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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-38931
SSBH Capital I
c/o Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
(212) 816-6000
PROSPECTUS SUPPLEMENT
(to Prospectus dated December 1, 1997)
16,000,000 SECURITIES
SSBH CAPITAL I
7.200% TRUST PREFERRED SECURITIES (TRUPS(R))
$25 LIQUIDATION AMOUNT
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
SALOMON SMITH BARNEY HOLDINGS INC.
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PRICE TO THE PUBLIC: $25 PER SHARE (OR $400,000,000 MILLION FOR ALL THE
SECURITIES), PLUS ACCRUED INTEREST. INTEREST ON THE SECURITIES WILL ACCRUE FROM
JANUARY 28, 1998 AND WILL BE PAID EACH MARCH 31, JUNE 30, SEPTEMBER 30 AND
DECEMBER 31, BEGINNING MARCH 31, 1998.
UNDERWRITING DISCOUNTS AND COMMISSIONS: 3.150% (OR $12,600,000 FOR ALL THE
SECURITIES), TO BE PAID BY SALOMON SMITH BARNEY HOLDINGS INC.; PROVIDED THAT
SUCH COMPENSATION WILL BE 2.000% FOR SALES TO CERTAIN INSTITUTIONS.
PROCEEDS TO SSBH CAPITAL I: 100% (OR $400,000,000 MILLION FOR ALL THE
SECURITIES), BEFORE DEDUCTION OF SSBH CAPITAL I'S EXPENSES ESTIMATED AT
$150,000.
"TRUPS" IS A REGISTERED SERVICE MARK OF SALOMON BROTHERS INC.
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THE TRUST PREFERRED SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION, NOR HAS ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
January 23, 1998
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SUMMARY
The following description of the Trust Preferred Securities (the "Preferred
Securities") supplements the rest of this Prospectus Supplement and the
Prospectus. To fully understand the terms of the Trust Preferred Securities, you
should carefully read this Prospectus Supplement and the Prospectus.
THE COMPANY
Salomon Smith Barney Holdings Inc. ("Salomon Smith Barney" or the
"Company") is a holding company primarily engaged in investment banking,
proprietary trading, retail brokerage and asset management activities through
its U.S. and foreign broker-dealer subsidiaries.
THE TRUST
SSBH Capital I ("SSBH Capital" or the "Trust") is a recently formed
Delaware business trust. All of the common undivided interests in the Trust (the
"Common Securities") will be held by Salomon Smith Barney or its subsidiaries.
The Common Securities will comprise at least 3% of the Trust's capital.
The Trust will not engage in any activities other than
- offering 16,000,000 Preferred Securities,
- investing the proceeds of the offering solely in Salomon Smith Barney's
junior subordinated deferrable interest debt securities (the "Junior
Subordinated Debt Securities," as described below) and
- activities incidental to the foregoing.
The Trust will not issue any securities other than the Common Securities
and the Preferred Securities.
The Trust will be managed by trustees elected by Salomon Smith Barney or
its subsidiaries, as the holders of the Common Securities. Except in certain
circumstances, the holders of the Preferred Securities have no right to elect or
remove trustees.
Salomon Smith Barney will pay all costs, expenses, debts and liabilities of
the Trust, including fees and expenses related to the offering of the Preferred
Securities, but not including payments under the Common or the Preferred
Securities.
THE PREFERRED SECURITIES
The holders of the Preferred Securities will have a preferred undivided
beneficial interest in the Trust. If there is a default on the Junior
Subordinated Debt Securities, the holders of the Preferred Securities will have
a preference over holders of the Common Securities for payments.
The holders of the Preferred Securities will be entitled to cash
distributions at an annual rate of 7.200% of the $25 liquidation amount of each
share of Preferred Securities. Distributions will accrue from January 28, 1998
and will be payable in arrears on March 31, June 30, September 30 and December
31 of each year, beginning March 31, 1998.
The Preferred Securities will be redeemed on or before January 28, 2038, as
described herein. At maturity, each Preferred Security will be redeemed for its
liquidation value plus any accrued distribution on such Preferred Security. The
Preferred Securities may also be redeemed before maturity, as described below.
The Preferred Securities have been approved for listing on the New York
Stock Exchange, Inc. (the "New York Stock Exchange"), subject to official notice
of issuance. Trading of the Preferred Securities on the New York Stock Exchange
is expected to begin within 30 days after initial delivery of the Preferred
Securities.
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PURCHASE OF SALOMON SMITH BARNEY JUNIOR SUBORDINATED DEBT SECURITIES
The Trust will use the entire proceeds of the offering of the Common
Securities and the Preferred Securities to purchase $412,372,000 of Junior
Subordinated Debt Securities issued by Salomon Smith Barney. Salomon Smith
Barney expects to use the proceeds from the sale of the Junior Subordinated Debt
Securities for its general corporate purposes.
The interest rate, the interest payment dates and the other payment dates
on the Junior Subordinated Debt Securities will correspond to the distribution
rate, the distribution payment dates and the other payment dates for the
Preferred Securities.
Salomon Smith Barney's obligations under the Junior Subordinated Debt
Securities are subordinated and junior in right of payment to all its present
and future senior indebtedness. Since the Junior Subordinated Debt Securities
will comprise substantially all the Trust's assets, if principal or interest is
not paid on the Junior Subordinated Debt Securities, the Trust will not have the
funds to make payments on the Preferred Securities.
One of the trustees of the Trust, The Chase Manhattan Bank ("Chase") will
hold title to the Junior Subordinated Debt Securities for the benefit of the
holders of the Common and the Preferred Securities. Chase will hold all payments
received on the Junior Subordinated Debt Securities for the benefit of the
holders of the Common Securities and the Preferred Securities in a segregated
non-interest bearing bank account, and will make all payments on the Common and
the Preferred Securities from this account.
POSTPONEMENT OF DISTRIBUTIONS
Salomon Smith Barney can postpone interest payments on the Junior
Subordinated Debt Securities for up to 20 consecutive quarters. A postponement
cannot extend, however, beyond the maturity of the Preferred Securities.
If interest payments on the Junior Subordinated Debt Securities are
postponed, distributions on the Preferred Securities will also be postponed.
During a postponement, interest would continue to accrue on the Junior
Subordinated Debt Securities, and distributions on the Preferred Securities
would also continue to accrue. Also, the postponed interest payments and
distributions will themselves accrue interest (to the extent legally permitted)
at an annual rate of 7.200% compounded quarterly.
Once Salomon Smith Barney makes all postponed interest payments on the
Junior Subordinated Debt Securities, with accrued interest, it can again
postpone interest payments.
During any period in which Salomon Smith Barney has postponed an interest
payment on the Junior Subordinated Debt Securities, it will not (with limited
exceptions) be able to
- pay a dividend or make any other payment or distribution on its stock,
- redeem, purchase or acquire any of its stock, or
- make an interest or principal payment, or repurchase or redeem, any of
its debt securities that rank equally with or junior to the Junior
Subordinated Debt Securities.
If a distribution on the Preferred Securities is postponed, holders will
still have to include deferred interest income in the form of original issue
discount ("OID") in gross income for United States federal income tax purposes,
even though they receive no cash distribution.
REDEMPTION OF PREFERRED SECURITIES
If Salomon Smith Barney redeems any Junior Subordinated Debt Securities,
the Trust will redeem Preferred Securities having an aggregate liquidation value
equal to the aggregate principal amount of the redeemed Junior Subordinated Debt
Securities.
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Salomon Smith Barney can redeem some or all of the Junior Subordinated Debt
Securities
- from time to time after January 28, 2003 and
- at any time if there are certain specific changes in tax or investment
company law (a "Special Event," as described herein).
Upon redemption of a Preferred Security, the holder will receive an amount
in cash equal to the liquidation value plus any accrued distributions.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES
If there is a Special Event but Salomon Smith Barney declines to redeem the
Junior Subordinated Debt Securities, the Trust will be terminated. The Trust
will then redeem the Preferred Securities by distributing the Junior
Subordinated Debt Securities to the holders of the Common Securities and the
Preferred Securities on a pro rata basis. If the Trust distributes Junior
Subordinated Debt Securities to the holders of the Preferred Securities, Salomon
Smith Barney will try to have the Junior Subordinated Debt Securities listed on
the New York Stock Exchange or any other exchange on which the Preferred
Securities are listed.
TAX TREATMENT OF DISTRIBUTIONS
Distributions on the Preferred Securities will be treated as interest
payments or OID, not dividends, under U.S. federal income tax law. Accordingly,
corporations that hold Preferred Securities will not be eligible for a
dividends-received deduction for distributions on Preferred Securities.
THE GUARANTEE
Salomon Smith Barney has guaranteed (the "Guarantee") that if a payment on
the Junior Subordinated Debt Securities is made to the Trust but, for any
reason, the Trust does not make the corresponding distribution or redemption
payment to the holders of the Preferred Securities, then Salomon Smith Barney
will make the payment directly to the holders of the Preferred Securities. To
avoid a double payment to a holder of the Preferred Securities, if Salomon Smith
Barney makes a payment under the Guarantee, the holder's right to receive the
corresponding payment from the Trust will automatically be surrendered to
Salomon Smith Barney.
Salomon Smith Barney's obligations under the Guarantee are
- subordinate and junior in right of payment to its other liabilities,
- equal in rank to its most senior current or future preferred stock and to
any current or future guarantee of preferred stock of any of its
subsidiaries, and
- senior to its common stock.
TERMINATION OF THE TRUST
If the Trust terminates, the Preferred Securities will be redeemed for
their liquidation amount plus accrued distributions (and interest on postponed
distributions), unless, as described above under "Distribution of Junior
Subordinated Debt Securities," the Junior Subordinated Debt Securities are
distributed to the holders of the Preferred Securities.
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RISK FACTORS
Before purchasing any Preferred Securities, you should carefully consider
the following special risk factors and other risk factors described on pages S-6
through S-9.
RANKING OF JUNIOR SUBORDINATED DEBT SECURITIES
Salomon Smith Barney's obligations under the Junior Subordinated Debt
Securities are subordinate and junior in right of payment to all of Salomon
Smith Barney's present and future senior indebtedness. This means that no
payment of principal (including redemption payments) or interest could be made
on the Junior Subordinated Debt Securities if Salomon Smith Barney were to
default on a principal or interest payment on indebtedness that is senior to the
Junior Subordinated Debt Securities. If no payment is made on the Junior
Subordinated Debt Securities, no payments can be made on the Preferred
Securities. The terms of neither the Preferred Securities nor the Junior
Subordinated Debt Securities limit Salomon Smith Barney's ability to incur
senior indebtedness.
OPTION TO POSTPONE INTEREST PAYMENTS
Salomon Smith Barney can postpone payments of interest on the Junior
Subordinated Debt Securities, as described in this Summary. Each such
postponement would result in a like postponement of distributions on the
Preferred Securities.
If distributions on the Preferred Securities are postponed, holders of
Preferred Securities will still accrue income in the form of OID equal to the
deferred distributions for United States federal income tax purposes. As a
result, during a postponement, a holder of Preferred Securities will recognize
income for United States federal income tax purposes in advance of receiving
cash.
A holder that disposes of its Preferred Securities during the postponement
of a distribution will not receive the distribution from the Trust if the holder
disposes of its Preferred Securities before the record date for the actual
distribution. Such a holder might not receive the same return on its investment
as a holder who continues to hold its Preferred Securities.
Salomon Smith Barney does not intend to postpone any payment of interest on
the Junior Subordinated Debt Securities. However, if Salomon Smith Barney
postpones an interest payment, the market price of the Preferred Securities is
likely to be affected. In addition, the possibility of a postponement may cause
the market price of the Preferred Securities to be more volatile than that of
similar securities where the issuer does not have a right to postpone interest
payments.
EARLY REDEMPTION
As described in this Summary, the Trust could be terminated prior to the
maturity date of the Preferred Securities. Also, if there is a Special Event,
some or all of the Preferred Securities might be redeemed for cash or Junior
Subordinated Debt Securities could be distributed in redemption of Preferred
Securities.
Under current United States federal income tax law, a redemption of
Preferred Securities for Junior Subordinated Debt Securities upon the
termination of the Trust would not be a taxable event to holders of the
Preferred Securities. If, however, the Preferred Securities are redeemed for
cash, this would be a taxable event to such holders.
Junior Subordinated Debt Securities distributed in redemption of the
Preferred Securities may trade at a discount to the price paid for the Preferred
Securities. Because holders of Preferred Securities could receive Junior
Subordinated Debt Securities in exchange for their Preferred Securities,
prospective purchasers of Preferred Securities are also making an investment
decision with regard to the Junior Subordinated Debt Securities and should
carefully review all the information regarding the Junior Subordinated Debt
Securities.
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights. In
particular, they will not be entitled to elect or remove trustees of the Trust.
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THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. Immediately thereafter, Smith Barney Holdings
Inc., another wholly owned subsidiary of Travelers Group, was merged into the
Company. The Company is a holding company primarily engaged in investment
banking, proprietary trading, retail brokerage and asset management activities
through its two broker-dealer subsidiaries, Smith Barney Inc. ("Smith Barney")
and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research; and other related
activities.
SALOMON BROTHERS
Together with Salomon Brothers Holding Company Inc and its subsidiaries
(which subsidiaries include Salomon Brothers), Salomon Brothers engages in
global investment banking and global securities trading activities; provides
capital raising, advisory, trading and risk management services to its
customers; and executes proprietary trading strategies on its own behalf.
Certain of the Company's commodities trading activities are conducted by the
Company's wholly owned subsidiary, Phibro Inc., and its subsidiaries.
THE TRUST
SSBH Capital is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of December 19, 1996, executed
by the Company, as sponsor (the "Sponsor"), and the trustees of SSBH Capital (as
described below) and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on December 19, 1996. Such
declaration of trust will be amended and restated in its entirety (as so amended
and restated, the "Declaration") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part. The Declaration will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the purchasers
thereof will own all of the Preferred Securities. See "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company." The Company will directly or indirectly acquire Common Securities in
an aggregate liquidation amount equal to 3% or more of the total capital of SSBH
Capital. SSBH Capital exists for the exclusive purposes of (i) issuing the Trust
Securities (as defined in the accompanying Prospectus) representing undivided
beneficial interests in the assets of the Trust, (ii) investing the gross
proceeds of the Trust Securities in the Junior Subordinated Debt Securities and
(iii) engaging in only those other activities necessary or incidental thereto.
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RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus, the following risk factors before purchasing the Preferred
Securities offered hereby.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBT SECURITIES
AND THE GUARANTEE
The obligations of the Company under the Junior Subordinated Debt
Securities are subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined herein) of the Company. No payment of
principal (including redemption payments, if any), premium, if any, or interest
on the Junior Subordinated Debt Securities may be made if (i) any Senior
Indebtedness of the Company is not paid when due and any applicable grace period
with respect to such default has ended with such default not having been cured
or waived or ceasing to exist, or (ii) the maturity of any Senior Indebtedness
of the Company has been accelerated because of a default. The Company's
obligations under the Guarantee rank (i) subordinate and junior in right of
payment to all other liabilities of the Company, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Company and
with any guarantee now or hereafter entered into by the Company in respect of
any preferred or preference stock of any subsidiary of the Company and (iii)
senior to the Company's common stock. There are no terms in the Preferred
Securities, the Junior Subordinated Debt Securities or the Guarantee that limit
the Company's ability to incur additional indebtedness, including indebtedness
that ranks senior to the Junior Subordinated Debt Securities and the Guarantee.
See "Description of Guarantee -- Status of the Guarantee" and "Description of
the Junior Subordinated Debt Securities -- Subordination."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. Chase will act as indenture trustee under the Guarantee (the "Guarantee
Trustee") for the purposes of compliance with the provisions of the Trust
Indenture Act. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent SSBH Capital has funds available
therefor, (ii) the Redemption Price (as defined in the accompanying Prospectus)
with respect to Preferred Securities called for redemption by SSBH Capital, to
the extent SSBH Capital has funds available therefor, and (iii) upon a voluntary
or involuntary dissolution, winding-up or termination of SSBH Capital (other
than in connection with the distribution of Junior Subordinated Debt Securities
to the holders of Preferred Securities or a redemption of all the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of the
payment and (b) the amount of assets of SSBH Capital remaining available for
distribution to holders of the Preferred Securities in liquidation of SSBH
Capital. The holders of a majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against SSBH Capital, the Guarantee Trustee
or any other person or entity. A holder of Preferred Securities may also
directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under the Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against SSBH Capital or any other person or
entity. If the Company were to default on its obligation to pay amounts payable
on the Junior Subordinated Debt Securities, SSBH Capital would lack available
funds for the payment of distributions or amounts payable on redemption of the
Preferred Securities or otherwise, and, in such event, holders of the Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, a holder of the Preferred Securities would rely on the
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enforcement (1) by the Institutional Trustee (as defined herein) of its rights
as registered holder of the Junior Subordinated Debt Securities against the
Company pursuant to the terms of the Junior Subordinated Debt Securities or (2)
by such holder of Preferred Securities of its right against the Company to
enforce payments on the Junior Subordinated Debt Securities. See "Description of
Guarantees" and "Description of Junior Subordinated Debt Securities" in the
accompanying Prospectus. The Declaration provides that each holder of Preferred
Securities, by acceptance thereof, agrees to the provisions of the Guarantee,
including the subordination provisions thereof, and the Indenture (as defined
herein).
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debt Securities against the Company. In addition, the holders of a
majority in liquidation amount of the Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee or to direct the exercise of any
trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it as a holder of the Junior Subordinated Debt Securities. If the
Institutional Trustee fails to enforce its rights under the Junior Subordinated
Debt Securities, any holder of Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Institutional Trustee's
rights under the Junior Subordinated Debt Securities without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. If a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debt Securities on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder (a "Direct Action") on or after the respective due
date specified in the Junior Subordinated Debt Securities without first (i)
directing the Institutional Trustee to enforce the terms of the Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of Preferred Securities under
the Declaration to the extent of any payment made by the Company to such holder
of Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from SSBH Capital. The holders
of Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debt Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period from time to time on the Junior Subordinated Debt Securities for an
Extension Period (as defined in the accompanying Prospectus) not exceeding 20
consecutive quarterly interest periods during which no interest shall be due and
payable, provided, that no Extension Period may extend beyond the maturity of
the Junior Subordinated Debt Securities. As a consequence of such an extension,
quarterly distributions on the Preferred Securities would be deferred (but
despite such deferral would continue to accrue with interest thereon compounded
quarterly) by SSBH Capital during any such extended interest payment period. In
the event that the Company exercises this right to defer interest payments, then
(a) the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or
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series of the Company's capital stock, or (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged), and (b) the Company shall not make any payment of interest on or
principal of (or premium, if any, on), or repay, repurchase or redeem, any debt
securities issued by the Company which rank pari passu with or junior to such
Junior Subordinated Debt Securities. The foregoing, however, will not apply to
any stock dividends paid by the Company where the dividend stock is the same
stock as that on which the dividend is being paid. Prior to the termination of
any Extension Period, the Company may further extend such Extension Period;
provided, that such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarterly interest
periods; provided, further, that no Extension Period may extend beyond the
maturity of the Junior Subordinated Debt Securities. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements.
Consequently, there could be up to 80 Extension Periods of varying lengths
throughout the term of the Junior Subordinated Debt Securities. See "Description
of the Preferred Securities -- Distributions" and "Description of the Junior
Subordinated Debt Securities -- Option to Extend Interest Payment Period."
Other junior subordinated deferrable interest debt securities issued from
time to time will contain the same restrictive covenants described in the
preceding paragraph. The effect of such restrictive covenants will be to limit
the rights of holders of Preferred Securities to receive payments with respect
thereto if there has been a deferral of interest under any such junior
subordinated deferrable interest debt securities.
Should the Company exercise its right to defer any payment of interest on
the Junior Subordinated Debt Securities by extending the interest payment
period, under recently issued Treasury regulations, each holder of Preferred
Securities will accrue income in the form of OID in respect of the deferred
interest allocable to its Preferred Securities for United States federal income
tax purposes, which will be allocated but not distributed, to holders of record
of Preferred Securities. As a result, during any Extension Period, each such
holder of Preferred Securities will recognize income for United States federal
income tax purposes in advance of the receipt of cash and will not receive the
cash from SSBH Capital related to such income if such holder disposes of its
Preferred Securities prior to the record date for the date on which
distributions of such amounts are made. The Company has no current intention of
exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Debt Securities. However, should the
Company exercise such right in the future, the market price of the Preferred
Securities is likely to be affected. A holder that disposes of its Preferred
Securities during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Preferred
Securities. In addition, as a result of the existence of the Company's right to
defer interest payments, the market price of the Preferred Securities (which
represent an undivided beneficial interest in the Junior Subordinated Debt
Securities) may be more volatile than other similar securities where the issuer
does not have such rights to defer interest payments. See "United States Federal
Income Taxation -- Interest Income and Original Issue Discount" and "-- Sales of
Preferred Securities."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event (as defined herein), SSBH Capital
will be dissolved, except in the limited circumstance described below, with the
result that the Junior Subordinated Debt Securities will be distributed to the
holders of the Trust Securities in connection with the liquidation of SSBH
Capital. In certain circumstances in connection with a Tax Event (as defined
herein), the Company has the right to redeem the Junior Subordinated Debt
Securities, in whole or in part, in lieu of a distribution of the Junior
Subordinated Debt Securities to holders of Trust Securities by SSBH Capital, in
which event SSBH Capital will redeem the Trust Securities on a pro rata basis to
the same extent as the Junior Subordinated Debt Securities are redeemed by the
Company. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution."
Under current United States federal income tax law, a distribution of
Junior Subordinated Debt Securities upon the dissolution of SSBH Capital would
not be a taxable event to holders of the Preferred Securities. Upon the
occurrence of a Tax Event, however, a dissolution of SSBH Capital in which
holders of
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the Preferred Securities receive cash would be a taxable event to such holders.
See "United States Federal Income Taxation -- Receipt of Junior Subordinated
Debt Securities or Cash Upon Liquidation of SSBH Capital."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of SSBH
Capital were to occur. Accordingly, the Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Junior Subordinated Debt Securities that a holder of Preferred
Securities may receive on dissolution and liquidation of SSBH Capital, may trade
at a discount to the price that the investor paid to purchase the Preferred
Securities offered hereby. Because holders of Preferred Securities may receive
Junior Subordinated Debt Securities upon the occurrence of a Special Event,
prospective purchasers of Preferred Securities are also making an investment
decision with regard to the Junior Subordinated Debt Securities and should
carefully review all the information regarding the Junior Subordinated Debt
Securities contained herein and in the accompanying Prospectus. See "Description
of the Preferred Securities -- Special Event Redemption or Distribution" and
"Description of the Junior Subordinated Debt Securities -- General."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and,
subject to certain exception, will not be entitled to vote to appoint, remove or
replace, or to increase or decrease the number of, SSBH Trustees (as defined in
the accompanying Prospectus), which voting rights are vested exclusively in the
holder of the Common Securities. See "Description of the Preferred Securities --
Voting Rights."
TRADING PRICE
Should the Company exercise its option to defer any payment of interest on
the Junior Subordinated Debt Securities, the Preferred Securities may trade at a
price that does not fully reflect the value of accrued but unpaid interest with
respect to the underlying Junior Subordinated Debt Securities. In the event of
such a deferral, a holder of Preferred Securities who disposes of its Preferred
Securities between record dates for payments of distributions thereon will be
required to include in income as ordinary income accrued but unpaid interest on
the Junior Subordinated Debt Securities to the date of disposition, and to add
such amount to its adjusted tax basis in its pro rata share of the underlying
Junior Subordinated Debt Securities deemed disposed of. To the extent the
selling price is less than such holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), such holder will recognize
a capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "United States Federal Income Taxation -- Interest Income and Original Issue
Discount" and "-- Sales of Preferred Securities."
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<PAGE> 11
USE OF PROCEEDS
All of the net proceeds from the sale of the Preferred Securities offered
hereby will be invested by SSBH Capital in Junior Subordinated Debt Securities
of the Company. The Company will use the net proceeds from the sale of the
Junior Subordinated Debt Securities to SSBH Capital to fund its financial
services business and for general corporate purposes, which may include the
reduction or refinancing of other borrowings, or the making of investments in,
or capital contributions to, subsidiaries of the Company. Also, in order to fund
its financial services business, the Company expects to incur additional
indebtedness in the future. See "Capitalization."
ACCOUNTING TREATMENT
The financial statements of SSBH Capital will be reflected in the Company's
consolidated financial statements with the Preferred Securities shown as
"SSBH-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust
holding solely Junior Subordinated Debt Securities of SSBH."
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED --------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed charges and
preferred stock dividends..................... 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amount by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed by dividing earnings from continuing operations
before income taxes and fixed charges by the combined fixed charges and
preferred stock dividends. For purposes of these ratios, fixed charges consist
of interest expense and that portion of rentals deemed representative of the
appropriate interest factor. The ratio of earnings to combined fixed charges and
preferred stock dividends has been computed excluding dividends relating to the
Company's Series A Cumulative Convertible Preferred Stock, 8.08% Cumulative
Preferred Stock, Series D and 8.40% Cumulative Preferred Stock, Series E, each
of which was exchanged on November 28, 1997 into shares of preferred stock of
Travelers Group in connection with the merger of the Company into a wholly owned
subsidiary of Travelers Group.
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<PAGE> 12
CAPITALIZATION
The following table sets forth the supplemental consolidated capitalization
of the Company at September 30, 1997, after giving retroactive effect to the
merger of the Company with Smith Barney Holdings Inc. as a combination of
entities under common control in a transaction accounted for in a manner similar
to a pooling of interests, and as adjusted to give effect to the issuance of the
Preferred Securities, the issuance and sale of additional long-term debt of the
Company after September 30, 1997 through the date hereof, and the application of
the proceeds from each of these transactions to the repayment of short-term
borrowings, as if such transactions had occurred on September 30, 1997,
including $50,000,000 of long-term debt which is expected to close on January
26, 1998.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------------
(UNAUDITED)
---------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings................................................ $11,161 $ 9,438
Notes payable........................................................ 10 10
Long-term debt....................................................... 19,717 21,040
-------- --------
Total debt................................................. $30,888 $30,488
-------- --------
Redeemable Preferred Stock, Series A(1).............................. 420 --
Salomon Smith Barney-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust holding solely Subordinated Debt
Securities of Salomon Smith Barney(2).............................. 345 345
SSBH-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust holding solely Junior
Subordinated Debt Securities of SSBH(3)............................ -- 400
Stockholder's equity
Preferred Stock, Series D and E(1)................................. 450 --
Common stock and additional paid-in capital (net of treasury
stock)............................................................. 634 1,504
Retained earnings.................................................... 7,318 7,318
Cumulative translation adjustment.................................... 3 3
-------- --------
Total stockholder's equity................................. 8,405 8,825
-------- --------
Total capitalization................................................. $40,058 $40,058
-------- --------
</TABLE>
- ---------------
(1) On November 28, 1997, in connection with the merger of the Company into a
wholly owned subsidiary of Travelers Group, each share of Series A
Cumulative Convertible Preferred Stock, 8.08% Cumulative Preferred Stock,
Series D and 8.40% Cumulative Preferred Stock, Series E of the Company was
exchanged, respectively, for one share of Series I Cumulative Preferred
Stock, 8.08% Cumulative Preferred Stock, Series J and 8.40% Cumulative
Preferred Stock, Series K, of Travelers Group.
(2) The sole asset of SI Financing Trust is $355,700,000 aggregate principal
amount of 9.25% Subordinated Debt Securities of the Company due June 30,
2026.
(3) The sole asset of SSBH Capital will be $412,372,000 aggregate principal
amount of 7.200% junior subordinated deferrable interest debentures of the
Company due January 28, 2038.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. Chase will act as indenture trustee under the Declaration (the
"Institutional Trustee") for purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the Preferred Securities will include those
stated in the Declaration and those made part of the Declaration by the Trust
Indenture Act. This description supplements the description of the general terms
and provisions of the Preferred Securities set forth in the accompanying
Prospectus under the caption "Description of Preferred Securities." The
following summary of the material terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by
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<PAGE> 13
reference to, the Declaration (a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement is a part), the
Delaware Business Trust Act (the "Trust Act") and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees (as defined in the
accompanying Prospectus) to issue, on behalf of SSBH Capital, the Trust
Securities, which represent undivided beneficial interests in the assets of SSBH
Capital. All of the Common Securities will be owned, directly or indirectly, by
the Company. The Common Securities rank pari passu, and payments will be made
thereon on a pro rata basis, with the Preferred Securities, except that upon the
occurrence and during the continuance of a Declaration Event of Default, the
rights of the holders of the Common Securities to receive payment of periodic
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Preferred Securities. The
Declaration does not permit the issuance by SSBH Capital of any securities other
than the Trust Securities or the incurrence of any indebtedness by SSBH Capital.
Pursuant to the Declaration, the Institutional Trustee will hold title to the
Junior Subordinated Debt Securities purchased by SSBH Capital for the benefit of
the holders of the Trust Securities. The payment of distributions out of money
held by SSBH Capital, and payments upon redemption of the Preferred Securities
or liquidation of SSBH Capital out of money held by SSBH Capital, are guaranteed
by the Company to the extent described under "Description of Guarantee." The
Guarantee will be held by Chase, the Guarantee Trustee, for the benefit of the
holders of the Preferred Securities. The Guarantee does not cover payment of
distributions when SSBH Capital does not have sufficient available funds to pay
such distributions. In such event, the remedy of a holder of Preferred
Securities is to (i) vote to direct the Institutional Trustee to enforce the
Institutional Trustee's rights under the Junior Subordinated Debt Securities or
(ii) if the failure of SSBH Capital to pay distributions is attributable to the
failure of the Company to pay interest or principal on the Junior Subordinated
Debt Securities, institute a proceeding directly against the Company for
enforcement of payment to such holder of the principal or interest on the Junior
Subordinated Debt Securities having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder on or after the
respective due date specified in the Junior Subordinated Debt Securities. See
"-- Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of 7.200% of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears beyond the first date such distributions are payable
(or would be payable, if not for any Extension Period or default by the Company
on the Junior Subordinated Debt Securities) will bear interest thereon at the
rate per annum of 7.200% thereof compounded quarterly. The term "distribution"
as used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from and including January 28, 1998, and will be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, commencing March
31, 1998. When, as and if available for payment, distributions will be made by
the Institutional Trustee, except as otherwise described below.
The distribution rate and the distribution payment dates and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated Debt
Securities.
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period from time to time on the Junior Subordinated Debt Securities for an
Extension Period not exceeding 20 consecutive quarterly interest periods during
which no interest shall be due and payable, provided, that no Extension Period
may extend beyond the maturity of the Junior Subordinated Debt Securities. As a
consequence of the Company's extension of the interest payment period,
distributions on the Preferred Securities would be deferred (though such
distributions would continue
S-12
<PAGE> 14
to accrue with interest thereon compounded quarterly, since interest would
continue to accrue on the Junior Subordinated Debt Securities) during any such
extended interest payment period. In the event that the Company exercises its
right to extend the interest payment period, then (a) the Company shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or make any guarantee payment with respect thereto (other than
(i) repurchases, redemptions or other acquisitions of shares of capital stock of
the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank pari passu with or junior to the Junior Subordinated Debt
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any Extension Period, the
Company may further extend such Extension Period; provided, that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed 20 consecutive quarterly interest periods; provided, further, that no
Extension Period may extend beyond the maturity of the Junior Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the above requirements. Consequently, there could be up to 80 Extension Periods
of varying lengths throughout the term of the Junior Subordinated Debt
Securities. See "Description of the Junior Subordinated Debt Securities --
Interest" and "-- Option to Extend Interest Payment Period." The Regular
Trustees shall give the holders of the Preferred Securities notice of any
Extension Period upon their receipt of notice thereof from the Company. See
"Description of the Junior Subordinated Debt Securities -- Option To Extend
Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to holders of record of
the Preferred Securities as they appear on the books and records of SSBH Capital
on the record date next following the termination of such deferral period.
Distributions on the Preferred Securities will be made on the dates payable
to the extent that SSBH Capital has funds available for the payment of such
distributions in the Property Account (as defined in the accompanying
Prospectus). SSBH Capital's funds available for distribution to the holders of
the Preferred Securities will be limited to payments received from the Company
on the Junior Subordinated Debt Securities. See "Description of the Junior
Subordinated Debt Securities." The payment of distributions out of monies held
by SSBH Capital is guaranteed by the Company to the extent set forth under
"Description of Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of SSBH Capital at the close of
business on the relevant record dates, which, as long as the Preferred
Securities remain in book-entry only form, will be one Business Day prior to the
relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the Junior
Subordinated Debt Securities in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "-- Book-Entry Only Issuance -- The Depository Trust Company"
below. In the event that the Preferred Securities do not continue to remain in
book-entry only form, the relevant record dates shall conform to the rules of
any securities exchange on which the Preferred Securities are listed and, if
none, the Regular Trustees shall have the right to select relevant record dates,
which shall be more than 14 days but less than 60 days prior to the relevant
payment dates. In the event that any date on which distributions are to be made
on the Preferred Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such record date.
A "Business Day"
S-13
<PAGE> 15
shall mean any day other than Saturday, Sunday or any other day on which banking
institutions in New York City (in the State of New York) are permitted or
required by any applicable law to close.
MANDATORY REDEMPTION OF TRUST SECURITIES
The Preferred Securities have no stated maturity date but will be redeemed
upon the maturity of the Junior Subordinated Debt Securities or to the extent
the Junior Subordinated Debt Securities are redeemed. The Junior Subordinated
Debt Securities will mature on January 28, 2038, and may be redeemed, in whole
or in part, at any time on or after January 28, 2003, or at any time, in whole
or in part, in certain circumstances upon the occurrence of a Tax Event (as
described under "Special Event Redemption or Distribution" below). See
"Description of the Junior Subordinated Debt Securities -- Optional Redemption."
Upon the maturity of the Junior Subordinated Debt Securities, the proceeds of
the repayment thereof shall simultaneously be applied to redeem all outstanding
Trust Securities at the Redemption Price. Upon the redemption of the Junior
Subordinated Debt Securities, whether in whole or in part (either at the option
of the Company or pursuant to a Tax Event), the proceeds from such redemption
shall simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed at the Redemption Price; provided, that
holders of Trust Securities shall be given not less than 30 nor more than 60
days' notice of such redemption. In the event that fewer than all of the
outstanding Preferred Securities are to be redeemed, the Preferred Securities
will be redeemed pro rata as described under "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after the date of this Prospectus Supplement), in
either case after the date of this Prospectus Supplement, there is more than an
insubstantial risk that (i) SSBH Capital would be subject to United States
federal income tax with respect to income accrued or received on the Junior
Subordinated Debt Securities, (ii) interest payable to SSBH Capital on the
Junior Subordinated Debt Securities would not be deductible, in whole or in
part, by the Company for United States federal income tax purposes or (iii) SSBH
Capital would be subject to more than a de minimis amount of other taxes, duties
or other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practicing under the 1940 Act (as defined herein) to the effect that, as a
result of the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that SSBH Capital is or will be
considered an "investment company" which is required to be registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus
Supplement.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, SSBH Capital
shall, except in the limited circumstances described below, be dissolved with
the result that Junior Subordinated Debt Securities with an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and with accrued and unpaid interest
equal to accrued and unpaid distributions on, the Trust Securities outstanding
at such time would be distributed to the holders of the Trust Securities in
liquidation of such holders' interests in SSBH Capital on a pro rata basis
within 90 days following the occurrence of such Special Event; provided,
however, that in the case of the occurrence of a Tax Event, such dissolution and
distribution shall be conditioned on the Regular Trustees' receipt of an opinion
of nationally recognized independent tax
S-14
<PAGE> 16
counsel experienced in such matters (a "No Recognition Opinion"), which opinion
may rely on, among other things, published revenue rulings of the Internal
Revenue Service, to the effect that the holders of the Trust Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of such dissolution and distribution of Junior Subordinated Debt
Securities and, provided further, that, if at the time there is available to the
Company or SSBH Capital the opportunity to eliminate, within such 90 day period,
the Special Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure, that will
have no adverse effect on SSBH Capital, the Company or the holders of the Trust
Securities, the Company or SSBH Capital will pursue such measure in lieu of
dissolution. Furthermore, if in the case of the occurrence of a Tax Event, (i)
the Company has received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a result
of such Tax Event, there is more than an insubstantial risk that the Company
would be precluded from deducting the interest on the Junior Subordinated Debt
Securities for United States federal income tax purposes, even after the Junior
Subordinated Debt Securities were distributed to the holders of Trust Securities
in liquidation of such holders' interests in SSBH Capital as described above, or
(ii) the Regular Trustees shall have been informed by such tax counsel that it
cannot deliver a No Recognition Opinion to the Regular Trustees, the Company
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Junior Subordinated Debt Securities, in whole or in part, for cash
within 90 days following the occurrence of such Tax Event, and, following such
redemption, Trust Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Junior Subordinated Debt Securities so
redeemed shall be redeemed by SSBH Capital at the Redemption Price on a pro rata
basis; provided, however, that if at the time there is available to the Company
or SSBH Capital the opportunity to eliminate, within such 90-day period, the Tax
Event by taking some ministerial action, such as filing a form or making an
election or pursuing some other similar reasonable measure that will have no
adverse effect on SSBH Capital, the Company or the holders of the Trust
Securities, the Company or SSBH Capital will pursue such measure in lieu of
redemption.
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, the Company will use its best efforts to cause the
Junior Subordinated Debt Securities to be listed on the New York Stock Exchange
or on such other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debt Securities
upon dissolution of SSBH Capital, (i) the Preferred Securities will no longer be
deemed to be outstanding, (ii) the securities depositary or its nominee, as the
record holder of the Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debt Securities
to be delivered upon such distribution, and (iii) any certificates representing
Preferred Securities not held by the Depositary or its nominee will be deemed to
represent Junior Subordinated Debt Securities having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and with accrued and unpaid interest
equal to accrued and unpaid distributions on, such Preferred Securities until
such certificates are presented to the Company or its agent for transfer or
reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of SSBH
Capital were to occur. Accordingly, the Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Junior Subordinated Debt Securities that an investor may receive
if a dissolution and liquidation of SSBH Capital were to occur, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
REDEMPTION PROCEDURES
SSBH Capital may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If SSBH Capital gives a notice of redemption in respect of the Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, and if the Company has paid
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<PAGE> 17
to the Institutional Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Junior Subordinated Debt Securities, the
Institutional Trustee will irrevocably deposit with the Depositary (as defined
in the accompanying Prospectus) funds sufficient to pay the applicable
Redemption Price and will give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. See "-- Book-Entry Only Issuance -- The Depository Trust Company."
If notice of redemption shall have been given and funds deposited as required,
then, immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by SSBH Capital, or by the
Company pursuant to the Guarantee, distributions on such Preferred Securities
will continue to accrue at the then applicable rate from the original redemption
date to the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed in accordance with
the Depositary's standard procedures. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its affiliates or
subsidiaries, including, without limitation, Smith Barney and/or Salomon
Brothers (and any successor or successors thereto), may at any time, and from
time to time, purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of SSBH Capital (each a "Liquidation"), the holders of
the Preferred Securities will be entitled to receive out of the assets of SSBH
Capital, after satisfaction of liabilities to creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment (the "Liquidation Distribution"), unless, in connection with such
Liquidation, Junior Subordinated Debt Securities in an aggregate stated
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and with accrued and unpaid
interest equal to accrued and unpaid distributions on, the Preferred Securities
outstanding at such time have been distributed on a pro rata basis to the
holders of such Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because SSBH Capital has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by SSBH Capital on the Preferred Securities shall be paid on a pro rata basis.
The holders of the Common Securities will be entitled to receive distributions
upon any such Liquidation pro rata with the holders of the Preferred Securities,
except that if a Declaration Event of Default has occurred and is continuing,
the Preferred Securities shall have a preference over the Common Securities with
regard to such distributions.
Pursuant to the Declaration, SSBH Capital shall terminate (i) on January
28, 2053, the expiration of the term of the Trust, (ii) upon the bankruptcy of
the Company or the holder of the Common Securities, (iii) upon the filing of a
certificate of dissolution or its equivalent with respect to the holder of the
Common Securities or the Company, the filing of a certificate of cancellation
with respect to SSBH Capital, or the revocation of the charter of the holder of
the Common Securities or the Company and the expiration of 90 days after the
date of revocation without a reinstatement thereof, (iv) upon the distribution
of Junior Subordinated Debt Securities upon the occurrence of a Special Event,
(v) upon the entry of a decree of a
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<PAGE> 18
judicial dissolution of the holder of the Common Securities, the Company or SSBH
Capital, or (vi) upon the redemption of all the Trust Securities.
Under the terms of the Indenture, the Company has covenanted that, for so
long as the Preferred Securities remain outstanding, it will not voluntarily
dissolve, wind-up or terminate SSBH Capital, except in connection with a
distribution of Junior Subordinated Debt Securities upon a Special Event or in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that, pursuant to the
Declaration the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration and therefore the
Indenture. In the event that any Declaration Event of Default with respect to
the Preferred Securities is waived by the holders of the Preferred Securities as
provided in the Declaration, the holders of Common Securities pursuant to the
Declaration have agreed that such waiver also constitutes a waiver of such
Declaration Event of Default with respect to the Common Securities for all
purposes under the Declaration without any further act, vote or consent of the
holders of Common Securities. See "-- Voting Rights."
If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debt Securities, any holder of Preferred Securities may directly
institute a legal proceeding against the Company to enforce the Institutional
Trustee's rights under the Junior Subordinated Debt Securities without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. If a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
the redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debt Securities without first (i) directing the
Institutional Trustee to enforce the terms of the Junior Subordinated Debt
Securities or (ii) instituting a legal proceeding against the Company to enforce
the Institutional Trustee's rights under the Junior Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from SSBH Capital. The holders
of Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debt Securities.
Upon the occurrence of an Indenture Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debt Securities will have
the right under the Indenture to declare the principal of and interest on the
Junior Subordinated Debt Securities to be immediately due and payable. The
Company and SSBH Capital are each required to file annually with the
Institutional Trustee an officers' certificate as to its compliance with all
conditions and covenants under the Declaration.
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VOTING RIGHTS
Except as described in this Prospectus Supplement and in the accompanying
Prospectus under "Description of Guarantees -- Modification of Guarantees;
Assignment," and except as provided under the Trust Act, the Trust Indenture Act
and as otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debt Securities, to (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee, or exercising any trust or power conferred on the
Indenture Trustee with respect to the Junior Subordinated Debt Securities, (ii)
waive any past Indenture Event of Default that is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debt Securities shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debt Securities where such consent shall be
required; provided, however, that, where a consent or action under the Indenture
would require the consent or act of holders of more than a majority in principal
amount of the Junior Subordinated Debt Securities (a "Super Majority") affected
thereby, only the holders of at least such Super Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
record holder of Preferred Securities may directly institute a legal proceeding
against the Company to enforce the Institutional Trustee's rights under the
Junior Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity. The
Institutional Trustee shall notify all holders of the Preferred Securities of
any notice of default received from the Indenture Trustee with respect to the
Junior Subordinated Debt Securities. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy available to the Institutional Trustee, the Institutional Trustee, as
holder of the Junior Subordinated Debentures, shall not take any of the actions
described in clauses (i), (ii), (iii) or (iv) above unless the Institutional
Trustee has obtained an opinion of a nationally recognized independent tax
counsel experienced in such matters to the effect that, as a result of such
action, SSBH Capital will not fail to be classified as a grantor trust for
United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debt Securities, is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Institutional Trustee shall request the written direction of the holders of the
Trust Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a majority in liquidation amount of the Trust Securities voting
together as a single class; provided, however, that where any amendment,
modification or termination under the Indenture would require the consent of a
Super Majority, the Institutional Trustee may only give such consent at the
direction of the holders of at least the proportion in aggregate liquidation
amount of the Trust Securities which the relevant Super Majority represents of
the aggregate principal amount of the Junior Subordinated Debt Securities
outstanding. The Institutional Trustee shall be under no obligation to take any
such action in accordance with the directions of the holders of the Trust
Securities unless the Institutional Trustee has obtained an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that for United States federal income tax purposes SSBH Capital will not
be classified as other than a grantor trust.
A waiver of an Indenture Event of Default by the Institutional Trustee at
the direction of the holders of the Preferred Securities will constitute a
waiver of the corresponding Declaration Event of Default.
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Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for SSBH Capital to
redeem and cancel Preferred Securities or distribute Junior Subordinated Debt
Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Except in certain circumstances, the Holders of the Preferred Securities
will have no rights to appoint or remove the SSBH Trustees, who may be
appointed, removed or replaced solely by the Company as the indirect or direct
holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee and the
Delaware Trustee (as defined in the accompanying Prospectus)), provided, that,
if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of SSBH Capital other than pursuant to the terms of the Declaration,
then the holders of the Trust Securities voting together as a single class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of holders of at least a
majority in liquidation amount of the Trust Securities affected thereby;
provided, that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or the Common Securities,
then only holders of the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of holders of a majority in liquidation amount of such
class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause SSBH Capital
to be classified for United States federal income tax purposes as other than a
grantor trust, (ii) reduce or otherwise adversely affect the powers of the
Institutional Trustee or (iii) cause SSBH Capital to be deemed an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
SSBH Capital may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body except as
described below. SSBH Capital may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state; provided, that, (i) such successor entity either
(x) expressly assumes all of the obligations of SSBH Capital under the Trust
Securities or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Trust Securities (the "Successor
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Securities"), so long as the Successor Securities rank the same as the Trust
Securities rank with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) the Company expressly acknowledges a trustee of
such successor entity possessing the same powers and duties as the Institutional
Trustee, in its capacity as the holder of the Junior Subordinated Debt
Securities, (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another organization on
which the Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of SSBH Capital, (vii) prior to such merger,
consolidation, amalgamation or replacement, SSBH Capital has received an opinion
of a nationally recognized independent counsel to SSBH Capital experienced in
such matters to the effect that, (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in the new entity), and (B) following such merger, consolidation,
amalgamation or replacement, neither SSBH Capital nor such successor entity will
be required to register as an "investment company" under the 1940 Act; and
(viii) the Company guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, SSBH Capital shall not, except with the consent
of holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
in the opinion of a nationally recognized independent tax counsel experienced in
such matters, such consolidation, amalgamation, merger or replacement would
cause SSBH Capital or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes. In addition, so
long as any Preferred Securities are outstanding and are not held entirely by
the Company, SSBH Capital may not voluntarily liquidate, dissolve, wind-up or
terminate except as described above under "-- Special Event Redemption
Distribution."
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates,
representing the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC 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 "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC 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 ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. (the
"NASD"). Access to the DTC system is also available to others, such as
securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with
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a Direct Participant either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the Securities
and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Preferred Securities, except in the event that
use of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Preferred Securities in accordance
with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to SSBH Capital as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co. consenting or voting
rights to those Direct Participants to whose accounts the Preferred Securities
are credited on the record date (identified in a listing attached to the Omnibus
Proxy). The Company and SSBH Capital believe that the arrangements among DTC,
Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights that
can be directly exercised by a holder of a beneficial interest in SSBH Capital.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of DTC,
SSBH Capital or the Company, subject to any statutory or regulatory requirements
to the contrary that may be in effect from time to time. Payment of
distributions to DTC is the responsibility of SSBH Capital, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
SSBH Capital. Under such circumstances, in the event
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that a successor securities depositary is not obtained, Preferred Securities
certificates are required to be printed and delivered. Additionally, the Regular
Trustees (with the consent of the Company) may decide to discontinue use of the
system of book-entry transfers through DTC (or any successor depositary) with
respect to the Preferred Securities. In that event, certificates for the
Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and SSBH Capital believe to be
reliable, but neither the Company nor SSBH Capital takes responsibility for the
accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such a default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. Notwithstanding the foregoing, the holders of
Preferred Securities will not be required to offer such indemnity in the event
such holders, by exercising their voting rights, direct the Institutional
Trustee to take any action following a Declaration Event of Default.
The Institutional Trustee has extended substantial credit facilities (the
borrowings under which constitute Senior Indebtedness (as defined herein)) to
the Company. The Company and certain of its subsidiaries also maintain bank
accounts, borrow money and have other customary commercial banking or investment
banking relationships with the Institutional Trustee in the ordinary course of
business.
PAYING AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions will apply:
The Institutional Trustee will act as paying agent and may designate
an additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of SSBH Capital, but upon payment (with the
giving of such indemnity as SSBH Capital or the Company may require) in
respect of any tax or other government charges that may be imposed in
relation to it.
SSBH Capital will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate SSBH Capital in
such a way so that SSBH Capital will not be required to register as an
"investment company" under the 1940 Act or be characterized as other than a
grantor trust for United States federal income tax purposes. The Company is
authorized and directed to conduct its affairs so that the Junior Subordinated
Debt Securities will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Company and the Regular
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust of SSBH Capital or the certificate of
incorporation of the Company, that each of the Company and the Regular Trustees
determines in its discretion to be necessary or desirable to achieve such end,
as long as such action does not adversely affect the interests of the holders of
the Preferred Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
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<PAGE> 24
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Junior
Subordinated Debt Securities in which SSBH Capital will invest the proceeds from
the issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Junior Subordinated Debt
Securities set forth in the accompanying Prospectus under the caption
"Description of Junior Subordinated Debt Securities." The following description
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the description of the Junior Subordinated Debt
Securities in the accompanying Prospectus; the Indenture, to be dated as of
January 28, 1998 (the "Indenture"), between the Company and Chase, as Trustee
(the "Indenture Trustee"), the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part; and the Trust Indenture Act. Certain capitalized terms
used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of SSBH Capital
following the occurrence of a Special Event, Junior Subordinated Debt Securities
may be distributed to the holders of the Trust Securities in liquidation of SSBH
Capital. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution."
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, the Company will use its best efforts to have the
Junior Subordinated Debt Securities listed on the New York Stock Exchange or on
such other national securities exchange or similar organization on which the
Preferred Securities are then listed or quoted.
GENERAL
The Junior Subordinated Debt Securities will be issued as unsecured debt
under the Indenture. The Junior Subordinated Debt Securities will be limited in
aggregate principal amount to approximately $412,372,000, such amount being the
sum of the aggregate stated liquidation amount of the Preferred Securities and
the capital contributed by the Company to SSBH Capital in exchange for the
Common Securities (the "SSBH Payment").
The Junior Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debt
Securities will mature and become due and payable, together with any accrued and
unpaid interest thereon including Compound Interest (as defined herein) and
Additional Interest (as defined herein), if any, on January 28, 2038.
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in SSBH Capital,
such Junior Subordinated Debt Securities will initially be issued in the form of
one or more Global Securities (as defined under "Book-Entry and Settlement"
below). As described herein, under certain limited circumstances, Junior
Subordinated Debt Securities may be issued in certificated form in exchange for
a Global Security. See "Book-Entry and Settlement" below. In the event that
Junior Subordinated Debt Securities are issued in certificated form, such Junior
Subordinated Debt Securities will be in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Junior Subordinated Debt Securities issued as a Global
Security will be made to DTC, to a successor depositary or, in the event that no
depositary is used, to a Paying Agent for the Junior Subordinated Debt
Securities. In the event Junior Subordinated Debt Securities are issued in
certificated form, principal and interest will be payable, the transfer of the
Junior Subordinated Debt Securities will be registrable and Junior Subordinated
Debt Securities will be exchangeable for Junior Subordinated Debt Securities of
other denominations of a like aggregate principal amount at the corporate trust
office of the Indenture Trustee in New York, New York; provided, that payment of
interest may be made at the option of the Company by check mailed to the
addresses of the persons entitled thereto.
The Company does not intend to issue and sell the Junior Subordinated Debt
Securities to any purchasers other than SSBH Capital.
There are no covenants or provisions in the Indenture that would afford the
holders of the Junior Subordinated Debt Securities protection in the event of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction involving the Company that may adversely affect such holders.
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SUBORDINATION
The Indenture provides that the Junior Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebtedness of the
Company. No payment of principal (including redemption payments), premium, if
any, or interest on the Junior Subordinated Debt Securities may be made if (i)
any Senior Indebtedness of the Company has not been paid when due and any
applicable grace period with respect to such default has ended and such default
has not been cured or waived or ceased to exist, or (ii) the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default.
Upon any 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, premium, if any, and interest due or to become due on all Senior
Indebtedness of the Company must be paid in full before the holders of Junior
Subordinated Debt Securities are entitled to receive or retain any payment. Upon
satisfaction of all claims related to all Senior Indebtedness of the Company
then outstanding, the rights of the holders of the Junior Subordinated Debt
Securities will be subrogated to the rights of the holders of Senior
Indebtedness of the Company to receive payments or distributions applicable to
Senior Indebtedness until all amounts owing on the Junior Subordinated Debt
Securities are paid in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of such
obligor for money borrowed and (B) indebtedness evidenced by securities, notes,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
conditional sale or title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations,
contingent or otherwise, of such obligor in respect of any letters of credit,
banker's acceptance, security purchase facilities or similar credit
transactions, (v) all obligations in respect of interest rate swap, cap or other
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements, (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise and (vii) all obligations of the type referred
to in clauses (i) through (vi) above of other persons secured by any lien on any
property or asset of such obligor (whether or not such obligation is assumed by
such obligor), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Junior Subordinated Debt Securities and
(2) any indebtedness between or among such obligor or its affiliates, including
all other debt securities and guarantees in respect of those debt securities,
issued to (a) any other SSBH Trust or a trustee of such trust and (b) any other
trust, or a trustee of such trust, partnership or other entity affiliated with
the Company that is a financing vehicle of the Company (a "financing entity") in
connection with the issuance by such financing entity of preferred securities or
other securities that rank pari passu with, or junior to, the Junior
Subordinated Debt Securities. Such Senior Indebtedness shall continue to be
Senior Indebtedness and be entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term of
such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by the Company.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Junior Subordinated Debt
Securities, in whole or in part, from time to time, on or after January 28,
2003, or at any time in certain circumstances upon the occurrence of a Tax Event
as described under "Description of the Preferred Securities -- Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest (as
defined herein), if any, to the redemption date. If a partial redemption of the
Preferred Securities resulting from a partial redemption of the Junior
Subordinated Debt Securities would result in the delisting of the Preferred
Securities, the Company may only redeem the Junior Subordinated Debt Securities
in whole.
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INTEREST
Each Junior Subordinated Debt Security shall bear interest at the rate of
7.200% per annum, from and including the original date of issuance, payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each an "Interest Payment Date"), commencing March 31, 1998 to the person
in whose name such Junior Subordinated Debt Security is registered, subject to
certain exceptions, at the close of business on the Business Day next preceding
such Interest Payment Date. In the event the Junior Subordinated Debt Securities
shall not continue to remain in book-entry only form, the Company shall have the
right to select record dates, which shall be more than 14 days but less than 60
days prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debt Securities is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, during
the term of the Junior Subordinated Debt Securities, to defer payments of
interest by extending the interest payment period for a period not exceeding 20
consecutive quarters, provided, that no Extension Period may extend beyond the
maturity of the Junior Subordinated Debt Securities, at the end of which
Extension Period, the Company shall pay all interest then accrued and unpaid
(including any Additional Interest (as defined below)) together with interest
thereon compounded quarterly at the rate specified for the Junior Subordinated
Debt Securities to the extent permitted by applicable law ("Compound Interest");
provided, further, that during any such Extension Period, (a) the Company shall
not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or make any guarantee payment with respect thereto (other than
(i) repurchases, redemptions or other acquisitions of shares of capital stock of
the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank pari passu with or junior to the Junior Subordinated Debt
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any Extension Period, the
Company may further defer payments of interest by extending such Extension
Period; provided, however, that such Extension Period, including all such
previous and further extensions, may not exceed 20 consecutive quarterly
interest periods (including the quarterly interest period in which notice of
such Extension Period (as described below) is given); provided, further, that no
Extension Period may extend beyond the maturity of the Junior Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the terms set forth in this section. No interest during an Extension Period,
except at the end thereof, shall be due and payable. The Company has no present
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Junior Subordinated Debt Securities. If the
Institutional Trustee shall be the sole holder of the Junior Subordinated Debt
Securities, the Company shall give the Regular Trustees and the Institutional
Trustee notice of its selection of such Extension Period one Business Day prior
to the earlier of (i) the date distributions on the Preferred Securities would
be payable, if not for such Extension Period, or (ii) the date the Regular
Trustees are required to give notice to the New York Stock Exchange (or other
applicable self-regulatory organization)
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or to holders of the Preferred Securities of the record date or the date such
distribution would be payable, if not for such Extension Period, but in any
event one Business Day prior to such record date. The Regular Trustees shall
give notice of the Company's selection of such Extension Period to the holders
of the Preferred Securities. If the Institutional Trustee shall not be the sole
holder of the Junior Subordinated Debt Securities, the Company shall give the
holders of the Junior Subordinated Debt Securities notice of its selection of
such Extension Period ten Business Days prior to the earlier of (i) the next
succeeding Interest Payment Date or (ii) the date upon which the Company is
required to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Junior Subordinated Debt
Securities of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time SSBH Capital shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Junior Subordinated Debt Securities such additional amounts as shall be
required so that the net amounts received and retained by SSBH Capital after
paying any such taxes, duties, assessments or other governmental charges will be
not less than the amounts SSBH Capital would have received had no such taxes,
duties, assessments or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debt Securities,
will have the right to declare the principal of and the interest on the Junior
Subordinated Debt Securities (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debt Securities. See "Description of Junior
Subordinated Debt Securities -- Events of Default" in the accompanying
Prospectus for a description of the Indenture Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders of
Preferred Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debt Securities. See "Description of the Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Junior Subordinated Debt Securities
on the date such interest or principal is otherwise payable, the Company
acknowledges that, in such event, a holder of Preferred Securities may institute
a Direct Action for payment on or after the respective due date specified in the
Junior Subordinated Debt Securities. The Company may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of all of the holders of Preferred Securities of SSBH Capital.
Notwithstanding any payment made to such holder of Preferred Securities by the
Company in connection with a Direct Action, the Company shall remain obligated
to pay the principal of or interest on the Junior Subordinated Debt Securities
held by SSBH Capital or the Institutional Trustee of SSBH Capital, and the
Company shall be subrogated to the rights of the holder of such Preferred
Securities with respect to payments on the Preferred Securities to the extent of
any payments made by the Company to such holder in any Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debt Securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of SSBH Capital
as a result of the occurrence of a Special Event, the Junior Subordinated Debt
Securities will be issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the depositary or its nominee.
Except under the limited circumstances described below, Junior Subordinated Debt
Securities represented by a Global Security will not be exchangeable for, and
will not otherwise be issuable as, Junior Subordinated Debt Securities in
definitive form. The Global Securities described above may not be transferred
except by the depositary to a nominee of
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the depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debt Securities in definitive form and will not be considered the
Holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debt
Securities shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the depositary or its
nominee or to a successor depositary or its nominee. Accordingly, each
Beneficial Owner must rely on the procedures of the depositary or if such person
is not a Participant, on the procedures of the Participant through which such
person owns its interest to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in SSBH Capital,
DTC will act as securities depositary for the Junior Subordinated Debt
Securities. For a description of DTC and the specific terms of the depositary
arrangements, see "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. The
Company may appoint a successor to DTC or any successor depositary in the event
DTC or such successor depositary is unable or unwilling to continue as a
depositary for the Global Securities.
None of the Company, SSBH Capital, the Indenture Trustee, any paying agent
and any other agent of the Company or the Indenture Trustee 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
for such Junior Subordinated Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than the depositary or its
nominee only if (i) the depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Junior Subordinated Debt Securities. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Junior
Subordinated Debt Securities registered in such names as the depositary shall
direct. It is expected that such instructions will be based upon directions
received by the depositary from its Participants with respect to ownership of
beneficial interests in such Global Security.
MISCELLANEOUS
The Indenture will provide that the Company will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Junior Subordinated
Debt Securities, (ii) the organization, maintenance and dissolution of SSBH
Capital, (iii) the retention of the SSBH Trustees and (iv) the enforcement by
the Institutional Trustee of the rights of the holders of the Preferred
Securities.
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DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by the Company for the benefit of the holders of
Preferred Securities. The Guarantee will be qualified as an indenture under the
Trust Indenture Act. Chase will act as the Guarantee Trustee under the
Guarantee. The terms of the Guarantee will be those set forth in the Guarantee
and those made part of the Guarantee by the Trust Indenture Act. This
description supplements the description of the general terms and provisions of
the Guarantee set forth in the accompanying Prospectus under the caption
"Description of Guarantees." The summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the form of Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement forms a part, and the
Trust Indenture Act. The Guarantee will be held by the Guarantee Trustee for the
benefit of the holders of the Preferred Securities.
GENERAL
Pursuant to and to the extent set forth in the Guarantee, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities (except to the extent paid by SSBH Capital), as and when
due, regardless of any defense, right of set-off or counterclaim which SSBH
Capital may have or assert, the following payments (the "Guarantee Payments"),
without duplication: (i) any accrued and unpaid distributions that are required
to be paid on the Preferred Securities, to the extent SSBH Capital has funds
available therefor, (ii) the redemption price of $25 per Preferred Security,
plus all accrued and unpaid distributions (the "Redemption Price"), to the
extent SSBH Capital has funds available therefor, with respect to any Preferred
Securities called for redemption by SSBH Capital, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of SSBH Capital (other than
in connection with the distribution of Junior Subordinated Debt Securities to
the holders of Preferred Securities or the redemption of all of the Preferred
Securities) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment or (b) the amount of assets of SSBH Capital remaining for distribution
to holders of the Preferred Securities in liquidation of SSBH Capital. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of Preferred
Securities or by causing SSBH Capital to pay such amounts to such holders.
The Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities from the time of issuance of the Preferred Securities
but will not apply to any payment of distributions or Redemption Price, or to
payments upon the dissolution, winding-up or termination of SSBH Capital, except
to the extent SSBH Capital shall have funds available therefor. If the Company
does not make interest payments on the Junior Subordinated Debt Securities, SSBH
Capital will not pay distributions on the Preferred Securities and will not have
funds available therefor. See "Description of Junior Subordinated Debt
Securities." The Guarantee, when taken together with the Company's obligations
under the Junior Subordinated Debt Securities, the Indenture and the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of SSBH Capital (other than with respect to Trust Securities), will
provide a full and unconditional guarantee on a subordinated basis by the
Company of payments due on the Preferred Securities.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Preferred
Securities remain outstanding, if there shall have occurred any event that would
constitute an Event of Default under such Guarantee or the Declaration, then (a)
the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional
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interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged) and (b) the Company shall not make any payment of interest on, or
principal of (or premium, if any, on), or repay, repurchase or redeem, any debt
securities issued by the Company which rank pari passu with or junior to the
Junior Subordinated Debt Securities. The Guarantee, however, will except from
the foregoing any stock dividends paid by the Company where the dividend stock
is the same stock as that on which the dividend is being paid.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Guarantee may be amended only with the prior approval of the holders of not less
than a majority in aggregate liquidation amount of the outstanding Preferred
Securities. All guarantees and agreements contained in the Guarantee shall bind
the successors, assignees, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
the Guarantee Trustee's rights under the Guarantee, any holder of related
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against SSBH Capital, the Guarantee Trustee
or any other person or entity. A holder of Preferred Securities may also
directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under the Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against SSBH Capital or any other person or
entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under the Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to the Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
The Guarantee Trustee has extended substantial credit facilities (the
borrowings under which constitute Senior Indebtedness) to the Company. The
Company and certain of its subsidiaries also maintain bank accounts, borrow
money and have other customary commercial banking or investment banking
relationships with the Guarantee Trustee in the ordinary course of business.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the Preferred Securities upon full
payment of the Redemption Price of all Preferred Securities, upon distribution
of the Junior Subordinated Debt Securities to the holders of the Preferred
Securities or upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of SSBH Capital. The Guarantee will continue to be
effective or will be reinstated, as the case may
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<PAGE> 31
be, if at any time any holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any affiliate of the Company and (iii) senior to the
Company's common stock. The terms of the Preferred Securities provide that each
holder of Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of SSBH Capital is to
issue the Trust Securities evidencing undivided beneficial interests in the
assets of SSBH Capital, and to invest the proceeds from such issuance and sale
in the Junior Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debt
Securities will be equal to the sum of the aggregate stated liquidation amount
of the Trust Securities; (ii) the interest rate and the interest and other
payment dates on the Junior Subordinated Debt Securities will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) pursuant to the Indenture, the Company shall pay, and SSBH
Capital shall not be obligated to pay, directly or indirectly, all costs,
expenses, debts and obligations of SSBH Capital other than with respect to the
Trust Securities; and (iv) the Declaration further provides that the SSBH
Trustees shall not cause or permit SSBH Capital to, among other things, engage
in any activity that is not consistent with the purposes of SSBH Capital.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by the Company as and to the extent set forth under
"Description of Guarantees" in the accompanying Prospectus. If the Company does
not make interest payments on the Junior Subordinated Debt Securities purchased
by SSBH Capital, it is expected that SSBH Capital will not have sufficient funds
to pay distributions on the Preferred Securities. The Guarantee is a guarantee
on a subordinated basis with respect to the Preferred Securities from the time
of its issuance but does not apply to any payment of distributions unless and
until SSBH Capital has sufficient funds for the payment of such distributions.
The Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal or other payments on the Junior Subordinated
Debt Securities held by SSBH Capital as its sole asset. The Guarantee, when
taken together with the Company's obligations under the Junior Subordinated Debt
Securities and the Indenture and its obligations under the Declaration,
including its obligations to pay costs, expenses, debts and liabilities of SSBH
Capital (other than with respect to the Trust Securities), will provide a full
and unconditional guarantee of distributions, redemption payments and
liquidation payments on the Preferred Securities.
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If the Company fails to make interest or other payments on the Junior
Subordinated Debt Securities when due (taking account of any Extension Period),
the Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities -- Book Entry Only Issuance -- The Depository Trust Company" and
"-- Voting Rights," may direct the Institutional Trustee to enforce its rights
under the Junior Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
holder of Preferred Securities may directly institute a legal proceeding against
the Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Junior Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities may also institute a Direct Action for payment on
or after the respective due date specified in the Junior Subordinated Debt
Securities without first (i) directing the Institutional Trustee to enforce the
terms of the Junior Subordinated Debt Securities or (ii) instituting a legal
proceeding against the Company to enforce the Institutional Trustee's rights
under the Junior Subordinated Debt Securities. In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by the
Company to such holder of Preferred Securities in such Direct Action.
Consequently, the Company will be entitled to payment of amounts that a holder
of Preferred Securities receives in respect of an unpaid distribution that
resulted in the bringing of a Direct Action to the extent that such holder
receives or has already received full payment with respect to such unpaid
distribution from SSBH Capital. The Company, under the Guarantee, acknowledges
that the Guarantee Trustee shall enforce the Guarantee on behalf of the holders
of the Preferred Securities. If the Company fails to make payments under the
Guarantee, the Guarantee provides a mechanism whereby the holders of the
Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against SSBH Capital, the Guarantee
Trustee, or any other person or entity. A holder of Preferred Securities may
also directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under the Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against SSBH Capital or any other person or
entity.
The Company and SSBH Capital believe that the above mechanisms and
obligations, taken together, are equivalent to a full and unconditional
guarantee by the Company of payments due on the Preferred Securities. See
"Description of Guarantee -- General."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Preferred Securities.
Unless otherwise stated, this summary deals only with Preferred Securities held
as capital assets. It does not deal with special classes of holders such as
banks, thrifts, real estate investment trusts, regulated investment companies,
common trust funds, insurance companies, dealers in securities or currencies,
tax-exempt investors, persons that have a functional currency other than the
U.S. Dollar or persons that will hold the Preferred Securities as a position in
a "straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly
with retroactive effect.
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CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
In connection with the issuance of the Junior Subordinated Debt Securities,
Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden, Arps"), tax counsel to the
Company and SSBH Capital, will render its opinion generally to the effect that,
under then current law and assuming full compliance with the terms of the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Junior Subordinated Debt Securities
held by SSBH Capital will be classified for United States federal income tax
purposes as indebtedness of the Company.
CLASSIFICATION OF SSBH CAPITAL
In connection with the issuance of the Preferred Securities, Skadden, Arps
will render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, SSBH Capital will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Preferred Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debt Securities, and each holder
will be required to include in its gross income interest (or OID) with respect
to its allocable share of those Junior Subordinated Debt Securities.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under Treasury regulations applicable to debt instruments issued on or
after August 13, 1996 (the "Regulations"), a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether a debt
instrument is issued with OID. The Company believes that the likelihood of its
exercising its option to defer payments is remote within the meaning of the
Regulations. Based on the foregoing, the Company believes that, although the
matter is not free from doubt, the Junior Subordinated Debt Securities will not
be considered to be issued with OID at the time of their original issuance and,
accordingly, that a holder of the Preferred Securities should include in gross
income such holder's allocable share of interest on the Junior Subordinated Debt
Securities in accordance with such holder's method of tax accounting.
Under the Regulations, if the option to defer any payment of interest was
determined not to be "remote" or if the Company exercised such option, the
Junior Subordinated Debt Securities would be treated as issued with OID at the
time of issuance or at the time of such exercise, as the case may be, and all
stated interest on the Junior Subordinated Debt Securities would thereafter be
treated as OID as long as the Junior Subordinated Debt Securities remained
outstanding. In such event, all of a holder's taxable interest income with
respect to the Junior Subordinated Debt Securities would constitute OID that
would have to be included in income on an economic accrual basis before the
receipt of the cash attributable to the interest, regardless of such holder's
method of tax accounting, and actual distributions of stated interest would not
be reported as taxable income. Consequently, a holder of Preferred Securities
would be required to include in gross income OID even though the Company would
not make any actual cash payments during an Extension Period.
No rulings or other interpretations have been issued by the Internal
Revenue Service (the "IRS") which have addressed the meaning of the term
"remote" as used in the Regulations, and it is possible that the IRS could take
a position contrary to the interpretation herein.
Because income on the Preferred Securities will constitute interest or OID,
corporate holders of Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Preferred Securities.
SUBSEQUENT HOLDERS
Holders of Preferred Securities other than holders who purchase the
Preferred Securities upon original issuance ("Subsequent Holders") may be
considered to have acquired their undivided interests in the Junior Subordinated
Debt Securities with (i) "market discount" (in which case all or a portion of
any gain
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<PAGE> 34
recognized upon the disposition of the Preferred Securities may be treated as
ordinary income), (ii) "amortizable bond premium" (which may entitle the holder
to certain deductions over the life of the Preferred Securities) or, (iii) if
the Preferred Securities are determined to be issued with OID, "acquisition
premium" (which may entitle holders to reduce a portion of their OID income
inclusions). Subsequent Holders should consult their tax advisors regarding the
potential applicability of such rules to such holders.
RECEIPT OF JUNIOR SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF SSBH
CAPITAL
Under certain circumstances, as described under "Description of the
Preferred Securities -- Special Event Redemption or Distribution," Junior
Subordinated Debt Securities may be distributed to holders in exchange for the
Preferred Securities upon the liquidation of SSBH Capital. Under current law,
such a distribution, for United States federal income tax purposes, would be
treated as a non-taxable event to each holder, and each holder would receive an
aggregate tax basis in the Junior Subordinated Debt Securities equal to such
holder's aggregate tax basis in its Preferred Securities. A holder's holding
period in the Junior Subordinated Debt Securities received in liquidation of
SSBH Capital would include the period during which the Preferred Securities were
held by such holder.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debt Securities may be redeemed
by the Company for cash and the proceeds of such redemption distributed by SSBH
Capital to holders in redemption of their Preferred Securities. Under current
law, such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Preferred Securities, and a
holder could recognize gain or loss as if it sold such redeemed Preferred
Securities for cash. See "United States Federal Income Taxation -- Sales of
Preferred Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will be considered to have
disposed of all or part of its pro rata share of the Junior Subordinated Debt
Securities and will recognize gain or loss equal to the difference between its
adjusted tax basis in the Preferred Securities and the amount realized on the
sale of such Preferred Securities. Assuming that the Company does not exercise
its option to defer payment of interest on the Junior Subordinated Debt
Securities and that the Junior Subordinated Debt Securities are not deemed to be
issued with OID, a holder's adjusted tax basis in the Preferred Securities
generally will be its initial purchase price. If the Junior Subordinated Debt
Securities are deemed to be issued with OID, a holder's tax basis in the
Preferred Securities generally will be its initial purchase price, increased by
OID previously includible in such holder's gross income to the date of
disposition and decreased by distributions or other payments received on the
Preferred Securities since and including the date that the Junior Subordinated
Debt Securities were deemed to be issued with OID. Such gain or loss generally
will be a capital gain or loss (except to the extent of any accrued interest
with respect to such holder's pro rata share of the Junior Subordinated Debt
Securities required to be included in income) and generally will be a long-term
capital gain or loss if the Preferred Securities have been held for more than
one year. Recently enacted United States tax legislation reduced the maximum
United States federal income tax rate applicable to long-term capital gains in
certain instances. Prospective investors should consult their tax advisors
regarding the possible effect on such investors of such legislation.
Should the Company exercise its option to defer any payment of interest on
the Junior Subordinated Debt Securities, the Preferred Securities may trade at a
price that does not accurately reflect the value of accrued but unpaid interest
with respect to the underlying Junior Subordinated Debt Securities. In the event
of such a deferral, a holder who disposes of its Preferred Securities between
record dates for payments of distributions thereon will be required to include
in income as ordinary income accrued but unpaid interest on the Junior
Subordinated Debt Securities to the date of disposition and to add such amount
to its adjusted tax basis in its pro rata share of the underlying Junior
Subordinated Debt Securities deemed disposed of. To the extent the selling price
is less than the holder's adjusted tax basis, such holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
S-33
<PAGE> 35
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
person other than (i) a citizen or a resident of the United States; (ii) a
corporation, partnership, or other entity created or organized in or under the
laws of the United States or any political subdivision thereof; (iii) an estate
the income of which is subject to United States federal income tax regardless of
its source; or (iv) a trust if (A) a U.S. court is able to exercise primary
supervision over the trust's administration and (B) one or more United States
persons have the authority to control all of the trust's substantial decisions.
The term "United States" means the United States of America (including the
States and the District of Columbia).
Under present United States federal income tax law: (i) payments by SSBH
Capital or any of its paying agents to any holder of a Preferred Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided, that, (a) the beneficial owner of the
Preferred Security 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, (b) the beneficial owner of the Preferred Security is not a controlled
foreign corporation that is related to the Company through stock ownership, and
(c) either (A) the beneficial owner of the Preferred Security certifies to SSBH
Capital or its agent, under penalties of perjury, that it is not a United States
holder 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 Preferred Security in such capacity, certifies to
SSBH Capital or its agent, under penalties of perjury, that such statement has
been received from the beneficial owner by it or by a Financial Institution
holding such security for the beneficial owner and furnishes SSBH Capital or its
agent with a copy thereof; and (ii) a United States Alien Holder of a Preferred
Security will not be subject to United States federal withholding tax on any
gain realized upon the sale or other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Preferred Securities will be reported to holders
on Forms 1099, which forms should be mailed to holders of Preferred Securities
by January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income tax, provided the
required information is provided to the IRS on a timely basis.
On October 7, 1997, the United States Treasury Department issued final
Treasury regulations governing information reporting and the certification
procedures regarding withholding and backup withholding on certain amounts paid
to United States Alien Holders after December 31, 1998. Such regulations, among
other things, may change the certification procedures relating to the receipt by
intermediaries of payments on behalf of a beneficial owner of a Preferred
Security. Prospective investors should consult their tax advisors regarding the
effect, if any, of such new Treasury regulations on an investment in the
Preferred Securities.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
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<PAGE> 36
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (an "ERISA Plan") should consider the fiduciary standards of ERISA in
the context of the ERISA Plan's particular circumstances before authorizing an
investment in the Preferred Securities of the Trust. Among other factors, the
fiduciary should consider whether such an investment is in accordance with the
documents governing the ERISA Plan and whether the investment is appropriate for
the ERISA Plan in view of its overall investment policy and diversification of
its portfolio.
Certain provisions of ERISA and the Code prohibit ERISA Plans, as well as
individual retirement accounts and Keogh plans subject to section 4975 of the
Code (collectively, "Plans"), from engaging in certain transactions involving
"plan assets" with parties that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to the Plan. The U.S.
Department of Labor has issued a final regulation (the "Regulation") with regard
to whether the underlying assets of an entity in which employee benefit plans
acquire equity interests are deemed to be plan assets.
Under such Regulation, for purposes of ERISA and section 4975 of the Code,
the assets of the Trust would be deemed to be "plan assets" of a Plan whose
assets were used to purchase Preferred Securities of the Trust if the Preferred
Securities of the Trust were considered to be equity interests in the Trust and
no exemption to plan asset status were applicable under the Regulation.
If the assets of the Trust were deemed to be plan assets of Plans that are
holders of the Preferred Securities of the Trust, the Company might be
considered a "party in interest" or "disqualified person" with respect to Plans
whose assets were used to purchase Preferred Securities of the Trust. If this
were the case, an investment in Preferred Securities of the Trust by a Plan
might constitute or in the course of the operation of the Trust, give rise to a
prohibited transaction under ERISA or the Code. In particular, it is likely that
under such circumstances a prohibited extension of credit to the Company would
be considered to occur under ERISA and the Code.
In addition, the Company might be considered a "party in interest" or
"disqualified person" with respect to certain Plans for reasons unrelated to the
operation of the Trust, e.g., because of the provision of services by the
Company or an affiliate to the Plan. A purchase of Preferred Securities of the
Trust by any such Plan would be likely to result in a prohibited extension of
credit to the Company, without regard to whether the assets of the Trust
constituted plan assets.
Because of the possibility that a prohibited extension of credit could
occur as a result of the purchase or holding of the Preferred Securities of the
Trust by a Plan, the Preferred Securities of the Trust may be not purchased or
held by any Plan or any person investing "plan assets" of any Plan, unless such
purchaser or holder is eligible for the exemptive relief available under
Prohibited Transaction Class Exemption ("PTCE") 96-23 (for certain transactions
determined by in-house asset managers), PTCE 95-60 (for certain transactions
involving insurance company general accounts), PTCE 91-38 (for certain
transaction involving bank collective investment funds), PTCE 90-1 (for certain
transactions involving insurance company separate accounts), or PTCE 84-14 (for
certain transactions determined by independent qualified asset managers). Any
purchaser of the Preferred Securities of the Trust or any interest therein will
be deemed to have represented to the Trust that either (a) it is not a Plan and
is not purchasing such securities (or interest therein) on behalf of or with
"plan assets" of any Plan or (b) its purchase, holding and disposition of the
Preferred Securities of the Trust (or interest therein) is eligible for the
exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that any person considering
the purchase of Preferred Securities of the Trust with Plan assets consult with
its counsel regarding the consequences under ERISA and the Code of the
acquisition and ownership of Preferred Securities of the Trust and the
availability of exemptive relief under the class
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<PAGE> 37
exemptions listed above. In John Hancock Mutual Life Insurance Co. v. Harris
Trust and Savings Bank, 114 S.Ct. 517 (1993), the Supreme Court ruled that
assets held in an insurance company's general account may be deemed to be "plan
assets" for ERISA purposes under certain circumstances. The issues raised in
Harris Trust have also been the subject of legislative action, and have been
addressed in proposed regulations issued by the U.S. Department of Labor in
December 1997.
UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated January 23, 1998 (the "Underwriting Agreement"), each Underwriter named
below (the "Underwriters") has severally agreed to purchase from SSBH Capital,
and SSBH Capital has agreed to sell to such Underwriter, the number of Preferred
Securities set forth opposite the name of such Underwriter below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS PREFERRED SECURITIES
- --------------------------------- --------------------
<S> <C>
Smith Barney Inc................. 2,077,500
A.G. Edwards & Sons, Inc. ....... 2,076,250
Goldman, Sachs & Co. ............ 2,076,250
Merrill Lynch, Pierce, Fenner &
Smith Incorporated............. 2,076,250
Morgan Stanley & Co.
Incorporated................... 2,076,250
PaineWebber Incorporated......... 2,076,250
Prudential Securities
Incorporated................... 2,076,250
ABN AMRO Chicago Corporation..... 95,000
Bear, Stearns & Co. Inc. ........ 95,000
BT Alex. Brown Incorporated...... 95,000
CIBC Oppenheimer Corp. .......... 95,000
Dain Rauscher Incorporated....... 95,000
Donaldson, Lufkin & Jenrette
Securities Corporation......... 95,000
EVEREN Securities, Inc. ......... 95,000
JC Bradford & Co. ............... 95,000
Piper Jaffray Inc. .............. 95,000
Raymond James & Associates,
Inc. .......................... 95,000
The Robinson-Humphrey Company,
LLC............................ 95,000
Advest, Inc. .................... 21,000
Cowen & Company.................. 21,000
Craigie Incorporated............. 21,000
<CAPTION>
NUMBER OF
UNDERWRITERS PREFERRED SECURITIES
- --------------------------------- --------------------
<S> <C>
Fahenstock & Co. Inc. ........... 21,000
Fidelity Capital Markets, a
Division of National Financial
Services Corporation........... 21,000
Gibraltar Securities Co. ........ 21,000
Gruntal & Co., L.L.C. ........... 21,000
Janney Montgomery Scott, Inc. ... 21,000
Legg Mason Wood Walker,
Incorporated................... 21,000
McDonald & Company Securities,
Inc. .......................... 21,000
McGinn, Smith & Co., Inc. ....... 21,000
Mesirow Financial, Inc........... 21,000
Morgan Keegan & Company, Inc. ... 21,000
Olde Discount Corporation........ 21,000
Pryor, McClendon, Counts & Co.,
Inc. .......................... 21,000
Roney & Co. L.L.C. .............. 21,000
Tucker Anthony Incorporated...... 21,000
U.S. Clearing Corp. ............. 21,000
Utendahl Capital Partners,
L.P. .......................... 21,000
Wheat, First Securities, Inc. ... 21,000
----------
Total................... 16,000,000
==========
</TABLE>
The Underwriters are obligated to take and pay for the total number of
Preferred Securities offered hereby if any such Preferred Securities are
purchased. In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.
The Underwriting Agreement provides that SSBH Capital and the Company will
indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, and to make certain
contributions in respect thereof, or to contribute to payments that such
Underwriters may be required to make in respect thereof and to reimburse each of
the Underwriters for certain legal and other expenses.
SSBH Capital and the Company have agreed, during the period beginning on
the date of the Underwriting Agreement and continuing to and including the date
that is 60 days after the closing date for the purchase of the Preferred
Securities, not to offer, sell, contract to sell or otherwise dispose of any
preferred securities or any other securities (including any backup undertakings
for such securities) of the Company or of SSBH Capital, in each case that are
substantially similar to the Preferred Securities, or any securities
S-36
<PAGE> 38
convertible into or exchangeable for the Preferred Securities or such
substantially similar securities of either SSBH Capital or the Company, except
preferred securities offered pursuant to the accompanying Prospectus, without
the prior written consent of Smith Barney Inc.
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Junior Subordinated Debt
Securities of the Company, the Underwriting Agreement provides that the Company
will pay as compensation to the Underwriters $.7875 per Preferred Security for
the accounts of the several Underwriters; provided that such compensation will
be $.50 per Preferred Security for sales to certain institutions. Therefore, to
the extent of such sales, the actual amount of Underwriters' compensation will
be less than the aggregate amount specified in the preceding sentence.
The Underwriters propose to offer the Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at a price that
represents a concession not in excess of $.50, provided that such concession for
sales to certain institutions will not be in excess of $.30 per Preferred
Security. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $.40 per Preferred Security to certain brokers and dealers.
After the Preferred Securities are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
representatives of the Underwriters.
In connection with underwritten offerings of Preferred Securities, certain
Underwriters and selling group members and their respective affiliates may
engage in transactions that stabilize, maintain or otherwise affect the market
price of the Preferred Securities. Such transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M under the
Exchange Act, pursuant to which such persons may bid for or purchase Preferred
Securities for the purposes of stabilizing their market price. The Underwriters
also may create a short position for their respective accounts by selling more
Preferred Securities in connection with this offering than they are committed to
purchase from SSBH Capital, and in such case may purchase Preferred Securities
in the open market following completion of this offering to cover all or a
portion of such short position. The Underwriters may also cover all or a portion
of such short position, up to a specified aggregate principal amount or number
of Preferred Securities, by exercising any Underwriters' over-allotment option
that may be applicable with respect to the particular underwritten offering. In
addition, the managing Underwriter for the particular offering, on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements between
the Underwriters whereby it may reclaim from an Underwriter (or dealer
participating in this offering) for the account of the Underwriters, the selling
concession with respect to Preferred Securities that are distributed in the
relevant offering but subsequently purchased for the account of the Underwriters
in the open market. Any of the transactions described in this paragraph may
result in the maintenance of the price of the Preferred Securities at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if any are
undertaken, they may be discontinued at any time.
The Preferred Securities have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance. Trading of the Preferred
Securities on the New York Stock Exchange is expected to commence within 30 days
after the initial delivery of the Preferred Securities.
The participation of any affiliate of the Company in the offer and sale of
Preferred Securities will comply with the requirements of Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. regarding
the underwriting by an affiliate of securities of its parent.
This Prospectus Supplement and the Prospectus may be used by the Company or
any Underwriter that is an affiliate or other affiliates of the Company in
connection with offers and sales of the Preferred Securities in market-making
transactions at negotiated prices related to prevailing market prices at the
time of sale. Any such entity may act as principal or agent in such
transactions. No such entity is obligated to make a market in the Preferred
Securities and any such entity may discontinue any market-making at any time
without notice, at its sole discretion. There can be no assurance of the
liquidity or existence of a secondary market for any Preferred Securities.
S-37
<PAGE> 39
LEGAL MATTERS
The validity of the Junior Subordinated Debt Securities, the Guarantee and
certain matters relating thereto will be passed upon for the Company and SSBH
Capital by Robert H. Mundheim, Esq., General Counsel of the Company. Mr.
Mundheim beneficially owns, or has rights to acquire under Travelers Group
employee benefit plans, an aggregate of less than one percent of the common
stock of Travelers Group. The validity of the Preferred Securities and certain
matters relating thereto and certain United States federal income tax matters
will be passed upon for the Company and SSBH Capital by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York. Certain legal matters will be passed
upon for the Underwriters by Cleary, Gottlieb, Steen & Hamilton, New York, New
York. Kenneth J. Bialkin, a partner of Skadden, Arps, Slate, Meagher & Flom LLP,
is a director of Travelers Group, the parent of the Company, and he and other
attorneys in such firm beneficially own an aggregate of less than one percent of
the common stock of Travelers Group. Each of Cleary, Gottlieb, Steen & Hamilton
and Skadden, Arps, Slate, Meagher & Flom LLP has from time to time acted as
counsel for Travelers Group and certain of its subsidiaries and may do so in the
future.
S-38
<PAGE> 40
PROSPECTUS
SALOMON SMITH BARNEY HOLDINGS INC.
may offer --
PREFERRED STOCK
DEPOSITARY SHARES
and
SSBH CAPITAL I
SSBH CAPITAL II
SSBH CAPITAL III
SSBH CAPITAL IV, which are subsidiaries of Salomon Smith Barney Holdings Inc.
may offer --
TRUST PREFERRED SECURITIES
that Salomon Smith Barney Holdings
Inc. has guaranteed to the extent
explained in this prospectus.
At the time of offering of these Trust
Preferred Securities, Salomon Smith
Barney Holdings Inc. will also by this
prospectus offer its related Junior
Subordinated Debt Securities.
We will provide the specific terms
of these securities in supplements
to this prospectus. You should read
this prospectus and the supplements
carefully before you invest.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAS ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS,
OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT, IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
SALOMON SMITH BARNEY
December 1, 1997
<PAGE> 41
PROSPECTUS SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the terms
of our securities, you should carefully read this document and the Prospectus
Supplement that explains the specific terms of the securities we are offering.
You should also read the documents we have referred you to in Where You Can Find
More Information on page 5 for information on our Company and our financial
statements. The Prospectus Supplement may also add, update or change information
contained in this Prospectus. It is important for you to consider the
information in the Prospectus and any Prospectus Supplement in making your
investment decision.
OUR COMPANY
Salomon Smith Barney Holdings Inc. is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. and Salomon Brothers Inc.
THE TRUSTS
SSBH Capital I, SSBH Capital II, SSBH Capital III and SSBH Capital IV (the
"Trusts") are recently formed Delaware business trusts. All of the common
undivided interests (the "Common Securities") in each of the Trusts will be held
by the Company or its subsidiaries.
Each Trust will not engage in any activities other than (i) offering trust
preferred securities representing undivided beneficial interests in the assets
of the respective Trust ("Preferred Securities" and, together with the Common
Securities, the "Trust Securities"), (ii) investing the proceeds of the offering
solely in the Company's Junior Subordinated Debt Securities (as described below)
and activities incidental to the foregoing. Each Trust will not issue any
securities other than the Common Securities and the Preferred Securities.
Each Trust will be managed by trustees appointed by the Company or its
subsidiaries, as holders of the Common Securities. The holders of the Preferred
Securities have no right to elect or remove trustees. The Company will pay all
costs, expenses, debts and liabilities of each of the Trusts, including fees and
expenses related to the offering of the Preferred Securities, but not including
payments under the Common Securities or the Preferred Securities.
A Prospectus Supplement will describe the specific types, amounts, price
and detailed terms of any Preferred Securities that any of the Trusts may offer.
THE SECURITIES OUR COMPANY MAY OFFER
We may use this Prospectus to offer Junior Subordinated Debt Securities in
connection with an offering by one or more of the Trusts of Preferred Securities
and Preferred Stock. The Preferred Stock may or may not be in the form of
Depositary Shares. A Prospectus Supplement will describe the specific types,
amounts, prices, and detailed terms of any securities we offer.
JUNIOR SUBORDINATED DEBT SECURITIES
These securities are unsecured general obligations of our Company. Our
obligations under the Junior Subordinated Debt Securities are subordinated and
junior in right of payment to all of our present and future senior indebtedness.
The Junior Subordinated Debt Securities will be issued under an indenture
between the Company and the Chase Manhattan Bank, as trustee; we have certain
banking relationships with the Chase Manhattan Bank. We have summarized below
the general features of the Junior Subordinated Debt Securities from the
indenture. We encourage you to read the indenture, which is an exhibit to our
registration statement No. 333-38931, our recent annual report on Form 10-K, our
recent quarterly reports on Form 10-Q and our
2
<PAGE> 42
recent reports on Form 8-K, including the Report on Form 8-K dated November 28,
1997. Directions on how you can receive copies of these documents are provided
on page 5.
GENERAL INDENTURE PROVISIONS THAT APPLY TO JUNIOR SUBORDINATED DEBT SECURITIES
- - The indenture gives the Company the right to postpone interest payments on the
Junior Subordinated Debt Securities for a number of periods of such duration
as will be specified in a Prospectus Supplement. These extension periods need
not be consecutive.
- - The indenture does not limit the amount of Junior Subordinated Debt Securities
that we may issue or provides holders any protection should there be a highly
leveraged transaction involving our Company.
- - Each indenture allows for Junior Subordinated Debt Securities to be issued in
series and provides for the issuance of securities in book-entry,
certificated, and, in limited circumstances, bearer form.
- - The indenture allows us to merge or to consolidate with another company, or
sell all or substantially all of our assets to another company. If these
events occur, the other company will be required to assume our
responsibilities under the Junior Subordinated Debt Securities, and, assuming
that the transaction has not resulted in an event of default, we will be
released from all liabilities and obligations.
- - The indenture provides that holders of a majority of the total principal
amount of the Junior Subordinated Debt Securities outstanding in any series
may vote to change certain of our obligations or your rights concerning those
securities. If the Junior Subordinated Debt Securities are held by one of the
Trusts or its trustee, any such change also requires the approval of holders
of a majority of liquidation preference of the Trust Securities of the
relevant Trust. However, every holder of a particular security must consent to
certain important changes in that security, including changes in the payment
of principal or interest on or currency of any security, and, if the Junior
Subordinated Debt Securities are held by one of the Trusts or its trustee,
each of the holders of Trust Securities of the relevant Trust must also
approve any such change.
- - We may discharge certain of the Junior Subordinated Debt Securities or be
released from our obligation to comply with the limitations discussed above or
certain events of default at any time by depositing sufficient amounts of cash
or United States government securities with the trustee to pay our obligations
under the particular securities when due. If we chose to discharge certain
securities, all amounts due to you on those securities would be paid by the
trustee from the deposited funds.
- - The indenture governs the actions of the trustee with regard to the Junior
Subordinated Debt Securities, including the circumstances under which the
trustee is required to give notices to holders of the securities and the
procedures by which lost or stolen debt securities may be replaced.
EVENTS OF DEFAULT
The events of default specified in the indenture include:
- Principal not paid when due
- Sinking fund payment not made when due
- Failure to pay interest for 30 days
- Covenants not performed for 90 days following notice
- Certain events of insolvency or bankruptcy, whether voluntary or not
- If Junior Subordinated Debt Securities are held by one of the Trusts or
its trustee in connection with a Trust's issuance of Trust Securities,
the voluntary or involuntary dissolution or termination of such Trust,
subject to certain limited exceptions
3
<PAGE> 43
REMEDIES
If we default in performing any of these obligations, the Trustee or
holders of 25% of the principal amount of Junior Subordinated Debt Securities
outstanding in a series may declare the principal immediately payable. However,
holders of a majority in principal amount of the securities may rescind this
action as regards payment defaults, but only with the approval of each holder of
Trust Securities if Junior Subordinated Debt Securities are held by one of the
Trusts or its trustee.
OTHER PROVISIONS APPLICABLE TO JUNIOR SUBORDINATED DEBT SECURITIES HELD BY THE
TRUSTS
If Junior Subordinated Debt Securities are held by one of the Trusts or its
trustee in connection with a Trust's issuance of Trust Securities:
- The Junior Subordinated Debt Securities may be distributed pro rata to
the holders of the relevant Trust Securities in certain circumstances, as
specified in the Prospectus Supplement.
- If the Company is in default under any such security or the related
Guarantee (as described below) or has postponed payments on such
security, then during the period of such default or postponement, the
Company will not (with limited exceptions) be able to:
- pay a dividend or make any other payment or distribution on its stock,
- redeem, purchase or acquire any of its stock, or
- make an interest or principal payment, or repurchase or redeem, any of
its debt securities that rank equally with or junior to the Junior
Subordinated Debt Securities.
- The Company will generally be required to maintain ownership of 100% of
the common securities of the relevant Trust, will not be allowed to
dissolve or wind up the Trust, and will be required to use its reasonable
efforts to cause the Trust to maintain its trust and tax status.
PREFERRED STOCK AND DEPOSITARY SHARES
The Company does not currently have any shares of Preferred Stock
outstanding. We may issue Preferred Stock from time to time in series, in which
case the Prospectus Supplement for the offering will explain the terms and
conditions of the particular series of Preferred Stock, including:
- the ranking of the Preferred Stock in relation to our Common Stock or
other series of Preferred Stock
- whether any dividends are payable on the Preferred Stock and at what rate
and on which dates dividends are payable
- whether the Company will have the right to redeem some or all of the
Preferred Stock
- details of the rights of holders of the Preferred Stock to distributions
of the Company's assets in the event of liquidation or dissolution,
including any liquidation preference
- any voting rights that holders of the Preferred Stock may have, although
the Company expects that all series of Preferred Stock will be non-voting
- whether the Company will offer receipts for Depositary Shares, each
representing a specified fraction of a share of Preferred Stock, which
Preferred Stock will be deposited with a Preferred Stock Depositary that
will serve as an intermediary for holders of Depositary Shares in
connection with the distribution of dividends, redemption, voting and
other matters relating to such Preferred Stock.
USE OF PROCEEDS
The Company will use the net proceeds we receive from any offering of
Junior Subordinated Debt Securities or Preferred Stock for general corporate
purposes, primarily to fund our operating units and subsidiaries. We may use
some of the proceeds to refinance or extend the maturity of some of the
Company's existing debt obligations.
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<PAGE> 44
Each Trust will use the net proceeds it receives from any offering of Trust
Securities to purchase Junior Subordinated Debt Securities from the Company.
PLAN OF DISTRIBUTION
The Company and the Trusts may sell the securities in any of the following
ways: (i) through underwriters or dealers; (ii) directly to one or more
purchasers; (iii) through agents or (iv) through a combination of any of these
methods of sale. The Prospectus Supplement will explain the ways in which the
Company or any Trust are selling specific securities, including the names of any
underwriters and details of the pricing of the securities, including the
commissions, concessions or discounts we are granting the underwriters, dealers
or agents.
If the Company or any Trust uses underwriters in any sale, the underwriters
will buy the securities for their own account and may resell the securities from
time to time in one or more transactions, at a fixed public offering price or at
varying prices determined at the time of sale. In connection with an offering,
certain underwriters and selling group members and their affiliates may engage
in transactions to stabilize, maintain or otherwise affect the market price of
the securities, in accordance with applicable law.
We expect that the underwriters for any offering will include one or more
of our broker-dealer subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
The Company files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission (the "SEC").
You may read and copy any document we file at the SEC's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed:
(a) Annual Report on Form 10-K for the year ended December 31, 1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997;
(c) Current Reports on Form 8-K dated January 21, 1997, March 17,
1997, April 15, 1997, July 17, 1997, September 24, 1997, September 29, 1997
(as amended by the Current Report on Form 8-K/A dated October 28, 1997 and
the Current Report on Form 8-K/A2 dated December 1, 1997), October 21,
1997, October 28, 1997 (as amended by the Current Report on Form 8-K/A
dated December 1, 1997), November 21, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Treasurer
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
212-816-6000
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
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<PAGE> 45
THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research; and other related
activities.
SALOMON BROTHERS
Together with Salomon Brothers Holding Company Inc and its subsidiaries
(which subsidiaries include Salomon Brothers), Salomon Brothers engages in
global investment banking and global securities trading activities; provides
capital raising, advisory, trading and risk management services to its
customers; and executes proprietary trading strategies on its own behalf.
Certain of the Company's commodities trading activities are conducted by the
Company's wholly owned subsidiary, Phibro Inc., and its subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED --------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges................ 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amount by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to fixed charges has been computed by dividing earnings
before income taxes and fixed charges by the fixed charges. For the purpose of
this ratio, fixed charges consist of interest expense and that portion of
rentals deemed representative of the appropriate interest factor.
SSBH TRUSTS
Each of the SSBH Trusts is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust executed by the Company, as sponsor
for such trust (the "Sponsor"), and the trustees of such trust dated as of
December 19, 1996 with respect to SSBH Capital I, SSBH Capital II and SSBH
Capital III and October 24, 1997 with respect to SSBH Capital IV and (ii) the
filing of a certificate of trust with the Secretary of State of the State of
Delaware on December 19, 1996 with respect to SSBH Capital I, SSBH Capital II
and SSBH Capital III and October 24, 1997 with respect to SSBH Capital IV. Each
such declaration will be amended and restated in its entirety (as so amended and
restated, each a "Declaration"),
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<PAGE> 46
and is substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Each of the SSBH Trusts exists
for the exclusive purposes of (i) issuing the Preferred Securities and common
securities representing undivided beneficial interests in the assets of the
Trust (the "Common Securities" and, together with the Preferred Securities, the
"Trust Securities"), (ii) investing the gross proceeds from the sale of the
Trust Securities in the Junior Subordinated Debt Securities and (iii) engaging
in only those other activities necessary or incidental thereto. All of the
Common Securities will be directly or indirectly owned by the Company. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities, except that, upon an event of default under
the Declaration, the rights of the holders of the Common Securities to payment
in respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. The Company will directly or indirectly acquire Common Securities in
an aggregate liquidation amount equal to 3% or more of the total capital of each
SSBH Trust.
Each SSBH Trust has a term of approximately 55 years but may terminate
earlier, as provided in each Declaration. Each SSBH Trust's business and affairs
will be conducted by the trustees of each applicable Trust (the "SSBH Trustees")
appointed by the Company as the direct or indirect holder of all the Common
Securities. The holder of the Common Securities will be entitled to appoint,
remove or replace any of, or increase or reduce the number of, the SSBH Trustees
of the SSBH Trusts. The duties and obligations of the SSBH Trustees shall be
governed by the Declaration of such SSBH Trust. Each SSBH Trust will have two
SSBH Trustees (the "Regular Trustees") who are employees or officers of or who
are affiliated with the Company. One SSBH Trustee of each SSBH Trust will be a
financial institution that is not affiliated with the Company and that has a
specified minimum amount of aggregate capital, surplus, and undivided profits of
not less than $50,000,000, which shall act as property trustee and as indenture
trustee for the purposes of compliance with the provisions of Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the terms set
forth in a Prospectus Supplement (the "Institutional Trustee"). In addition,
unless the Institutional Trustee maintains a principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, one
SSBH Trustee of each SSBH Trust will have a principal place of business or
reside in the State of Delaware (the "Delaware Trustee"). The Company will pay
all fees and expenses related to the SSBH Trusts and the offering of the Trust
Securities.
The office of the Delaware Trustee for each of the SSBH Trusts is Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. The
address for each SSBH Trust is c/o the Company, the Sponsor of the SSBH Trusts,
at the Company's corporate headquarters located at 388 Greenwich Street, New
York, New York 10013.
USE OF PROCEEDS
All of the net proceeds from the sale of any Preferred Securities offered
hereby will be invested by the SSBH Trust in Junior Subordinated Debt
Securities. The Company will use the proceeds from the sale of the Junior
Subordinated Debt Securities to the SSBH Trusts to fund its financial services
business and for general corporate purposes, which may include the reduction or
refinancing of other borrowings, or the making of investments in or capital
contributions to subsidiaries of the Company. Also, in order to fund its
financial services business the Company expects to incur additional indebtedness
in the future.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The following description sets forth certain general terms and provisions
of Junior Subordinated Deferrable Interest Debentures (the "Junior Subordinated
Debt Securities") to which any Prospectus Supplement may relate. The particular
terms of the Junior Subordinated Debt Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Junior Subordinated Debt Securities so offered will be described in the
Prospectus Supplement relating to such Junior Subordinated Debt Securities.
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<PAGE> 47
The Junior Subordinated Debt Securities may be issued, from time to time,
in one or more series, under an Indenture (the "Indenture"), between the Company
and The Chase Manhattan Bank, as trustee (the "Indenture Trustee"), the form of
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
The following summary of certain provisions of the Junior Subordinated Debt
Securities and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by express reference to, all of the provisions
of the Indenture, including the definitions therein of certain terms. All
article and section references appearing herein are to articles and sections of
the Indenture, unless otherwise indicated, and capitalized terms which are not
otherwise defined in this Prospectus shall have the meanings specified in the
Indenture.
General. The Junior Subordinated Debt Securities will be direct, unsecured
obligations of the Company. The Indenture does not limit the amount of Junior
Subordinated Debt Securities which may be issued thereunder, and provides that
Junior Subordinated Debt Securities may be issued thereunder in series up to the
aggregate principal amount which may be authorized from time to time by the
Board of Directors of the Company. (Section 3.1)
Reference is made to the Prospectus Supplement which accompanies this
Prospectus for the following terms and other information with respect to the
Junior Subordinated Debt Securities being offered thereby: (i) the designation,
priority, aggregate principal amount and authorized denominations; (ii) the
percentage of their principal amount at which such Junior Subordinated Debt
Securities will be issued; (iii) the date on which such Junior Subordinated Debt
Securities will mature; (iv) the rate per annum at which such Junior
Subordinated Debt Securities will bear interest or the method of determination
of such rate; (v) the dates on which such interest will be payable; (vi) the
rights, if any, to defer payments of interest on the Junior Subordinated Debt
Securities by extending the interest payment period, and the maximum duration of
such extensions (each, an "Extension Period"); (vii) the place or places where
payments on such Junior Subordinated Debt Securities shall be made; (viii) any
redemption terms or sinking fund provisions; (ix) the terms of subordination of
Junior Subordinated Debt Securities; (x) whether Junior Subordinated Debt
Securities issued in fully registered form will be represented by either a
global security delivered to a depositary and recorded in a book-entry system
maintained by such depositary or by a certificate delivered to the Holder; (xi)
the restrictions, if any, applicable to the exchange of Junior Subordinated Debt
Securities of a series of one form for another of such series and to the offer,
sale and delivery of the Junior Subordinated Debt Securities; (xii) whether and
under what circumstances the Company will pay additional amounts in the event of
certain developments with respect to United States withholding tax or
information reporting laws; or (xiii) other specific terms.
Unless otherwise specified in the applicable Prospectus Supplement, Junior
Subordinated Debt Securities will be issued in fully registered form without
coupons, will be exchangeable for other Junior Subordinated Debt Securities of
the same series, registered in the same name, for a like aggregate principal
amount in authorized denominations, and will be transferable at any time or from
time to time at the Corporate Trust Office of the Indenture Trustee or at any
other office or agency of the Company maintained for that purpose. No charge
will be made to the Holder for any such exchange or transfer except for any tax
or governmental charge incidental thereto.
Unless otherwise described in the Prospectus Supplement accompanying this
Prospectus, there are no covenants or provisions contained in the Indenture
which afford the Holders of the Junior Subordinated Debt Securities protection
in the event of a highly leveraged transaction involving the Company.
Consolidation, Merger and Sale of Assets. The Indenture provides that the
Company will not consolidate with or merge into any other corporation or convey,
transfer or lease its assets substantially as an entirety unless (a) the
successor is a corporation organized in the United States and expressly assumes
the due and punctual payment of the principal of (and premium, if any) and
interest on all Junior Subordinated Debt Securities issued thereunder and the
performance of every other covenant of the Indenture on the part of the Company
and (b) immediately thereafter no Event of Default and no event which, after
notice or lapse of time, or both, would become an Event of Default, shall have
happened and be continuing. Upon any such
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<PAGE> 48
consolidation, merger, conveyance or transfer, the successor corporation shall
succeed to and be substituted for the Company under the Indenture and
thereafter, except in the case of a lease, the predecessor corporation shall be
relieved of all obligations and covenants under the Indenture and the Junior
Subordinated Debt Securities. (Article Eight)
Events of Default. The Indenture provides that the following are Events of
Default thereunder with respect to any series of the Junior Subordinated Debt
Securities: (a) default in the payment of the principal of (or premium, if any,
on) any Junior Subordinated Debt Security of such series at its maturity; (b)
default in making a sinking fund payment, if any, when and as the same shall be
due and payable by the terms of the Junior Subordinated Debt Securities of such
series; (c) default for 30 days in the payment of any installment of interest on
any Junior Subordinated Debt Security of such series; (d) default for 90 days
after written notice in the performance of any other covenant in respect of the
Junior Subordinated Debt Securities of such series contained in the Indenture;
(e) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of the Company; (f) any other
Event of Default provided in the applicable resolution of the Board of Directors
or supplemental indenture under which the Junior Subordinated Debt Securities
are issued; and (g) in the event Junior Subordinated Debt Securities of a series
are issued and sold to an SSBH Trust or a trustee of such trust in connection
with the issuance of Trust Securities by such SSBH Trust, such SSBH Trust shall
have voluntarily or involuntarily dissolved, wound-up its business or otherwise
terminated its existence, except in connection with (i) the distribution of
Junior Subordinated Debt Securities to holders of Trust Securities in
liquidation or redemption of their interests in such SSBH Trust upon a Special
Event, (ii) the redemption of all of the outstanding Trust Securities of such
SSBH Trust or (iii) certain mergers, consolidations or amalgamations, each as
permitted by the Declaration of such SSBH Trust. (Section 5.1) The Indenture
Trustee may withhold notice to the Holders of the Junior Subordinated Debt
Securities of any default with respect thereto (except in the payment of
principal, premium or interest) if it considers such withholding to be in the
interests of such Holders. (Section 6.2)
If an Event of Default with respect to the Junior Subordinated Debt
Securities shall have occurred and be continuing, the Indenture Trustee or the
Holders of 25% in aggregate principal amount of the Junior Subordinated Debt
Securities may declare the principal of all the Junior Subordinated Debt
Securities to be due and payable immediately. (Section 5.2)
The Indenture contains a provision entitling the Indenture Trustee to be
indemnified by the Holders before proceeding to exercise any right or power
under the Indenture at the request of any of the Holders. (Section 6.3). The
Indenture provides that the Holders of a majority in principal amount of the
outstanding Junior Subordinated Debt Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture Trustee,
with respect to the Junior Subordinated Debt Securities. (Section 5.12) The
right of a Holder to institute a proceeding with respect to the Indenture is
subject to certain conditions precedent including notice and indemnity to the
Indenture Trustee, but the Holder has an absolute right to receipt of principal,
premium, if any, and interest on the Junior Subordinated Debt Securities at the
Stated Maturity (or, in the case of redemption, on the Redemption Date) or to
institute suit for the enforcement thereof. (Sections 5.7 and 5.8)
The Holders of not less than a majority in principal amount of the
Outstanding Junior Subordinated Debt Securities may on behalf of the Holders of
all the Junior Subordinated Debt Securities waive any past defaults except (a) a
default in payment of the principal of (or premium, if any) or interest on any
Junior Subordinated Debt Security and (b) a default in respect of a covenant or
provision of the Indenture which cannot be amended or modified without the
consent of the Holder of each affected Junior Subordinated Debt Security;
provided, however, that if the Junior Subordinated Debt Securities are held by
an SSBH Trust or a trustee of such trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the applicable SSBH Trust shall have consented
to such waiver or modification to such waiver; provided further, that if the
consent of the Holder of each outstanding Junior Subordinated Debt Security is
required, such waiver shall not be effective until each holder of the Trust
Securities of the applicable SSBH Trust shall have consented to such waiver.
(Section 5.13)
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<PAGE> 49
The Indenture requires the Company to furnish to the Indenture Trustee an
annual statement as to defaults, if any, by the Company under the Indenture.
(Section 10.4)
Modifications and Amendments. Modifications and amendments to the
Indenture may be made by the Company and the Indenture Trustee with the consent
of the Holders of a majority in principal amount of the Junior Subordinated Debt
Securities at the time outstanding of each series which is affected thereby,
provided, that no such modification or amendment may, without the consent of the
Holder of each Junior Subordinated Debt Security affected thereby: (i) modify
the terms of payment of principal, premium, if any, or interest; or (ii) reduce
the percentage of Holders of Junior Subordinated Debt Securities necessary to
modify or amend the Indenture or waive compliance by the Company with any
covenant or past default; provided, further, that if the Junior Subordinated
Debt Securities of such series are held by an SSBH Trust or a trustee of such
trust, such supplemental indenture shall not be effective until the holders of a
majority in liquidation preference of Trust Securities of the applicable SSBH
Trust shall have consented to such supplemental indenture; provided further,
that if the consent of the Holder of each outstanding Junior Subordinated Debt
Security is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities of the applicable SSBH Trust shall have
consented to such supplemental indenture. (Section 9.2)
Discharge and Defeasance. The Company may discharge all of its obligations
(except those set forth below) to holders of any series of Junior Subordinated
Debt Securities issued under the Indenture, which Junior Subordinated Debt
Securities have not already been delivered to the Indenture Trustee for
cancellation and which either have become due and payable or are by their terms
due and payable within one year (or are to be called for redemption within one
year) by depositing with the Indenture Trustee an amount certified to be
sufficient to pay when due the principal of and premium, if any, and interest on
all outstanding Junior Subordinated Debt Securities of such series and to make
any mandatory sinking fund payments thereon when due. (Section 4.1)
Unless otherwise specified in the applicable Prospectus Supplement with
respect to the Junior Subordinated Debt Securities of a series, the Company, at
its option, (i) will be discharged from any and all obligations in respect of
the Junior Subordinated Debt Securities of such series (except for certain
obligations to pay all expenses of the applicable SSBH Trust, to register the
transfer or exchange of Junior Subordinated Debt Securities of such series, to
replace mutilated, defaced, destroyed, lost or stolen Junior Subordinated Debt
Securities of such series, and to maintain Paying Agents and hold monies for
payment in trust), or (ii) need not comply with certain covenants specified in
the applicable Prospectus Supplement with respect to the Junior Subordinated
Debt Securities of that series, and the occurrence of an event described in
clause (d) under "Events of Default" above with respect to any defeased covenant
and clause (f) of the "Events of Default" above shall no longer be an Event of
Default if, in either case, the Company deposits with the Indenture Trustee, in
trust, money or U.S. Government Obligations that through the payment of interest
thereon and principal thereof in accordance with their terms will provide money
in an amount sufficient to pay all the principal of (and premium, if any) and
any interest on the Junior Subordinated Debt Securities of such series on the
dates such payments are due (which may include one or more redemption dates
designated by the Company) in accordance with the terms of such Junior
Subordinated Debt Securities. Such a trust may only be established, if, among
other things, the Company shall have delivered an Opinion of Counsel, which, in
the case of a discharge pursuant to clause (i), must be based upon a ruling or
administrative pronouncement of the Internal Revenue Service, to the effect that
the Holders of the Junior Subordinated Debt Securities will not recognize gain
or loss for federal income tax purposes as a result of such deposit or
defeasance and will be subject to federal income tax in the same manner as if
such defeasance had not occurred. (Sections 4.2, 4.3 and 4.4) In the event the
Company omits to comply with its remaining obligations under the Indenture after
a defeasance of the Indenture with respect to the Junior Subordinated Debt
Securities of any series as described under clause (ii) above and the Junior
Subordinated Debt Securities of such series are declared due and payable because
of the occurrence of any undefeased Event of Default, the amount of money and
United States Government Obligations on deposit with the Indenture Trustee may
be insufficient to pay amounts due on the Junior Subordinated Debt Securities of
such series at the time of the acceleration resulting from such Event of
Default. However, the Company will remain liable in respect of such payments.
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<PAGE> 50
Concerning the Indenture Trustee. The Indenture Trustee has extended
substantial credit facilities (the borrowings under which constitute Senior
Indebtedness (as defined in the Prospectus Supplement that will accompany this
Prospectus)) to the Company. The Company and certain of its subsidiaries also
maintain bank accounts, borrow money and have other customary commercial banking
or investment banking relationships with the Indenture Trustee in the ordinary
course of business.
Global Securities. The Indenture provides that the registered Junior
Subordinated Debt Securities of a series may be issued in the form of one or
more fully registered Global Securities (a "Registered Global Security") that
will be deposited with a depositary (a "Depositary") or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series and
registered in the name of the Depositary or a nominee thereof. (Section 3.1) In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Junior Subordinated Debt Securities
to be represented by such Registered Global Security or Securities. Unless and
until it is exchanged in whole for Junior Subordinated Debt Securities in
definitive registered form, a Registered Global Security may not be transferred
except as a whole by the Depositary for such Registered 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. The Depositary
currently accepts only debt securities that are payable in U.S. dollars.
The specific terms of the depositary arrangement with respect to any
portion of a series of Junior Subordinated Debt Securities to be represented by
a Registered Global Security will be described in the Prospectus Supplement
relating to such series.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The accounts to be credited shall be
designated by any dealers, underwriters or agents participating in the
distribution of such Junior Subordinated Debt Securities. Ownership of
beneficial interests in such Registered Global Security will be shown on, and
the transfer of such ownership interests will be effected only through, records
maintained by the Depositary for such Registered Global Security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may 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 own, transfer or pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Junior Subordinated Debt Securities represented by such Registered Global
Security for all purposes under the Indenture. Except as set forth below, owners
of beneficial interests in a Registered Global Security will not be entitled to
have the Junior Subordinated Debt Securities represented by such Registered
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of such Junior Subordinated Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture. Accordingly, each person owning a beneficial interest in a
Registered Global Security must rely on the procedures of the Depositary for
such Registered Global Security and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, if the Company requests any action of
holders or if an owner of a beneficial interest in a Registered Global Security
desires to give or take any action which a holder is entitled to give or take
under the Indenture, the Depositary for such Registered Global Security would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners holding through them.
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Principal, premium, if any, and interest payments on Junior Subordinated
Debt Securities represented by a Registered Global Security registered in the
name of a Depositary or its nominee will be made to such Depositary or its
nominee, as the case may be, as the registered owner of such Registered Global
Security. None of the Company, the Indenture Trustee or any other agent of the
Company or agent of the Indenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Registered Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary for any Junior Subordinated Debt
Securities represented by a Registered Global Security, upon receipt of any
payment of principal, premium or interest in respect of such Registered Global
Security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such
Registered 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 Registered Global Security held through such participants will
be governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
participants.
If the Depositary for any Junior Subordinated Debt Securities represented
by a Registered Global Security is at any time unwilling or unable to continue
as Depositary or ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and a successor
Depositary registered as a clearing agency under the Exchange Act is not
appointed by the Company within 90 days, the Company will issue such Junior
Subordinated Debt Securities in definitive form in exchange for such Registered
Global Security. In addition, the Company may at any time and in its sole
discretion determine not to have any of the Junior Subordinated Debt Securities
of a series represented by one or more Registered Global Securities and, in such
event, will issue Junior Subordinated Debt Securities of such series in
definitive form in exchange for all of the Registered Global Security or
Securities representing such Junior Subordinated Debt Securities. Any Junior
Subordinated Debt Securities issued in definitive form in exchange for a
Registered Global Security will be registered in such name or names as the
Depositary shall instruct the relevant Trustee. It is expected that such
instructions will be based upon directions received by the Depositary from
participants with respect to ownership of beneficial interests in such
Registered Global Security.
The Junior Subordinated Debt Securities of a series may also be issued in
the form of one or more bearer global Securities (a "Bearer Global Security")
that will be deposited with a common depositary for Euro-clear and Cedel Bank,
Societe Anonyme, or with a nominee for such depositary identified in the
Prospectus Supplement relating to such series. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any portion of a series of Junior Subordinated Debt Securities to be
represented by a Bearer Global Security will be described in the Prospectus
Supplement relating to such series.
Ranking of Junior Subordinated Debt Securities. The Junior Subordinated
Debt Securities will be subordinated and junior in right of payment to certain
indebtedness of the Company to the extent set forth in the Prospectus Supplement
that will accompany this Prospectus.
Certain Provisions Applicable to SSBH Trusts. In the event Junior
Subordinated Debt Securities of a series are issued and sold to an SSBH Trust or
a trustee of such trust in connection with the issuance of Trust Securities by
such SSBH Trust, such Junior Subordinated Debt Securities subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of such SSBH Trust upon the occurrence of certain events
described in the Prospectus Supplement relating to such Trust Securities. Only
one series of Junior Subordinated Debt Securities will be issued to an SSBH
Trust, or a trustee of such trust, in connection with the issuance of Trust
Securities by such SSBH Trust. If Junior Subordinated Debt Securities are issued
to an SSBH Trust or a trustee of such trust in connection with the issuance of
Trust Securities by such SSBH Trust and (i) there shall have occurred and be
continuing an Event of Default, (ii) the Company shall be in default with
respect to its payment of any obligations under the related Guarantee, or (iii)
the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Securities by extending the interest
payment period as provided in the Indenture
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and such period, or any extension thereof, shall be continuing, then (a) the
Company shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) the Company shall not make any payment of
interest on or principal of (or premium, if any, on), or repay, repurchase or
redeem any debt securities issued by the Company which rank pari passu with or
junior to such Junior Subordinated Debt Securities. The foregoing, however, will
not apply to any stock dividends paid by the Company where the dividend stock is
the same stock as that on which the dividend is being paid.
In the event Junior Subordinated Debt Securities are issued to an SSBH
Trust or a trustee of such trust in connection with the issuance of Trust
Securities of such SSBH Trust, for so long as such Trust Securities remain
outstanding, the Company will covenant (i) to directly or indirectly maintain
100% ownership of the Common Securities of such SSBH Trust; provided, however,
that any permitted successor of the Company under the Indenture may succeed to
the Company's ownership of such Common Securities, (ii) to not voluntarily
dissolve, wind-up or terminate such SSBH Trust, except in connection with a
distribution of Junior Subordinated Debt Securities upon a Special Event and in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration of the applicable SSBH Trust, (iii) to timely perform its duties
as Sponsor of the applicable SSBH Trust and (iv) to use its reasonable efforts
to cause such SSBH Trust (a) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Trust Securities in liquidation of such SSBH Trust, the redemption of
all of the Trust Securities of such SSBH Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
SSBH Trust, and (b) to otherwise continue to be classified as a grantor trust
for United States federal income tax purposes. (Section 10.5)
DESCRIPTION OF PREFERRED SECURITIES
The following description sets forth certain general terms and provisions
of the Preferred Securities to which any Prospectus Supplement may relate. The
particular terms of the Preferred Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Preferred Securities so offered will be described in the Prospectus
Supplement relating to such Preferred Securities. The description does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the forms of Declarations, which
are filed as exhibits to the Registration Statement of which this Prospectus
forms a part.
Each SSBH Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each SSBH Trust authorizes the Regular Trustees of such SSBH
Trust to issue on behalf of such SSBH Trust one series of Preferred Securities.
Each Declaration will be qualified as an indenture under the Trust Indenture
Act. The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration of the SSBH Trust issuing such Preferred Securities or made part of
such Declaration by the Trust Indenture Act. Reference is made to any Prospectus
Supplement relating to the Preferred Securities of an SSBH Trust for specific
terms, including (i) the distinctive designation of such Preferred Securities,
(ii) the number of Preferred Securities issued by such SSBH Trust, (iii) the
annual distribution rate (or method of determining such rate) for Preferred
Securities issued by such SSBH Trust and the date or dates upon which such
distributions shall be payable, (iv) whether distributions on Preferred
Securities issued by such SSBH Trust shall be cumulative, and, in the case of
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities issued by such SSBH Trust shall be cumulative, (v) the
amount or amounts which shall be paid out of the
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assets of such SSBH Trust to the Holders of Preferred Securities of such SSBH
Trust upon voluntary or involuntary dissolution, winding-up or termination of
such SSBH Trust, (vi) the obligation, if any, of such SSBH Trust to purchase or
redeem Preferred Securities issued by such SSBH Trust and the price or prices at
which, the period or periods within which and the terms and conditions upon
which Preferred Securities issued by such SSBH Trust shall be purchased or
redeemed, in whole or in part, pursuant to such obligation, (vii) the voting
rights, if any, of Preferred Securities issued by such SSBH Trust in addition to
those required by law, including the number of votes per Preferred Security and
any requirement for the approval by the holders of Preferred Securities, or of
Preferred Securities issued by one or more SSBH Trusts, or of both, as a
condition to specified action or amendments to the Declaration of such SSBH
Trust, and (viii) any other relevant rights, preferences, privileges,
limitations or restrictions of Preferred Securities issued by such SSBH Trust
consistent with the Declaration of such SSBH Trust or with applicable law. All
Preferred Securities offered hereby will be guaranteed by the Company to the
extent set forth below under "Description of Guarantees." Certain United States
federal income tax considerations applicable to any offering of Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each SSBH Trust
will issue one series of Common Securities. The Declaration of each SSBH Trust
authorizes the Regular Trustees of such trust to issue on behalf of such SSBH
Trust one series of Common Securities having such terms including distributions,
redemption, voting, liquidation rights or such restrictions as shall be set
forth therein. The terms of the Common Securities issued by such SSBH Trust will
be substantially identical to the terms of the Preferred Securities issued by
such SSBH Trust and the Common Securities will rank pari passu, and payments
will be made thereon pro rata with such Preferred Securities except that, upon
an Event of Default under the Declaration of such SSBH Trust, the rights of the
holders of such Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of such Preferred Securities. Except in certain limited
circumstances, the Common Securities of an SSBH Trust will also carry the right
to vote and to appoint, remove or replace any of the SSBH Trustees of such SSBH
Trust. All of the Common Securities of an SSBH Trust will be directly or
indirectly owned by the Company.
If an Event of Default with respect to a Declaration of any SSBH Trust
occurs and is continuing, then the holders of Preferred Securities of such SSBH
Trust would rely on the enforcement by the Institutional Trustee of its rights
as a holder of the Junior Subordinated Debt Securities against the Company. In
addition, the holders of a majority in liquidation amount of such Preferred
Securities will have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee under such Declaration, including the right to direct the Institutional
Trustee to exercise the remedies available to it as a holder of the Junior
Subordinated Debt Securities. If the Institutional Trustee fails to enforce its
rights under the Junior Subordinated Debt Securities, any holder of such
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If an Event of
Default with respect to the Declaration of any SSBH Trust has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Preferred Securities of such SSBH
Trust may also directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Junior Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of such Preferred Securities of such holder (a "Direct Action") on or after the
respective due date specified in the Junior Subordinated Debt Securities without
first (i) directing the Institutional Trustee to enforce the terms of the Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's Rights under the Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of such Preferred Securities
under such Declaration to the extent of any payment made by the Company to such
holder of such Preferred Securities in such Direct Action. Consequently, the
Company will be entitled to payment of amounts that a holder of Preferred
Securities receives in respect of an unpaid distribution that resulted in the
bringing of a
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Direct Action to the extent that such holder receives or has already received
full payment with respect to such unpaid distribution from an SSBH Trust. The
holders of Preferred Securities of an SSBH Trust will not be able to exercise
directly any other remedy available to the holders of the Junior Subordinated
Debt Securities.
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the guarantees by
the Company on a subordinated basis of the payment of periodic cash
distributions ("distributions") and payments on liquidation, redemption or
otherwise on the Preferred Securities (the "Guarantees") that will be executed
and delivered by the Company for the benefit of the holders, from time to time,
of Preferred Securities. Each Guarantee will be qualified as an indenture under
the Trust Indenture Act. The Chase Manhattan Bank will act as indenture trustee
under each Guarantee (the "Guarantee Trustee"). The terms of each Guarantee will
be those set forth in such Guarantee and those made part of such Guarantee by
the Trust Indenture Act. The summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the form of Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act. Each Guarantee will be held by the Guarantee Trustee for the
benefit of the holders of the Preferred Securities of an SSBH Trust.
GENERAL
Pursuant to and to the extent set forth in each Guarantee and except as
otherwise set forth in the applicable Prospectus Supplement, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities issued by an SSBH Trust (except to the extent paid by such
SSBH Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such SSBH Trust may have or assert, the following payments
(the "Guarantee Payments"), without duplication: (i) any accrued and unpaid
distributions that are required to be paid on such Preferred Securities, to the
extent such SSBH Trust has funds available therefor, and (ii) the redemption
price per Preferred Security set forth in the applicable Prospectus Supplement,
which will not be lower than the stated liquidity amount, plus all accrued and
unpaid distributions (the "Redemption Price"), to the extent such SSBH Trust has
funds available therefor, with respect to any Preferred Securities called for
redemption by such SSBH Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such SSBH Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Preferred Securities or the redemption of all of the Preferred
Securities) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Preferred Securities to the date of
payment or (b) the amount of assets of such SSBH Trust remaining for
distribution to holders of such Preferred Securities in liquidation of such SSBH
Trust. The Company's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of
Preferred Securities or by causing such SSBH Trust to pay such amounts to such
holders.
Each Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities issued by an SSBH Trust from the time of issuance of
such Preferred Securities but will not apply to any payment of distributions or
Redemption Price, or to payments upon the dissolution, winding-up or termination
of such SSBH Trust, except to the extent such SSBH Trust shall have funds
available therefor. If the Company does not make interest payments on the Junior
Subordinated Debt Securities purchased by an SSBH Trust, such SSBH Trust will
not pay distributions on the Preferred Securities issued by such SSBH Trust and
will not have funds available therefor. See "Description of Junior Subordinated
Debt Securities." The Guarantee, when taken together with the Company's
obligations under the Junior Subordinated Debt Securities, the Indenture and the
Declaration of any SSBH Trust, including its obligations to pay costs, expenses,
debts and liabilities of such SSBH Trust (other than with respect to Trust
Securities) will provide a full and unconditional guarantee on a subordinated
basis by the Company of payments due on the Preferred Securities issued by such
SSBH Trust.
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CERTAIN COVENANTS OF THE COMPANY
In each Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by an SSBH Trust remain outstanding, if there shall have
occurred any event that would constitute an Event of Default under such
Guarantee or the Declaration of such SSBH Trust, then (a) the Company shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or make any guarantee payment with respect thereto (other than
(i) repurchases, redemptions or other acquisitions of shares of capital stock of
the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged) and (b) the
Company shall not make any payment of interest on, or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank pari passu with or junior to such Junior Subordinated Debt
Securities. Each Guarantee, however, will except from the foregoing any stock
dividends paid by the Company where the dividend stock is the same stock as that
on which the dividend is being paid.
MODIFICATION OF THE GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities to which a Guarantee relates (in which case
no vote will be required), each Guarantee may be amended only with the prior
approval of the holders of not less than a majority in aggregate liquidation
amount of the outstanding related Preferred Securities issued by an SSBH Trust.
The manner of obtaining any such approval of holders of such Preferred
Securities will be set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in a Guarantee shall bind the successors,
assignees, receivers, trustees and representatives of the Company and shall
inure to the benefit of the holders of the related Preferred Securities of an
SSBH Trust then outstanding.
EVENTS OF DEFAULT
An Event of Default under a Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities to which a Guarantee relates have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee. If the
Guarantee Trustee fails to enforce the Guarantee Trustee's rights under a
Guarantee, any holder of related Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Guarantee Trustee's rights
under such Guarantee without first instituting a legal proceeding against the
SSBH Trust that issued such Preferred Securities, the Guarantee Trustee or any
other person or entity. A holder of Preferred Securities may also directly
institute a legal proceeding against the Company to enforce such holder's right
to receive payment under such Guarantee without first (i) directing the
Guarantee Trustee to enforce the terms of the Guarantee or (ii) instituting a
legal proceeding against the SSBH Trust that issued such Preferred Securities or
any other person or entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each of the Guarantees and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
a Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to a Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of
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the powers vested in it by a Guarantee at the request of any holder of Preferred
Securities to which such Guarantee relates unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate as to the Preferred Securities issued by an
SSBH Trust upon full payment of the Redemption Price of all Preferred Securities
of such SSBH Trust, upon distribution of the Junior Subordinated Debt Securities
held by such SSBH Trust to the holders of the Preferred Securities of such SSBH
Trust or upon full payment of the amounts payable in accordance with the
Declaration of such SSBH Trust upon liquidation of such SSBH Trust. Each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of related Preferred Securities issued by an SSBH
Trust must restore payment of any sums paid under such Preferred Securities or
such Guarantee.
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any affiliate of the Company and (iii) senior to the
Company's common stock. The terms of the Preferred Securities provide that each
holder of Preferred Securities issued by a SSBH Trust by acceptance thereof
agrees to the subordination provisions and other terms of the applicable
Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under a Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantees will be governed by, and construed in accordance with, the
internal laws of the State of New York.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the Company's authorized capital stock
consists of 1,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"), and 10,000,000 shares of preferred stock, par value $1.00 per share
(the "Preferred Stock"). All of the outstanding shares of Common Stock are held
by Travelers Group. Under the Company's Amended and Restated Certificate of
Incorporation (as amended, the "Certificate of Incorporation"), the Board of
Directors of the Company is authorized to issue shares of the Preferred Stock in
one or more series, and to establish from time to time the number of shares to
be included in each such series and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of Directors of
the Company and as are not stated and expressed in the Certificate of
Incorporation. Prior to the issuance of each series of Preferred Stock, the
Board of Directors of the Company will adopt resolutions creating and
designating such series as a series of Preferred Stock and such resolutions will
be filed in a Certificate of Designation as an amendment to the Certificate of
Incorporation. As used herein, the term "Board of Directors of the Company"
means the Board of Directors of the Company and includes any duly authorized
committee thereof.
The rights of holders of the Preferred Stock offered hereby will be subject
to, and may be adversely affected by, the rights of holders of any shares of
preferred stock that may be issued in the future. The Board of Directors may
cause shares of preferred stock to be issued in public or private transactions
for any proper corporate purposes, which may include issuance to obtain
additional financing in connection with acquisitions
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or otherwise, and issuance to officers, directors and employees of the Company
and its subsidiaries pursuant to benefit plans or otherwise.
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms of
the Company's Preferred Stock to which any Prospectus Supplement may relate.
Certain terms of any series of Preferred Stock offered by any Prospectus
Supplement will be described in the Prospectus Supplement relating thereto. If
so indicated in the Prospectus Supplement, the terms of any series may differ
from the terms set forth below. The description of certain provisions of the
Company's Preferred Stock does not purport to be complete and is subject to and
qualified in its entirety by reference to the provisions of the Company's
Certificate of Incorporation, and the Certificate of Designation (the
"Certificate of Designation") relating to each particular series of Preferred
Stock which will be filed or incorporated by reference, as the case may be, as
an exhibit to the Registration Statement of which this Prospectus forms a part
at or prior to the time of the issuance of such Preferred Stock.
GENERAL
As of the date of this Prospectus there were no shares of Preferred Stock
outstanding. The Preferred Stock may be issued in one or more series, with such
designations of titles; dividend rates; any redemption provisions; special or
relative rights in the event of liquidation, dissolution, distribution or
winding up of the Company; any sinking fund provisions; any conversion
provisions; any voting rights thereof; and any other preferences, privileges,
powers, rights, qualifications, limitations and restrictions, as shall be set
forth as and when established by the Board of Directors of the Company. The
shares of any series of Preferred Stock will be, when issued, fully paid and
non-assessable and holders thereof will have no preemptive rights in connection
therewith.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of Preferred Stock will be specified in the
Prospectus Supplement relating thereto.
RANK
Unless otherwise specified in the Prospectus Supplement relating to the
shares of any series of Preferred Stock, such shares will rank on a parity with
each other series of Preferred Stock and prior to the Common Stock as to
dividends and distributions of assets.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Company out of funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of Preferred
Stock. Such rates may be fixed or variable or both. Dividends will be payable to
holders of record of Preferred Stock as they appear on the books of the Company
(or, if applicable, the records of the Depositary referred to below under
"Description of Depositary Shares") on such record dates as shall be fixed by
the Board of Directors. Dividends on any series of Preferred Stock may be
cumulative or noncumulative.
No full dividends may be declared or paid on funds set apart for the
payment of dividends on any series of Preferred Stock unless dividends shall
have been paid or set apart for such payment on equity securities ranking on a
parity with respect to dividends with such series of Preferred Stock. If full
dividends are not so paid, such series of Preferred Stock shall share dividends
pro rata with such other equity securities.
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Company or the holder thereof and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
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In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Company, or by any other method determined to be equitable by the Board of
Directors.
On and after a redemption date, unless the Company defaults in the payment
of the redemption price, dividends will cease to accrue on shares of Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of each series of Preferred Stock will be entitled to
receive out of assets of the Company available for distribution to shareholders,
before any distribution is made on any securities ranking junior with respect to
liquidation, including Common Stock, distributions upon liquidation in the
amount set forth in the Prospectus Supplement relating to such series of
Preferred Stock, plus an amount equal to any accrued and unpaid dividends. If,
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock of any series
and any other securities ranking on a parity with respect to liquidation rights
are not paid in full, the holders of the Preferred Stock of such series and such
other securities will share ratably in any such distribution of assets of the
Company in proportion to the full liquidation preferences to which each is
entitled. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of such series of Preferred Stock will not
be entitled to any further participation in any distribution of assets of the
Company.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock or except as expressly required by
applicable law, the holders of Preferred Stock will have no voting rights.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain material provisions of the
Deposit Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts (as defined below) is subject to and qualified in its entirety by
reference to the forms of Deposit Agreement and Depositary Receipt relating to
the Preferred Stock, which will be filed or incorporated by reference, as the
case may be, as exhibits to the Registration Statement of which this Prospectus
forms a part. The particular terms of any Depositary Shares, any Depositary
Receipts and any Deposit Agreement relating to a particular series of Preferred
Stock which vary from the terms set forth below will be set forth in the
applicable Prospectus Supplement.
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In such event, the
Company will issue receipts for Depositary Shares, each of which will represent
a fraction (to be set forth in the Prospectus Supplement relating to a
particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below.
The shares of series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 (the "Preferred Stock Depositary"). Subject to the terms
of the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, conversion
and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing
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the fractional shares of Preferred Stock in accordance with the terms of the
applicable Prospectus Supplement.
Pending the preparation of definitive Depositary Receipts, the Preferred
Stock Depositary may, upon the written order of the Company or any holder of
deposited Preferred Stock, execute and deliver temporary Depositary Receipts
which are substantially identical to, and entitle the holders thereof to all the
rights pertaining to, the definitive Depositary Receipts. Depositary Receipts
will be prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited Preferred Stock to the
record holders of Depositary Shares relating to such Preferred Stock in
proportion to the numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto. If the Preferred Stock Depositary determines
that it is not feasible to make such distribution, it may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
REDEMPTION OF PREFERRED STOCK
If a series of Preferred Stock represented by Depositary Shares is to be
redeemed, the Depositary Shares will be redeemed from the proceeds received by
the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of such series of Preferred Stock held by the Preferred Stock Depositary.
The Depositary Shares will be redeemed by the Preferred Stock Depositary at a
price per Depositary Share equal to the applicable fraction of the redemption
price per share payable in respect of the shares of Preferred Stock so redeemed.
Whenever the Company redeems shares of Preferred Stock held by the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem as of the same date
the number of Depositary Shares representing shares of Preferred Stock so
redeemed. If fewer than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by the Preferred Stock
Depositary by lot or pro rata or by any other equitable method as may be
determined by the Preferred Stock Depositary.
WITHDRAWAL OF PREFERRED STOCK
Any holder of Depositary Shares may, upon surrender of the Depositary
Receipts at the corporate trust office of the Preferred Stock Depositary (unless
the related Depositary Shares have previously been called for redemption),
receive the number of whole shares of the related series of Preferred Stock and
any money or other property represented by such Depositary Receipts. Holders of
Depositary Shares making such withdrawals will be entitled to receive whole
shares of Preferred Stock on the basis set forth in the related Prospectus
Supplement for such series of Preferred Stock, but holders of such whole shares
of Preferred Stock will not thereafter be entitled to deposit such Preferred
Stock under the Deposit Agreement or to receive Depositary Receipts therefor. If
the Depositary Shares surrendered by the holder in connection with such
withdrawal exceed the number of Depositary Shares that represent the number of
whole shares of Preferred Stock to be withdrawn, the Preferred Stock Depositary
will deliver to such holder at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited Preferred Stock are entitled to vote, the Preferred Stock Depositary
will mail the information contained in such notice of meeting to the record
holders of the Depositary Shares relating to such series of Preferred Stock.
Each record holder of such Depositary Shares on the record date (which will be
the same date as the record date for the relevant series of Preferred Stock)
will be entitled to instruct the Preferred Stock Depositary as to the exercise
of the voting rights pertaining to the amount of the Preferred Stock represented
by such holder's Depositary Shares.
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The Preferred Stock Depositary will endeavor, insofar as practicable, to vote
the amount of such series of Preferred Stock represented by such Depositary
Shares in accordance with such instructions, and the Company will agree to take
all reasonable actions that may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will vote all shares of any series of Preferred Stock
held by it proportionately with instructions received, to the extent it does not
receive specific instructions from the holder of Depositary Shares representing
such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock Depositary. However, any amendment
that imposes additional charges or materially and adversely alters any
substantial existing right of the holders of the Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the affected Depositary Shares then outstanding. Every holder of an
outstanding Depositary Receipt at the time any such amendment becomes effective,
or any transferee of such holder, shall be deemed, by continuing to hold such
Depositary Receipt, or by reason of the acquisition thereof, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended
thereby. The Deposit Agreement automatically terminates if (i) all outstanding
Depositary Shares have been redeemed; or (ii) each share of Preferred Stock has
been converted into other Preferred Stock or has been exchanged for Debt
Securities; or (iii) there has been a final distribution in respect of the
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Shares. The Deposit Agreement may be terminated by the Company at any
time and the Preferred Stock Depositary will provide notice of such termination
to the record holders of all outstanding Depositary Receipts not less than 30
days prior to the termination date, in which event the Preferred Stock
Depositary will deliver or make available for delivery to holders of Depositary
Shares, upon surrender of such Depositary Shares, the number of whole or
fractional shares of the related series of Preferred Stock as are represented by
such Depositary Shares.
CHARGES OF DEPOSITARY; TAXES AND OTHER ENVIRONMENTAL CHARGES
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay all charges of the Preferred Stock Depositary in connection with the
initial deposit of the relevant series of Preferred Stock and any redemption of
such Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges or expenses as are
expressly provided in the Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its intent to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock Depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward all reports and communications
from the Company which are delivered to the Preferred Stock Depositary and which
the Company is required to furnish to the holders of the deposited Preferred
Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. The
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obligations of the Company and the Preferred Stock Depositary under the Deposit
Agreement will be limited to performance in good faith of their duties
thereunder and they will not be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares, Depositary Receipts or shares of
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or upon information provided by
holders of Depositary Receipts or other persons believed to be competent and on
documents believed to be genuine.
DESCRIPTION OF COMMON STOCK
Each holder of Common Stock is entitled to one vote per share for the
election of directors and for all other matters to be voted on by the Company's
stockholders. Except as otherwise provided by law, the holders of shares of
Common Stock vote as one class. Holders of Common Stock may not cumulate their
votes in the election of directors, and are entitled to share equally in such
dividends as may be declared by the Board of Directors out of funds legally
available therefor, but only after payment of dividends required to be paid on
outstanding shares of preferred stock.
Upon voluntary or involuntary liquidation, dissolution or winding up of the
Company, the holders of the Common Stock share pro rata in the assets remaining
after payments to creditors and provision for the preference of any preferred
stock. There are no preemptive or other subscription rights, conversion rights
or redemption or sinking fund provisions with respect to shares of Common Stock.
All of the outstanding shares of Common Stock are fully paid and nonassessable.
PLAN OF DISTRIBUTION
The Company may sell any series of Preferred Stock or Depositary Shares and
any SSBH Trust may sell Preferred Securities in one or more of the following
ways from time to time: (i) to or through underwriters or dealers, (ii) directly
to purchasers, or (iii) through agents. Any such underwriters, dealers or agents
may include one or more affiliates of the Company. The Prospectus Supplement
with respect to any securities offered hereby (the "Offered Securities") will
set forth (i) the terms of the offering of the Offered Securities, including the
name or names of any underwriters, dealers or agents, (ii) the purchase price of
the Offered Securities and the proceeds to the Company or an SSBH Trust as the
case may be, from such sale, (iii) any underwriting discounts and commissions or
agency fees and other items constituting underwriters' or agents' compensation,
(iv) any initial public offering prices, (v) any discounts or concessions
allowed or reallowed or paid to dealers and (vi) any securities exchange on
which such Offered Securities may be listed. Any initial public offering price,
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in the sale, the 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 one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, 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 the
Offered Securities if any are purchased.
In connection with underwritten offerings of Offered Securities, certain
underwriters and selling group members and their respective affiliates may
engage in transactions that stabilize, maintain or otherwise affect the market
price of the Offered Securities. Such transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M under the
Exchange Act, pursuant to which such persons may bid for or purchase Offered
Securities for the purposes of stabilizing their market price. The underwriters
also may
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create a short position for their respective accounts by selling more Offered
Securities in connection with this offering than they are committed to purchase
from the Company, and in such case may purchase Offered Securities in the open
market following completion of this offering to cover all or a portion of such
short position. The Underwriters may also cover all or a portion of such short
position, up to a specified aggregate principal amount or number of Offered
Securities, by exercising any underwriters' over-allotment option that may be
applicable with respect to the particular underwritten offering. In addition,
the managing underwriter for the particular offering, on behalf of the
underwriters, may impose "penalty bids" under contractual arrangements between
the underwriters whereby it may reclaim from an underwriter (or dealer
participating in this offering) for the account of the underwriters, the selling
concession with respect to Offered Securities that are distributed in the
relevant offering but subsequently purchased for the account of the underwriters
in the open market. Any of the transactions described in this paragraph may
result in the maintenance of the price of the Offered Securities at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if any are
undertaken, they may be discontinued at any time. Such transactions may be
effected in the over-the-counter market or otherwise. Underwriters are not
required to engage in any of these activities. Any such activities, if
commenced, may be discontinued at any time.
If dealers are utilized in the sale of Offered Securities, the Company or
the applicable SSBH Trust will sell such Offered Securities to the dealers as
principals. The dealers may then resell such Offered Securities to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offered Securities may be sold directly by the Company and/or, if
applicable, any SSBH Trust to one or more institutional purchasers, or through
agents designated by the Company and/or, if applicable, any SSBH Trust from time
to time, at a fixed price, or prices, which may be charged, or at varying prices
determined at time of sale. Any agent involved in the offer or sale of the
Offered Securities in respect to which this Prospectus is delivered will be
named, and any commissions payable by the Company or the applicable SSBH Trust
to such agent will be set forth in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
The Preferred Securities may be sold directly by an SSBH Trust to
institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, the Company or the applicable
SSBH Trust will authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase Offered Securities from the Company or
such SSBH Trust at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts (the "Contracts") providing
for payment and delivery on a specified date or dates in the future. Such
Contracts will not be subject to any conditions except (a) the purchase by an
institution of the Offered Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject and (b) if the Offered Securities
are being sold to underwriters, the Company shall have sold to such underwriters
the total principal amount of the Offered Securities less the principal amount
thereof covered by the Contracts. The Prospectus Supplement will set forth the
commission payable for solicitation of such Contracts.
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus or any accompanying Prospectus
Supplement and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or any of the SSBH
Trusts, or any underwriter, agent or dealer. Neither the delivery of this
Prospectus and any Prospectus Supplement nor any sale made thereunder shall,
under any circumstance, create an implication that there has been no change in
the affairs of the Company or any of the SSBH Trusts since the date hereof or
thereof. This Prospectus and any related Prospectus Supplement do not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered
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hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
The participation of any affiliate of the Company in the offer and sale of
Offered Securities will comply with the requirements of Rule 2720 of the Conduct
Rules of the National Association of Securities Dealers, Inc. regarding the
underwriting by an affiliate of securities of its parent.
This Prospectus Supplement and the related Prospectus may be used by the
Company or any of its affiliates in connection with offers and sales of the
Offered Securities in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Any such entity may act as
principal or agent in such transactions. No such entity is obligated to make a
market in the Offered Securities, and any such entity may discontinue any
market-making at any time without notice, at its sole discretion. Each series of
Offered Securities will be a new issue of securities and will have no
established trading market. The Offered Securities may or may not be listed on a
national securities exchange. There can be no assurance of the existence or
liquidity of a secondary market for any Offered Securities, or that the maximum
number of Offered Securities will be sold.
Agents, dealers and underwriters may be entitled, under agreements with the
Company or an SSBH Trust, to indemnification by the Company or the applicable
SSBH Trust against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Act"), or to contribution with respect
to payments that such agents, dealers or underwriters may be required to make in
respect thereof and to reimbursement of certain legal and other expenses
incurred by such agents, dealers or underwriters. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for the Company or an SSBH Trust in the ordinary course of business.
EXPERTS
The consolidated financial statements and schedules of Salomon Inc as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in Salomon Inc's Annual Report on Form 10-K
for the year ended December 31, 1996 (the "Salomon Financials"), are
incorporated by reference herein, in reliance upon the report (also incorporated
by reference herein) of Arthur Andersen LLP, independent public accountants and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Smith Barney Holdings
Inc. and its subsidiaries for the fiscal years ended December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996, included
in the Company's Current Report on Form 8-K dated September 29, 1997, have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements referred to above are incorporated by
reference herein in reliance upon such report given upon the authority of said
firm as experts in accounting and auditing.
The supplemental consolidated financial statements of the Company and its
subsidiaries for the fiscal years ended December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996, included in the
Company's Current Report on Form 8-K dated November 28, 1997 have been audited
by Coopers & Lybrand L.L.P., independent certified public accountants, as set
forth in their report thereon, included therein and incorporated herein by
reference, which report states that Coopers & Lybrand L.L.P. did not audit the
Salomon Financials and that their opinion with respect to any amounts contained
in the Salomon Financials is based on the report of Arthur Andersen L.L.P. Such
financial statements referred to above are incorporated by reference herein in
reliance upon such reports given upon the authority of said firm as experts in
accounting and auditing.
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LEGAL MATTERS
The validity of the Junior Subordinated Debt Securities, the Preferred
Stock, Depositary Shares, Guarantees and certain matters relating thereto will
be passed upon for the Company and SSBH Capital by Robert H. Mundheim, Esq.,
General Counsel of the Company. Mr. Mundheim beneficially owns, or has rights to
acquire under Travelers Group employee benefit plans, an aggregate of less than
one percent of the common stock of Travelers Group. The validity of the
Preferred Securities and certain matters relating thereto and certain United
States federal income tax matters will be passed upon for the Company and SSBH
Capital by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. Certain
legal matters will be passed upon for the Underwriters by Cleary, Gottlieb,
Steen & Hamilton, New York, New York or Skadden, Arps, Slate, Meagher & Flom
LLP, as set forth in the applicable Prospectus Supplement. Kenneth J. Bialkin, a
partner of Skadden, Arps, Slate, Meagher & Flom LLP, is a director of Travelers
Group, the parent of the Company, and he and other attorneys in such firm
beneficially own an aggregate of less than one percent of the common stock of
Travelers Group. Each of Cleary, Gottlieb, Steen & Hamilton and Skadden, Arps,
Slate, Meagher & Flom LLP has from time to time acted as counsel for Travelers
Group and certain of its subsidiaries and may do so in the future.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at: Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Seven World Trade Center, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a site on the World Wide Web,
the address of which is http://www.sec.gov, that contains reports, proxy and
information statements and other information regarding issuers, such as the
Company, that file electronically with the Commission. Such reports and other
information can also be inspected at the offices of the New York Stock Exchange,
Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005.
The Company and the SSBH Trusts have filed with the Commission a
Registration Statement on Form S-3 (the "Registration Statement," which term
shall include all amendments, exhibits, annexes and schedules thereto) pursuant
to the Act, with respect to the Offered Securities. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company, the SSBH Trusts
and the Offered Securities, reference is made to the Registration Statement and
exhibits thereto. Statements contained in this Prospectus as to the contents of
any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or document filed as an
exhibit to the Company's Registration Statement, each such statement being
qualified in all respects by such reference.
No separate financial statements of the SSBH Trusts have been included or
incorporated by reference herein. The Company does not consider that such
financial statements would be material to holders of the Preferred Securities
because (i) all of the voting securities of the SSBH Trusts will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) the SSBH Trusts have no independent operations but exist for the sole
purpose of issuing securities representing undivided beneficial interests in
their respective assets and investing the proceeds thereof in Junior
Subordinated Debt Securities issued by the Company, and (iii) the obligations of
the SSBH Trusts under the Preferred Securities are fully and unconditionally
guaranteed by the Company to the extent that the respective SSBH Trust has funds
available to meet such obligations. See "Description of Junior Subordinated Debt
Securities" and "Description of Guarantees."
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed by the Company with the Commission pursuant to the Exchange Act: (i) the
Annual Report on Form 10-K for the year ended December 31, 1996, (ii) the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997, June 30,
1997 and September 30, 1997, and (iii) the Current Reports on Form 8-K dated
January 21, 1997, March 17, 1997, April 15, 1997, July 17, 1997, September 24,
1997, September 29, 1997 (as amended by the Current Report on Form 8-K/A dated
October 28, 1997 and the Current Report on Form 8-K/A2 dated December 1, 1997),
October 21, 1997, October 28, 1997 (as amended by the Current Report on Form
8-K/A dated December 1, 1997), November 21, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
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 later of (i) the termination of the Offered Securities and (ii) the date on
which all broker-dealer subsidiaries of the Company cease offering and selling
Offered Securities pursuant to this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part of
this Prospectus except as so modified or superseded.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference in the
Registration Statement of which this Prospectus forms a part other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into such documents. Requests should be directed to Salomon Smith
Barney Holdings Inc., 388 Greenwich Street, New York, New York 10013; Attention:
Treasurer; telephone (212) 816-6000.
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======================================================
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT. WE HAVE
AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING
AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THE DOCUMENT.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary..................................... S-1
The Company................................. S-5
The Trust................................... S-5
Risk Factors................................ S-6
Use of Proceeds............................. S-10
Accounting Treatment........................ S-10
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............. S-10
Capitalization.............................. S-11
Description of the Preferred Securities..... S-11
Description of the Junior Subordinated Debt
Securities................................ S-23
Description of Guarantee.................... S-28
Effect of Obligations Under the Junior
Subordinated Debt Securities and the
Guarantee................................. S-30
Certain United States Federal Income Tax
Considerations............................ S-31
ERISA Considerations........................ S-35
Underwriting................................ S-36
Legal Matters............................... S-38
PROSPECTUS
Prospectus Summary.......................... 2
The Company................................. 6
Ratio of Earnings to Fixed Charges.......... 6
SSBH Trusts................................. 6
Use of Proceeds............................. 7
Description of Junior Subordinated Debt
Securities................................ 7
Description of Preferred Securities......... 13
Description of Guarantees................... 15
Description of Capital Stock................ 17
Description of Preferred Stock.............. 18
Description of Depositary Shares............ 19
Description of Common Stock................. 22
Plan of Distribution........................ 22
Experts..................................... 24
Legal Matters............................... 25
Available Information....................... 25
Incorporation of Certain Documents by
Reference................................. 26
</TABLE>
======================================================
======================================================
16,000,000 SECURITIES
SSBH CAPITAL I
7.200% TRUST PREFERRED SECURITIES
(TRUPS(R))
GUARANTEED TO THE EXTENT SET FORTH
HEREIN BY
SALOMON SMITH BARNEY
HOLDINGS INC.
------------
PROSPECTUS SUPPLEMENT
JANUARY 23, 1998
(INCLUDING PROSPECTUS
DATED DECEMBER 1, 1997)
------------
SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
======================================================
