific terms of, or information regarding, such Warrants. The Warrants involve a high degree of risk, including risks arising from fluctuations in the values of the Underlying Stocks, risks relating to the Stock Index, general risks applicable to the stock market (or markets) on which the Underlying Stocks are traded and, in the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, foreign exchange risks. Purchasers should recognize that their Warrants, other than Warrants having a Minimum Expiration Value, may expire worthless. Purchasers should be prepared to sustain a total loss of the purchase price of their Warrants, and are advised to consider carefully the information under "Risk Factors" herein and the information regarding the Warrants and the Stock Index set forth in the Prospectus Supplement. ------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Warrants may be sold by the Company directly to purchasers, through agents designated from time to time, through underwriting syndicates led by one or more managing underwriters or through one or more underwriters. Any such managing underwriters, underwriters or agents may include PaineWebber Incorporated ("PaineWebber"). If underwriters or agents are involved in the offering of any Warrants, the names of such underwriters or agents will be set forth in the Prospectus Supplement. If an underwriter, agent or dealer is involved in the offering of any Warrants, the underwriter's discount, agent's commission or dealer's purchase price will be set forth in, or may be calculated from the information set forth in, the Prospectus Supplement, and the net proceeds to the Company from such offering will be the public offering price of the Warrants less such discount in the case of an offering through an underwriter or the purchase price of the Warrants less such commission in the case of an offering through an agent, and less, in each case, the other expenses of the Company associated with the issuance and distribution of the Warrants. PaineWebber expects to offer and sell previously issued Warrants from time to time in the course of its business as a broker-dealer. PaineWebber may act as principal or agent in such transactions. See "Plan of Distribution". ------------------ PAINEWEBBER INCORPORATED ------------------ The date of this Prospectus is May 25, 1994. 3 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information concerning the Company can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained upon written request addressed to the Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, reports, proxy statements and other information concerning the Company may be inspected at the offices of The New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10004, and the Pacific Stock Exchange, 115 Sansome Street, San Francisco, California 94104. The Company has filed with the Commission a registration statement on Form S-3 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the Warrants. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. DOCUMENTS INCORPORATED BY REFERENCE The following documents filed by the Company with the Commission (File No. 1-7367) pursuant to Section 13 of the Exchange Act are incorporated herein by reference: (i) the Annual Report on Form 10-K (including the portions of the Company's annual report to stockholders incorporated by reference therein) for the year ended December 31, 1993 (the "1993 Form 10-K"); (ii) the Quarterly Report on Form 10-Q for the quarter ended March 31, 1994; and (iii) the Current Reports on Form 8-K dated January 14, 1994, February 10, 1994 and March 9, 1994. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Warrants shall be deemed to be incorporated by reference in this Prospectus. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, on the written or oral request of any such person, a copy of any or all of the documents incorporated herein by reference, except the exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). Requests for such copies should be directed to Assistant Secretary, Paine Webber Group Inc., 1285 Avenue of the Americas, New York, New York 10019; telephone (212) 731-2722. ------------------ References herein to "U.S. dollar", "dollar", "U.S.$" or "$" are to the lawful currency of the United States of America. 2 4 RISK FACTORS The Warrants involve a high degree of risk, including risks arising from fluctuations in the prices of the Underlying Stocks, risks relating to the Stock Index, general risks applicable to the stock market (or markets) on which the Underlying Stocks are traded and, in the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, foreign exchange risks. Prospective purchasers of the Warrants should recognize that their Warrants, other than Warrants having a Minimum Expiration Value, may expire worthless. Purchasers should be prepared to sustain a total loss of the purchase price of their Warrants. Prospective purchasers of the Warrants should be experienced with respect to options and options transactions and understand the risks of stock index (and, if applicable, foreign currency) transactions and should reach an investment decision only after careful consideration, with their advisers, of the suitability of the Warrants in light of their particular financial circumstances, the information set forth below and under "Description of Warrants" herein and the information regarding the Warrants and the Stock Index set forth in the Prospectus Supplement. POSSIBLE ILLIQUIDITY OF SECONDARY MARKET It is not possible to predict how the Warrants will trade in the secondary market or whether such market will be liquid or illiquid. The Company intends to list the Warrants of each issue on a national securities exchange. In the event of a delisting or suspension of trading on such exchange, the Company will use its best efforts to list the Warrants on another national securities exchange. If the Warrants are not listed or traded on any securities exchange, pricing information for the Warrants may be more difficult to obtain and the liquidity of the Warrants may be adversely affected. To the extent Warrants are exercised, the number of Warrants outstanding will decrease, resulting in a lessening of the liquidity of the Warrants. RELATIONSHIP BETWEEN CASH SETTLEMENT VALUE AND STOCK INDEX LEVEL Each Warrant will entitle the Warrantholder to receive from the Company upon exercise thereof a cash value (the "Cash Settlement Value") that (i) in the case of a Put Warrant, will be determined by reference to the amount, if any, by which a predetermined level or range of levels of the Stock Index (the "Strike Index") exceeds the then-current level of the Stock Index (the "Spot Index") at the close of business on the relevant exchange or exchanges, and (ii) in the case of a Call Warrant, will be determined by reference to the amount, if any, by which the Spot Index at the time of exercise of such Warrant exceeds the Strike Index. However, a Warrantholder will receive a cash payment upon exercise only if the Warrants are "in-the-money" -- that is, have a Cash Settlement Value greater than zero at the time -- except that, in the case of Warrants having a Minimum Expiration Value, in certain circumstances the Warrantholder will receive upon expiration or exercise a cash payment in an amount equal to the greater of the applicable Cash Settlement Value and such Minimum Expiration Value. The Cash Settlement Value of a Put Warrant will be greater than zero only if the Spot Index at the time of exercise is less than the Strike Index for such Put Warrant (that is, if the level of the Stock Index drops below the predetermined Strike Index). The Cash Settlement Value of a Call Warrant will be greater than zero only if the Strike Index for such Call Warrant is less than the Spot Index at the time of exercise (that is, if the level of the Stock Index rises above the predetermined Strike Index). EXTRAORDINARY EVENTS; EXERCISE LIMITATION EVENTS; CANCELLATION OF WARRANTS; DELAYED EXERCISE If so specified in the Prospectus Supplement, the Warrants of an issue may be cancelled by the Company upon the occurrence of one or more events ("Extraordinary Events") described in the Prospectus Supplement. In such event, Warrantholders will have the right to receive only the Cancellation Amount, which may be a predetermined amount, or an amount to be determined in accordance with a predetermined formula, specified in such Prospectus Supplement. Certain events that may constitute Extraordinary Events and therefore lead to cancellation of the Warrants of an issue may be events that would tend to increase the Cash Settlement Value otherwise applicable to the Warrants of such issue. In addition, if so specified in the Prospectus Supplement, any exercise of the Warrants may be suspended by the Company, and the valuation of and payment for such Warrants may be postponed and/or the determination of the Cash Settlement Amount 3 5 thereof may be made on a different basis, upon the occurrence of an Extraordinary Event or certain other events ("Exercise Limitation Events") specified in the Prospectus Supplement. CERTAIN FACTORS AFFECTING VALUE AND TRADING PRICE OF WARRANTS Unless otherwise specified in the Prospectus Supplement, the Warrants of each issue will have a Cash Settlement Value of zero at the time of the initial public offering of such Warrants. The Cash Settlement Value of the Warrants at any time prior to expiration is expected typically to be less than the trading price of the Warrants at that time. The difference between the trading price and the Cash Settlement Value will reflect, among other things, a "time value" for the Warrants. The "time value" of the Warrants will depend partly upon the length of the period remaining to expiration and expectations concerning the level of the Stock Index as compared to the Strike Index during the period. In the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, such "time value" will also depend in part on expectations concerning the value of the related foreign currency as compared to the U.S. dollar (or such other currency in which such Warrants are payable) during such period. Before exercising or selling Warrants, Warrantholders should carefully consider, among other things, (i) the trading price of the Warrants, (ii) the level of the Stock Index at such time, (iii) the time remaining to expiration, (iv) in the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, the exchange rate between the related foreign currency and the U.S. dollar (or such other currency in which such Warrants are payable) at such time, (v) the probable range of Cash Settlement Values, (vi) any Minimum Expiration Value and (vii) any related transaction costs. The trading price of a Warrant at any time is expected to be dependent on (i) the relationship between the Strike Index and the level of the Stock Index at such time, (ii) in the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, the exchange rate between the related foreign currency and the U.S. dollar (or such other currency in which such Warrants are payable) at such time, (iii) any Minimum Expiration Value and (iv) a number of other interrelated factors, including those listed below. The relationship among these factors is complex. However, the expected effect on the trading price of a Warrant of each of the factors listed below, assuming in each case that all other factors are held constant, is as follows: (1) The prevailing level of the Stock Index. If the level of the Stock Index falls in relation to the Strike Index, the trading price of a Put Warrant is expected to increase and the trading price of a Call Warrant is expected to decrease; if the level of the Stock Index rises in relation to the Strike Index, the trading price of a Put Warrant is expected to decrease and the trading price of a Call Warrant is expected to increase. However, as a result of other factors, the trading price of a Warrant may decline significantly even if, in the case of a Put Warrant, there is a decrease in the level of the Stock Index as compared to the Strike Index or, in the case of a Call Warrant, there is an increase in the level of the Stock Index as compared to the Strike Index. (2) The volatility of the Stock Index. If volatility increases, the trading price of both Put and Call Warrants is expected to increase; if volatility decreases, the trading price of both Put and Call Warrants is expected to decrease. (3) The time remaining to the expiration date of the Warrants. As the time remaining to the expiration date of the Warrants decreases, the trading price of both Put and Call Warrants is expected to decrease. (4) The prevailing interest rates. If interest rates in the country where the Underlying Stocks trade increase, the trading value of a Put Warrant is expected to decrease and the trading value of a Call Warrant is expected to increase. If such interest rates decrease, the trading value of a Put Warrant is expected to increase and the trading value of a Call Warrant is expected to decrease. Increases and decreases in other interest rates may also affect the value of the Warrants. (5) Dividend rates. If dividend rates on the Underlying Stocks increase, the trading value of a Put Warrant is expected to increase and the trading value of a Call Warrant is expected to decrease; however, increased dividend rates may positively affect the value of the Stock Index, and the trading value of a Put Warrant could then be expected to decrease and the trading value of a Call Warrant could then be 4 6 expected to increase. If such dividend rates decrease, the trading value of a Put Warrant is expected to decrease and the trading value of a Call Warrant is expected to increase; however, decreased dividend rates may adversely affect the value of the Stock Index, and the trading value of a Put Warrant could then be expected to increase and the trading value of a Call Warrant could then be expected to decrease. (6) The prevailing currency exchange rate. In the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, if the value of the U.S. dollar (or such other currency in which such Warrants are payable) falls in relation to the related foreign currency, the trading price of both Put and Call Warrants is expected to increase; if the value of the U.S. dollar (or such other currency) rises in relation to the related foreign currency, the trading price of both Put and Call Warrants is expected to decrease. Some of the factors referred to above are in turn influenced by various political, economic and other factors referred to herein and in the Prospectus Supplement that can affect trading prices of the Underlying Stocks and the level of the applicable Stock Index (and, if applicable, currency exchange rates). TIME LAG AFTER EXERCISE AND POTENTIAL INTERIM CHANGES IN STOCK INDEX Unless otherwise specified in the Prospectus Supplement, in the case of any exercise of Warrants, there will be a time lag between the time a Warrantholder gives instructions to exercise and the time the Spot Index relating to such exercise and, in the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, the applicable currency exchange rate, are determined. The delay will, at a minimum, amount to almost an entire day and could be much longer, particularly in the case of a delay in exercise of Warrants arising from any daily maximum exercise limitation as described in the immediately following paragraph or following the occurrence of an Extraordinary Event or an Exercise Limitation Event as described under "Extraordinary Events; Exercise Limitation Events; Cancellation of Warrants; Delayed Exercise" above. The level of the Stock Index and, if applicable, the exchange rate between the related foreign currency and the U.S. dollar (or such other currency in which the Warrants are payable) may change significantly during any such period, and such movement or movements could decrease the Cash Settlement Value of the Warrants being exercised and may result in such Cash Settlement Value being zero. LIMITATIONS ON EXERCISE If so indicated in the Prospectus Supplement, the Company will have the option to limit the number of Warrants exercisable on any date to the maximum number specified in the Prospectus Supplement and, in conjunction with such limitation, to limit the number of Warrants exercisable by any person or entity on such date. In the event that the total number of Warrants being exercised on any date exceeds such maximum number and the Company elects to limit the number of Warrants exercisable on such date, a Warrantholder may not be able to exercise on such date all Warrants that such holder desires to exercise. Warrants to be exercised on such date will be selected on a pro rata basis or in any other manner specified in the Prospectus Supplement. Unless otherwise specified in the Prospectus Supplement, the Warrants tendered for exercise but not exercised on such date will be automatically exercised on the next date on which Warrants may be exercised, subject to the same daily maximum limitation and delayed exercise provisions described in this paragraph. Unless otherwise specified in the Prospectus Supplement, any such limitation will not apply to cases of automatic exercise, including at expiration. MINIMUM EXERCISE AMOUNT If so indicated in the Prospectus Supplement, a Warrantholder must tender a specified minimum number of Warrants at any one time in order to exercise (except for cases of automatic exercise, including at expiration). Thus, except in such cases, Warrantholders with fewer than the specified minimum number of Warrants will either have to sell their Warrants or purchase additional Warrants, incurring transaction costs in each case, in order to realize upon their investment. Furthermore, such Warrantholders incur the risk that there may be differences between the trading price of the Warrants and the Cash Settlement Value of such Warrants. 5 7 OFFERING PRICE OF WARRANTS The initial offering price of the Warrants may be in excess of the price that a commercial user of options might pay for a comparable option in a private, less liquid transaction. CERTAIN RISK CONSIDERATIONS The purchaser of a Warrant may lose his entire investment except to the extent of any Minimum Expiration Value that such Warrant may have. This risk reflects the nature of a Warrant as an asset which, other factors held constant, tends to decline in value over time and which may, depending on the prevailing level of the Stock Index as compared to the Strike Index, become worthless when it expires (except to the extent of any Minimum Expiration Value). Assuming all other factors are held constant, the more a Warrant is "out-of-the-money" and the shorter its remaining term to expiration, the greater the risk that a purchaser of the Warrant will lose all or part of his investment. This means that a Warrantholder who does not either exercise or sell his Warrant prior to expiration will necessarily lose his entire investment in the Warrant upon expiration (except to the extent of any Minimum Expiration Value) if, in the case of a Put Warrant, the Spot Index at expiration is greater than or equal to the Strike Index or, in the case of a Call Warrant, such Spot Index is less than or equal to the Strike Index. The risk of the loss of some or all of the purchase price of a Warrant upon expiration means that a purchaser of a Warrant must generally be correct about both the direction and magnitude of an anticipated change in the level of the Stock Index in relation to the Strike Index and must also be correct about when such change will occur. In the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, purchasers should also consider expected changes in the value of the related foreign currency as compared to the U.S. dollar (or such other currency in which such Warrants are payable). If the level of the Stock Index as compared to the Strike Index does not decline, in the case of a Put Warrant, or does not rise, in the case of a Call Warrant, before the Warrant expires to an extent sufficient (giving effect to currency exchange rate movements in the case of a Warrant relating to a Foreign Stock Index and settled based on then-current currency exchange rates) to cover a purchaser's cost of the Warrant (i.e., the purchase price plus transaction costs, if any), the purchaser will lose all or part of his investment in such Warrant upon expiration. CERTAIN FACTORS AFFECTING STOCK INDEX The Cash Settlement Value of a Warrant at any time will depend primarily on the level of the Stock Index at such time in relation to the Strike Index, which level in turn will be based primarily on the trading prices of the Underlying Stocks. Prospective purchasers of Warrants should familiarize themselves with the basic features of the relevant Stock Index, including the Underlying Stocks and the general method of calculation of such Stock Index. Unless otherwise specified in the Prospectus Supplement, the Stock Index will be an established, broadly-based index related to a major domestic or foreign equity trading market. The general method of calculation of a Stock Index can significantly influence the relationship between changes in the level of such Stock Index and price movements in the Underlying Stocks. For example, a "price-weighted" Stock Index reflects only the prevailing prices of the Underlying Stocks, while a "value-weighted" Stock Index is based on both the price and the number of outstanding shares of each Underlying Stock (i.e., total market capitalization). Thus, in a "value-weighted" Stock Index (in contrast to a "price-weighted" Stock Index), changes in the stock price of a corporation with a large market capitalization will generally have a greater influence on the level of the Stock Index than changes in the stock price of a corporation with a small market capitalization. Prospective purchasers are advised to consider carefully the information set forth in the Prospectus Supplement regarding the Stock Index, the Underlying Stocks and the method of calculation of the Stock Index. The trading prices of the Underlying Stocks will determine the level of the related Stock Index. Prospective purchasers of the Warrants should recognize that it is impossible to predict whether the level of a Stock Index will rise or fall. Trading prices of the Underlying Stocks will be influenced by both the complex and interrelated political, economic, financial and other factors that can affect the capital markets generally 6 8 and/or the equity trading market on which the Underlying Stocks are trading and by the various circumstances that can influence the values of Underlying Stocks in a specific market segment or particular Underlying Stocks. The levels of major market Stock Indexes are typically updated continually during each trading day for the applicable equity trading market, with updated levels disseminated at frequent intervals. However, Stock Index levels ordinarily continue to be reported on a current basis even when trading is interrupted in some or all of the Underlying Stocks. In that event, the reported Stock Index level will be based on the current market prices of those Underlying Stocks that are still being traded (if any) and the last reported prices of those Underlying Stocks that are not currently trading. As a result, reported Stock Index levels may at times be based on non-current price information with respect to some or even all of the Underlying Stocks. Certain trading strategies involving purchases and sales of options on a Stock Index, futures contracts on such Stock Index, options on such futures contracts and portfolios of certain of the related Underlying Stocks can affect the level of such Stock Index and, therefore, the trading price and Cash Settlement Value of the related Warrants. These transactions and the resulting changes in the Stock Index can occur at any time, but may occur more frequently at or shortly before the regular expiration dates of the related options or futures contracts. CERTAIN RISKS RELATING TO FOREIGN STOCK INDEX In the case of a Foreign Stock Index where the Underlying Stocks are those of non-U.S. issuers, the factors and circumstances that can affect the level of such Stock Index will include foreign political, economic, financial and other developments. Prospective purchasers of Warrants relating to a Foreign Stock Index should consider such developments, which may not be as well known or as rapidly or thoroughly reported in the U.S. as comparable U.S. developments. Prospective purchasers of such Warrants should be aware of such possible lack of availability of important information that can affect the level of the Foreign Stock Index and must be prepared to make special efforts to obtain such information on a timely basis. Special risks may also be presented in the case of Warrants relating to a Foreign Stock Index where, because of differences in time zones between the United States and the related foreign market, the Underlying Stocks are traded on a foreign exchange that is not open when the trading market for the Warrants in the United States is open and/or where trading occurs in the Underlying Stocks during times when the trading market for the Warrants in the United States is closed. In such cases, prospective purchasers of and holders of Warrants may have to make investment and exercise decisions at times when current pricing information regarding the Underlying Stocks comprising such Foreign Stock Index is not available, and changes in the level of the Foreign Stock Index may take place when the trading market for the Warrants in the United States is closed. Such difference in time zones may also lengthen the delay between the time when a Warrantholder is required to make a decision to exercise Warrants and the time of calculation of the Spot Index. In addition, the relevant equity trading market for a Foreign Stock Index will not be subject to regulation by the Commission or any U.S. securities exchange. POTENTIAL MODIFICATIONS OF STOCK INDEX The policies of the publisher of the Stock Index concerning additions, deletions and substitutions of Underlying Stocks and the manner in which Stock Index calculations take account of certain changes affecting the Underlying Stocks (such as stock dividends and stock splits) can also significantly affect the performance of such Stock Index. Additions, deletions or substitutions may be necessary due to the disappearance of one or more Underlying Stocks as a result of liquidations, mergers or other business combinations, or may be occasioned by the publisher's view that a particular Underlying Stock is, for example, no longer representative of a particular industry category. Although Stock Indexes are normally calculated in a manner (typically involving adjustments to the "base" of the Stock Index) intended to ensure that such additions, deletions, substitutions and changes do not, by themselves, instantaneously change the level of the Stock Index, the level of the Stock Index over time may be influenced by changes in the composition and characteristics of the Underlying Stocks. Whether to add, delete or substitute Underlying Stocks, and the 7 9 method of adjusting the "base" of the Stock Index in respect of changes affecting the Underlying Stocks, are typically solely within the discretion of the publisher of the Stock Index. In contrast to standardized stock index options of the type issued by The Options Clearing Corporation ("OCC"), the terms of which may be adjusted if the publisher of the related stock index changes the composition or method of calculation of such stock index in a manner that causes a significant discontinuity in the index level, the terms of the Warrants will not be adjusted as a result of changes in the related Stock Index. The publisher of a Stock Index may replace such Stock Index with a successor index or may cease publishing such Stock Index entirely. The Prospectus Supplement specifies how the Cash Settlement Value of the related Warrants will be determined in such circumstances. Although the method used will generally be intended to enable Cash Settlement Values to be determined on as consistent a basis as practicable, discontinuities may arise in such circumstances. Moreover, information regarding the current level of certain substitute indexes may not be readily available to Warrantholders, which may adversely affect the trading market for their Warrants. CERTAIN CONSIDERATIONS REGARDING HEDGING Prospective purchasers intending to purchase Warrants to hedge against the market risk associated with investing in one or more individual Underlying Stocks and/or other stocks should recognize the complexities of utilizing Warrants in this manner. Historically, the prices of some stocks have tended to be highly sensitive to factors influencing the market generally; others less so. In addition, a stock's sensitivity to broad market influences may change over time. Prospective purchasers intending to use Warrants in this manner should also understand that they remain subject to issuer risk -- that is, the risk that factors affecting a particular issuer, such as its market position or the quality of its management, may cause its stock to perform differently than the market as a whole. In addition, prospective purchasers intending to utilize Warrants to hedge a stock portfolio against market risk should understand that unless the stocks in the portfolio exactly mirror the Underlying Stocks, the portfolio and the Stock Index may respond differently to a given market influence (including in different directions and to different extents). For this reason, the use of Warrants for hedging purposes involves special risks that are not present with "true" hedges -- i.e., hedges composed of options on the specific stocks in the hedged position. These risks are greatest when Warrants relating to a broadly-based Stock Index are used to hedge a non-diversified stock position. In addition, in the case of Warrants relating to a Foreign Stock Index, the effect of changes in the relevant currency exchange rate on the Cash Settlement Value of such Warrants could complicate any hedging strategy. CERTAIN FOREIGN CURRENCY EXCHANGE RISKS In the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, the Cash Settlement Value upon exercise (assuming that such Cash Settlement Value is otherwise greater than zero) will depend in part on the then-current exchange rate between the applicable foreign currency and the U.S. dollar (or such other currency in which such Warrants are payable). Purchasers of such Warrants are thus subject to foreign currency exchange risks. Accordingly, such Warrants are not an appropriate investment for prospective purchasers who are not experienced with respect to foreign currency transactions. Foreign currency exchange risks include, among other things, the possibility of significant changes in rates of exchange between the applicable foreign currency and the U.S. dollar (or such other currency in which such Warrants are payable) and the possibility of the imposition or modification of exchange controls with respect to such foreign currency. Such risks generally depend on the supply of and demand for the relevant currencies and economic and political events. In recent years, rates of exchange for certain currencies have been highly volatile, and such volatility may be expected in the future. Fluctuations in any particular exchange rate that have occurred in the past are not necessarily indicative, however, of fluctuations that may occur during the term of any Warrant. Assuming all other factors are held constant, depreciation in the value of the related foreign currency against the U.S. dollar (or such other currency in which the Warrants are payable) can be expected to result in a decrease in the trading price of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates and a decrease in the Cash Settlement Value otherwise payable upon exercise of such Warrants. 8 10 WARRANTS ARE UNSECURED OBLIGATIONS The Warrants are unsecured contractual obligations of the Company and will rank on a parity with the Company's other unsecured contractual obligations and with the Company's unsecured and unsubordinated debt. The Company expects to issue several issues of Warrants relating to various Stock Indexes. At any given time the number of Warrants outstanding may be substantial. The Warrants are not standardized stock index options of the type issued by the OCC. For example, unlike purchasers of OCC standardized options who have the credit benefits of guarantees and margin and collateral deposits by OCC clearing members to protect the OCC from a clearing member's failure, purchasers of Warrants must look solely to the Company for performance of its obligations to pay the Cash Settlement Value and, if applicable, the Minimum Expiration Value upon the exercise or expiration of the Warrants. Further, the market for the Warrants is not expected to be generally as liquid as the market for some OCC standardized options. COMPARISON WITH OTHER TYPES OF WARRANTS OR OPTIONS Options and warrants provide opportunities for investment and pose risks to investors as a result of fluctuations in the value of the underlying investment interests. Certain of the risks associated with the Warrants are similar to those generally applicable to other options or warrants of private corporate issuers. However, unlike options or warrants on equity or debt securities, which are priced primarily on the basis of the present and expected value of a single underlying security, the trading price of a Warrant is likely to reflect primarily (i) the current and expected level of the Stock Index, (ii) the time remaining until expiration, (iii) in the case of Warrants relating to a Foreign Stock Index and settled based on then-current currency exchange rates, the spot and forward currency exchange rates between the applicable foreign currency and the U.S. dollar (or such other currency in which such Warrants are payable) and (iv) if applicable, the Minimum Expiration Value. PAINE WEBBER GROUP INC. Paine Webber Group Inc. is a holding company which, together with its operating subsidiaries, forms one of the largest full-service securities and commodities firms in the industry. Founded in 1879, the Company employs approximately 14,400 people in 281 offices worldwide. The Company's principal line of business is to serve the investment and capital needs of individual, corporate, institutional and public agency clients through its broker-dealer subsidiary, PaineWebber Incorporated ("PaineWebber"), and other specialized subsidiaries. The Company holds memberships in all major securities and commodities exchanges in the United States, and makes a market in many securities traded on the Automated Quotations System of the National Association of Securities Dealers, Inc. or in other over-the-counter markets. Additionally, PaineWebber is a primary dealer in U.S. government securities. The Company is comprised of four interrelated core business groups -- Retail Sales and Marketing, Institutional Sales and Trading, Investment Banking and Asset Management -- which utilize common operational and administrative personnel and facilities. RETAIL SALES AND MARKETING consists primarily of a domestic branch office system and consumer product groups through which PaineWebber and certain other subsidiaries provide clients with financial services and products, including the purchase and sale of securities, option contracts, commodity and financial futures contracts, direct investments, selected insurance products, fixed income instruments and mutual funds. The Company may act as principal or agent in providing these services. Fees charged vary according to the size and complexity of a transaction, and the activity level of a client's account. INSTITUTIONAL SALES AND TRADING is comprised of five businesses: Fixed Income, U.S. Equity, International, Derivatives and Research. The Company places securities with, and executes trades on behalf of, institutional clients both domestically and internationally. In addition, the Company takes positions in both listed and unlisted equity and fixed income securities to facilitate client transactions or for the Company's own account. 9 11 Through the INVESTMENT BANKING group, the Company provides financial advice to, and raises capital for, a broad range of domestic and international corporate clients. Corporate Finance manages and underwrites public offerings, participates as an underwriter in syndicates of public offerings managed by others, and provides advice in connection with mergers and acquisitions, lease financings and debt restructurings. The Municipal Securities group originates, underwrites, sells and trades taxable and tax-exempt issues for municipal and public agency clients. The ASSET MANAGEMENT group is comprised of Mitchell Hutchins Asset Management Inc. ("MHAM"), Mitchell Hutchins Institutional Investors Inc. ("MHII") and Mitchell Hutchins Investment Advisory division ("MHIA"). MHAM and MHII provide investment advisory and portfolio management services to pension and endowment funds. MHAM also provides investment advisory and portfolio management services to individuals and mutual funds. MHIA provides portfolio management services to individuals, trusts and institutions. The securities business is one of the nation's most highly regulated industries. Violations of applicable regulations can result in the revocation of broker-dealer licenses, the imposition of censures or fines, and the suspension or expulsion of a firm, its officers or employees. The Company's securities business is regulated by various agencies, including the Commission, the New York Stock Exchange, Inc., the Commodity Futures Trading Commission and the National Association of Securities Dealers, Inc. (the "NASD"). The Company's principal executive offices are located at 1285 Avenue of the Americas, New York, New York 10019 (Telephone: (212) 713-2000). For purposes of the foregoing description, all references to the "Company" refer collectively to Paine Webber Group Inc. and its operating subsidiaries unless the context otherwise requires. SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data have been derived from the consolidated financial statements of the Company.
YEARS ENDED DECEMBER 31, -------------------------------------------------------------- 1993 1992 1991 19901 1989 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS) Operating Results Total revenues.......................... $4,004,717 $3,363,731 $3,165,895 $2,978,505 $2,925,809 Net revenues (including net interest)... $2,874,005 $2,484,489 $2,109,771 $1,736,354 $1,727,169 Income (loss) before taxes.............. $ 407,576 $ 339,115 $ 226,247 $ (102,633) $ 82,568 Net income (loss)....................... $ 246,183 $ 213,175 $ 150,716 $ (57,351) $ 51,960 Per Common Share2 Primary earnings (loss)................. $ 3.11 $ 2.83 $ 2.10 $ (1.44) $ 0.47 Fully diluted earnings (loss)........... $ 2.95 $ 2.37 $ 1.67 $ (1.44) $ 0.47 Dividends declared...................... $ 0.38 $ 0.31 $ 0.24 $ 0.23 $ 0.23 Book value.............................. $ 16.29 $ 14.24 $ 12.23 $ 10.03 $ 11.58 Financial condition Total assets............................ $37,026,909 $26,508,982 $22,621,763 $18,150,539 $22,075,292 Long-term borrowings.................... $1,936,082 $1,150,553 $ 815,728 $ 656,993 $ 521,929 Stockholders' equity.................... $1,195,047 $1,080,667 $1,050,478 $ 895,916 $1,001,202 Total capitalization.................... $3,131,129 $2,231,220 $1,866,206 $1,552,909 $1,523,131
- --------------- 1 The 1990 results reflect an after-tax charge of $95,452 ($149,128 before income taxes) for restructuring and merchant banking reserves. 2 Per common share data has been retroactively adjusted to reflect the three-for-two common stock split in the form of a 50% stock dividend effective March 10, 1994 to stockholders of record on February 17, 1994, in addition to the three-for-two common stock split in December 1991. 10 12 USE OF PROCEEDS As may be described in further detail in the Prospectus Supplement, a substantial portion of the proceeds to be received by the Company from the sale of each issue of Warrants may be used by the Company or one or more of its subsidiaries to purchase or maintain positions in certain of the Underlying Stocks on which the related Stock Index is based or options, futures contracts or options on futures contracts relating to such Stock Index or Underlying Stocks, as the case may be, and, if applicable, to pay the costs and expenses of hedging any currency risk with respect to such Warrants. The remainder of such proceeds will be used by the Company or its subsidiaries for general corporate purposes. DESCRIPTION OF WARRANTS The following description of the terms of the Warrants sets forth certain general terms and provisions of the Warrants to which any Prospectus Supplement may relate. The particular terms of the Warrants offered by any Prospectus Supplement and the extent, if any, to which such general provisions do not apply to the Warrants so offered will be described in such Prospectus Supplement. Each issue of Warrants will be issued under a separate warrant agreement (each, a "Warrant Agreement") to be entered into between the Company and a bank or trust company, as warrant agent (the "Warrant Agent"), all as described in the Prospectus Supplement relating to such Warrants. A single bank or trust company may act as Warrant Agent for more than one issue of Warrants. The Warrant Agent will act solely as the agent of the Company under the applicable Warrant Agreement and will not assume any obligation or relationship of agency or trust for or with any holders of such Warrants. A copy of the form of Warrant Agreement, including the form of warrant certificate, is filed as an exhibit to the Registration Statement. The following summaries of certain provisions of the Warrants and the form of Warrant Agreement do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Warrants and the Warrant Agreement. The Company will have the right to "reopen" a previous issue of Warrants and to issue additional Warrants of such issue. GENERAL Each Warrant will entitle the Warrantholder to receive from the Company upon exercise the Cash Settlement Value of such Warrant, which will be an amount in cash (i) in the case of a Put Warrant, determined by reference to the amount, if any, by which the Strike Index exceeds the Spot Index at the time of exercise and (ii) in the case of a Call Warrant, determined by reference to the amount, if any, by which the Spot Index at the time of exercise exceeds the Strike Index. The Prospectus Supplement for an issue of Warrants will set forth the formula pursuant to which the Cash Settlement Value of such Warrants will be determined. The Strike Index may either be a fixed level of the Stock Index or a level that varies during the term of the Warrants in accordance with a schedule or formula. Certain Warrants will, if specified in the Prospectus Supplement, entitle the Warrantholder to receive from the Company, upon automatic exercise at expiration and under any other circumstances specified in the Prospectus Supplement, an amount equal to the greater of the applicable Cash Settlement Value and the Minimum Expiration Value of such Warrants. In addition, if so specified in the Prospectus Supplement, following the occurrence of an Extraordinary Event, the Cash Settlement Value of a Warrant may, at the option of the Company, be determined on a different basis, including in connection with automatic exercise at expiration. Unless otherwise specified in the Prospectus Supplement, the Stock Index will be an established, broadly-based index related to a major domestic or foreign equity trading market, and the Cash Settlement Value, if any (and, if applicable, the Minimum Expiration Value), of the Warrants will be payable in U.S. dollars. Unless otherwise indicated in the Prospectus Supplement, a Warrant will be settled only in cash and, accordingly, will not require or entitle a Warrantholder to sell, deliver, purchase or take delivery of any securities (including the Underlying Stocks) to or from the Company, and the Company will be under no 11 13 obligation to, nor will it, purchase or take delivery of or sell or deliver any securities (including the Underlying Stocks) from or to Warrantholders pursuant to the Warrants. Unless otherwise specified in the Prospectus Supplement, the Warrants will be deemed to be automatically exercised upon expiration. Upon such automatic exercise, Warrantholders will be entitled to receive the Cash Settlement Value of the Warrants, except that holders of Warrants having a Minimum Expiration Value will be entitled to receive an amount equal to the greater of such Cash Settlement Value and the applicable Minimum Expiration Value. The Minimum Expiration Value may be either a fixed amount or an amount that varies during the term of the Warrants in accordance with a schedule or formula. Any Minimum Expiration Value applicable to an issue of Warrants, as well as any additional circumstances resulting in the automatic exercise of such Warrants, will be specified in the related Prospectus Supplement. If so specified in the Prospectus Supplement, the Warrants may be cancelled by the Company upon the occurrence of an Extraordinary Event. Any Extraordinary Events or Exercise Limitation Events relating to an issue of Warrants will be set forth in the related Prospectus Supplement. Upon such cancellation, the related Warrantholders will be entitled to receive only the applicable Cancellation Amount specified in such Prospectus Supplement. The Cancellation Amount may be either a fixed amount or an amount that varies during the term of the Warrants in accordance with a schedule or formula. Reference is hereby made to the Prospectus Supplement relating to the particular issue of Warrants offered thereby for the terms of such Warrants, including, where applicable: (i) the aggregate amount of such Warrants; (ii) the offering price of such Warrants; (iii) the Stock Index for such Warrants, which may be based on United States or foreign stocks or a combination thereof and may be a pre-existing U.S. or foreign stock index compiled and published by a third party or an index based on a group of Underlying Stocks selected by the Company solely in connection with the issuance of such Warrants, and certain information regarding such Stock Index and the Underlying Stocks; (iv) whether such Warrants are Put Warrants or Call Warrants; (v) the date on which the right to exercise such Warrants commences and the date on which such right expires; (vi) the manner in which such Warrants may be exercised; (vii) the minimum number, if any, of such Warrants exercisable at any one time; (viii) the maximum number, if any, of such Warrants that may, subject to the Company's election, be exercised by all Warrantholders (or by any person or entity) on any day; (ix) any provisions permitting a Warrantholder to condition an exercise notice on the absence of certain specified changes in the Spot Index after the exercise date, any provisions permitting the Company to suspend exercise of such Warrants or redeem such Warrants based on market conditions or other circumstances and any other special provisions relating to the exercise of such Warrants; (x) any provisions for the automatic exercise of such Warrants other than at expiration; (xi) any provisions permitting the Company to cancel such Warrants upon the occurrence of certain events; (xii) the method of determining the amount payable in connection with the exercise or cancellation of such Warrants, including the Strike Index, the method of determining the Spot Index, the method of expressing movements in the Stock Index as a cash amount in the currency in which the Cash Settlement Value of such Warrants is payable, including, in the case of Warrants relating to a Foreign Stock Index, the method of converting amounts in the relevant foreign currency or currencies into U.S. dollars (or such other currency in which such Warrants are payable), and any Cancellation Amount or Minimum Expiration Value applicable to such Warrants; (xiii) the method of providing for a substitute index or otherwise determining the amount payable in connection with the exercise of such Warrants if the Stock Index changes or ceases to be made available by its publisher; (xiv) the time or times at which amounts will be payable in respect of such Warrants following exercise or automatic exercise; (xv) any national securities exchange on which such Warrants will be listed; (xvi) any provisions for issuing such Warrants in certificated form from the perspective of Warrantholders; (xvii) if such Warrants are not issued in book-entry form, the place or places at which payment of the Cash Settlement Value, Cancellation Amount, if any, and Minimum Expiration Value, if any, of such Warrants is to be made by the Company; and (xviii) any other terms of such Warrants. Prospective purchasers of Warrants should be aware of special United States federal income tax considerations applicable to instruments such as the Warrants. The Prospectus Supplement relating to each issue of Warrants will describe such tax considerations. The summary of United States federal income tax considerations contained in the Prospectus Supplement will be presented for informational purposes only, 12 14 however, and will not be intended as legal or tax advice to prospective purchasers. Prospective purchasers of Warrants are urged to consult their own tax advisors prior to any acquisition of Warrants. BOOK-ENTRY PROCEDURES AND SETTLEMENT Unless otherwise specified in the Prospectus Supplement, the Warrants offered thereby will be issued in book-entry form from the perspective of Warrantholders. Such Warrants will be issued in the form of a single global certificate registered in the name of the nominee of the depository, The Depository Trust Company ("DTC", which term, as used herein, includes any successor depository selected by the Company). DTC is a limited-purpose trust company which was created to hold securities for its participating organizations (the "Participants") and to facilitate the clearance and settlement of securities transactions between Participants in such securities through electronic book-entry changes in accounts of its Participants. Participants include securities brokers and dealers, banks and trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("indirect participants"). Persons who are not Participants may beneficially own securities held by DTC only through Participants or indirect participants. DTC's nominee for all purposes will be considered the sole owner or holder of the Warrants under the related Warrant Agreement. Owners of beneficial interests in the global certificate will not be entitled to have Warrants registered in their names, will not receive or be entitled to receive physical delivery of Warrants in definitive form, and will not be considered the holders thereof under the related Warrant Agreement. Neither the Company nor the Warrant Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interest in the global certificate, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. A Warrantholder's ownership of a Warrant will be recorded on or through the records of the brokerage firm or other entity that maintains such Warrantholder's account. In turn, the total number of Warrants held by an individual brokerage firm for its clients will be maintained on the records of DTC in the name of such brokerage firm (or in the name of a Participant or indirect participant that acts as agent for the Warrantholder's brokerage firm if such firm is not a Participant or indirect participant). Therefore, a Warrantholder must rely upon the foregoing procedures to evidence such Warrantholder's ownership of a Warrant. Transfer of ownership of any Warrant may be effected only through the selling Warrantholder's brokerage firm. The Cash Settlement Value and, if applicable, the Cancellation Amount or Minimum Expiration Value payable in respect of the Warrants will be paid by the Warrant Agent to DTC. DTC will be responsible for crediting the amount of such payments to the accounts of the Participants or indirect participants in accordance with its standard procedures, which currently provide for payments in next-day funds settled through the New York Clearing House. Each Participant or indirect participant will be responsible for disbursing such payments to the beneficial owners of the Warrants that it represents and to each brokerage firm for which it acts as agent. Each such brokerage firm will be responsible for disbursing funds to the owners of the Warrants that it represents. It is suggested that any purchaser of Warrants with accounts at more than one brokerage firm only effect transactions in the Warrants, including exercises, through the brokerage firm or firms that hold such purchaser's Warrants. If DTC is at any time unwilling or unable to continue as depository and a successor depository is not appointed by the Company within 90 days, the Company will issue Warrants in definitive form in exchange for the global certificate. In addition, the Company may at any time determine not to have the Warrants represented by a global certificate and, in such event, will issue Warrants in definitive form in exchange for such global certificate. In either instance, an owner of a beneficial interest in the global certificate will be entitled to have Warrants equal in aggregate amount to such beneficial interest registered in its name and will be entitled to physical delivery of such Warrants in definitive form. 13 15 LISTING Unless otherwise indicated in the Prospectus Supplement, the Warrants will be listed on a national securities exchange as specified in the Prospectus Supplement. It is expected that such exchange will cease trading an issue of Warrants as of the close of business on the related expiration date of such Warrants. MODIFICATION The Warrant Agreement and the terms of the related Warrants may be amended by the Company and the Warrant Agent, without the consent of the holders of any Warrants, for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective or inconsistent provision contained therein, maintaining the listing of such Warrants on any national securities exchange or registration of such Warrants under the Exchange Act, permitting the issuance of individual Warrant certificates to Warrantholders, reflecting the issuance by the Company of additional Warrants of the same issue or reflecting the appointment of a successor depository, or in any other manner which the Company may deem necessary or desirable and which will not materially and adversely affect the interests of the Warrantholders. The Company and the Warrant Agent also may modify or amend the Warrant Agreement and the terms of the related Warrants, with the consent of the holders of not less than a majority in number of the then outstanding Warrants affected by such modification or amendment, for any purpose, provided that no such modification or amendment that decreases the Strike Index (in the case of Put Warrants) or increases the Strike Index (in the case of Call Warrants), otherwise changes the determination of the Cash Settlement Value or Cancellation Amount, if any, or Minimum Expiration Value, if any, of the Warrants (or any aspects of such determination) so as to reduce the amount receivable upon exercise, cancellation or expiration, shortens the period of time during which the Warrants may be exercised, decreases the Minimum Expiration Value, if any, or otherwise materially and adversely affects the exercise rights of the holders of the Warrants or reduces the percentage of the number of outstanding Warrants the consent of whose holders is required for modification or amendment of the Warrant Agreement or the terms of the related Warrants, may be made without the consent of each Warrantholder affected thereby. MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS If at any time there is a merger or consolidation involving the Company or a sale, transfer, conveyance or other disposition of all or substantially all of the assets of the Company, then the successor or assuming corporation will succeed to and be substituted for the Company under the Warrant Agreement and the related Warrants, with the same effect as if it had been named in such Warrant Agreement and Warrants as the Company. The Company will thereupon be relieved of any further obligation under such Warrant Agreement and Warrants and, in the event of any such sale, transfer, conveyance (other than by way of lease) or other disposition, the Company as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. ENFORCEABILITY OF RIGHTS BY WARRANTHOLDERS Any Warrantholder may, without the consent of the Warrant Agent or any other Warrantholder, enforce by appropriate legal action on his own behalf his right to exercise, and to receive payment for, his Warrants. PLAN OF DISTRIBUTION The Company may sell the Warrants in any of three ways: (i) through underwriters; (ii) directly to one or more purchasers; or (iii) through agents. The Prospectus Supplement with respect to the Warrants being offered thereby sets forth the terms of the offering of such Warrants, including the names of any underwriters, the purchase price of such Warrants and the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price, any discounts or concessions allowed or reallowed or paid to dealers and any national securities exchange on which 14 16 such Warrants will be listed. Only underwriters so named in the Prospectus Supplement are deemed to be underwriters in connection with the Warrants offered thereby. If underwriters are used in the sale, the Warrants will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Warrants may be offered to the public either through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Such managing underwriters or underwriters may include PaineWebber. Unless otherwise set forth in the Prospectus Supplement, the obligations of the underwriters to purchase such Warrants will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all the Warrants offered by the Prospectus Supplement if any of such Warrants are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Warrants may also be sold directly by the Company or through agents designated by the Company from time to time. Any agents involved in the offer or sale of the Warrants will be named, and any commissions payable by the Company to such agents will be set forth, in the Prospectus Supplement. Such agents may include PaineWebber. Unless otherwise indicated in the Prospectus Supplement, any such agent is acting on a best-efforts basis for the period of its appointment. The Warrants, including additional Warrants of a previous issue, may be sold on any national securities exchange on which the Warrants are listed. Agents and underwriters may be entitled under agreements entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which the agents or underwriters may be required to make in respect thereof. Agents and underwriters may be customers of, engage in transactions with, or perform services for, the Company or its affiliates in the ordinary course of business. PaineWebber expects to offer and sell previously issued Warrants from time to time in the course of its business as a broker-dealer. PaineWebber may act as principal or agent in such transactions. The Warrants may be offered or sold in such transactions on any national securities exchange on which the Warrants are listed. Sales will be made at prices related to prevailing prices at the time of sale. PaineWebber is a wholly owned subsidiary of the Company. The participation of PaineWebber in the offer and sale of the Warrants will comply with the requirements of Schedule E of the By-Laws of the NASD regarding underwriting securities of an affiliate. Under the provisions of Schedule E, when a NASD member such as PaineWebber distributes warrants of an affiliate, the price of the warrants can be no higher than that recommended by a "qualified independent underwriter", as such term is defined in Schedule E, meeting certain standards. In accordance with such requirement, PaineWebber will select a "qualified independent underwriter" in connection with each issue of Warrants to conduct due diligence and recommend a price for such Warrants in compliance with the requirements of Schedule E. ERISA CONSIDERATIONS The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), imposes certain restrictions on employee benefit plans ("Plans") which are subject to ERISA, and on those persons who are fiduciaries with respect to such Plans. In accordance with ERISA's general fiduciary requirements, a fiduciary with respect to any such Plan who is considering the purchase of Warrants on behalf of such Plan should determine whether such purchase is permitted under the governing Plan documents, is prudent and is appropriate for the Plan in view of its overall investment policy and the composition and diversification of its portfolio. See "Risk Factors". Other provisions of ERISA and section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), prohibit certain transactions involving the assets of a Plan and persons who have certain specified relationships to the Plan ("parties in interest" within the meaning of ERISA or "disqualified persons" within the meaning of section 4975 of the Code). Thus, a Plan fiduciary considering the purchase of Warrants should consider whether such a purchase might constitute or result in a prohibited transaction under ERISA or section 4975 of the Code. 15 17 The Company and PaineWebber may each be considered a "party in interest" or a "disqualified person" with respect to many Plans. The purchase of Warrants by a Plan that is subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of section 4975 of the Code (including individual retirement arrangements and other plans described in section 4975(e)(1) of the Code) and with respect to which the Company or PaineWebber or any of their affiliates is a service provider (or otherwise is a "party in interest" or "disqualified person") may constitute or result in a non-exempt prohibited transaction under ERISA or section 4975 of the Code, unless such Warrants are acquired pursuant to and in accordance with an applicable exemption, such as Prohibited Transaction Class Exemption ("PTCE") 90-1 (an exemption for certain transactions involving insurance company pooled separate accounts), PTCE 84-14 (an exemption for certain transactions determined by an independent qualified professional asset manager) or PTCE 91-38 (an exemption for certain transactions involving bank collective investment funds). Any pension or other employee benefit plan proposing to acquire any Warrants should consult with its counsel. EXPERTS The consolidated financial statements of the Company incorporated by reference in the 1993 Form 10-K have been audited by Ernst & Young, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. The information under the caption "Selected Consolidated Financial Data" for each of the five years in the period ended December 31, 1993, included elsewhere herein, have been derived from consolidated financial statements audited by Ernst & Young, as set forth in their report incorporated herein by reference. Such financial statements and selected financial data have been incorporated herein by reference and included herein, respectively, in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. LEGAL OPINIONS The validity of the Warrants will be passed upon for the Company by Cravath, Swaine & Moore, New York, New York. 16 18 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS. ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth all expenses payable by the Registrant in connection with the issuance and distribution of the securities being registered. All the amounts shown are estimates. Accounting fees and expenses .................... $2,000 Legal fees and expenses ......................... 2,500 Printing expenses ............................... 5,000 Miscellaneous ................................... 500 ------ Total ................. $10,000 =======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 102 of the General Corporation Law of the State of Delaware gives corporations the power to eliminate or limit the personal liability of directors under certain circumstances. Section 145 of the General Corporation Law of the State of Delaware gives corporations the power to indemnify directors and officers under certain circumstances. Article IX of the Registrant's Restated Certificate of Incorporation (relating to the elimination of personal liability) is hereby incorporated by reference to Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1987, filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. Article VII of the Registrant's By-Laws (relating to indemnification) is hereby incorporated by reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1987, filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. The Registrant also maintains directors and officers liability and corporate reimbursement insurance which provides for coverage against loss arising from claims made against directors and officers in their capacity as such. The general scope of coverage is any breach of duty, 19 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. See the proposed form of Underwriting Agreement filed as Exhibit 1 for certain indemnification provisions. ITEM 16. EXHIBITS. 1 */ -- Proposed form of Underwriting Agreement. - 4.1 */ -- Proposed form of Warrant Agreement for Book-Entry Warrants, with the form of Global Warrant Certificate attached as - Exhibit A thereto. 4.2 */ -- Proposed form of Warrant Agreement for Certificated Warrants, with the form of Warrant Certificate attached as - Exhibit A thereto. 5 */ -- Opinion of Cravath, Swaine & Moore, in respect of the legality of the Stock Index Warrants registered hereunder. - 8 */ -- Opinion of Cravath, Swaine & Moore regarding tax matters (included in Exhibit 5). - 23.1 **/ -- Consent of Ernst & Young relating to the Registrant's Annual Report on Form 10-K for the year ended December 31, -- 1993. 23.2 */ -- Consents of Cravath, Swaine & Moore (included in Exhibit 5). - 24 */ -- Powers of Attorney. -
__________________________________ */ Previously filed. **/ Filed herewith. 20 ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post- effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is 21 incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (d)(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 22 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Amended Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in The City of New York, State of New York, on May 25, 1994. PAINE WEBBER GROUP INC., (Registrant) by * ---------------------- (Donald B. Marron, Chairman of the Board, Chief Executive Officer and Director) *by /s/ Pierce R. Smith -------------------- Pierce R. Smith, Attorney-in-Fact Pursuant to the requirements of the Securities Act of 1933, this Amended Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- * Chairman of the Board, Chief May 25, 1994 - ----------------------- Executive Officer, and Director (Donald B. Marron) (principal executive officer) /s/ Regina A. Dolan Vice President and Chief Financial May 25, 1994 - ----------------------- Officer (principal financial and (Regina A. Dolan) accounting officer)
23
Signature Title Date --------- ----- ---- * Director May 25, 1994 - ----------------------- (T. Stanton Armour) * Director May 25, 1994 - ----------------------- (E. Garrett Bewkes, Jr.) * Director May 25, 1994 - ----------------------- (John A. Bult) Director - ----------------------- (Yozo Fujisawa) - ----------------------- Director (Joseph J. Grano, Jr.) * Director May 25, 1994 - ----------------------- (Paul B. Guenther) * Director May 25, 1994 - ----------------------- (John E. Kilgore, Jr.) * Director May 25, 1994 - ----------------------- (Robert M. Loeffler) * Director May 25, 1994 - ----------------------- (Edward Randall, III) * Director May 25, 1994 - ----------------------- (Henry Rosovsky) * Director May 25, 1994 - ----------------------- (Kyosaku Sorimachi)
*by /s/ Pierce R. Smith -------------------- Pierce R. Smith, Attorney-in-fact 24 INDEX TO EXHIBITS Exhibit Number Exhibit - ------- ------- 23.1 Consent of Ernst & Young relating to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. EX-23.1 2 CONSENT OF ERNST & YOUNG 1 Exhibit 23.1 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of Paine Webber Group Inc. for the registration of Stock Index Warrants and to the incorporation by reference therein of our report dated January 24, 1994, execpt for the note as to the subsequent event, for which the date is February 3, 1994, with respect to the consolidated financial statements and schedules of Paine Webber Group Inc. included or incorporated by reference in its Annual Report (Form 10-K) for the year ended December 31, 1993, filed with the Securities and Exchange Commission. /s/ Ernst & Young New York, New York May 25, 1994 -----END PRIVACY-ENHANCED MESSAGE-----