-----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, JZPtprYHDwxgaCcpVex0InTtomBhm1RGQpMGDtjoDycIIShEa+W9c+O76LqDCplx nSc8FzR79jQw0WTkpVTyJA== 0001047469-98-034136.txt : 19980910 0001047469-98-034136.hdr.sgml : 19980910 ACCESSION NUMBER: 0001047469-98-034136 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 11 REFERENCES 429: 333-17913 FILED AS OF DATE: 19980909 SROS: NONE 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 SEC ACT: SEC FILE NUMBER: 333-63107 FILM NUMBER: 98706274 BUSINESS ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132000 MAIL ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: PAINE WEBBER INC DATE OF NAME CHANGE: 19840523 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 9, 1998 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ 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 SENIOR 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. /X/ 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 MAXIMUM AMOUNT OF TITLE OF EACH CLASS AGGREGATE REGISTRATION OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) FEE Debt Securities(2).............................................................. $3,000,000,000 $885,000
(1) Debt Securities may be denominated in U.S. Dollars or the equivalent in other currencies or composite currencies. (2) The Prospectus contained in this Registration Statement also relates to $353,115,000 in Debt Securities previously registered pursuant to Registration Statement No. 333-17913. A registration fee of $606,061 was paid in connection with Registration Statement No. 333-17913, of which $107,005 related to such Debt Securities. --------------------- 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. 333-17913, 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS SUPPLEMENT DATED SEPTEMBER 9, 1998 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED SEPTEMBER ,1998) 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. $3,353,115,000 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 a composite currency will not be sold in, or to residents of, a 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% .05% to .75% 99.25% to 99.95% U.S. U.S. $1,676,558 to U.S. $3,327,966,638 to Total(4)........... $3,353,115,000 $25,148,363 $3,351,438,443
(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 PaineWebber Incorporated ("PWI") a commission of from .05% to .75%, depending on Stated Maturity, of the principal amount of any Notes sold through PWI as agent (the "Agent") or sold to PWI as principal under circumstances in which no other discount is agreed upon. (3) Before deducting estimated expenses of U.S. $ 1,333,500 payable by the Company, including reimbursement of certain of the Agent's 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 Agent 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 the 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 the Agent. In addition, the 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 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 ------- The date of this Prospectus Supplement is September , 1998. IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, THE AGENT MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF NOTES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE "PLAN OF DISTRIBUTION." 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," "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 The Chase Manhattan Bank (formerly known as 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 Chase Manhattan Bank Delaware (formerly known as 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. $3,353,115,000, 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 aggregate principal amount of up to an additional U.S. $3,353,115,000, 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 S-2 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 The Chase Manhattan Bank in the Borough of Manhattan, The City of New York (the "Notes Office"). The Chase Manhattan 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 1, 1998, U.S. $1,819,885,000 aggregate principal amount of Senior Notes were outstanding under the Senior Indenture and U.S. $186,950,000 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, 1998, the aggregate outstanding principal amount of Superior Indebtedness was approximately U.S. $5.6 billion (including approximately U.S. $10 million of commercial paper and approximately U.S. $1.0 billion 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 note entitled "Commitments and Contingencies" in the notes S-3 to the Company's Consolidated Financial Statements for the quarter ended June 30, 1998, included in the Company's Quarterly Report on Form 10-Q for such quarter incorporated by reference in the accompanying Prospectus). 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 The Chase Manhattan 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 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- S-4 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. 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 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. Unless otherwise specified in the applicable Pricing Supplement, 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 and (ii) if such Note is a LIBOR Note, a London Banking Day. Unless otherwise specified in the applicable Pricing Supplement, "Business Day Centers" 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 a composite currency, 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 and "New York Business Day" 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 S-5 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 a country issuing the Specified Currency (or, with respect to Notes denominated in a composite currency, the location specified in the applicable Pricing Supplement) 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 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. S-6 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 "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, The Chase Manhattan 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. Unless otherwise specified in the applicable Pricing Supplement, if any Interest Reset Date for any Floating Rate Note would otherwise be a S-7 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-8 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, Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15") under the heading "Commercial paper--Nonfinancial." 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 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 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. S-9 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 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 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 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 3750 on the Dow Jones Market Service (or such other page or pages as may replace page 3750 on that service for the purpose of displaying London interbank offered rates of major banks). "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 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 nor 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 S-10 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 under the heading "U.S. Government securities--Treasury bills--Auction average" 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 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. S-11 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 that its participants ("Participants") deposit with the Depositary. The Depositary also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. The Depositary is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the Depositary's system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). 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 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. S-12 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 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 S-13 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, 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 S-14 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 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 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 S-15 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 a country issuing the Specified Currency (or, with respect to Notes denominated in a composite currency, the location specified in the applicable Pricing Supplement). Unless otherwise specified in the applicable Pricing Supplement, Notes denominated or payable in a Specified Currency other than U.S. dollars or a composite currency will not be sold in, or to residents of, a 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 or enter a judgment or decree in the currency of the underlying obligation and the judgment 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 S-16 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. 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-17 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 income 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 only 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 holders of Notes other than U.S. Holders (as defined below). This summary is based upon the United States Federal income 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 income tax laws to their particular situations as well as any consequences to them under the laws of any other taxing jurisdiction. For purposes of this discussion, a "U.S. Holder" 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. 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 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 and the Treasury 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 S-18 issue of Notes are sold to the public (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 payments made with respect to 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 S-19 beginning of such accrual period is reduced by the amount of the payment. If a portion of the issue price of a Note is attributable to interest that accrued prior to the 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 for an amount in excess of its adjusted issue price as of the purchase date 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 amount of OID which must be included in gross income for any taxable year (but not below zero) by the portion of the acquisition premium properly allocable to such year. 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. For purposes of detemining whether a Note is a Discount Note and calculating the amount of OID on such Note, an option to redeem a Note will be presumed to be exercised if, by utilizing any date on which such Note may be redeemed or repaid as the maturity date and the amount payable on such date in accordance with the terms of such Note (the "redemption price") as the stated redemption price at maturity, the yield on the Note would be (i) in the case of an option to redeem held by the Company, lower than its yield to Stated Maturity, or (ii) in the case of an option to redeem held by 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-20 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 purchased 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. 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 S-21 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 adjusted 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 adjusted 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. 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 five 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 S-22 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 cost 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, and such income or loss will not be treated as interest income or expense. 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 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 or a bank receiving interest described in Section 881(c)(3)(A) of the Code and (iii) either S-23 (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 (or a successor form) 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 (or a successor form) 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 income 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. Recently enacted Treasury regulations alter the rules regarding certification as to non-U.S. status for payments made after December 31, 1999. Non-U.S. Holders should consult their tax advisor about the effects on them, if any, of such rules. 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 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. S-24 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-25 PLAN OF DISTRIBUTION The Notes are being offered on a continuing basis by the Company through the Agent, 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. The Agent 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 the Agent a commission of from .05% to .75% of the principal amount of any Note, depending upon the Stated Maturity of such Note, for sales made through the Agent as agent. The Company also may sell Notes at a discount to the 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 the 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, the Agent may offer Notes purchased by it as principal to other dealers. Notes sold by the 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 the Agent from the Company. Unless otherwise specified in the applicable Pricing Supplement, any Note purchased by the 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 Agent. 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. In connection with the distribution of the Notes, the Agent may purchase and sell Notes in the open market. These transactions may include overallotment and stabilizing transactions and purchases to cover short positions created by the Agent in connection with such distribution. Stabilizing transactions consist of certain bids or purchases for the purpose of preventing or retarding a decline in the price of Notes; and short positions created by the Agent involve the sale by the Agent of a greater aggregate principal amount of Notes than they are required to purchase from the Company in such distribution. The Agent also may impose a penalty bid, whereby selling concessions allowed to broker-dealers in respect of the Notes sold in such distribution may be reclaimed by the Agent if such Notes are repurchased by the Agent in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of Notes, which may be higher than the price that might otherwise prevail in the open market; and these activities, if commenced, may be discontinued at any time. These transactions may be effected in the over-the-counter market or otherwise. The Agent, 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 Agent against certain liabilities, including liabilities under the Act or to contribute to payments that the Agent may be required to make in respect thereof. The Company has agreed to reimburse the Agent for all out-of-pocket expenses (including advertising expenses) incurred by the Agent 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 Agent for the reasonable fees and disbursements of its counsel incurred in connection with the distribution agreement between the Company and the Agent. The estimated maximum amount of such reimbursable fees and disbursements is $150,000. The Notes do not have an established trading market and will not be listed on any securities exchange. The Agent may make a market in the Notes, but the Agent is not obligated to do so and may discontinue S-26 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 Agent 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. All distributions of the Notes will conform to the requirements set forth in Rule 2720 of the Conduct Rules of the National Association of Securities Dealers, Inc. S-27 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED SEPTEMBER 9, 1998 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 Securities offered by this Prospectus 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 aggregate initial public offering price of the Securities to be offered by this Prospectus shall not exceed $3,353,115,000 (or the equivalent thereof if any of the Securities are denominated in a foreign currency or a composite currency). 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 September , 1998 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 EFFECT TRANSACTIONS WHICH STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED SECURITIES OR OTHER SECURITIES OF THE COMPANY. ANY SUCH ACTIVITIES WILL BE DESCRIBED IN THE APPLICABLE PROSPECTUS SUPPLEMENT. ------------------- 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"). The registration statements of which this Prospectus forms a part, as well as reports, proxy statements and other information filed by the Company, may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may be obtained at prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be accessed electronically by means of the Commission's home page on the Internet at http://www.sec.gov. In addition, reports, proxy statements and other information concerning the Company may be inspected at the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York, and the Pacific Stock Exchange, 301 Pine Street, San Francisco, California. This Prospectus constitutes a part of certain Registration Statements on Form S-3 (together with all amendments and exhibits thereto, the "Registration Statement") filed with the Commission under the Securities Act of 1933 (the "Securities Act") with respect 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. Reference is made to the Registration Statement and to the exhibits relating thereto for further information with respect to the Company and the Securities. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the Commission or incorporated by reference herein are not necessarily complete, and in each instance reference is made to the copy of such document so filed for a more complete description of the matter involved. Each such statement is qualified in its entirety by such reference. ------------------- DOCUMENTS INCORPORATED BY REFERENCE The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998 and the Company's Current Report on Form 8-K dated July 15, 1998, 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) 713-3224. ------------------- 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," "dollar," "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 17,000 people in 291 offices worldwide. The Company's principal line of business is to serve the investment and capital needs of individual and institutional clients through its broker-dealer subsidiary, PaineWebber, and other specialized subsidiaries. These activities are conducted through interrelated business groups, which utilize common operational and administrative personnel and facilities. 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 National Association of Securities Dealers Nasdaq Stock Market or in other over-the-counter markets. 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, fixed income instruments, mutual funds, trusts, wrap-free assets and selected insurance products. 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. Also, part of the Private Client Group is the Municipal Securities Group, which structures, underwrites, sells and trades taxable and tax-exempt issues for municipal and public agency clients. Capital Markets is comprised of Research, Global Fixed Income and Commercial Real Estate, Global Equities and Investment Banking. The Research Group provides investment advice to institutional and individual investors, and other business areas of the Company, on approximately 800 companies in 61 industry sectors. Through the Global Fixed Income and Global Equities groups, the Company places securities for, and executes trades on behalf of, institutional clients, both domestically and internationally. To facilitate client transactions or for the Company's product development efforts, the Company takes positions in fixed income securities, listed and over-the-counter equity securities and holds direct equity investments in partnerships and other entities that invest in fixed income securities, equity securities and other financial instruments. The Commercial Real Estate group provides a full range of capital market services to real estate clients, including underwriting of debt and equity securities, principal lending, debt restructuring, property sales and bulk sales services, and a broad range of other advisory services. 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, restructurings and recapitalizations. The Asset Management group is comprised of Mitchell Hutchins Asset Management Inc., including Mitchell Hutchins Investment Advisory division, Mitchell Hutchins Institutional Investors Inc., Financial Counselors Inc. and NewCrest Advisors Inc. The Asset Management group provides investment advisory and portfolio management services to mutual funds, institutions, pension funds, endowment funds, individuals and trusts. 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. 3 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 Commission, the New York Stock Exchange, the Commodity Futures Trading Commission, the National Association of Securities Dealers, Inc. ("NASD") and the Securities and Futures Authority. 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, and all references to "Paine Webber" refer to Paine Webber Incorporated. 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, 1997, and the six-month period ended June 30, 1998.
FISCAL YEAR ENDED SIX MONTHS ENDED DECEMBER 31 JUNE 30, 1998 - --------------------------------------------------------------- ----------------------- 1993 1994 1995 1996 1997 ----- ----- ----- ----- ----- 1.3 1.0 1.1 1.3 1.2 1.3
For purposes of computing the ratio of earnings to fixed charges, "earnings" consist of income before taxes and fixed charges, "Fixed charges" consist principally of interest expense incurred on securities sold under repurchase agreements, short-term and long-term borrowings, debt issued to affiliated trusts, 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 The Chase Manhattan Bank (formerly known as 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 Chase Manhattan Bank Delaware (formerly known as Chemical Bank Delaware), as Trustee (the "Subordinated Indenture"). The Senior Indenture and the Subordinated Indenture (being sometimes referred to herein collectively as the "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. 4 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 Offered Securities are Senior Securities or Subordinated Securities; (ii) the percentage of their principal 5 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, will 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 terms, if any, on which the Offered Securities may be converted into or exchanged for stock or other securities of the Company or other entities, any specific terms relating to the adjustment therof and the period during which the Offered Securities may be so converted or exchanged; (ix) 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; (x) 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; (xi) 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; (xii) 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; (xiii) 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; (xiv) 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; (xv) 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; (xvi) 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; (xvii) 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 (xviii) 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) 6 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 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 applicable 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, except as provided below) 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 The Chase Manhattan 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 outside the United States. 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 7 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 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) Unless otherwise indicated in an applicable Prospectus Supplement, 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 The Chase Manhattan 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 8 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) 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. 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 in such Depositary. 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. 9 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 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 Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("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 10 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 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 Euroclear 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 Euroclear 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 Euroclear 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 any Holders of 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) 11 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) 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) 12 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) 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 13 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 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 14 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 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 D, of the Company, or any obligation of the Company to any subsidiary; PROVIDED FURTHER, HOWEVER, that, notwithstanding the foregoing, Superior Indebtedness will not be deemed to include, and the Subordinated Securities will rank senior in right of payment to, the Company's unsecured debentures issued under the Indenture dated as of December 9, 1996, between the Company and The Chase Manhattan Bank, as Trustee, including but not limited to the Company's 8.30% Junior Subordinated Debentures due 2036 and 8.08% Junior Subordinated Debentures due 2037. (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 15 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 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. The Company's rights and the rights of its creditors (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. The operations of the Company are conducted through its subsidiaries and, therefore, the Company is dependent upon the earnings and cash flow of its subsidiaries to meet its obligations, including obligations under the Senior Securities and Subordinated Securities. The Senior Securities and Subordinated Securities will be effectively subordinated to all indebtedness of the Company's subsidiaries. As of June 30, 1998, the aggregate amount of indebtedness of the Company's subsidiaries (such indebtedness consisting of short-term borrowings and excluding short-term and long-term borrowings owed directly or indirectly to the Company or another subsidiary) to which holders of the Senior Securities and Subordinated Securities would have been structurally subordinated was approximately $660 million. 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 The Chase Manhattan Bank is the Trustee under the Senior Indenture. The Chase Manhattan 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. Chase Manhattan 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 or discribed in Section 4975 of the Code. 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 16 applicable exemption issued by the U.S. Department of Labor. In addition, ERISA imposes specific requirements on fiduciaries of Plans subject to ERISA, namely, that they make prudent investments, diversify investments, make investments in accordance with the terms of the Plan documents and in the best interests of Plan participants and beneficiaries. ANY PENSION OR OTHER EMPLOYEE BENEFIT PLAN PROPOSING TO ACQUIRE ANY SECURITIES SHOULD DETERMINE THAT THE SECURITIES ARE AN APPROPRIATE INVESTMENT IN LIGHT OF ERISA'S FIDUCIARY STANDARDS AND CONSULT WITH ITS COUNSEL TO DETERMINE THAT THE INVESTMENT IS NOT OTHERWISE PROHIBITED UNDER ERISA OR THE CODE. 17 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) to dealers or (iv) through underwriters 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. 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 18 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 Rule 2720 of the Conduct Rules 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. Mr. Levine beneficially owns, or has rights to acquire under an employee benefit plan of the Company, an aggregate of less than 1% of the common stock of the Company. Certain legal matters relating to the Securities will be passed upon 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. EXPERTS The consolidated financial statements of the Company for the year ended December 31, 1997, incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1997, 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. 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 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-15 Certain United States Federal Income Tax Considerations............................. S-18 Plan of Distribution......................... S-26 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......................... 18 Limitations on Issuance of Bearer Securities................................. 19 Legal Matters................................ 19 Experts...................................... 19
[LOGO] U.S. $3,353,115,000 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 ------------ September , 1998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the expenses payable by the Registrant in connection with the issuance and distribution of the securities being registered, other than underwriting discounts and commissions. All the amounts shown are estimates, except the Securities and Exchange Commission registration fee and the NASD filing fee. Securities and Exchange Commission registration fee..................... $ 885,000 NASD filing fee......................................................... 30,500 Rating agency fees...................................................... 150,000 Fees and expenses of accountants........................................ 40,000 Fees and expenses of counsel............................................ 150,000 Fees and expenses of Trustees........................................... 50,000 Printing and engraving expenses......................................... 18,000 Miscellaneous........................................................... 10,000 --------- Total............................................................. 1,333,500 --------- ---------
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 3.5 to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. 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 3.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998. 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, respectively. ITEM 16. EXHIBITS. 1.1* --Form of Underwriting Agreement. 1.2* --Form of Distribution Agreement. 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 the 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, Fixed Rate) (incorporated by reference to Exhibit 4.1f to the 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 The Chase Manhattan Bank (formerly known as 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 The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee, relating to Senior Debt Securities (incorporated by reference to Exhibit No. 4.2b to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 4.2c --Supplemental Indenture dated as of March 22, 1991, between the Registrant and The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee, relating to Senior Debt Securities (incorporated by reference to Exhibit No. 4.2c to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 4.2d --Indenture dated as of March 15, 1988, between the Registrant and Chase Manhattan Bank Delaware (formerly known as 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 Chase Manhattan Bank Delaware (formerly known as Chemical Bank Delaware), as Trustee, relating to Subordinated Debt Securities (incorporated by reference to Exhibit No. 4.2e to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 4.2f --Supplemental Indenture dated as of March 22, 1991, between the Registrant and Chase Manhattan Bank Delaware (formerly known as Chemical Bank Delaware), as Trustee, relating to Subordinated Debt Securities (incorporated by reference to Exhibit No. 4.2f to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 4.2g --Supplemental Indenture dated as of November 30, 1993, between the Registrant and Chase Manhattan Bank Delaware (formerly known as Chemical Bank Delaware), as Trustee, relating to Subordinated Debt Securities (incorporated by reference to Exhibit No. 4.2g to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 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 the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 23.1* --Consent of Ernst & Young LLP.
II-2 23.2* --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 The Chase Manhattan Bank. 25.2* --Form T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of Chase Manhattan 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 deviation from the low or high end of the estimated 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 II-3 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-4 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PAINE WEBBER GROUP INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY AND STATE OF NEW YORK, ON SEPTEMBER 9, 1998. PAINE WEBBER GROUP INC. (Registrant) By /s/ Donald B. Marron ................................... (Donald B. Marron, CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND DIRECTOR) POWER OF ATTORNEY Each person whose signature appears below hereby authorizes and appoints Donald B. Marron, Regina A. Dolan and William J. Nolan or any of them, as his or her attorney-in-fact, with full power of substitution and resubstitution, to sign and file on his or her behalf individually and in each capacity stated below any and all amendments (including post-effective amendments) to this Registration Statement and any subsequent registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act of 1933, as fully as such person could do in person, hereby verifying and confirming all that such attorney-in-fact, or his or her substitutes, may lawfully do or cause to be done by virtue hereof. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT 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 Executive September 9, 1998 ............................................ Officer, Director (principal executive (Donald B. Marron) officer) /s/ Regina A. Dolan Senior Vice President and Chief Financial September 9, 1998 ............................................ Officer (principal financial and (Regina A. Dolan) accounting officer) and Director /s/ E. Garrett Bewkes, Jr. Director September 9, 1998 ............................................ (E. Garrett Bewkes, Jr.) /s/ Reto Braun Director September 9, 1998 ............................................ (Reto Braun) /s/ Frank P. Doyle Director September 9, 1998 ............................................ (Frank P. Doyle) /s/ Joseph J. Grano, Jr. Director September 9, 1998 ............................................ (Joseph J. Grano, Jr.) /s/ James W. Kinnear Director September 9, 1998 ............................................ (James W. Kinnear)
II-5
SIGNATURE TITLE DATE - -------------------------------------------- -------------------------------------------- ---------------------- /s/ Naoshi Kiyono Director September 9, 1998 ............................................ (Naoshi Kiyono) /s/ Robert M. Loeffler Director September 9, 1998 ............................................ (Robert M. Loeffler) /s/ Edward Randall, III Director September 9, 1998 ............................................ (Edward Randall, III) /s/ Henry Rosovsky Director September 9, 1998 ............................................ (Henry Rosovsky) Director ............................................ (Yoshinao Seki) /s/ John R. Torell, III Director September 9, 1998 ............................................ (John R. Torell, III)
II-6 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - --------- ----------------------------------------------------------------------------------------- 1.1* --Form of Underwriting Agreement. 1.2* --Form of Distribution Agreement. 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 the 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, Fixed Rate) (incorporated by reference to Exhibit 4.1f to the 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 The Chase Manhattan Bank (formerly known as 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 The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee, relating to Senior Debt Securities (incorporated by reference to Exhibit No. 4.2b to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 4.2c --Supplemental Indenture dated as of March 22, 1991, between the Registrant and The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee, relating to Senior Debt Securities (incorporated by reference to Exhibit No. 4.2c to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 4.2d --Indenture dated as of March 15, 1988, between the Registrant and Chase Manhattan Bank Delaware (formerly known as 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 Chase Manhattan Bank Delaware (formerly known as Chemical Bank Delaware), as Trustee, relating to Subordinated Debt Securities (incorporated by reference to Exhibit No. 4.2e to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 4.2f --Supplemental Indenture dated as of March 22, 1991, between the Registrant and Chase Manhattan Bank Delaware (formerly known as Chemical Bank Delaware), as Trustee, relating to Subordinated Debt Securities (incorporated by reference to Exhibit No. 4.2f to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995).
EXHIBIT NO. DESCRIPTION - --------- ----------------------------------------------------------------------------------------- 4.2g --Supplemental Indenture dated as of November 30, 1993, between the Registrant and Chase Manhattan Bank Delaware (formerly known as Chemical Bank Delaware), as Trustee, relating to Subordinated Debt Securities (incorporated by reference to Exhibit No. 4.2g to the Registrant's Registration Statement No. 33-52695-01 on Form S-3 filed with the Commission on October 16, 1995). 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 the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 23.1* --Consent of Ernst & Young LLP. 23.2* --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 The Chase Manhattan Bank. 25.2* --Form T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of Chase Manhattan Bank Delaware.
- ---------- * Filed herewith. EX-1.1 2 EXHIBIT 1.1 [Draft--9/2/98] EXHIBIT 1.1 PAINE WEBBER GROUP INC. Underwriting Agreement , To the Representative(s) named in Schedule I hereto of the Underwriter named in Schedule II hereto Dear Sirs: Paine Webber Group Inc., a Delaware corporation (the "Company"), proposes to issue and sell to the underwriters, 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 Underwriter, 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 Securities pursuant to delayed delivery arrangements, the respective 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 determined as provided below. Securities to be purchased by the Underwriters are herein sometimes called the "Underwriters' Securities" and Securities to be purchased pursuant to Delayed Delivery Contracts (as hereinafter defined) are herein called "Contract Securities". The obligations of the Underwriters under this Agreement are several and not joint. 2 If so provided in Schedule I hereto, the Underwriters are authorized to solicit offers to purchase Securities 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 Underwriters 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 principal 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 Securities. 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 official bank check or checks payable in New York Clearing House funds to the Company shall take place at the office, on the 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 3 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 two 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) (including the Basic Prospectus as so supplemented) is hereinafter referred to as the "Final Prospectus". Any 4 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", "amendment" 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 Prospectus or any Interim Prospectus. (b) The Basic Prospectus and any Interim Prospectus 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 Prospectus is first filed with the Commission pursuant to Rule 424(b), when, before the Closing Date, any amendment to either of the Registration Statements becomes effective, when, before the Closing Date, any document incorporated by reference in either of the Registration 5 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 contemplated by this Agreement, except those which have been obtained or which may be required under the 6 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 subsidiaries 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 from fire, explosion, flood or other calamity, whether 7 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 Repre- sentatives, 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 Securities 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 suspending 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 LLP, 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, 8 such firm of accountants shall have furnished to the Representatives a letter or letters, dated the date of this Agreement, in form and substance satisfactory to the Representatives, 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 Agreement, 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 Rating Services, a Division of the McGraw-Hill Companies, Inc. (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. 9 (k) Subsequent to the execution of this Agreement, 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 within a reasonable period of time prior to the filing thereof and the Representatives shall not have reasonably 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 Prospectus 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 10 notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will make every reasonable effort to prevent the issuance of an order 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 Representatives 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 necessary 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- 11 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. (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 Representatives, 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 12 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 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 preparation 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, including 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 execution of this Agreement and ending on the later of the Closing Date or the date on which any price restrictions 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 13 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 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 14 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 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 proceeding (i) shall not relieve it from liability under this 15 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 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) 16 (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 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 17 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. 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 govern- mental restrictions, not in force and effect on the date hereof, shall have been imposed upon trading in securities 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 18 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 (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 terminated 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 sufficient 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 Representatives 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 19 remaining Underwriters may agree to purchase such Securities in such proportions as may be approved by the Representatives 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 principal 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 hereunder; or (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 Underwriters 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 Underwriters 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 Underwriters agreed to purchase, this Agreement shall terminate without liability on the part of any nondefaulting Underwriter to the Company and without liability on the part of the Company except, in both cases, as provided in Sections 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 20 arising out of such default. A substitute underwriter hereunder shall become an Underwriter for all purposes of this Agreement. 11. Miscellaneous. The reimbursement, indemnification and contribution agreements contained in Sections 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 termination 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. 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. 21 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 --------------------- Name: Title: Confirmed: [name(s) of Representative(s)], by ------------------------ Name: Title: SCHEDULE I Underwriting Agreement dated Registration Statement No[s]. Representative(s): [include additional 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 LLP 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: Other Provisions: SCHEDULE II
Principal Amount of Securities to Underwriter be Purchased - ----------- ------------- $ Total.....................................................$ ------------ ------------
SCHEDULE III Delayed Delivery Contract , [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 , , (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 , , 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 for 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 (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 2 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 LLP 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, 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 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 incorporated 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 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 - ---------- 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 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 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 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 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 3 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 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. 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 Incorporated, Mitchell Hutchins Asset Management Inc., PaineWebber International (U.K.) Ltd. and PaineWebber Real Estate Securities Inc., wholly owned subsidiaries (individually a "Subsidiary" and collectively the "Subsidiaries"), 2/ 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 - ---------- 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/ In the case of PaineWebber International (U.K.) Ltd., an opinion of counsel from the jurisdiction in which such Subsidiary is organized may be delivered with respect to the matters covered herein. 2 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 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 and 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, 3 which is not described or filed as required; and the statements included or incorporated in the Final Prospectus describing any legal proceedings or material 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 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 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 Indenture 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; 4 (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 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, administrative 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 registration of such securities under the Registration Statements. 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 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 5 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 EXHIBIT 1.2 [Draft -- 9/2/98] Exhibit 1.2 $[ ] 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 September [ ], 1998 New York, New York PaineWebber Incorporated 1285 Avenue of the Americas New York, New York 10019 Dear Sirs: Paine Webber Group Inc., a Delaware corporation (the "Company"), confirms its agreement with 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 The Chase Manhattan Bank (formerly known as 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 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 Chase Manhattan Bank Delaware (formerly known as Chemical Bank Delaware), as trustee (the -------- 1/ Or the U.S. dollar equivalent. "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 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 you acting solely as principal pursuant to Section l(g) and not as agent, and the term "you" shall refer to you acting in both such capacities or in either such capacity. 1. Appointment of Agent; Solicitation by the Agent of Offers to Purchase; Sales of Notes to a Purchaser. (a) Subject to the terms and conditions set forth herein, the Company hereby appoints the Agent 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 Agent hereunder is not exclusive and the Company may from time to time offer Notes for sale otherwise than to or through the 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 Agent and without giving the Agent 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 engaged on terms substantially similar to the applicable terms of this Agreement and (ii) the Agent is given notice of such engagement promptly after it is agreed to. 2 (b) On the basis of the representations and warranties set forth herein, but subject to the terms and conditions set forth herein, the Agent 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. The Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by the Agent and accepted by the Company, but the 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 the Agent at such times and in such amounts as the 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, the 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 the Agent that such solicitation may be resumed. (d) 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, and any such rejection shall not be deemed a breach of the Agent's agreements contained herein. (e) The Company agrees to pay the 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 by the Agent, in an amount equal to that percentage specified 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 3 amended from time to time by written agreement of the Company and the Agent. (f) The Agent agrees, with respect to any Note denominated in a currency other than the U.S. dollar or a composite currency, 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 the Agent determine that the Company shall sell Notes directly to the Agent as purchaser (the "Purchaser"), each such sale of Notes shall be made in accordance with the terms of this Agreement and any supplemental 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 commitment 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 contained 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 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 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 Agent after notice to the Trustees, and, to the extent any such amendment affects a Trustee, with the approval of such 4 Trustee. The Company and the Agent 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. 333-17913)(the "First Registration Statement") and a registration statement on Form S-3 (No. 333-[ ]) (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 initial public offering price 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 Supplement specifying the interest rates, maturity dates, redemption 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 (in the case of the First Registration Statement, on or after the effective date of Post-Effective Amendment No. 1 thereto) that such Registration Statement or 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 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 Prospectus 5 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 be stated therein or necessary in order to make the statements 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 6 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; except that this representation and warranty does not apply to (x) statements or omissions made in reliance on and in conformity with information 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 Registration 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 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 7 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 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 (including 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. (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 8 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 Date 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 Section 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 qualification in effect for so long as may be required for the distribution of the Notes and will arrange for the determination of the legality of the Notes for purchase by institutional investors. (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 9 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 reasonably 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 any 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 of Cravath, Swaine & Moore, your counsel, incurred in connection with this Agreement. 10 (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 secretary 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 Prospectus 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 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 11 opinion and a written letter of counsel for the Company satisfactory to you, 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 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 Prospectus, 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 Analysis of Financial Condition and Results of Operations" and any other information of an accounting, financial or statistical 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 consent of the Purchaser, issue or announce the proposed issuance of any of its debt securities, including Notes, 12 with terms substantially similar to the Notes being purchased 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 delivered 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, authenticated, 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 the Agent. The obligations of the 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 the Agent or the 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 threatened by the Commission, and any requests for additional information on the part of the 13 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 the 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 the 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 the 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 carefully examined the Registration Statements, the Prospectus, the Indentures and this Agreement, (ii) the 14 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 the 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) The 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) The Agent shall have received on the date of this Agreement from Cravath, Swaine & Moore, its counsel, an opinion dated such date with respect to the Company, the Notes, the Indentures, this Agreement and the form and sufficiency of all proceedings taken in connection with the sale and delivery of the Notes and a letter dated such date with respect to the Registration Statements and the Prospectus. Such opinion, letter and proceedings shall be satisfactory in all respects to the 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) The Agent shall have received, at the date of this Agreement, a signed letter from Ernst & Young LLP, independent accountants for the Company, substantially in the form of Annex D to this Agreement. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement will comply 15 with this Agreement only if they are in form and scope satisfactory to the 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 the Agent and its counsel, this Agreement and all obligations of the Agent hereunder may be canceled at any time by the 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 Agent, at Worldwide Plaza, 825 Eighth Avenue, New York, New York, on the date of this Agreement. 7. Conditions to the Obligations of the Pur chaser. 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 a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in 16 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, 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 downgrading, 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 Section 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 and letter of the General Counsel of the Company, each dated as of the Closing Date, to the effect set forth in Section 6(d), (iii) the opinion and letter of Cravath, Swaine & Moore, counsel for the Purchaser, each dated as of the Closing Date, to the effect set forth in Section 6(e) and (iv) a letter of Ernst & Young LLP, 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 information, 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 respects when and as provided in this Agreement and any 17 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 the 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 the 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 (i) made in reliance upon and in conformity with 18 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 any such action is brought against any indemnified party and 19 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 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 you may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company and by you from the offering of the Notes 20 from which such Losses arise; provided, however, that in no case shall you be responsible for any amount in excess of the commissions received by you 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 if such commissions had been payable). If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and 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 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 you shall be deemed to be equal to the total commissions received by you 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 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 you. The Company and 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 contri bution may be sought, but the omission so to notify (i) will 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 21 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 representa tions, 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 reimbursement, indemnification and contribution agreements in Sections 1(e), 5(h), 9, 10 and 12 will remain in full force and effect regardless of any termination of this Agreement. 22 This Agreement is for the benefit of you and the Company and the respective successors 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 December 23, 1996, 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 12 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 PaineWebber Incorporated at 1285 Avenue of the Americas, New York, New York 10019, attention of General Counsel and Treasurer 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 counterparts 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: 23 Confirmed: PAINEWEBBER INCORPORATED, by -------------------- Title: 24 Schedule I SENIOR AND SUBORDINATED MEDIUM-TERM NOTE FEES
Maturity Senior Subordinated - ----------------------------------- ------ ------------ 9 months to less than 12 months .050 .050 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 September [ ], 1998 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 "Company"). PaineWebber Incorporated, as agent (the "Agent"), has agreed to use reasonable efforts to solicit offers to purchase Notes from the Company. The 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 the Agent dated September [ ], 1998 (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"). The Chase Manhattan 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. Chase Manhattan 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 The Chase Manhattan 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 maintained by DTC (each such interest in a Global Note being 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 connection with the qualification of the Book-Entry Notes for eligibility in the book-entry system maintained by DTC, The Chase Manhattan 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 The Chase Manhattan Bank to DTC relating to the Senior Notes and a Letter of Representations from the Company, The Chase Manhattan 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 The Chase Manhattan 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 Certificated 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 the Agent from time to time in writing of those persons with whom the 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 the Agent involved in any proposed purchase and sale of any Note or Notes. 2 Part I. Certain Terms of the Offering ----------------------------- Price to Public: Each Note will be issued at the percentage of its principal amount specified in the Prospectus Supplement, as then amended or supplemented, relating to the Notes. Denominations: Notes denominated in U.S. dollars will be - -------------- issued in minimum denominations of $100,000 and in denominations 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 Each Note will bear interest (i) in the case Payment: 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 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 3 are specified therein (each such date of payment other than the maturity date being 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 4 defined in the Prospectus 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 The Company and the Agent will discuss from Setting and Posting: 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 Agent. 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 Agent 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 interest rates, the Company will 5 promptly notify the Agent. The Agent forthwith will suspend solicitation of offers to purchase notes from the Company until such time as the Company has advised the 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 As provided in the Distribution Agreement, Solicitation; the Company may suspend solicitation of Amendment or offers to purchase at any time and, upon Supplement: receipt of instructions from the Company, - ------------ the Agent will forthwith suspend solicitation until such time as the Company has advised it that solicitation of offers to purchase may be resumed. If the 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 6 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 the Agent with the proposed 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 the Agent and will furnish the 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 the Agent (and Cravath, Swaine & Moore or such other law firm as may be counsel to the Agent at the time) with copies of any such amendment or supplement, confirm to the Agent that such amendment or supplement has been filed with the Commission and advise the 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 outstanding 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 Prospectus 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 responsibility 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 7 amended or supplemented 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 simultaneously 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 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. 8 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 and (ii) if such Note is a LIBOR Note (as defined in the Prospectus Supplement), a London Banking Day (as hereinafter defined). Unless otherwise specified in the applicable Note, "Business Day Centers" 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 a composite currency, 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. Advertising Cost: The Company will determine with the Agent - ----------------- 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: The Agent will forward to the Company, - -------------------- following the end of each quarter, a statement of the out-of-pocket expenses incurred by the Agent during that quarter which are reimbursable to it pursuant to the terms of the Distribution 9 Agreement. The Company will remit payment to the Agent promptly following the receipt of each such statement. Authenticity of Signatures: The Agent will not have any obligation 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 $200,000,000 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 The Chase Manhattan Bank, as the Authenticating Agent). No Global 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 10 and will deliver such list to The Chase Manhattan 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. The Chase Manhattan 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 The Chase Manhattan 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 or agents for such owner in connection 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 11 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: The Chase Manhattan Bank may deliver to DTC - ------------- and the CUSIP Service Bureau at any time a written notice of consolidation 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 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 The Chase Manhattan Bank) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, The Chase Manhattan Bank will deliver to the CUSIP Service Bureau a written notice 12 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 specified exchange date, The Chase Manhattan 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 Representations), 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 $200,000,000 in aggregate principal amount, one Global Note will be authenticated and issued to represent each $200,000,000 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 amount by integral multiples of $1,000. Global Notes will be denominated in principal amounts not in excess of $200,000,000. If one or more Book-Entry Notes having an aggregate principal amount in excess of $200,000,000 would, but for the preceding sentence, be represented by a single Global Note, then one Global Note will be issued to represent each $200,000,000 principal amount of such Book-Entry Note or Notes and an additional Global Note will be issued to represent any remaining 13 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 Ratings Services, a Division of the McGraw-Hill Companies, Inc. ("S&P"), 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 S&P. Payments of Payments of Interest Only. On the fifth Principal and Business Day immediately preceding each Interest: Interest Payment Date, The Chase Manhattan - --------- 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 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 S&P. The Company will pay to The Chase Manhattan Bank, as paying agent, the total amount of interest due on such Interest Payment Date and The Chase Manhattan Bank will pay such amount to DTC at the times and in the manner set forth below under "Manner of Payment". 14 Payments at Maturity. On or about the first Business Day of each month, The Chase Manhattan 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, The Chase Manhattan 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 The Chase Manhattan Bank, as paying agent, the principal amount of such Global Note, together with interest due at such Maturity and The Chase Manhattan 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 Day of each month, The Chase Manhattan Bank will deliver to each Trustee a written statement 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 The Chase Manhattan Bank in funds available for use by The Chase Manhattan Bank as of 15 9:30 a.m. (New York City time) on such date. The Company will make such payment on such Global Notes by instructing The Chase Manhattan Bank to withdraw funds from an account maintained by the Company at The Chase Manhattan Bank or by wire transfer to The Chase Manhattan Bank. The Company will confirm such instruction in writing to The Chase Manhattan Bank (with a copy to the 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, The Chase Manhattan 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, THE CHASE MANHATTAN 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. 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 16 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 the 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. Principal amount and issue price. 2. If a Fixed Rate Note, the interest rate, Regular Record Dates and Interest Payment Dates, if any. 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). 17 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. 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 18 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 Indenture, are administratively 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 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 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 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 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. 19 B. The Company will assign a CUSIP number to the Global Note representing such Book-Entry Note and then advise The Chase Manhattan Bank in writing, including facsimile or electronic transmission, and, in the case of Subordinated Notes, the Subordinated Note Trustee by telephone (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 representation and warranty by the Company to The Chase Manhattan Bank, each Trustee and the Agent that (i) such Book-Entry 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 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 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 Statements. C. The Chase Manhattan Bank will enter a pending deposit message through DTC's Participant Terminal System, providing the 20 following settlement information to DTC, the Agent, S&P 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). 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. The Chase Manhattan Bank will complete and the Senior Note Trustee or the Authenticating Agent, as the case may be, will authenticate the Global Note, and The Chase Manhattan Bank 21 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 The Chase Manhattan Bank, as Custodian. F. DTC will credit each Book-Entry Note represented by the Global Note to be issued to the applicable participant account at DTC. G. The Chase Manhattan 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 The Chase Manhattan Bank's participant account and credit such Book-Entry Note to the Agent's participant account and (ii) debit the Agent's settlement account and credit The Chase Manhattan Bank's settlement account for an amount equal to the price of such Book-Entry Note less the Agent's commission. The entry of such a deliver order shall constitute a representation and warranty by The Chase Manhattan Bank to DTC that (i) the Global Note representing such Book- Entry Note has been issued and authenticated and (ii) The Chase Manhattan 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 22 Book-Entry Note to the 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 the 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 Procedures "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. The Chase Manhattan Bank will credit to an account of the Company maintained at The Chase Manhattan Bank funds available for immediate use in the amount transferred to The Chase Manhattan Bank in accordance with Settlement Procedure "G". K. The Chase Manhattan Bank, as Custodian, will hold the Global Note pursuant to the Certificate Agreement. Periodically, The Chase Manhattan 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 Agent will deliver to the purchaser a copy of the most recent Prospectus applicable to the Notes with or prior to the earlier of any written offer of Notes and the confirmation and 23 payment by the purchaser of the Note. The 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 institutional delivery system or by mailing a written confirmation to such purchaser. Settlement Procedures Timetable: For orders of Book-Entry Notes solicited by - ---------- the 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 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 24 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 The Chase Manhattan Bank notice to such effect. The Chase Manhattan 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 The Chase Manhattan Bank has received such notice from the Company by noon on the Business Day immediately preceding the settlement date). Fails: If The Chase Manhattan Bank fails to enter - ------ an SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure "G", The Chase Manhattan Bank may deliver to DTC, through DTC's Participant Terminal System, as soon as practicable a withdrawal message instructing DTC to debit such Book-Entry Note to The Chase Manhattan Bank's participant account. DTC will process the withdrawal message, provided that The Chase Manhattan 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 25 Notes represented by a Global Note, the Senior Note Trustee, in the case of Senior Notes, or the Authenticating Agent, in the case of Subordinated 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, The Chase Manhattan 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 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, The Chase Manhattan Bank will deliver the withdrawal message and take the related actions described in the preceding paragraph. 26 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, The Chase Manhattan 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 A Certificated Note (whether a Senior Note Exchanges: or a Subordinated Note) 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. Certificated Notes will not be exchangeable for Book-Entry Notes. Payments of On the fifth Business Day immediately Principal and preceding each Interest Payment Date, The Interest: Chase Manhattan - --------- 27 Bank, as paying agent, will furnish the Company with the total amount of the interest 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, The Chase Manhattan Bank will provide to the Company's Treasurer's Office a list of the principal and interest to be paid on the respective Notes maturing in the following month. The Company will provide to The Chase Manhattan Bank not later than any payment date sufficient moneys to pay in full all principal and interest payments due on such payment date. The Chase Manhattan Bank shall make all such payments in accordance with the terms of the Notes. Notes presented to The Chase Manhattan Bank at Maturity will be canceled by The Chase Manhattan Bank. The Chase Manhattan 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 immediately - ----------- available funds in exchange for an authenticated Certificated Note delivered to the Agent and the Agent's delivery of such Certificated Note against receipt of immediately available funds shall, with 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 Settlement Procedures with regard to each Procedures: Certificated Note sold by - ----------- 28 the Company through the 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 identification 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. 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. 29 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. 13. Authorized denominations 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 addition to or different from the terms set forth on any form 30 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 Indenture, are administratively 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 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 a Note containing such terms). Any offer to purchase such a 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 31 that the Senior Trustee or the Authenticating Agent, as the case may be, will have adequate time to prepare and authenticate 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 electronic 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 constitute a representation and warranty by the Company to each Trustee and the 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 to be issued on or prior to the settlement date for such Certificated 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 Statements. C. The Company will deliver to The Chase Manhattan 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 Agent 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 Authenticating 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 acknowledgment of receipt. Upon verification by the Agent that a Note has been properly prepared and authenticated 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 33 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 incorrectly prepared, the applicable Trustee (and, if a Subordinated Note, the Authenticating Agent) will promptly issue a replacement 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 acknowledgment 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 applicable Trustee and its agents may decide to issue Certificated Notes which are printed as separate documents and not as part of five-ply packets 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. 34 Settlement For orders of Certificated Notes solicited Procedures by the Agent, as agent, and accepted by the Timetable: 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 settlement date therefor, the Agent will notify the relevant Trustee and, if 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 35 instructions to complete the transactions 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 settlement date for such Note, if possible, 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 confirmation 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 occurred, the Senior Note Trustee or Authenticating Agent will make appropriate entries in its records and cancel such Note. 36 Annex B ------- Paine Webber Group Inc. Terms Agreement --------------- , 199[ ] [PaineWebber Incorporated 1285 Avenue of the Americas New York, New York 10019] Dear Sirs: Paine Webber Group Inc. (the "Company") proposes, subject to the terms and conditions stated herein and in the Distribution Agreement dated September [ ], 1998 (the "Distribution Agreement"), between the Company and PaineWebber Incorporated, to issue and sell to [PaineWebber Incorporated] (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 Agent, as the agent 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. 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 1 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 counterpart 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], By ------------------------- Title: 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]: % 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: [ %] 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: [(1) 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 accountant's letter referred to in Section 7(c)(iv).] Other Provisions (including syndicate provisions or Section 5(l) limitations, if applicable): 2 Annex C ------- (A) The Company 1/ shall furnish to the Agent an opinion of the General Counsel of the Company 2/ , dated the Closing Date, to the effect that: (1) each of the Company and its significant United States subsidiaries listed on Schedule I hereto (individually, a "U.S. Subsidiary" and collectively, the "U.S. 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 Company and its subsidiaries, considered as a whole; (2) all the outstanding shares of capital stock of each U.S. 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; (3) the Notes conform in all material respects to the description thereof contained in the Prospectus. The Indentures have been duly authorized, executed and delivered by the Company, have been duly qualified under the Trust Indenture Act of 1939 and constitute legal, valid and binding obligations of the Company - -------- 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/ To the extent any significant subsidiary of the Company is not chartered or organized under the laws of a State of the United States, counsel qualified to practice law in the jurisdiction in which such subsidiary is chartered or organized will furnish an opinion on behalf of the Company with respect to the matters set forth in paragraphs 1 and 2 below for such subsidiary. enforceable against the Company in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law). The Notes have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indentures and delivered and paid for pursuant to the Distribution Agreement, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the appropriate Indenture and enforceable against the Company in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law). In expressing the opinion set forth in this paragraph, counsel will, with your consent, assume that the Notes will conform as to form to the forms of Notes reviewed by him (with maturity, interest rate and original issuance date and other data requiring completion appropriately completed and without any entry having been made on the face of the Notes under "Other Terms") and that the Notes will be duly authenticated by the appropriate Trustee. (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, and 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 to either of the Registration Statements or the Prospectus, which is not disclosed, 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; 2 (5) the Registration Statements have become effective under the Securities Act, and, to the best knowledge of such counsel, no stop order suspending the 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 issuance and sale of the Notes, the consummation by the Company of any other of the transactions contemplated in the Distribution Agreement or the fulfillment of the terms of the Distribution Agreement will (a) conflict with, result in a breach of, or constitute a default under (i) the Restated Certificate of Incorporation, as amended, or By-laws of the Company, or (ii) the terms of any indenture or other agreement or instrument known to such counsel and to which the Company or any of its U.S. Subsidiaries or significant foreign subsidiaries listed on Schedule I hereto (the "Foreign Subsidiaries" and, together with the U.S. Subsidiaries, the "Subsidiaries") is a party or bound, or (b) violate 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 except, in the case of clauses (a)(ii) and (b) above, for conflicts, breaches, defaults or violations as would not have a material adverse effect 3 on the Company and its subsidiaries, taken as a whole, and would not have a material adverse effect on the issuance or sale of the Notes; 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. 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 Agent. (B) The Company shall furnish to the Agent 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) the Registration Statements and the Prospectus (except for the financial statements and other information of an accounting or financial nature included therein, and 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 First Registration Statement, at the time Post Effective Amendment No. 1 thereto became effective, or the Second Registration Statement, at the time it 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 (in each case except for the financial statements and other information of an accounting or financial nature included therein, and the Statements of Eligibility (Form T-1) included as exhibits to the Registration Statements, as to which he need not express any view). 4 SCHEDULE I Significant U.S. Subsidiaries ----------------------------- PaineWebber Incorporated Mitchell Hutchins Assets Management Inc. Significant U.K. Subsidiary --------------------------- PaineWebber International (U.K.) Ltd. Annex D ------- Accountant's Comfort Letter --------------------------- At each Closing Date and at such times as provided in the Distribution Agreement, 1/ Ernst & Young LLP shall furnish to the Agent or the Purchaser, as the case may be, a letter or letters (which may refer to letters previously delivered to the Agent 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 Agent 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 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 Distribution Agreement of which this Annex D is a part. 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 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 2 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. 3 EX-4.1A 4 FORM OF DEBT SECURITIES SERIES C- Exhibit 4.1a NOTE NUMBER AGENT'S NAME PAINE WEBBER GROUP INC. - --------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT SETTLEMENT DATE TRADE DATE U.S.$ (ORIGINAL ISSUE DATE) - ------------------------------------------------------------------------------------------------------------------------------- MATURITY DATE TRUSTEE CUST. NO. INTEREST RATE TAXPAYER ID OR TRANSFERRED SOC. SEC. NO. OF PURCHASER - ------------------------------------------------------------------------------------------------------------------------------- NAME AND ADDRESS OF REGISTERED OWNER MEDIUM TERM NOTE PROGRAM THE CHASE MANHATTAN BANK TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------- CUSTOMER'S RETAIN FOR THE TIME OF THE TRANSACTION PLEASE SIGN AND RETURN SEE REVERSE SIDE COPY TAX PURPOSES WILL BE FURNISHED UPON ENCLOSED 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 CENTERS: DISCOUNT SECURITY: [ ] YES [ ] NO REGULAR RECORD DATES: OPTIONAL REDEMPTION: PAYMENT OF ADDITIONAL [ ] YES [ ] NO AMOUNTS: [ ] 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 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 2 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 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 inconsis tent 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. Notwith standing 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 five 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 3 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 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 4 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: THE CHASE MANHATTAN BANK As Trustee By ---------------------- Authorized Officer 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 The Chase Manhattan Bank (formerly known as 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 beneficiary of, or a person holding a power over, such 2 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 from any such payment, if (and only if) such payment can be made without such deduction or withholding by any other paying agent; 3 (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 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 4 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 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 cancelation 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 5 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 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 canceled 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 6 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 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. 7 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 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 8 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, 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 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, 9 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. 10 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) U.S.$ Name: ------------------ -------------------- Address: ----------------- ------------------- (Please print name and address including zip code) SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER ------------------- 11 ------------------ 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 the Under Uniform Gifts to entireties Minors Act JT TEN - as joint tenants with right of survivorship and ......................... not as tenants in common (State) 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 - -------------------------------------------------------------------------------- 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-4.1B 5 EX-4.1B Exhibit 4.1b NOTE NUMBER AGENT'S NAME PAINE WEBBER GROUP INC. - --------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT SETTLEMENT DATE TRADE DATE U.S.$ (ORIGINAL ISSUE DATE) - ------------------------------------------------------------------------------------------------------------------------------- MATURITY DATE TRUSTEE CUST. NO. INTEREST RATE TAXPAYER ID OR TRANSFERRED SOC. SEC. NO. OF PURCHASER - ------------------------------------------------------------------------------------------------------------------------------- NAME AND ADDRESS OF REGISTERED OWNER MEDIUM TERM NOTE PROGRAM CHASE MANHATTAN BANK DELAWARE TRUSTEE THE CHASE MANHATTAN BANK AUTHENTICATING AGENT - ------------------------------------------------------------------------------------------------------------------------------- CUSTOMER'S RETAIN FOR THE TIME OF THE TRANSACTION PLEASE SIGN AND RETURN SEE REVERSE SIDE COPY TAX PURPOSES WILL BE FURNISHED UPON ENCLOSED RECEIPT REQUEST OF THE CUSTOMER - ------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------
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 BUSINESS DAY CENTERS: DISCOUNT SECURITY: [ ] YES [ ] NO REGULAR RECORD DATES: OPTIONAL REDEMPTION: PAYMENT OF ADDITIONAL [ ] YES [ ] NO AMOUNTS: [ ] 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 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 pay able 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 inconsis tent 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 Securi ties 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 Chase Manhattan Bank, as Paying Agent), but only if appropriate payment instructions have been received in writing by the Paying Agent not less than five Business Days prior to the applicable Interest Payment Date. Pay ments 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"); 2 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 parti cipants' 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 repre sentative 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 3 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: CHASE MANHATTAN BANK CHASE MANHATTAN BANK DELAWARE DELAWARE As Trustee As Trustee OR By The Chase Manhattan Bank As Authenticating Agent By --------------------------- Authorized Officer By ----------------------------- Authorized Officer 4 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 Chase Manhattan Bank Delaware (formerly known as 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 with holding 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 bene- ficiary 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 from any such payment, if (and only if) such payment can be made without such deduction or withholding by any other paying agent; 2 (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 irrevo cable), 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 succee ding 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 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 3 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 Redemp tion 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 cancelation 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 4 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 circum stances 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 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 canceled 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 5 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 appro priate 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. 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. 6 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 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 registra tion 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 7 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. 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. 8 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. 9 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 repaid, if amount to be Fill In for registration of repaid is less than the Securities if to be issued otherwise principal amount of this than to registered holder: Security (principal amount 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 ------------------------------ 10 ------------- 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 common ..........Custodian.......... TEN ENT - as tenants by the (Cust) (Minor) entireties Under Uniform Gifts to JT TEN - as joint tenants with Minors Act right of survivorship and not as tenants in common ............................. (State) Additional abbreviations may also be used though not in the above list. FOR VALUED RECEIVED, the undersigned hereby sell(s), assign(s) and transfers) unto Please insert Social Security Number or Other Identifying Number of Assignee - -------------------------------------------------------------------------------- PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE 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 11 EX-4.1C 6 EX-4.1C Exhibit 4.1c NOTE NUMBER AGENT'S NAME PAINE WEBBER GROUP INC. - --------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT SETTLEMENT DATE TRADE DATE U.S.$ (ORIGINAL ISSUE DATE) - ------------------------------------------------------------------------------------------------------------------------------- MATURITY DATE TRUSTEE CUST. NO. INTEREST RATE BASIS TAXPAYER ID OR TRANSFERRED SOC. SEC. NO. OF PURCHASER - ------------------------------------------------------------------------------------------------------------------------------- NAME AND ADDRESS OF REGISTERED OWNER MEDIUM TERM NOTE PROGRAM THE CHASE MANHATTAN BANK TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------- CUSTOMER'S RETAIN FOR THE TIME OF THE TRANSACTION PLEASE SIGN AND RETURN SEE REVERSE SIDE COPY TAX PURPOSES WILL BE FURNISHED UPON ENCLOSED 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 DISCOUNT BUSINESS DAY CENTERS: SECURITY: [ ] YES [ ] NO REGULAR RECORD DATES: OPTIONAL REDEMPTION: PAYMENT OF ADDITIONAL AMOUNTS: [ ] YES [ ] YES [ ] NO [ ] 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 PERIOD DEPOSITARY: CALCULATION AGENT: OID: INTEREST RATE BASIS: MAXIMUM RATE: MINIMUM RATE: SPREAD: SPREAD MULTIPLIER: INDEX MATURITY: INTEREST RESET DATES: INTEREST DETERMINATION LIBOR BASIS: DATES (IF OTHER THAN AS [ ] Telerate 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, 2 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 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, 3 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 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. 4 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: THE CHASE MANHATTAN BANK As Trustee By --------------------- Authorized officer 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 The Chase Manhattan Bank (formerly known as 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 with- holding 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 bene- ficiary of, or a person holding a power over, such Holder, if such Holder is an estate or a trust, or 2 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 from any such payment, if (and only if) such payment can be made without such deduction or withholding by any other paying agent; 3 (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 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 4 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 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 cancelation 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 5 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 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 he canceled 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 6 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 face hereof. Commencing with the first Interest Reset Date following the Original Issue Date, the rate at which interest on this Security is payable shall be adjusted on each Interest Reset Date. 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, 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 7 Index Maturity specified on the face hereof as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15, Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15") under the heading "Commercial paper--Nonfinancial". 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 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 Determina tion 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 8 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 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 for such Interest Determination Date will be the rate on such 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 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 9 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 3750 on the Dow Jones Market Service (or such other page or pages as may replace page 3750 on that service for the purpose of displaying London interbank offered rates of major banks). "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 fewer than two offered rates appear on the Reuters Screen LIBO Page, as applicable, LIBOR for such Interest Determina tion 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 10 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 trans action 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 the face hereof as published in H.15 under the heading "U.S. Government securities--Treasury bills--Auction average" or, 11 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 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 12 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 or to but excluding Maturity. 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 13 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, 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, if such next succeeding 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 14 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 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 15 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, 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 fully registered form, without coupons, in denominations of U.S. $100,000 and integral multiples 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. 16 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. 17 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 fact 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 to Security (principal amount registered holder: remaining must be an authorized denomination) U.S. $ Name: -------------------- --------------------- Address: ------------------ ------------------ (Please print name and address including zip code) SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER -------------------------- 18 -------------------- 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: TEN COM - as tenants in common UNIF GIFT MIN ACT... TEN ENT - as tenants by ..........Custodian.......... the entireties (Cust) (Minor) JT TEN - as joint tenants with Under Uniform Gifts to right of survivorship Minors Act and not as tenants in ............................. common (State) 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 - ------------------------------------------------------------------------------- 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-4.1D 7 EXHIBIT 4.1D Exhibit 4.1d NOTE NUMBER AGENT'S NAME PAINE WEBBER GROUP INC. - --------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT SETTLEMENT DATE TRADE DATE U.S.$ (ORIGINAL ISSUE DATE) - ------------------------------------------------------------------------------------------------------------------------------- MATURITY DATE TRUSTEE CUST. NO. INTEREST RATE BASIS TAXPAYER ID OR TRANSFERRED SOC. SEC. NO. OF PURCHASER - ------------------------------------------------------------------------------------------------------------------------------- NAME AND ADDRESS OF REGISTERED OWNER MEDIUM TERM NOTE PROGRAM CHASE MANHATTAN BANK DELAWARE TRUSTEE THE CHASE MANHATTAN BANK AUTHENTICATING AGENT - ------------------------------------------------------------------------------------------------------------------------------- CUSTOMER'S RETAIN FOR THE TIME OF THE TRANSACTION PLEASE SIGN AND RETURN SEE REVERSE SIDE COPY TAX PURPOSES WILL BE FURNISHED UPON ENCLOSED RECEIPT REQUEST OF THE CUSTOMER - ------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------
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 RATE: MATURITY DATE: ISSUE PRICE: ORIGINAL ISSUE DISCOUNT SECURITY: BUSINESS DAY CENTERS: [ ] YES [ ] NO REGULAR RECORD DATES: OPTIONAL REDEMPTION: PAYMENT OF ADDITIONAL AMOUNTS: [ ] YES [ ] YES [ ] NO [ ] 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 PERIOD OID: DEPOSITARY: CALCULATION AGENT: INTEREST RATE BASIS: MAXIMUM RATE: MINIMUM RATE: SPREAD: SPREAD MULTIPLIER: INDEX MATURITY: INTEREST RESET DATES: INTEREST DETERMINATION LIBOR BASIS: DATES (IF OTHER THAN AS [ ] Telerate Screen Page 3750 SPECIFIED ON THE [ ] Reuters Screen LIBO Page REVERSE HEREOF): 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 2 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 or0 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 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 3 continental United States (or other jurisdiction acceptable to the Company and The Chase Manhattan 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 4 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: CHASE MANHATTAN BANK DELAWARE CHASE MANHATTAN BANK As Trustee DELAWARE OR As Trustee By By The Chase Manhattan Bank -------------------- As Authenticating Agent Authorized Officer By -------------------------------- Authorized Officer 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 Chase Manhattan Bank Delaware (formerly known as 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 existence of any present or former connection between 2 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 (ii) required to be deducted or withheld by any paying agent from any such payment, if (and only if) such payment can be made 3 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 1966, 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 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 4 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 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 cancelation 5 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 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 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 canceled 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 6 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. Commencing with the first Interest Reset Date following the Original Issue Date, the rate at which interest on this Security is payable shall be adjusted on each Interest Reset Date. 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 7 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, Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15") under the heading "Commercial paper--Nonfinancial". 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 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 8 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 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 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 for such Interest Determination Date will be the rate on such 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 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 9 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 3750 on the Dow Jones Market Service (or such other page or pages as may replace page 3750 on that service for the purpose of displaying London interbank offered rates of major banks). "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 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 10 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. 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 11 ("Treasury bills") having the Index Maturity specified on the face hereof as published in H.15 under the heading "U.S. Government securities--Treasury bills--Auction average" 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 be the Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week. 12 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 or to but excluding Maturity. 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 13 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, 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, if such next succeeding 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. 14 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 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 15 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, 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 fully registered form, without coupons, in denominations of U.S. $100,000 and integral multiples 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. 16 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. 17 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) U.S.$ Name: ------------------------ ------------------------ Address: ---------------------- ---------------------- (Please print name and address including zip code) SOCIAL SECURITY OR OTHER TAXPAYER ID NUMBER ---------------------- 18 ------------------ 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 common ........Custodian........ TEN ENT - as tenants by the entireties (Cust) (Minor) JT TEN - as joint tenants with Under Uniform Gifts to right of survivorship and Minors Act not as tenants in common ------------------------- (State)
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 - -------------------------------------------------------------------------------- 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-5 8 EXHIBIT 5 Exhibit 5 PAINE WEBBER GROUP INC. Paine Webber Group Inc. 1285 Avenue of the Americas New York, NY 10019 $3,000,000,000 PAINE WEBBER GROUP INC. DEBT SECURITIES September 9, 1998 Dear Sirs: I have examined and am familiar with the Restated Certificate of Incorporation of Paine Webber Group Inc., a Delaware corporation (the "Company"), as amended, and the By-Laws of the Company. I am also familiar with the corporate proceedings taken by the Company to authorize the offering, from time to time, by the Company of one or more series of senior debt securities ("Senior Debt Securities") to be issued under an Indenture dated as of March 15, 1988, between the Company and The Chase Manhattan Bank (as amended, the "Senior Indenture") and/or subordinated debt securities ("Subordinated Debt Securities" and, together with the Senior Debt Securities, "Debt Securities") to be issued under an Indenture dated as of March 15, 1988, between the Company and Chase Manhattan Bank Delaware (as amended, the "Subordinated Indenture" and, together with the Senior Indenture, the "Indentures"), such Debt Securities to be in such aggregate principal amount as may have an aggregate initial public offering price of up to $3,000,000,000. 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 such Debt Securities have been validly authorized; and such Debt Securities, when duly executed and authenticated and issued and sold in accordance with the provisions of the applicable Indenture 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, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors' rights generally from time to time in effect and to general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether 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 Registations Statement. Very truly yours, /s/ Theodore A. Levine Theodore A. Levine Senior Vice President, General Counsel and Secretary 2 EX-23.1 9 EXHIBIT 23.1 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 the related Prospectus of Paine Webber Group Inc. for the registration of $3,000,000,000 of Debt Securities of Paine Webber Group Inc., and to the incorporation by reference therein of our report dated January 30, 1998, which 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, 1997, filed with the Securities and Exchange Commission. New York, New York September 9, 1998 EX-25.1 10 EXHIBIT 25.1 Exhibit 25.1 ___________________________________________________________________ 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) ________ ________________________________________ THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) NEW YORK 13-2760086 (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, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, 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. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 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. 333-06249, 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. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 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, The Chase Manhattan 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 1st day of September, 1998. THE CHASE MANHATTAN BANK By /s/ L. O'Brien --------------------------------- L. O'Brien Senior Trust Officer - 3 - Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan 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, 1998, 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 ................................... $ 12,546 Interest-bearing balances ........................... 6,610 Securities: ............................................. Held to maturity securities............................... 2,014 Available for sale securities............................. 46,342 Federal funds sold and securities purchased under agreements to resell ................................ 27,489 Loans and lease financing receivables: Loans and leases, net of unearned income $129,281 Less: Allowance for loan and lease losses 2,796 Less: Allocated transfer risk reserve ... 0 -------- Loans and leases, net of unearned income, allowance, and reserve .............................. 126,485 Trading Assets ........................................... 58,015 Premises and fixed assets (including capitalized leases).............................................. 3,001 Other real estate owned .................................. 260 Investments in unconsolidated subsidiaries and associated companies................................. 255 Customers' liability to this bank on acceptances outstanding ......................................... 1,245 Intangible assets ........................................ 1,492 Other assets ............................................. 16,408 -------- TOTAL ASSETS ............................................. $302,162 ======== - 4 - LIABILITIES Deposits In domestic offices ................................. $ 99,347 Noninterest-bearing ........................$41,566 Interest-bearing ........................... 57,781 ------- In foreign offices, Edge and Agreement, subsidiaries and IBF's .............................. 80,602 Noninterest-bearing ........................$ 4,109 Interest-bearing ........................... 76,493 Federal funds purchased and securities sold under agree- ments to repurchase ...................................... 37,760 Demand notes issued to the U.S. Treasury ................. 1,000 Trading liabilities ...................................... 42,941 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less ....... 4,162 With a remaining maturity of more than one year . through three years............................ 213 With a remaining maturity of more than three years... 106 Bank's liability on acceptances executed and outstanding.. 1,245 Subordinated notes and debentures ........................ 5,408 Other liabilities ........................................ 11,796 TOTAL LIABILITIES ........................................ 284,580 -------- EQUITY CAPITAL Perpetual preferred stock and related surplus............. 0 Common stock ............................................. 1,211 Surplus (exclude all surplus related to preferred stock). 10,441 Undivided profits and capital reserves ................... 5,916 Net unrealized holding gains (losses) on available-for-sale securities ......................... (2) Cumulative foreign currency translation adjustments ...... 16 TOTAL EQUITY CAPITAL ..................................... 17,582 -------- TOTAL LIABILITIES AND EQUITY CAPITAL ..................... $302,162 ======== I, Joseph L. Sclafani, E.V.P. & 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 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 ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) - 5 - EX-25.2 11 EXHIBIT 25.2 Exhibit 25.2 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 ------------------- CHASE MANHATTAN 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) ------------------- 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 Lookerman 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. 333-13525 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. 333-13525, which is incorporated by reference). 7. A copy of the latest report of condition of Chase Manhattan 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, Chase Manhattan 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 1st day of September, 1998. Chase Manhattan Bank Delaware By: /s/ John J. Cashin ------------------ John J. Cashin Vice President REPORT OF CONDITION EXHIBIT 7 - -------------------------------------------------------------------------------- Consolidating domestic subsidiaries of the CHASE MANHATTAN BANK DELAWARE IN THE STATE OF DE AT THE CLOSE OF BUSINESS ON JUNE 30, 1998 published in response to call made by (Enter additional information below) -------------------------------------------------------------------- 4769 -------------------------------------------------------------------- 4769 --------------------------------------------------------------------
STATEMENT OF RESOURCES AND LIABILITIES Dollar Amounts in Thousands - -------------------------------------------------------------------------------------------------------------------- ASSETS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin................................................... 131,416 ------- Interest-bearing balances............................................................................ 17,233 ------- SECURITIES Held-to-maturity securities.......................................................................... 39,837 ------- Available-for-sale securities........................................................................ 174,315 ------- Federal funds sold and securities purchased under agreements to resell................................. 475,000 ------- Loans and lease financing receivables: Loans and leases, net of unearned income..................................... 2,126 ------- LESS: Allowance for loan and lease losses.................................... 2,108 ------- LESS: Allocated transfer risk reserve........................................ 0 ------- Loans and leases, net of unearned income, allowance, and reserve..................................... 18 ------- Trading Assets......................................................................................... 0 ------- Premises and fixed assets (including capitalized leases)............................................... 54,997 ------- Other real estate owned................................................................................ 0 ------- Investments in unconsolidated subsidiaries and associated companies.................................... 2,490 ------- Customers' liability to this bank on acceptances outstanding........................................... 3,493 ------- Intangible assets...................................................................................... 68,252 ------- Other assets........................................................................................... 25,948 ------- Total assets........................................................................................... 992,999 ------- - --------------------------------------------------------------------------------------------------------------------
REPORT OF CONDITION (CONTINUED) - --------------------------------------------------------------------------------
LIABILITIES Dollar Amounts in Thousands - -------------------------------------------------------------------------------------------------------------------- DEPOSITS: In domestic offices................................................................................. 424,755 ------- Noninterest-bearing....................................................... 372,360 ------- Interest-bearing.......................................................... 52,395 ------- In foreign offices, Edge and Agreement subsidiaries, and IBFs....................................... 84,665 ------- Noninterest-bearing....................................................... 0 ------- Interest-bearing.......................................................... 84,665 ------- Federal funds purchased and securities sold under agreements to repurchase............................ 0 ------- Demand notes issued to the U.S. Treasury.............................................................. 8,000 ------- Trading liabilities................................................................................... 0 ------- Other borrowed money: With remaining maturity of one year or less......................................................... 0 ------- With a remaining maturity of more than one year through three years................................. 363 ------- With a remaining maturity of more than three years.................................................. 0 ------- Bank's liability on acceptances executed and outstanding.............................................. 3,493 ------- Subordinated notes and debentures..................................................................... 0 ------- Other liabilities..................................................................................... 143,795 ------- Total liabilities..................................................................................... 665,071 ------- EQUITY CAPITAL Perpetual preferred stock and related surplus......................................................... 0 ------- Common stock.......................................................................................... 25,000 ------- Surplus............................................................................................... 158,081 ------- Undivided profits and capital reserves................................................................ 142,654 ------- Net unrealized holdings gains (losses) on available-for-sale securities............................... 2,193 ------- Cumulative foreign currency translation adjustments................................................... 0 ------- Total equity capital.................................................................................. 327,928 ------- Total liabilities and equity capital.................................................................. 992,999 ------- I, ------------------------------------------------- We, the undersigned directors, attest to the 4769 correctness of this statement of resources and ------------------------------------------------- liabilities. We declare that it has been examined (NAME, TITLE by us, and to the best of our knowledge and of the above named bank do hereby declare belief has been prepared in conformance that this Report of Condition is true and with the instructions and is true and correct. correct to the best of my knowledge and belief. Text ---- 4769 ------------------------------------------ Director #1 ------------------------------------------ ------------------------------------------------- ------------------------------------------ Director #2 ------------------------------------------ ------------------------------------------------- ------------------------------------------ Director #3 ------------------------------------------ -------------------------------------------------
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