<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1997
REGISTRATION NO. 333-38931
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
SALOMON INC DELAWARE 22-166-0266
SSBH CAPITAL I DELAWARE 06-6452992
SSBH CAPITAL II DELAWARE 06-6452994
SSBH CAPITAL III DELAWARE 06-6452995
SSBH CAPITAL IV DELAWARE 06-6452996
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBERS)
</TABLE>
SEVEN WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 783-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROBERT H. MUNDHEIM, ESQ., GENERAL COUNSEL
SALOMON INC
SEVEN WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 783-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
SEE INTRODUCTORY NOTE BELOW
------------------------
Copies to:
<TABLE>
<S> <C> <C>
STEPHANIE B. MUDICK, ESQ. ALAN L. BELLER, ESQ. KENNETH J. BIALKIN, ESQ.
TRAVELERS GROUP INC. CLEARY, GOTTLIEB, STEEN & SKADDEN, ARPS, SLATE,
388 GREENWICH STREET HAMILTON MEAGHER & FLOM LLP
NEW YORK, NEW YORK 10013 ONE LIBERTY PLAZA 919 THIRD AVENUE
NEW YORK, NEW YORK 10006 NEW YORK, NEW YORK 10022
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: At such time (from time to time) after the effective date of this
Registration Statement as agreed upon by Salomon Inc and the Underwriters in
light of market conditions.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
- ------------------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
------------------------
Pursuant to Rule 429 under the Securities Act of 1933, as amended (the
"Securities Act"), the Prospectuses and Prospectus Supplements included in this
Registration Statement also relate to the Debt Securities and Index Warrants
previously registered under the Registrant's Registration Statement on Form S-3
(No. 333-01807). This Registration Statement also constitutes Post-Effective
Amendment No. 1 to Salomon Inc's Registration Statement on Form S-3 (No.
333-01807).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1)(2) PRICE(1)(2) FEE(3)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(4)................
- ----------------------------------------------------------------------------------------------------------
Index Warrants(5).................
- ----------------------------------------------------------------------------------------------------------
Trust Preferred Securities of the
Trusts(6).......................
- ----------------------------------------------------------------------------------------------------------
Junior Subordinated Debt
Securities of Salomon Inc(6)....
- ----------------------------------------------------------------------------------------------------------
Guarantees of Trust Preferred
Securities of the Trusts and
certain back-up
obligations(7)..................
- ----------------------------------------------------------------------------------------------------------
Preferred Stock of Salomon
Inc(8)..........................
- ----------------------------------------------------------------------------------------------------------
Depositary Shares of Salomon
Inc(9)..........................
==========================================================================================================
Total............................. $11,735,346,786 100% $11,735,346,786 $3,628,698.03
==========================================================================================================
</TABLE>
(1) The proposed maximum offering price per unit will be determined from time
to time by the Registrant in connection with the issuance by the Registrant
of the securities registered hereunder.
(2) The proposed maximum aggregate offering price has been estimated solely for
the purpose of calculating the registration fee pursuant to Rule 457 under
the Securities Act of 1933. The aggregate public offering price of the Debt
Securities, Index Warrants, Junior Subordinated Debt Securities, Preferred
Stock and Depositary Shares of Salomon Inc and the Preferred Securities of
the Trusts registered hereby will not exceed $2,380,346,786 or the
equivalent thereof in one or more foreign currencies, foreign currency
units or composite currencies.
(3) A filing fee aggregating $749,910.15 was previously paid in connection with
registration statements filed earlier as well as the initial filing of this
registration statement relating to the registration of in the aggregate
$2,235,346,786 of securities.
(4) Subject to note (12) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold, from time
to time. If any Debt Securities are issued at an original issue discount,
then the offering price shall be in such greater principal amount as shall
result in an aggregate initial offering price not to exceed
$11,735,346,786.
(5) Subject to note (12) below, there is being registered hereunder an
indeterminate principal amount of Index Warrants representing rights to
receive an amount of cash that will be determined by reference to prices,
yields, levels or other specified objective measure or changes in an index
or differences between two or more indexes as may be sold, from time to
time.
(6) Subject to note (12) below, there is being registered hereunder an
indeterminate number of Preferred Securities of SSBH Capital I, SSBH
Capital II, SSBH Capital III, SSBH Capital IV (each a "Trust") and such
indeterminate principal amount of Junior Subordinated Debt Securities of
Salomon Inc as may from time to time be issued at indeterminate prices.
Includes Preferred Securities which may be purchased by underwriters to
cover over-allotments, if any. Junior Subordinated Debt Securities may be
issued and sold to any Trust, in which event such Junior Subordinated Debt
Securities may later be distributed to the holders of Preferred Securities
upon a dissolution of such Trust and the distribution of the assets
thereof.
(7) Includes the rights of holders of the Preferred Securities under any
Guarantees and certain back-up undertakings, comprised of the obligations
of Salomon Inc, to provide certain indemnities in respect of, and pay and
be responsible for certain costs, expenses, debts and liabilities of, each
Trust (other than with respect to the Preferred Securities) and such
obligations of Salomon Inc as set forth in the Amended and Restated
Declaration of Trust of each Trust and the Indenture, in each case as
further described in the Registration Statement. The Guarantees, when taken
together with Salomon Inc's obligations under the Junior Subordinated Debt
Securities, the Indenture and the Amended and Restated Declaration of
Trust, will provide a full and unconditional guarantee on a subordinated
basis by Salomon Inc of payments due on the Preferred Securities. No
separate consideration will be received for any Guarantees or such back-up
obligations.
(8) Subject to note (12) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock of Salomon Inc as from
time to time may be issued at indeterminate prices. Includes Preferred
Stock which may be purchased by underwriters to cover over-allotments, if
any.
(9) Subject to note (12) below, there is being registered hereunder an
indeterminate number of Depositary Shares as may be issued in the event
that Salomon Inc elects to offer fractional interests in the Preferred
Stock registered hereby. Includes Depositary Shares which may be purchased
by underwriters to cover over-allotments, if any.
(11) Exclusive of accrued interest and distributions, if any.
(12) In no event will the aggregate offering price of all securities issued from
time to time pursuant to this Registration Statement exceed $11,735,346,786
or the equivalent thereof in one or more foreign currencies, foreign
currency units or composite currencies.
<PAGE> 3
INTRODUCTORY NOTE
ON SEPTEMBER 24, 1997, SALOMON INC AND TRAVELERS GROUP INC. ("TRAVELERS
GROUP") ANNOUNCED THAT THEY HAD ENTERED INTO AN AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997, PURSUANT TO WHICH A NEWLY-FORMED, WHOLLY OWNED
SUBSIDIARY OF TRAVELERS GROUP WILL MERGE (THE "FIRST STEP MERGER") WITH AND INTO
SALOMON INC, WHICH WILL BECOME A WHOLLY OWNED SUBSIDIARY OF TRAVELERS GROUP AND
BE RENAMED SALOMON SMITH BARNEY HOLDINGS INC. (THE "COMPANY"). IMMEDIATELY
THEREAFTER, IT IS ANTICIPATED THAT SMITH BARNEY HOLDINGS INC., ANOTHER WHOLLY
OWNED SUBSIDIARY OF TRAVELERS GROUP, WILL BE MERGED WITH AND INTO THE COMPANY
(THE "SECOND STEP MERGER;" AND TOGETHER WITH THE FIRST STEP MERGER, REFERRED TO
COLLECTIVELY HEREIN AS THE "MERGER").
THIS REGISTRATION STATEMENT ASSUMES THE CONSUMMATION OF THE MERGER, WHICH
IS CURRENTLY ANTICIPATED TO BE COMPLETED ON OR ABOUT NOVEMBER 30, 1997. THE
SECURITIES OFFERED HEREBY ARE NOT INTENDED TO BE OFFERED, AND THE PROSPECTUSES
AND PROSPECTUS SUPPLEMENTS INCLUDED HEREIN ARE NOT INTENDED TO BE USED, PRIOR TO
THE CONSUMMATION OF THE MERGER.
This Registration Statement contains (i) a form of Prospectus relating to
Debt Securities and Index Warrants (the "Basic Prospectus"), (ii) a form of
Prospectus relating to Preferred Stock and Junior Subordinated Debt Securities
of Salomon Smith Barney Holdings Inc. and to the Trust Preferred Securities of
SSBH Capital I, SSBH Capital II, SSBH Capital III and SSBH Capital IV (the
"Trusts") (the "Preferred Prospectus"), (iii) a form of Prospectus relating to
the Notes, Series J (the "Series J Prospectus"), (iv) a form of Prospectus
Supplement to the Basic Prospectus relating to the offering by Salomon Smith
Barney Holdings Inc. of its Medium-Term Notes, Series H and I, in registered
form (the "Registered Prospectus Supplement"), (v) a form of Prospectus
Supplement to the Basic Prospectus relating to the offering by Salomon Smith
Barney Holdings Inc. of its Medium-Term Notes, Series H and I, in bearer form
(the "Bearer Prospectus Supplement"), (vi) a form of Prospectus Supplement
relating to the offering by the Trusts of Trust Preferred Securities and the
offering of related guarantees and junior subordinated debt securities by
Salomon Smith Barney Holdings Inc. (the "Trust Prospectus Supplement") and (vii)
a form of Prospectus which may be used by broker-dealer subsidiaries of Salomon
Smith Barney Holdings Inc. in connection with offers and sales of the securities
described therein in market-making transactions.
The Registered Prospectus Supplement and the Bearer Prospectus Supplement
are forms which may be used, among others, as a supplement to the Basic
Prospectus. The Trust Prospectus Supplement is a form which may be used, among
others, as a supplement to the Preferred Prospectus. Although the amount of
securities shown on the cover page of the Prospectuses and Prospectus
Supplements included in this Registration Statement exceeds in the aggregate the
amount of securities registered under this Registration Statement, the aggregate
amount offered and sold hereunder will not exceed the aggregate amount
registered under this Registration Statement.
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO AMENDMENT. A REGISTRATION
STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO
BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 28, 1997
ON SEPTEMBER 24, 1997, SALOMON INC AND TRAVELERS GROUP INC. ("TRAVELERS
GROUP") ANNOUNCED THAT THEY HAD ENTERED INTO AN AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997, PURSUANT TO WHICH A NEWLY-FORMED, WHOLLY OWNED
SUBSIDIARY OF TRAVELERS GROUP WILL MERGE (THE "FIRST STEP MERGER") WITH AND INTO
SALOMON INC, WHICH WILL BECOME A WHOLLY OWNED SUBSIDIARY OF TRAVELERS GROUP AND
BE RENAMED SALOMON SMITH BARNEY HOLDINGS INC. (THE "COMPANY"). IMMEDIATELY
THEREAFTER, IT IS ANTICIPATED THAT SMITH BARNEY HOLDINGS INC., ANOTHER WHOLLY
OWNED SUBSIDIARY OF TRAVELERS GROUP, WILL BE MERGED WITH AND INTO THE COMPANY
(THE "SECOND STEP MERGER;" AND TOGETHER WITH THE FIRST STEP MERGER, REFERRED TO
COLLECTIVELY HEREIN AS THE "MERGER").
THIS PROSPECTUS ASSUMES THE CONSUMMATION OF THE MERGER, WHICH IS CURRENTLY
ANTICIPATED TO BE COMPLETED ON OR ABOUT NOVEMBER 30, 1997. THE SECURITIES
OFFERED HEREBY ARE NOT INTENDED TO BE OFFERED, AND THIS PROSPECTUS IS NOT
INTENDED TO BE USED, PRIOR TO THE CONSUMMATION OF THE MERGER.
SALOMON SMITH BARNEY HOLDINGS INC.
By this Prospectus, we may offer -
DEBT SECURITIES
INDEX WARRANTS
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 PROSPECTUS SUPPLEMENT OR PRICING SUPPLEMENT IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is dated , 1997.
<PAGE> 5
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED
SECURITIES, INCLUDING PURCHASES OF SUCH SECURITIES TO STABILIZE THEIR MARKET
PRICE, PURCHASES OF SUCH SECURITIES TO COVER ALL OR SOME OF A SHORT POSITION IN
THE SECURITIES MAINTAINED BY THE UNDERWRITERS FOR ANY OFFERING AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF
DISTRIBUTION."
AVAILABLE INFORMATION
Salomon Smith Barney Holdings Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information concerning
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained upon written request addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
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 concerning issuers, such as the Company, that file
electronically with the Commission. Such reports and other information may also
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005 and the American Stock Exchange, 86 Trinity
Place, New York, New York 10006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Offered Securities (as defined below). 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, reference is hereby made
to the Registration Statement and to the exhibits thereto. Statements contained
herein concerning the provisions of certain documents are not necessarily
complete, and in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to Section 13 of the Exchange Act (File No. 1-4346), are incorporated herein by
reference: (i) the Annual Report on Form 10-K for the year ended December 31,
1996 (the "1996 Form 10-K"), (ii) the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997 and June 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), October 21, 1997 and October 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 termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference in this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
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<PAGE> 6
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER OF OFFERED SECURITIES, TO WHOM A COPY OF THIS PROSPECTUS IS
DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE, EXCEPT THE EXHIBITS TO
SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
IN SUCH DOCUMENTS). WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE
TREASURER, SALOMON SMITH BARNEY HOLDINGS INC., 388 GREENWICH STREET, NEW YORK,
NEW YORK 10013. TELEPHONE REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE
TREASURER AT (212) 816-6000.
References herein to "U.S. dollars," "U.S.$," "dollar" or "$" are to the
lawful currency of the United States.
3
<PAGE> 7
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 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 U.S. and foreign broker-dealer subsidiaries.
THE SECURITIES WE MAY OFFER
We may use this Prospectus to offer up to $ of Debt Securities
and Index Warrants. A Prospectus Supplement will describe the specific types,
amounts, prices, and detailed terms of any securities we offer.
DEBT SECURITIES
These securities are unsecured general obligations of our Company in the
form of senior or subordinated debt. Senior debt includes our notes, debt, and
guarantees, which are for money borrowed and not subordinated. Subordinated
debt, designated at the time it is issued, is not entitled to interest and
principal payments if payments on the senior debt are not made.
The senior and subordinated debt will be issued under separate indentures
between the Company and a trustee. The trustees under the indentures are bank or
trust companies; we have certain banking relationships with these companies. We
have summarized below the general features of the debt securities from these
indentures. We encourage you to read the indentures, which are exhibits to our
registration statement No. 333- , our recent annual report on Form 10-K,
our recent quarterly reports on Form 10-Q and our recent Reports on Form 8-K,
including the Report on Form 8-K dated , 1997. Directions on how you
can receive copies of these documents are provided on page .
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED DEBT
- - None of the indentures limits the amount of debt that we may issue or provides
holders any protection should there be a highly leveraged transaction
involving our company, although the indentures do limit our company's ability
to pledge the stock of certain of our important subsidiaries.
- - Each indenture allows for different types of Debt Securities (including
indexed securities) to be issued in series and provides for the issuance of
securities in book-entry, certificated, and, in limited circumstances, bearer
form.
- - The indentures allow us to merge or to consolidate with another company, or
sell all or substantially all of our assets to another company. If any of
these events occur, the other company will be required to assume our
responsibilities on the debt, and, assuming that the transaction has not
resulted in an event of default, we will be released from all liabilities and
obligations under the Debt Securities.
- - The indentures provide that holders of a majority of the total principal
amount of the Debt Securities outstanding in any series may vote to change
certain of our obligations or your rights concerning those securities.
However, every holder of a particular security must consent to certain
important changes in that
4
<PAGE> 8
security, including changes in the payment of principal or interest on any
security or the currency of payment.
- - We may discharge certain of the Debt Securities issued under the indentures or
be released from our obligation to comply with the limitations discussed above
at any time by depositing sufficient amounts of cash or U.S. government
securities with the trustee to pay our obligations under the particular
securities when due. If we choose to discharge certain securities, all amounts
due to you on those securities will be paid by the Trustee from the deposited
funds.
- - The indentures govern the actions of the trustee with regard to the 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 indentures include:
- Principal not paid when due.
- Sinking fund payment not made when due.
- Failure to pay interest for 30 days.
- Covenants not performed for 60 days following notice.
- Certain events of insolvency or bankruptcy, whether voluntary or not.
REMEDIES
If there is a default, the trustee or holders of 25% of the principal
amount of Debt Securities outstanding in a series may declare the principal
immediately payable. However, holders of a majority in principal amount of the
securities in that series may rescind this action.
INDEX WARRANTS
We may issue Index Warrants independently or together with Debt Securities.
We will issue each series of Index Warrants under a separate Warrant Agreement
between our Company and a bank or trust company. We encourage you to read the
standard form of the Warrant Agreement, which is filed as an exhibit to our
registration statement No. 333---. We provide directions on how you can get
copies of these documents on page --.
Index Warrants are securities that, when exercised by the purchaser at a
time when certain conditions are met, entitle you to receive from our Company an
amount in cash that will be indexed to prices, yields, or other specified
measures or changes in an index or differences between two or more indexes. You
may only exercise Index Warrants during a specified period and the Index
Warrants expire on a specified date. Depending on circumstances and the terms
and conditions of the particular Index Warrant, you may not be entitled to
receive any amount for an Index Warrant during any period when you may exercise
it or at its expiration.
The Prospectus Supplement for a series of Index Warrants will set forth the
formula for determining the amount in cash, if any, that we will pay you when
you exercise an Index Warrant and certain information about the relevant
underlying assets, as well as other information about the specific terms of the
Index Warrant.
We will generally issue Index Warrants in book-entry form and list Index
Warrants for trading on a national securities exchange, such as the New York
Stock Exchange, American Stock Exchange or Chicago Board Options Exchange.
The Warrant Agreement for any series of Index Warrants will provide that
holders of a majority of the total principal amount of the Index Warrants
outstanding in any series may vote to change certain of our obligations or your
rights concerning those Index Warrants. However, every holder of a particular
Index
5
<PAGE> 9
Warrant must consent to certain important changes in that security, including
changes in the amount or manner of payment on an Index Warrant or further limits
on the time during which it may be exercised.
Index Warrants can involve a high degree of risk, including risks arising
from changes in the values of the underlying assets that are used to determine
the amount to be paid to you when you exercise the Index Warrant. Certain Index
Warrants may also involve risks linked to changes in foreign exchange rates,
securities markets, interest rates and the business of certain companies or
groups of companies. You should recognize that any Index Warrant that does not
have a specified minimum expiration value may be worthless when it expires.
Buyers of Index Warrants should be experienced in options transactions and
understand these types of risks. You should only decide to buy Index Warrants
after careful consideration with your advisers about the suitability of the
Index Warrants in light of your particular financial circumstances and the terms
and conditions of the particular Index Warrant.
Any prospective purchasers of Index Warrants should be aware of special
United States federal income tax considerations applicable to instruments such
as the Index Warrants. The Prospectus Supplement relating to each series of
Index Warrants will describe certain tax considerations.
USE OF PROCEEDS
We will use the net proceeds we receive from any offering of these
securities 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. We will use a
portion of the proceeds from the sale of Index Warrants and Indexed Notes to
hedge our exposure to payments that we may have to make on such Index Warrants
and Indexed Notes.
PLAN OF DISTRIBUTION
We 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 we 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 we use 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,
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.
These broker-dealer subsidiaries also expect to offer and sell previously
issued Debt Securities and Index Warrants as part of their business, and may act
as a principal or agent in such transactions. We or any of our subsidiaries may
use this Prospectus and the related Prospectus Supplements and Pricing
Supplements in connection with these activities.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with 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.
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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 and
June 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), October 21,
1997 and October 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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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"), which 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
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 OFFERED SECURITIES
The Company intends to issue from time to time (i) debt securities ("Debt
Securities"), which may be subordinated to other indebtedness of the Company; or
(ii) warrants ("Index Warrants") representing the right to receive, upon
exercise, an amount in cash that will be determined by reference to prices,
yields, levels or other specified objective measures, or changes in an Index or
differences between two or more Indexes all having an aggregate initial public
offering price or purchase price of up to $ , or the equivalent
thereof in one or more foreign or composite currencies. The Debt Securities and
Index Warrants are referred to herein collectively as the "Offered Securities."
The Offered Securities may be offered separately or as units with other Offered
Securities, in separate series in amounts, at prices and on terms to be
determined at or prior to the time of sale. The sale of other securities under
the Registration Statement of which this Prospectus forms a part or under a
Registration Statement to which this Prospectus relates will reduce the amount
of Offered Securities which may be sold hereunder.
The specific terms of the Offered Securities with respect to which this
Prospectus is being delivered will be set forth in an accompanying supplement to
this Prospectus (a "Prospectus Supplement"), together with the terms of the
offering of the Offered Securities and the initial price and the net proceeds to
the Company from the sale thereof. The Prospectus Supplement will also contain
information, where applicable, about material United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by such Prospectus Supplement. This Prospectus may
not be used to consummate sales of Offered Securities unless accompanied by a
Prospectus Supplement.
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DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be unsecured general obligations of the Company.
As a holding company, the Company's sources of funds are derived principally
from advances and dividends from subsidiaries, certain of which are subject to
regulatory considerations, and from sales of assets and investments. The Debt
Securities will constitute either senior or subordinated debt of the Company and
will be issued, in the case of Debt Securities that will be senior debt, under a
senior debt indenture (as amended from time to time, the "Senior Debt
Indenture") and, in the case of Debt Securities that will be subordinated debt,
under a subordinated debt indenture (as amended from time to time, the
"Subordinated Debt Indenture"). The Senior Debt Indenture and the Subordinated
Debt Indenture are sometimes hereinafter referred to individually as an
"Indenture" and collectively as the "Indentures." The institutions named as
trustees under the Indentures are hereinafter referred to individually as a
"Trustee" and collectively as the "Trustees." Forms of the Indentures have been
filed with the Commission and are incorporated by reference as part of the
Registration Statement. The following summaries of certain provisions of the
Indentures and the Debt Securities do not purport to be complete and such
summaries are subject to the detailed provisions of the applicable Indenture to
which reference is hereby made for a full description of such provisions,
including the definition of certain terms used, and for other information
regarding the Debt Securities. Numerical references in parentheses below are to
sections in the applicable Indenture or, if no Indenture is specified, to
sections in each of the Indentures. Wherever particular sections or defined
terms of the applicable Indenture are referred to, such sections or defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference.
Unless otherwise provided in the applicable Prospectus Supplement, the
Trustee under the Senior Debt Indenture will be Citibank, N.A., a national
banking association, under an indenture dated as of December 1, 1988, as amended
from time to time, and the Trustee under the Subordinated Debt Indenture will be
Bankers Trust Company, a New York banking corporation, under an indenture dated
as of December 1, 1988, as amended from time to time. Copies of the respective
Indentures under which Citibank, N.A. and Bankers Trust Company serve as
Trustees have been filed with the Commission and are incorporated by reference
as part of the Registration Statement.
GENERAL
Neither of the Indentures limits the amount of Debt Securities that may be
issued thereunder, and each Indenture provides that Debt Securities may be
issued from time to time in series (Section 301). The Debt Securities to be
issued under either of the Indentures will be unsecured senior or subordinated
obligations of the Company as set forth below. Debt Securities of a series may
be issuable as individual securities in registered form without coupons
("Registered Securities") or in bearer form ("Bearer Securities") with or
without coupons ("Coupons") attached or as one or more global securities in
registered or bearer form (each a "Global Security").
Reference is made to the Prospectus Supplement for a description of the
following terms of the Debt Securities in respect of which this Prospectus is
being delivered: (i) the title and series of such Debt Securities, whether such
Debt Securities will be senior or subordinated debt of the Company and under
which indenture such Debt Securities are being issued; (ii) the limit, if any,
upon the aggregate principal amount of such Debt Securities and the method by
which such principal amount (and premium, if any) will be determined; (iii) the
dates on which or periods during which such Debt Securities may be issued and
the dates on which, or the range of dates within which, the principal of (and
premium, if any, on) such Debt Securities will be payable or the method by which
such date or dates shall be determined; (iv) the rate or rates (which may be
fixed or variable) or the method of determination thereof, at which such Debt
Securities will bear interest, if any; the date or dates from which such
interest will accrue; the dates on which such interest will be payable (each, an
"Interest Payment Date"); and, in the case of Registered Securities, the regular
record dates for the interest payable on such Interest Payment Dates (each, a
"Regular Record Date"); the place or places where the principal of, premium, if
any, and interest on the Debt Securities shall be payable; (v) the obligation,
if any, of the Company to redeem or purchase such Debt Securities pursuant to
any sinking fund or analogous provisions, or at the option of the Company or a
Holder, and the periods within which or the dates
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<PAGE> 13
on which, the prices at which and the terms and conditions upon which such Debt
Securities will be redeemed or repurchased, in whole or in part, pursuant to
such obligation or option; (vi) the periods within which or the dates on which,
the prices at which and the terms and conditions upon which such Debt Securities
may be redeemed, if any, in whole or in part, at the option of the Company;
(vii) if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which such Debt Securities will be issuable; (viii) whether
such Debt Securities are to be issued as Discount Securities (as defined below)
and the amount of discount with which such Debt Securities will be issued; (ix)
provisions, if any, for the defeasance of such Debt Securities; (x) whether such
Debt Securities are to be issued as Registered Securities or Bearer Securities
or both and, if Bearer Securities are to be issued, whether Coupons will be
attached thereto, whether Bearer Securities of the series may be exchanged for
Registered Securities having the same terms and the circumstances under which
and the place or places at which any such exchanges, if permitted, may be made;
(xi) whether such Debt Securities are to be issued in whole or in part in the
form of one or more Global Securities and, if so, the identity of the Depositary
(as defined below) for such Global Security or Securities; (xii) if a temporary
Debt Security is to be issued with respect to such Debt Securities, whether any
interest thereon payable on an Interest Payment Date prior to the issuance of a
definitive Debt Security of the series will be credited to the account of the
Persons entitled thereto on such Interest Payment Date; (xiii) if a temporary
Global Security is to be issued with respect to such Debt Securities, the terms
upon which beneficial interests in such temporary Global Security may be
exchanged in whole or in part for beneficial interests in a definitive Global
Security or for individual Debt Securities of the series and the terms upon
which beneficial interests in a definitive Global Security, if any, may be
exchanged for individual Debt Securities having the same terms; (xiv) if other
than United States dollars, the foreign or composite currency in which such Debt
Securities are to be denominated, or in which payment of the principal of (and
premium, if any) and any interest on such Debt Securities will be made and the
circumstances, if any, when such currency of payment may be changed; (xv) if the
principal of (and premium, if any) or any interest on such Debt Securities are
to be payable, at the election of the Company or a Holder, in a currency other
than that in which such Debt Securities are denominated or stated to be payable,
the periods within which, and the terms and conditions upon which, such election
may be made and the time and the manner of determining the exchange rate between
the currency in which such Debt Securities are denominated or stated to be
payable and the currency in which such Debt Securities are to be paid pursuant
to such election; (xvi) if the amount of payments of principal of (and premium,
if any) or any interest on such Debt Securities may be determined with reference
to an index based on a currency or currencies other than that in which such Debt
Securities are stated to be payable, the manner in which such amounts shall be
determined; (xvii) if the amount of payments of principal of (and premium, if
any) or any interest on such Debt Securities may be determined with reference to
an index based on the prices, changes in prices, or differences between prices,
of one or more securities, currencies, intangibles, goods, articles or
commodities or by application of a formula, the manner in which such amounts
shall be determined; (xviii) any additional Events of Default (as defined below)
or restrictive covenants provided for with respect to such Debt Securities;
(xix) whether and under what circumstances the Company will pay additional
interest on such Debt Securities held by a Person who is not a U.S. Person in
respect of any tax, assessment or governmental charge withheld or deducted and,
if so, whether the Company will have the option to redeem such Debt Securities
under such circumstances; (xx) whether and under what circumstances the Company
will be obligated to redeem such Debt Securities if certain events occur
involving United States information reporting requirements; and (xxi) any other
terms of such Debt Securities not inconsistent with the provisions of the
Indenture under which they are issued (Section 301).
Under the Indentures, the Company may authorize the issuance and provide
the terms of a series of Debt Securities pursuant to a supplemental indenture or
pursuant to a resolution of its Board of Directors, any duly authorized
committee of the Board or any committee of officers or other representatives of
the Company duly authorized by the Board of Directors for such purpose. The
provisions of the Indentures provide the Company with the ability, in addition
to the ability to issue Securities with terms different from those of Debt
Securities previously issued, to "reopen" a previous issue of a series of
Securities and to issue additional Securities of such series.
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Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities will be issued only as Registered Securities in denominations of
$1,000 and any integral multiple thereof and will be payable only in United
States dollars (Section 302).
If Bearer Securities are issued, the U.S. federal income tax consequences
and other special considerations applicable to such Bearer Securities will be
described in the Prospectus Supplement relating thereto.
If the amount of payments of principal of (and premium, if any) or any
interest on Debt Securities is determined with reference to any type of index or
formula or changes in prices of one or more particular securities, currencies,
intangibles, goods, articles or commodities, the U.S. federal income tax
consequences, specific terms and other information with respect to such Debt
Securities and such index or formula, securities, currencies, intangibles,
goods, articles or commodities will be described in the Prospectus Supplement
relating thereto.
If the principal of (and premium, if any) or any interest on Debt
Securities are payable in a foreign or composite currency, the restrictions,
elections, U.S. federal income tax consequences, specific terms and other
information with respect to such Debt Securities and such currency will be
described in the Prospectus Supplement relating thereto.
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate that at the time of
issuance is below market rates ("Discount Securities"). Debt Securities may be
variable rate debt securities that may be exchangeable for fixed rate debt
securities. U.S. federal income tax consequences and other special
considerations applicable to any such Debt Securities will be described in the
Prospectus Supplement relating thereto.
Unless otherwise provided in the applicable Prospectus Supplement, the
principal of (and premium, if any) and any interest on Debt Securities will be
payable (in the case of Registered Securities) at the corporate trust office or
agency of the applicable Trustee in the City and State of New York or (in the
case of Bearer Securities) at the principal London office of the applicable
Trustee; provided, however, that payment of interest on Registered Securities
may be made at the option of the Company by check mailed to the Registered
Holders thereof or, if so provided in the applicable Prospectus Supplement, at
the option of a Holder by wire transfer to an account designated by such Holder
(Section 307). Except as otherwise provided in the applicable Prospectus
Supplement, no payment on a Bearer Security will be made by mail to an address
in the United States or by wire transfer to an account maintained by the Holder
thereof in the United States.
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Securities may be transferred or exchanged at the corporate trust
office or agency of the applicable Trustee in the City and State of New York,
subject to the limitations provided in the applicable Indenture, without the
payment of any service charge, other than any tax or governmental charge payable
in connection therewith (Section 305). Bearer Securities will be transferable by
delivery. Provisions with respect to the exchange of Bearer Securities will be
described in the applicable Prospectus Supplement.
All moneys paid by the Company to a paying agent for the payment of
principal of (and premium, if any) or any interest on any Debt Security that
remain unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company, and
the Holder of such Debt Security or any Coupon appertaining thereto will
thereafter look only to the Company for payment thereof (Section 1204).
Unless otherwise indicated in the applicable Prospectus Supplement, the
covenants contained in the Indenture and the Debt Securities would not afford
Holders protection in the event of a highly leveraged or other similar
transaction that may adversely affect Holders.
GLOBAL SECURITIES
Debt Securities having the same issue date and the same terms may be issued
in whole or in part in the form of one or more Global Securities that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such Debt Securities. Global Securities
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may be issued in either registered or bearer form and in either temporary or
definitive form. Unless and until it is exchanged in whole or in part for the
individual Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor (Sections 303
and 305).
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depositary arrangements for Debt Securities.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Debt Securities represented by
such Global Security to the accounts of institutions that have accounts with
such Depositary ("participants"). The accounts to be credited shall be
designated by the underwriters of such Debt Securities or, if such Debt
Securities are offered and sold directly by the Company or through one or more
agents, by the Company or such agent or agents. Ownership of beneficial
interests in a Global Security will be limited to participants or Persons that
may hold beneficial interests through participants. Ownership of beneficial
interests in a Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary
for such Global Security or by participants or Persons that hold through
participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities. Such limits and such laws
may limit the market for beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
owner of such Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole Holder of the individual Debt Securities
represented by such Global Security for all purposes under the Indenture
governing such Debt Securities. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have any of the
individual Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of any
such Debt Securities and will not be considered the Holders thereof under the
Indenture governing such Debt Securities.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Securities and Bearer Warrants" below, payments of principal of (and
premium, if any) and any interest on individual Debt Securities represented by a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder of such Global Security. None of the Company, the Trustee for
such Debt Securities, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in such
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Company expects that the Depositary for any Debt Securities, upon
receipt of any payment of principal, premium or interest in respect of a
definitive Global Security representing any of such Debt Securities, will credit
immediately participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants. Receipt by owners of beneficial
interests in a temporary Global Security of payments of principal, premium or
interest in respect thereof will be subject to the restrictions discussed under
"Limitations on Issuance of Bearer Securities and Bearer Warrants" below.
If the Depositary for any Debt Securities is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within ninety days, the Company will issue individual Debt
Securities in exchange for the Global Security or Securities representing such
Debt Securities. In addition, the Company may at any time and in its sole
discretion determine not to have certain Debt Securities represented by one or
more Global Securities and, in such event, will issue individual Debt Securities
in
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exchange for the Global Security or Securities representing such Debt
Securities. Further, if the Company so specifies with respect to any Debt
Securities, an owner of a beneficial interest in a Global Security representing
such Debt Securities may, on terms acceptable to the Company and the Depositary
for such Global Security, receive individual Debt Securities in exchange for
such beneficial interest. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities are issuable as Registered
Securities). Individual Debt Securities so issued will be issued (i) as
Registered Securities in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof if the Debt Securities are
issuable as Registered Securities, (ii) as Bearer Securities in the denomination
or denominations specified by the Company if the Debt Securities are issuable as
Bearer Securities or (iii) as either Registered or Bearer Securities, if the
Debt Securities are issuable in either form (Section 305). See, however,
"Limitations on Issuance of Bearer Securities and Bearer Warrants" below for a
description of certain restrictions on the issuance of individual Bearer
Securities in exchange for beneficial interests in a Global Security.
SENIOR DEBT
The Debt Securities and Coupons that will constitute part of the senior
debt of the Company will be issued under the Senior Debt Indenture and will rank
pari passu with all other unsecured debt of the Company except subordinated
debt.
SUBORDINATED DEBT
The Debt Securities and Coupons that will constitute part of the
subordinated debt of the Company will be issued under the Subordinated Debt
Indenture and will be subordinate and junior in the right of payment, to the
extent and in the manner set forth in the Subordinated Debt Indenture, to all
"Senior Indebtedness" of the Company. The Subordinated Debt Indenture defines
"Senior Indebtedness" as the following indebtedness or obligations, whether
outstanding at the date of such Indenture or thereafter incurred, assumed,
guaranteed or otherwise created, unless in the instrument creating or evidencing
any such indebtedness or obligation or pursuant to which the same is outstanding
it is provided that such indebtedness or obligation is not superior in right of
payment to the subordinated Debt Securities and any appurtenant Coupons: (a) all
indebtedness of the Company (including indebtedness of others guaranteed by the
Company), other than the subordinated Debt Securities and any appurtenant
Coupons and other than the debt securities issuable under the indenture dated as
of July 1, 1986 between the Company and The Bank of New York, as trustee, that
(i) is for money borrowed, (ii) arises in connection with the acquisition of any
business, properties, securities or assets of any kind, other than in the
ordinary course of the Company's business as heretofore conducted or (iii) is
secured, in whole or in part, by real or personal property, (b) obligations of
the Company (including obligations of others guaranteed by the Company) as
lessee under leases required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles and leases of property or
assets made as part of any sale and lease-back transaction and (c) amendments,
renewals, extensions, modifications and refundings of any such indebtedness or
obligation (Subordinated Debt Indenture, Section 101). The subordinated Debt
Securities and any appurtenant Coupons will not be superior in right of payment
to the debt securities issuable under the indenture dated as of July 1, 1986
between the Company and The Bank of New York, as trustee (Subordinated Debt
Indenture, Section 1601).
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or (b) that (i) a
default shall have occurred with respect to the payment of principal of (and
premium, if any) or any interest on or other monetary amounts due and payable on
any Senior Indebtedness, or (ii) there shall have occurred an event of default
(other than a default in the payment of principal, premium, if any, or interest,
or other monetary amounts due and payable) with respect to any Senior
Indebtedness, as defined therein or in the instrument under which the same is
outstanding, permitting the holder or holders thereof to accelerate the maturity
thereof (with notice or lapse of time, or both), and such event of default shall
have continued beyond the period of grace, if any, in respect thereof, and such
default or event of default shall not
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have been cured or waived or shall not have ceased to exist, or (c) that the
principal of and accrued interest on the subordinated Debt Securities issued
under the Subordinated Debt Indenture shall have been declared due and payable
upon an Event of Default pursuant to Section 502 thereof and such declaration
shall not have been rescinded and annulled as provided therein, then the holders
of all Senior Indebtedness shall first be entitled to receive payment of the
full amount due thereon, or provision shall be made for such payment in money or
money's worth, before the Holders of any of the subordinated Debt Securities or
Coupons issued under the Subordinated Debt Indenture are entitled to receive a
payment on account of the principal of (and premium, if any) or any interest on
the indebtedness evidenced by such Debt Securities or such Coupons (Subordinated
Debt Indenture, Section 1601). If this Prospectus is being delivered in
connection with a series of subordinated Debt Securities, the related Prospectus
Supplement will set forth the amount of Senior Indebtedness outstanding as of
the most recent practicable date.
LIMITATION ON LIENS
The Senior Debt Indenture provides that the Company will not, and will not
permit any Restricted Subsidiary to, incur, issue, assume, guarantee or suffer
to exist any indebtedness for borrowed money if the payment of such indebtedness
is secured by a pledge of, lien on or security interest in any shares of stock
of any Restricted Subsidiary without effectively providing for the equal and
ratable securing of the payment of the Debt Securities issued thereunder
(Section 1205). The term "Restricted Subsidiary" is defined in the Senior Debt
Indenture to mean each of Salomon Brothers Inc, Phibro Inc. and, with respect to
the Company's Medium-Term Notes Series D and E, Philipp Brothers, Inc. and any
Subsidiary of the Company owning, directly or indirectly, any of the common
stock of, or succeeding to any substantial part of the business now conducted
by, any of such corporations.
EVENTS OF DEFAULT
The following will constitute Events of Default under each Indenture with
respect to any series of Debt Securities issued thereunder: (i) default in the
payment of the principal of (and premium, if any, on) any Debt Security of such
series when due; (ii) default for 30 days in the payment of any interest on any
Debt Security of such series or of any related Coupon when due; (iii) default in
the deposit of any sinking fund payment, when and as due by the terms of any
Debt Security of such series; (iv) default in the performance of any other
covenant in such Indenture, continued for 60 days after written notice thereof
by the applicable Trustee or the Holders of at least 25% in principal amount of
the Debt Securities of such series then Outstanding; and (v) certain events of
bankruptcy, insolvency or reorganization (Section 501). Any additional Events of
Default provided with respect to a series of Debt Securities will be set forth
in the applicable Prospectus Supplement. No Event of Default with respect to a
particular series of Debt Securities issued under either Indenture necessarily
constitutes an Event of Default with respect to any other series of Debt
Securities.
Each Indenture provides that if an Event of Default specified therein shall
occur and be continuing with respect to a series of Debt Securities issued
thereunder, either the Trustee thereunder or the Holders of at least 25% in
principal amount of the Debt Securities of such series then Outstanding may
declare the principal of and all accrued interest on all Debt Securities of such
series (or, in the case of Discount Securities, an amount equal to such portion
of the principal amount thereof as will be specified in the related Prospectus
Supplement) to be due and payable. In certain cases, the Holders of a majority
in principal amount of the Debt Securities then Outstanding of a series may, on
behalf of the Holders of all such Debt Securities, rescind and annul such
declaration and its consequences (Section 502).
Each Indenture contains a provision entitling the Trustee thereunder,
subject to the duty of such Trustee during the continuance of a default to act
with the required standard of care, to be indemnified by the Holders of the Debt
Securities or any Coupons of any series thereunder before proceeding to exercise
any right or power under such Indenture with respect to such series at the
request of such Holders (Section 603). Each Indenture provides that no Holder of
a Debt Security or any Coupon of any series thereunder may institute any
proceeding, judicial or otherwise, to enforce such Indenture except in the case
of failure of the Trustee thereunder, for 60 days, to act after it receives (i)
written notice of such default, (ii) a written request to
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enforce such Indenture by the Holders of at least 25% in aggregate principal
amount of the Debt Securities then Outstanding of such series (and the Trustee
receives no direction inconsistent with such written request from the Holders of
a majority in aggregate principal amount of the Debt Securities then outstanding
of such series) and (iii) an offer of reasonable indemnity (Section 507). This
provision will not prevent any Holder of any such Debt Security from enforcing
payment of the principal thereof (and premium, if any, thereon) and any interest
thereon or of any such Coupon from enforcing payment thereof at the respective
due dates thereof (Section 508). The Holders of a majority in aggregate
principal amount of the Debt Securities then Outstanding of any series may
direct the time, method and place of conducting any proceedings for any remedy
available to the applicable Trustee or of exercising any trust or power
conferred on it with respect to the Debt Securities of such series. However,
such Trustee may refuse to follow any direction that conflicts with law or the
applicable Indenture or that would be unjustly prejudicial to Holders not
joining therein (Section 512).
Each Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to any series of Debt Securities
thereunder known to it, give to the Holders of Debt Securities and Coupons of
such series notice of such default, unless such default shall have been cured or
waived; but, except in the case of a default in the payment of the principal of
(and premium, if any) or any interest on any Debt Security or of any Coupon of
such series or in the payment of any sinking fund installment with respect to
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if it determines in good faith that the withholding of such notice
is in the interest of the Holders of such Debt Securities and Coupons (Section
602).
The Company will be required to file annually with each Trustee a
certificate of an appropriate officer of the Company as to the absence of
certain defaults under the terms of the appropriate Indenture (Section 1206;
Subordinated Debt Indenture, Section 1205).
MODIFICATION AND WAIVER
Each Indenture contains provisions for convening meetings of Holders to
consider matters affecting their interests (Article Nine).
Modifications of and amendments to each Indenture may be made by the
Company and the Trustee thereunder with the consent of the Holders of a majority
in principal amount of the Debt Securities then outstanding (the "Outstanding
Debt Securities") of each series issued thereunder that is affected by such
modification or amendment, voting separately; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby: (i) change the Stated Maturity of
the principal of, or any installment of interest or additional amounts payable
on, any Debt Security or Coupon; (ii) reduce the principal amount (including the
amount payable on a Discount Security upon the acceleration of the Maturity
thereof) of, or any interest on or any premium payable upon redemption of, or
additional amounts payable on, any Debt Security or Coupon; (iii) change the
currency or composite currency of denomination or payment of the principal of
(and premium, if any, on) or any interest or additional amounts payable on any
Debt Security or Coupon; (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security or Coupon;
(v) reduce the percentage of the principal amount of the Outstanding Debt
Securities of any series, the consent of the Holders of which is required for
modification or amendment of the applicable Indenture with respect to waiver of
compliance with certain provisions of the applicable Indenture or waiver of
certain defaults; (vi) limit the Company's obligation to maintain a Paying Agent
outside the United States for Bearer Securities; or (vii) limit the obligation
of the Company to redeem certain Bearer Securities if certain events occur
involving United States information reporting requirements (Section 1102).
The Subordinated Debt Indenture may not be amended to alter or impair the
subordination of the subordinated Debt Securities issued thereunder without the
consent of each holder of Senior Indebtedness then outstanding (Subordinated
Debt Indenture, Section 1107).
The Holders of a majority in principal amount of the Outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by
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<PAGE> 19
the Company with certain restrictive provisions of the applicable Indenture
before the time for such compliance (Section 1207; Subordinated Debt Indenture,
Section 1206). The Holders of a majority in principal amount of the Outstanding
Debt Securities of each series may, on behalf of all Holders of Debt Securities
of that series, waive any past default under the applicable Indenture with
respect to Debt Securities of that series, except a default in the payment of
the principal of (and premium, if any) or any interest on any such Debt Security
or in the payment of any Coupon of that series and except a default in respect
of a covenant or provision the modification or amendment of which would require
the consent of the Holder of each Outstanding Debt Security affected thereby
(Section 513).
CONSOLIDATION, MERGER AND TRANSFER OR LEASE OF ASSETS
Each Indenture provides that the Company may not consolidate with or merge
into any corporation, or transfer or lease its assets substantially as an
entirety to any Person, unless (i) the successor corporation or transferee or
lessee (the "Successor Corporation") is a corporation organized under the laws
of the United States or any political subdivision thereof; (ii) the Successor
Corporation assumes the Company's obligations under the applicable Indenture and
on the Debt Securities and any Coupons issued thereunder; (iii) after giving
effect to the transaction no Event of Default and no event that, after notice or
lapse of time, or both, would become an Event of Default shall have occurred and
be continuing; (iv) the Successor Corporation waives any right to redeem any
Bearer Security under circumstances in which the Successor Corporation would be
entitled to redeem such Bearer Security but the Company would not have been so
entitled if such consolidation, merger, transfer or lease had not occurred; and
(v) certain other conditions are met (Section 1001).
DEFEASANCE
If so specified in the applicable Prospectus Supplement with respect to
Debt Securities of any series that are Registered Securities payable only in
United States dollars, the Company, at its option, (i) will be discharged from
any and all obligations in respect of the Debt Securities of such series (except
for certain obligations to register the transfer or exchange of Debt Securities
of such series, replace stolen, lost or mutilated Debt Securities of such
series, maintain paying agencies and hold moneys for payment in trust) or (ii)
will not be subject to provisions of the applicable Indenture described above
under "Limitation on Liens" and "Consolidation, Merger and Transfer or Lease of
Assets" with respect to the Debt Securities of such series, in each case if the
Company deposits with the applicable 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 Debt
Securities of such series on the dates such payments are due in accordance with
the terms of such Debt Securities. To exercise any such option under either of
the Indentures, the Company is required to deliver to the applicable Trustee an
opinion of counsel to the effect that (1) the deposit and related defeasance
would not cause the Holders of the Debt Securities of such series to recognize
income, gain or loss for Federal income tax purposes and, in the case of a
discharge pursuant to clause (i) above, a ruling to such effect received from or
published by the United States Internal Revenue Service, and (2) if the Debt
Securities of such series are then listed on the New York Stock Exchange, such
Debt Securities would not be delisted from the New York Stock Exchange as a
result of the exercise of such option (Sections 1501 and 1502). Defeasance
provisions, if any, with respect to any other Debt Securities of any series will
be described in the applicable Prospectus Supplement.
REPLACEMENT DEBT SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, if a
Debt Security of any series or any related Coupon is mutilated, destroyed, lost
or stolen, it may be replaced at the corporate trust office or agency of the
applicable Trustee in the City and State of New York (in the case of Registered
Securities) or at the principal London office of the applicable Trustee (in the
case of Bearer Securities and Coupons) upon payment by the Holder of such
expenses as may be incurred by the Company and the applicable Trustee in
connection therewith and the furnishing of such evidence and indemnity as the
Company and such Trustee
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may require. Mutilated Debt Securities and Coupons must be surrendered before
new Debt Securities (with or without Coupons) will be issued (Section 306).
NOTICES
Unless otherwise provided in the applicable Prospectus Supplement, any
notice required to be given to a Holder of a Debt Security of any series that is
a Registered Security will be mailed to the last address of such Holder set
forth in the applicable security register. Any notice required to be given to a
Holder of a Debt Security that is a Bearer Security will be published in a daily
morning newspaper of general circulation in the city or cities specified in the
Prospectus Supplement relating to such Bearer Security (Section 105).
CONCERNING THE TRUSTEES
The Company and certain of its subsidiaries maintain lines of credit and
have other customary banking relationships with Citibank, N.A. and Bankers Trust
Company, and certain of their respective affiliates, and may have such
relationships with other Trustees and their affiliates.
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DESCRIPTION OF INDEX WARRANTS
The following description of the terms of the Index Warrants sets forth
certain general terms and provisions of the Index Warrants to which any
Prospectus Supplement may relate. The particular terms of the Index Warrants
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions do not apply to the Index Warrants so offered will be
described in such Prospectus Supplement.
Index Warrants may be issued independently or together with Debt Securities
offered by any Prospectus Supplement and may be attached to or separate from any
such Offered Securities. Each series of Index Warrants will be issued under a
separate index warrant agreement (each, an "Index Warrant Agreement") to be
entered into between the Company and a bank or trust company, as warrant agent
(the "Index Warrant Agent"), all as described in the Prospectus Supplement
relating to such Index Warrants. A single bank or trust company may act as Index
Warrant Agent for more than one series of Index Warrants. The Index Warrant
Agent will act solely as the agent of the Company under the applicable Index
Warrant Agreement and will not assume any obligation or relationship of agency
or trust for or with any owners of such Index Warrants. A copy of the form of
Index Warrant Agreement, including the form of index warrant certificate (the
"Index Warrant Certificate," or, if issued in global form, the "Index Warrant
Global Certificate"), is filed as an exhibit to or incorporated by reference in
the Registration Statement. The following summaries of certain provisions of the
Index Warrants and the form of Index Warrant Agreement do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the Index Warrant Agreement and the Index Warrant
Certificate or Index Warrant Global Certificate.
GENERAL
The Index Warrant Agreement does not limit the number of Index Warrants
that may be issued thereunder. The Company will have the right to "reopen" a
previous series of Index Warrants and to issue additional Index Warrants of such
series.
Each Index Warrant will entitle the holder (each, a "Warrant Holder") to
receive from the Company, upon exercise, including any automatic exercise, an
amount in cash that will be determined by reference to prices, yields, levels or
other specified objective measures (any such measure, an "Index"), or changes in
an Index or differences between two or more Indexes. The assets by reference to
which an Index is determined (the "Underlying Assets") may be one or more
specified securities or securities indexes or one or more foreign currencies or
foreign currency indexes, or a combination thereof. The Prospectus Supplement
for a series of Index Warrants will set forth the formula or methodology
pursuant to which the amount payable or distributable on the Index Warrants will
be determined by reference to the relevant Index or Indexes.
Certain Index Warrants will, if specified in the Prospectus Supplement,
entitle the Warrant Holder to receive from the Company, upon automatic exercise
at expiration and under certain other circumstances, a minimum or maximum
amount.
The Prospectus Supplement applicable to any series of Index Warrants will
set forth any circumstances in which the payment or the determination of the
payment on the Index Warrants may be postponed and the period for which such
payment or determination may be postponed. Conversely, the Index Warrants may be
subject to early exercise or cancellation in certain circumstances described in
the applicable Prospectus Supplement. The amount due, or the means by which the
amount due, on the Index Warrants may be determined after any such delay or
postponement, or early exercise or cancellation will be set forth in the
applicable Prospectus Supplement.
The Company will be under no obligation to, nor will it, purchase or take
delivery of or sell or deliver any securities or currencies (including the
Underlying Assets), other than the payment of any cash due on the Index
Warrants, from or to Warrant Holders pursuant to the Index Warrants.
Unless otherwise specified in the Prospectus Supplement, the Index Warrants
will be deemed to be automatically exercised upon expiration. Upon such
automatic exercise, Warrant Holders will be entitled to receive the cash amount
due, if any, on such exercise of the Index Warrants.
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Reference is hereby made to the Prospectus Supplement relating to the
particular series of Index Warrants offered thereby for the terms of such Index
Warrants, including, where applicable: (i) the aggregate number of such Index
Warrants; (ii) the offering price of such Index Warrants; (iii) the Index or
Indexes by reference to which payment or distribution on such Index Warrants
will be determined; (iv) certain information regarding the Underlying Assets;
(v) the amount due, or the means by which the amount due may be calculated, on
exercise of the Index Warrants, including automatic exercise, or upon
cancellation; (vi) the date on which the Index Warrants may first be exercised
and the date on which they expire; (vii) any minimum number of Index Warrants
exercisable at any one time; (viii) any maximum number of Index Warrants that
may, subject to the Company's election, be exercised by all Warrant Holders (or
by any person or entity) on any day; (ix) any provisions permitting a Warrant
Holder to condition an exercise of Index Warrants; (x) the method by which the
Index Warrants may be exercised; (xi) the currency in which the Index Warrants
will be denominated and in which payments on the Index Warrants will be made in
respect of the Index Warrants; (xii) the method of making any foreign currency
translation applicable to payments on the Index Warrants; (xiii) the method of
providing for a substitute Index or Indexes or otherwise determining the amount
payable in connection with the exercise of Index Warrants if an Index changes or
is no longer available; (xiv) the time or times at which amounts will be payable
in respect of such Index Warrants following exercise or automatic exercise; (xv)
any national securities exchange on, or self-regulatory organization with which,
such Index Warrants will be listed; (xvi) any provisions for issuing such Index
Warrants in certificated form; (xvii) if such Index Warrants are not issued in
book-entry form, the place or places at and the procedures by which payments or
distributions on the Index Warrants will be made; and (xviii) any other terms of
such Index Warrants.
Prospective purchasers of Index Warrants should be aware of special U.S.
federal income tax considerations applicable to instruments such as the Index
Warrants. The Prospectus Supplement relating to each series of Index Warrants
will describe such tax considerations. The summary of U.S. federal income tax
considerations contained in the Prospectus Supplement will be presented for
informational purposes only, however, and will not be intended as legal or tax
advice to prospective purchasers. Prospective purchasers of Index Warrants are
urged to consult their own tax advisors prior to any acquisition of Index
Warrants.
BOOK-ENTRY PROCEDURES AND SETTLEMENT FOR INDEX WARRANTS
Subject to the rules of the Warrant Depositary (as defined below) and
unless otherwise specified in the Prospectus Supplement, the Index Warrants
offered thereby will be issued in the form of a single Index Warrant Global
Certificate that will be deposited with, or on behalf of, a depositary (the
"Warrant Depositary"), which shall be, unless otherwise specified in the
applicable Prospectus Supplement, the Depository Trust Company, New York, New
York ("DTC"). Index Warrants will be registered in the name of the Warrant
Depositary or a nominee of the Warrant Depositary. Unless and until it is
exchanged in whole or in part for the individual Index Warrants represented
thereby, an Index Warrant Global Certificate may not be transferred except as a
whole by the Warrant Depositary to a nominee of the Warrant Depositary or by a
nominee of the Warrant Depositary to the Warrant Depositary or another nominee
of the Warrant Depositary or by the Warrant Depositary or any such nominee to a
successor of the Warrant Depositary or a nominee of such successor.
The Company anticipates that the following provisions will apply to all
depository arrangements.
Upon the issuance of an Index Warrant Global Certificate, the Warrant
Depositary will credit, on its book-entry registration and transfer system, the
respective numbers of the individual Index Warrants represented by such Index
Warrant Global Certificate to the accounts of institutions that have accounts
with the Warrant Depositary ("depositary participants"). The accounts to be
credited shall be designated by the underwriters of such Index Warrants or, if
such Index Warrants are offered and sold directly by the Company or through one
or more agents, by the Company or such agent or agents. Ownership of beneficial
interests in an Index Warrant Global Certificate will be limited to participants
or persons that may hold beneficial interests through participants. Ownership of
beneficial interests in an Index Warrant Global Certificate will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the Warrant Depositary for such Index Warrant Global Certificate
or by participants or persons that hold through
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participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities. Such limits and such laws
may limit the market for beneficial interests in an Index Warrant Global
Certificate.
The Warrant Depositary's nominee for all purposes will be considered the
sole owner or holder of the Index Warrants under the related Index Warrant
Agreement. Except as set forth below, owners of beneficial interests in the
Index Warrant Global Certificate will not be entitled to have any of the
individual Index Warrants represented by such Index Warrant Global Certificate
registered in their names, will not receive or be entitled to receive physical
delivery of any such Index Warrants, and will not be considered the holders
thereof under the related Index Warrant Agreement.
Neither the Company nor the Index Warrant Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Index Warrant
Global Certificate or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
If the Warrant Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue individual Index Warrant Certificates in exchange
for the Index Warrant Global Certificate. In addition, the Company may at any
time and in its sole discretion determine not to have certain Index Warrants
represented by an Index Warrant Global Certificate and, in such event, will
issue individual Index Warrant Certificates in exchange for such Global
Certificate. Further, if the Company so specifies with respect to any Index
Warrants, an owner of a beneficial interest in an Index Warrant Global
Certificate may, on such terms acceptable to the Company and the Warrant
Depositary, receive individual Index Warrants in exchange for such beneficial
interest. In any such instance, an owner of a beneficial interest in the Index
Warrant Global Certificate will be entitled to have Index Warrants equal in
aggregate number to such beneficial interest registered in its name and will be
entitled to physical delivery of such Index Warrants. The registered owner of
such Index Warrants will be entitled to receive any amounts payable in respect
of such Index Warrants, upon surrender of such Index Warrants to the Index
Warrant Agent in accordance with the procedures set forth in the Prospectus
Supplement.
LISTING
Unless otherwise indicated in the Prospectus Supplement, the Index Warrants
will be listed on a national securities exchange or with a self-regulatory
organization, the rules and regulations of which are filed with the Commission
pursuant to Section 19(b) of the Exchange Act (a "Self-Regulatory
Organization"), in each case as specified in the Prospectus Supplement. It is
expected that such Self-Regulatory Organization will cease trading a series of
Index Warrants as of the close of business on the related expiration date of
such Index Warrants.
MODIFICATION
The Index Warrant Agreement and the terms of the related Index Warrants may
be amended by the Company and the Index Warrant Agent, without the consent of
the holders of any Index Warrants, for the purpose of curing any ambiguity or of
curing, correcting or supplementing any defective or inconsistent provision
contained therein, maintaining the listing of such Index Warrants on any
national securities exchange or with any other Self-Regulatory Organization or
registration of such Index Warrants under the Exchange Act, permitting the
issuance of individual Index Warrant certificates to Warrant Holders, reflecting
the issuance by the Company of additional Index Warrants of the same series or
reflecting the appointment of a successor depository, or for any other purpose
which the Company may deem necessary or desirable and which will not materially
and adversely affect the interests of the Warrant Holders.
The Company and the Index Warrant Agent also may modify or amend the Index
Warrant Agreement and the terms of the related Index Warrants, with the consent
of the holders of not less than a majority in number of the then outstanding
Warrants affected by such modification or amendment, for any purposes; provided,
however, that no such modification or amendment that changes the amount to be
paid to the
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Warrant Holder or the manner in which such amount is to be determined, shortens
the period of time during which the Index Warrants may be exercised, or
otherwise materially and adversely affects the exercise rights of the holders of
the Index Warrants or reduces the percentage of the number of outstanding Index
Warrants the consent of whose holders is required for modification or amendment
of the Index Warrant Agreement or the terms of the related Index Warrants, may
be made without the consent of each Holder affected thereby.
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITION
If at any time there is a merger or consolidation involving the Company or
a sale, transfer, conveyance (other than by way of lease) or other disposition
of all or substantially all of the assets of the Company, then the successor or
assuming corporation will succeed to and be substituted for the Company under
the Index Warrant Agreement and the related Index Warrants, with the same effect
as if it had been named in such Index Warrant Agreement and Index Warrants as
the Company. The Company will thereupon be relieved of any further obligation
under such Index Warrant Agreement and Index Warrants and may at any time
thereafter be dissolved, wound up or liquidated.
ENFORCEABILITY OF RIGHTS BY WARRANT HOLDERS
Any Warrant Holder may, without the consent of the Index Warrant Agent or
any other Warrant Holder, enforce by appropriate legal action on his own behalf
his right to exercise, and to receive payment for, his Index Warrants.
SPECIAL CONSIDERATIONS RELATING TO INDEX WARRANTS
The Index Warrants involve a high degree of risk, including risks arising
from fluctuations in the values of the Underlying Assets, risks relating to the
Index or Indexes by which payments on the Index Warrants are calculated, general
risks applicable to the securities or currency markets on which the Underlying
Assets are traded and, in the case of certain Index Warrants, foreign exchange,
interest rate, issuer and other risks. Purchasers should recognize that their
Index Warrants, other than Index Warrants having a minimum expiration value, may
expire worthless. Purchasers should be prepared to sustain a total loss of the
purchase price of their Index Warrants, and are advised to consider carefully
the information set forth herein and under "Risk Factors Relating to the Index
Warrants" in the applicable Prospectus Supplement. Prospective purchasers of the
Index Warrants should be experienced with respect to options and options
transactions and understand the risks of the Index (and, if applicable, foreign
currency transactions), and should reach an investment decision only after
careful consideration, with their advisers, of the suitability of the Index
Warrants in light of their particular financial circumstances, the information
set forth herein under "Description of Index Warrants," and the information
regarding the Index Warrants, the Index and the Underlying Assets set forth in
the Prospectus Supplement.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES AND BEARER WARRANTS
In compliance with U.S. federal income tax laws and regulations, the
Company and any underwriter, agent or dealer participating in the offering of
any Bearer Security will agree that, in connection with the original issuance of
such Bearer Security and during the period ending 40 days after the issue date
of such Bearer Security, they will not offer, sell or deliver such Bearer
Security, directly or indirectly, to a U.S. Person or to any person within the
United States, except to the extent permitted under U.S. Treasury regulations.
Bearer Securities will bear a legend to the following effect: "Any United
States Person who holds this obligation will be subject to limitations under the
United States income tax laws, including the limitations provided in Sections
165(j) and 1287(a) of the Internal Revenue Code." The sections referred to in
the legend provide that, with certain exceptions, a U.S. Person who holds Bearer
Securities will not be allowed to deduct any loss with respect to, and will not
be eligible for capital gain treatment with respect to any gain realized on a
sale, exchange, redemption or other disposition of, such Bearer Securities.
As used herein, "U.S. Person" means a person who is a citizen or resident
of the United States, or that is a corporation, partnership or other entity
created or organized in or under the laws of the United States or any
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political subdivision thereof, an estate the income of which is subject to U.S.
federal income taxation regardless of its source or a trust if (i) a U.S. court
is able to exercise primary supervision over the trust's administration and (ii)
one or more United States persons have the authority to control all of the
trust's substantial decisions, and the term "United States" means the United
States of America (including the States and the District of Columbia).
Pending the availability of a definitive Global Security or individual
Bearer Securities, as the case may be, Debt Securities that are issuable as
Bearer Securities may initially be represented by a single temporary Global
Security, without interest coupons, to be deposited with a common depositary in
London for Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear"), and Cedel Bank S.A. ("CEDEL")
for credit to the accounts designated by or on behalf of the purchasers thereof.
Following the availability of a definitive Global Security in bearer form,
without coupons attached, or individual Bearer Securities and subject to any
further limitations described in the applicable Prospectus Supplement, the
temporary Global Security will be exchangeable for interests in such definitive
Global Security or for such individual Bearer Securities, respectively, only
upon receipt of a "Certificate of Non-U.S. Beneficial Ownership". A "Certificate
of Non-U.S. Beneficial Ownership" is a certificate to the effect that a
beneficial interest in a temporary Global Security or Bearer Warrant is owned by
a person that is not a U.S. Person or is owned by or through a financial
institution in compliance with applicable U.S. Treasury regulations. In no event
will a definitive Bearer Security be delivered to a purchaser without the
receipt of a Certificate of Non-U.S. Beneficial Ownership. No Bearer Security
will be delivered in or to the United States. If so specified in the applicable
Prospectus Supplement, interest on a temporary Global Security will be paid to
each of Euroclear and CEDEL with respect to that portion of such temporary
Global Security held for its account, but only upon receipt as of the relevant
Interest Payment Date of a Certificate of Non-U.S. Beneficial Ownership.
Limitations on the offer, sale, delivery and exercise of Bearer Warrants
(including a requirement that a Certificate of Non-U.S. Beneficial Ownership be
delivered upon exercise of a Bearer Warrant) will be described in the Prospectus
Supplement relating to such Bearer Warrants.
EUROPEAN MONETARY UNION
Stage III of the European Economic and Monetary Union ("Stage III") is
presently scheduled to commence on January 1, 1999 for those member states of
the European Union that satisfy the economic convergence criteria set forth in
the Treaty on European Union. Certain of the foreign currencies in which Debt
Securities may be denominated or payments in respect of Index Warrants may be
due are signatories to such Treaty (any such country, a "Relevant Jurisdiction"
with respect to such Offered Securities). Stage III includes the introduction of
a single currency (the "Euro") which will be legal tender in such member states.
It is anticipated that the European Union will adopt regulations or other
legislation providing specific rules for the introduction of the Euro in
substitution for the respective current national currencies of such member
states, which regulations or legislation may be supplemented by legislation of
the individual member states. In the event that any Relevant Jurisdiction adopts
the Euro, the laws and regulations of the European Union (and, if any, of such
Relevant Jurisdiction) relating to the Euro implemented pursuant to or by virtue
of the Treaty on European Union shall apply to the relevant Offered Securities,
Indenture or Indentures and Index Warrant Agreement or Agreements, and, except
as provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of such relevant Offered Securities at any
time after the official date of introduction of the Euro by the Relevant
Jurisdiction shall be effected in Euro in conformity with any such legally
applicable measures.
If, following the introduction of the Euro by a Relevant Jurisdiction, the
Company has the option, pursuant to legally applicable measures, to make
payments of principal of, or interest on or any other amounts in respect of, the
relevant Offered Securities in either the current national currency of such
Relevant Jurisdiction or Euro, the Company will make such payments in such
national currency or Euro at its sole discretion. To the extent that the terms
and conditions of the relevant Offered Securities require the rounding
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up or down of certain amounts or quotations expressed in Euro, such rounding
will be made to the smallest currency unit of the Euro.
The circumstances and consequences described in this section and any
resultant amendment to the terms and conditions of the relevant Offered
Securities will not entitle any Holder of such Offered Securities (i) to any
legal remedy, including, without limitation, redemption, rescission, notice,
repudiation, adjustment or renegotiation of the terms and conditions of the
Offered Securities, Indenture or Indentures and Index Warrant Agreement or
Agreements, or (ii) to raise any defense or make any claim (including, without
limitation, claims of breach, force majeure, frustration of purpose or
impracticability) or any other claim for compensation, damages or any other
relief, nor will any such events affect any of the other obligations of the
Company under the Offered Securities, Indenture or Indentures and Index Warrant
Agreement or Agreements.
USE OF PROCEEDS AND HEDGING
General. The proceeds to be received by the Company from the sale of the
Offered Securities will be used for general corporate purposes, principally to
fund the business of its operating units and to fund investments in, or
extensions of credit or capital contributions to, its subsidiaries and to
lengthen the average maturity of liabilities, which may include the reduction of
short-term liabilities or the refunding of maturing indebtedness. In order to
fund its business, the Company expects to incur additional indebtedness in the
future.
Use of Proceeds Relating to Index Warrants and Indexed Notes. All or a
portion of the proceeds to be received by the Company from the sale of each
series of Index Warrants or any series of Debt Securities on which certain or
all payments of interest, principal or premium may be linked to an Index
("Indexed Notes") may be used by the Company or one or more of its subsidiaries
to purchase or maintain positions in all or certain of the Underlying Assets on
which the related Index is based, or options, futures contracts, forward
contracts or swaps, or options on the foregoing, or other derivative or
synthetic instruments relating to such Index or Underlying Assets, as the case
may be, and, if applicable, to pay the costs and expenses of hedging any
currency, interest rate or other Index-related risk with respect to such Index
Warrants and Indexed Notes. From time to time after the initial offering and
prior to the maturity of the Index Warrants and Indexed Notes, depending on
market conditions (including the value of the Index and/or the Underlying
Assets), in connection with hedging with respect to such Offered Securities, the
Company expects that it or one or more of its subsidiaries will increase or
decrease their initial hedging positions using dynamic hedging techniques and
may take long or short positions in the Index, the Underlying Assets, options,
futures contracts, forward contracts, swaps, or other derivative or synthetic
instruments related to, the Index and such Assets. In addition, the Company or
one or more of its subsidiaries may purchase or otherwise acquire a long or
short position in Index Warrants and Indexed Notes from time to time and may, in
their sole discretion, hold, resell or retire such Offered Securities. The
Company or one or more of its subsidiaries may also take hedging positions in
other types of appropriate financial instruments that may become available in
the future. To the extent that the Company or one or more of its subsidiaries
has a long hedge position in, options contracts in, or other derivative or
synthetic instruments related to, the Underlying Assets or Index, the Company or
one or more of its subsidiaries may liquidate all or a portion of its holdings
at or about the time of the maturity of the Index Warrants and Indexed Notes.
Depending on, among other things, future market conditions, the aggregate amount
and composition of such positions are likely to vary over time. Profits or
losses from any such position cannot be ascertained until such position is
closed out and any offsetting position or positions are taken into account.
Although the Company has no reason to believe that its hedging activity will
have a material impact on the price of such options, swaps, futures contracts,
options on the foregoing, or other derivative or synthetic instruments, or on
the value of the Index or the Underlying Assets, there can be no assurance that
the Company will not affect such prices or value as a result of its hedging
activities. The remainder of the proceeds from the sale of Index Warrants and
Indexed Notes will be used by the Company or its subsidiaries for general
corporate purposes, as described above.
23
<PAGE> 27
PLAN OF DISTRIBUTION
The Company may sell Offered 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 such methods of sale. The
applicable Prospectus Supplement will set forth the terms of the offering of any
Offered Securities, including the names of any underwriter or underwriters, the
purchase price of such Offered Securities and the proceeds to the Company from
such sale, any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers, any securities exchanges on which such
Offered Securities may be listed and any restrictions on the sale and delivery
of Offered Securities in bearer form.
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.
Such Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or by underwriters
without a syndicate. The Company expects that such managing underwriters or
underwriters in the United States will include one or more broker-dealer
subsidiaries of the Company. Unless otherwise set forth in the applicable
Prospectus Supplement, the obligations of the underwriters to purchase such
Offered Securities will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all of such Offered Securities if any
of such Offered Securities are purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
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 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.
Offered Securities may also be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, by one or
more firms ("remarketing firms") acting as principals for their own accounts or
as agents for the Company. Any remarketing firm will be identified and the terms
of its agreement, if any, with the Company and its compensation will be
described in the Prospectus Supplement. Remarketing firms may be deemed to be
underwriters in connection with the Offered Securities remarketed thereby.
Offered Securities may also be sold directly by the Company or through
agents designated by the Company from time to time. Any agent involved in the
offer or sale of Offered Securities will be named, and any commissions payable
by the Company to such agent will be set forth, in the applicable Prospectus
Supplement. Unless otherwise indicated in the applicable Prospectus Supplement,
any such agent will act on a best efforts basis for the period of its
appointment.
24
<PAGE> 28
As one of the means of direct issuance of Offered Securities, the Company
may utilize the services of an entity through which it may conduct an electronic
"dutch auction" or similar offering of the Offered Securities among potential
purchasers who are eligible to participate in the auction or offering of such
Offered Securities, if so described in the applicable Prospectus Supplement.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Offered Securities at the public offering price set
forth in such Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a future date specified in such Prospectus
Supplement. Such contracts will be subject only to those conditions set forth in
the applicable Prospectus Supplement, and such Prospectus Supplement will set
forth the commissions payable for solicitation of such contracts.
The anticipated date of delivery of Offered Securities will be as set forth
in the Prospectus Supplement relating to the offering of such Securities.
Any underwriters, dealers or agents participating in the distribution of
Offered Securities may be deemed to be underwriters and any discounts or
commissions received by them on the sale or resale of Offered Securities may be
deemed to be underwriting discounts and commissions under the Securities Act.
Agents, underwriters and dealers may be entitled under agreements entered into
with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments that the agents or underwriters may be required to make
in respect thereof. Agents, underwriters and dealers may be customers of, engage
in transactions with, or perform services for, the Company or its affiliates in
the ordinary course of business.
The participation of any broker-dealer subsidiary of the Company in the
offer and sale of Offered Securities complies 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. Each of
the Company's broker-dealer subsidiaries may act as an underwriter in an "at the
market" equity offering pursuant to Rule 415(a)(4) under the Securities Act and
may make a market in the Offered Securities but is not obligated to do so.
Certain of the Company's broker-dealer subsidiaries expect to offer and
sell previously issued Offered Securities in the course of each of their
respective business and may act as principal or agent in such transactions. This
Prospectus and the related Prospectus Supplements and Pricing Supplements may be
used by the Company or any of its subsidiaries in connection with such
transactions.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of the Offered
Securities on behalf of such Plan should determine whether such purchase is
permitted under the governing Plan documents and is prudent and appropriate for
the Plan in view of its overall investment policy and the composition and
diversification of its portfolio. Other provisions of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ("parties in interest" within the meaning of
ERISA or "disqualified persons" within the meaning of Section 4975 of the Code).
Thus, a Plan fiduciary considering the purchase of the Offered Securities should
consider whether such a purchase might constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code.
The Company, directly or through its affiliates, may be considered a "party
in interest" or a "disqualified person" with respect to many Plans that are
subject to ERISA. The purchase of Offered Securities by a Plan that is subject
to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code (including individual
retirement accounts and other plans described in Section 4975(e)(1) of the Code)
and with respect to which the Company is a party in interest or a disqualified
25
<PAGE> 29
person may constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code, unless such Offered Securities are acquired pursuant
to and in accordance with an applicable exemption, such as Prohibited
Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 91-38 (an exemption for certain transactions involving bank collective
investment funds), PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), or PTCE 95-60 (an exemption for
certain transactions involving insurance company general accounts). ANY PENSION
OR OTHER EMPLOYEE BENEFIT PLAN PROPOSING TO ACQUIRE ANY OFFERED SECURITIES
SHOULD CONSULT WITH ITS COUNSEL.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, have been 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 schedules of Travelers Group as
of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, included in the Company's Current Report on Form
8-K dated September 29, 1997, as amended by the Current Report on Form 8-K/A
dated October 28, 1997, have been audited by KPMG Peat Marwick LLP, 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 consolidated financial statements and schedules 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,
as amended by the Current Report on Form 8-K/A dated October 28, 1997 have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report therein, included thereon 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.
LEGAL MATTERS
Certain legal matters relating to the Offered Securities will be passed
upon for the Company 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.
Certain legal matters relating to the Offered Securities will be passed
upon for any underwriters or agents by Cleary, Gottlieb, Steen & Hamilton, New
York or Skadden, Arps, Slate, Meagher & Flom LLP, New York, 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.
26
<PAGE> 30
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 28, 1997
ON SEPTEMBER 24, 1997, SALOMON INC AND TRAVELERS GROUP INC. ("TRAVELERS
GROUP") ANNOUNCED THAT THEY HAD ENTERED INTO AN AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997, PURSUANT TO WHICH A NEWLY-FORMED, WHOLLY OWNED
SUBSIDIARY OF TRAVELERS GROUP WILL MERGE (THE "FIRST STEP MERGER") WITH AND INTO
SALOMON INC, WHICH WILL BECOME A WHOLLY OWNED SUBSIDIARY OF TRAVELERS GROUP AND
BE RENAMED SALOMON SMITH BARNEY HOLDINGS INC. (THE "COMPANY"). IMMEDIATELY
THEREAFTER, IT IS ANTICIPATED THAT SMITH BARNEY HOLDINGS INC., ANOTHER WHOLLY
OWNED SUBSIDIARY OF TRAVELERS GROUP, WILL BE MERGED WITH AND INTO THE COMPANY
(THE "SECOND STEP MERGER;" AND TOGETHER WITH THE FIRST STEP MERGER, REFERRED TO
COLLECTIVELY HEREIN AS THE "MERGER").
THIS PROSPECTUS SUPPLEMENT ASSUMES THE CONSUMMATION OF THE MERGER, WHICH IS
CURRENTLY ANTICIPATED TO BE COMPLETED ON OR ABOUT NOVEMBER 30, 1997. THE
SECURITIES OFFERED HEREBY ARE NOT INTENDED TO BE OFFERED, AND THIS PROSPECTUS
SUPPLEMENT IS NOT INTENDED TO BE USED, PRIOR TO THE CONSUMMATION OF THE MERGER.
PROSPECTUS SUPPLEMENT
$
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES H AND SERIES I
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
GENERAL TERMS OF SALE
The following terms will generally apply to the medium-term notes that we
will sell from time to time using this Prospectus Supplement and the attached
Prospectus. We will include information on the specific terms for each note in a
pricing supplement to this Prospectus Supplement (a "Pricing Supplement") that
we will deliver to prospective buyers of any note. We expect to receive between
$ and $ from the sale of the notes, after paying the agents
commissions of between $ and $ .
<TABLE>
<S> <C> <C>
MATURITY: More than 9 Months TERMS OF SPECIFIC NOTES MAY PERMIT ONE OR MORE OF THESE
FEATURES. YOU SHOULD REVIEW THE PRICING SUPPLEMENT FOR
FEATURES THAT APPLY TO YOUR NOTES
INTEREST RATES: Fixed, Floating,
or Zero Coupon
BASE FLOATING LIBOR - May be redeemable or repurchasable by us
RATES: Commercial Paper Rate
Treasury Rate - May be renewable at your option or extendible at our
CD Rate option
Prime Rate
J.J. Kenny Rate - Interest rate may be reset at our option from time to
Eleventh District Cost of time and be redeemable by you at the time of any reset
Funds Rate
- May be issued with Original Issue Discount for tax
purposes
INDEXED NOTES: Payments of interest or - Portion of principal may be payable prior to maturity
principal may be linked to the
price of one or more
securities, currencies,
commodities or other goods
PAYMENT DATES: Generally semi-annually for Notes will be sold through our broker-dealer
Fixed Rate Notes subsidiaries, as Agents
Interest on Floating Rate or Notes may be subject to certain indexation and currency
Indexed Notes may be paid risks
monthly, quarterly, semi-
annually or annually Series H Notes are part of our Senior Indebtedness;
Series I Notes are part of our Subordinated
Indebtedness
CURRENCIES: U.S. Dollars and other
currencies
DENOMINATION: Minimum of $1,000
</TABLE>
This Prospectus Supplement is dated , 1997.
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAS ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 31
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
ACCOMPANYING PROSPECTUS ("THE PROSPECTUS") IN CONNECTION WITH THE OFFER
CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR AN AGENT. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING
SUPPLEMENT AND THE PROSPECTUS) NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
PROSPECTUS. THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING
SUPPLEMENT) AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
PURCHASES OF SUCH NOTES TO STABILIZE THEIR MARKET PRICE, PURCHASES OF SUCH NOTES
TO COVER ALL OR SOME OF A SHORT POSITION IN THE SECURITIES MAINTAINED BY THE
UNDERWRITERS FOR ANY OFFERING AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
THIS PROSPECTUS SUPPLEMENT, THE RELATED PRICING SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS MAY BE USED BY THE COMPANY, THE AGENTS OR OTHER
AFFILIATES OF THE COMPANY IN CONNECTION WITH OFFERS AND SALES RELATED TO
SECONDARY MARKET TRANSACTIONS IN THE REGISTERED NOTES OFFERED HEREBY. AN AGENT
OR OTHER SUCH COMPANY AFFILIATES MAY ACT AS PRINCIPAL OR AGENT IN SUCH
TRANSACTION. SUCH SALES WILL BE MADE AT VARYING PRICES RELATING TO PREVAILING
MARKET PRICES OR THE TIME OF SALE.
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"), which 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" and, together with Smith Barney (as
well as any successor or successors thereto), hereinafter referred to from time
to time as the "Agents").
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
S-2
<PAGE> 32
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
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.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each Registered Note (as defined below)
in the currency designated by the Company (the "Specified Currency") for such
Note. If requested by a prospective purchaser of a Registered Note having a
Specified Currency other than U.S. dollars, each of the Agents may at its
discretion arrange for the exchange of U.S. dollars into such Specified Currency
to enable the purchaser to pay for such Note. Each such exchange will be made by
an Agent on such terms and subject to such conditions, limitations and charges
as an Agent may from time to time establish in accordance with its regular
foreign exchange practice. All costs of exchange will be borne by the purchaser.
References herein to "U.S. dollars," "U.S.$," "dollar" or "$" are to the
lawful currency of the United States.
DESCRIPTION OF REGISTERED NOTES
The following description of the particular terms of the Registered Notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made.
GENERAL
The Company's Medium-Term Notes, Series H Notes (the "Series H Notes") are
a series of Debt Securities issued under the Senior Debt Indenture, and the
Company's Medium-Term Notes, Series I Notes (the "Series I Notes" and, together
with the Series H Notes, the "Notes") are a series of Debt Securities issued
under the Subordinated Debt Indenture. At the date of this Prospectus
Supplement, the Notes offered pursuant to this Prospectus Supplement are limited
to an aggregate initial public offering price or purchase price of up to
$ or the equivalent thereof in one or more foreign or composite
currencies, which amount is subject to reduction as a result of the sale of
other securities under the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part or under a Registration
Statement to which this Prospectus Supplement and the accompanying Prospectus
relate. The amount of Notes sold of either series will reduce the amount of
Notes of the other series that may be sold. The Company reserves the right to
withdraw, cancel or modify the offer made hereby without notice. The aggregate
amount of Notes may be increased from time to time to such larger amount as may
be authorized by the Company. In addition to the Notes in registered form
("Registered Notes") being offered hereby in the United States, the Company may
offer Notes in bearer form ("Bearer Notes") in a concurrent offering outside the
United States. The U.S. dollar equivalent of the public offering price or
purchase price of a Note having a Specified Currency other than U.S. dollars
will be determined on the basis of the noon buying rate in New York City for
cable transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York (the "Market Exchange Rate") for such Specified
Currency on the applicable issue date. Such
S-3
<PAGE> 33
determination will be made by the Company or its agent, as exchange rate agent
for both series of Notes (the "Exchange Rate Agent").
The Series H Notes will constitute part of the Senior Indebtedness of the
Company and will rank pari passu with all other unsecured debt of the Company
except subordinated debt. The Series I Notes will be subordinate and junior in
the right of payment, to the extent and in the manner set forth in the
Subordinated Debt Indenture, to all Senior Indebtedness of the Company. See
"Description of Debt Securities -- Subordinated Debt" in the Prospectus. On a
combined basis after giving effect to the merger of Smith Barney Holdings Inc.
with and into the Company, as of September 30, 1997, the aggregate principal
amount of Senior Indebtedness of the Company outstanding was $ billion,
consisting of the following: $ billion of term debt, $ billion in
commercial paper and $ billion in other short-term borrowings.
The Notes will consist of Registered Notes and Bearer Notes, each of which
will be offered on a continuous basis. Registered Notes will be issued in fully
registered form only, without coupons. Registered Notes may not be exchanged for
Bearer Notes.
Each Registered Note will be issued initially as either a Global Security
registered in the name of a nominee of The Depository Trust Company, as
Depositary (a "Book-Entry Note") or, if specified in the applicable Pricing
Supplement, a certificate issued in temporary or definitive form (a
"Certificated Note"). Except as set forth in the Prospectus under "Description
of Debt Securities -- Global Securities," Book-Entry Notes will not be issuable
as Certificated Notes. See "Book-Entry System" below.
Unless otherwise specified in the applicable Pricing Supplement, the
authorized denominations of Registered Notes denominated in U.S. dollars will be
$1,000 and any larger amount that is an integral multiple of $1,000, and the
authorized denominations of Registered Notes having a Specified Currency other
than U.S. dollars will be the approximate equivalents thereof in the Specified
Currency.
Unless otherwise specified in the applicable Pricing Supplement, each
Registered Note will mature on a Business Day more than nine months from its
date of issue, as selected by the purchaser and agreed to by the Company (the
"Stated Maturity"), which maturity date may be subject to extension at the
option of the Company. Each Registered Note may also be subject to redemption at
the option of the Company, or to repayment at the option of the Holder, prior to
its Stated Maturity. Each Registered Note having a Specified Currency of Pounds
Sterling will mature in compliance with such regulations as the Bank of England
may promulgate from time to time.
The Pricing Supplement relating to a Registered Note will describe the
following terms: (i) the Specified Currency for such Note; (ii) whether such
Note bears interest at a fixed rate (a "Fixed Rate Note," which may be zero in
the case of certain Original Issue Discount Notes, as defined below), a floating
rate (a "Floating Rate Note"), an amortizing note (an "Amortizing Note") on
which a portion or all the principal amount is payable prior to Stated Maturity
in accordance with a schedule, by application of a formula, or by reference to
an index and/or an indexed note (an "Indexed Note") on which the amount of any
interest payment, in the case of an Indexed Rate Note (as defined below), and/or
the principal amount payable at maturity, in the case of an Indexed Principal
Note (as defined below), will be determined by reference to the level of prices,
or changes in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities or by application of a formula;
(iii) the price (expressed as a percentage of the aggregate principal amount or
face amount thereof) at which such Note will be issued (the "Issue Price"); (iv)
the date on which such Note will be issued (the "Original Issue Date"); (v) the
date of the Stated Maturity; (vi) if such Note is a Fixed Rate Note, the rate
per annum at which such Note will bear interest, if any, and whether and the
manner in which such rate may be changed prior to its Stated Maturity; (vii) if
such Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the
Interest Reset Period or the Interest Reset Dates, the Interest Payment Dates,
and, if applicable, the Index Maturity, the Maximum Interest Rate, the Minimum
Interest Rate, the Spread or Spread Multiplier (all as defined below), and any
other terms relating to the particular method of calculating the interest rate
for such Note and whether and the manner in which such Spread or Spread
Multiplier may be changed prior to Stated Maturity; (viii) whether such Note is
an Original Issue Discount Note (as defined under "Certain United States Federal
Income Tax Considerations -- Original Issue Discount"); (ix) if such Note is an
Amortizing Note, the terms for repayment prior to
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Stated Maturity; (x) if such Note is an Indexed Note, in the case of an Indexed
Rate Note, the manner in which the amount of any interest payment will be
determined or, in the case of an Indexed Principal Note, its Face Amount and the
manner in which the principal amount payable at Stated Maturity will be
determined; (xi) whether such Note may be redeemed at the option of the Company,
or repaid at the option of the Holder, prior to Stated Maturity as described
under "Optional Redemption, Repayment and Repurchase" below and, if so, the
provisions relating to such redemption or repayment, including, in the case of
an Original Issue Discount Note or Indexed Note, the information necessary to
determine the amount due upon redemption or repayment; (xii) whether such Note
is subject to an optional extension beyond its Stated Maturity as described
under "Extension of Maturity" below; (xiii) whether such Note will be
represented by a Global Security or a certificate issued in definitive form;
(xiv) certain special U.S. federal income tax consequences of the purchase,
ownership and disposition of certain Notes, if any; (xv) whether such Note is a
Renewable Note (as defined below), and, if so, the specific terms thereof; (xvi)
the use of proceeds, if such use materially differs from that disclosed in the
accompanying Prospectus; and (xvii) any other terms of such Note provided in the
accompanying Prospectus to be set forth in a Pricing Supplement or otherwise not
inconsistent with the provisions of the Indenture under which such Note will be
issued.
"Business Day" with respect to any Registered Note means any day, other
than a Saturday or Sunday, that is (i) not a day on which banking institutions
are authorized or required by law or regulation to be closed in (a) The City of
New York or (b) if the Specified Currency for such Note is other than U.S.
dollars, the financial center of the country issuing such Specified Currency
(which, in the case of the Euro, shall be Brussels, Belgium) and (ii) if such
Note is a LIBOR Note (as defined below), a London Banking Day. "London Banking
Day" with respect to any Registered Note means any day on which dealings in
deposits in the Specified Currency of such Note are transacted in the London
interbank market.
"Original Issue Discount Note" means (i) a Registered Note, including any
such Note whose interest rate is zero, that has a stated redemption price at
Stated Maturity that exceeds its Issue Price by at least 0.25% of its stated
redemption price at Stated Maturity, multiplied by the number of full years from
the Original Issue Date to the Stated Maturity for such Note and (ii) any other
Registered Note designated by the Company as issued with original issue discount
for U.S. federal income tax purposes.
A "basis point" or "bp" equals one one-hundredth of a percentage point.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of and any premium and interest on each Registered Note are
payable by the Company in the Specified Currency for such Note. If the Specified
Currency for a Registered Note is other than U.S. dollars, the Company will
(unless otherwise specified in the applicable Pricing Supplement) arrange to
convert all payments in respect of such Note into U.S. dollars in the manner
described in the following paragraph. The Holder of a Registered Note having a
Specified Currency other than U.S. dollars may (if the applicable Pricing
Supplement and such Note so indicate) elect to receive all payments in respect
of such Note in the Specified Currency by delivery of a written notice to the
Trustee for such Note not later than fifteen calendar days prior to the
applicable payment date, except under the circumstances described under
"Currency Risks -- Payment Currency" below. Such election will remain in effect
until revoked by written notice to such Trustee received not later than fifteen
calendar days prior to the applicable payment date and no such change of
election may be made with respect to payments on any Note with respect to which
(i) an Event of Default has occurred or (ii) the Company has given notice of
redemption.
In the case of a Registered Note having a Specified Currency other than
U.S. dollars, the amount of any U.S. dollar payment in respect of such
Registered Note will be determined by the Exchange Rate Agent based on the
highest firm bid quotation expressed in U.S. dollars received by the Exchange
Rate Agent at approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date (or, if no such rate is
quoted on such date, the last date on which such rate was quoted), from three
(or, if three are not available, then two) recognized foreign exchange dealers
in The City of New York (one or both of which may be an Agent and another of
which may be the Exchange Rate Agent) selected by the Exchange Rate Agent, for
the purchase by the quoting dealer, for settlement on such payment date, of the
aggregate
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amount of such Specified Currency payable on such payment date in respect of all
Registered Notes denominated in such Specified Currency. All currency exchange
costs will be borne by the Holders of such Notes by deductions from such
payments. If no such bid quotations are available, such payments will be made in
such Specified Currency, unless such Specified Currency is unavailable due to
the imposition of exchange controls or to other circumstances beyond the
Company's control, in which case such payments will be made as described under
"Currency Risks -- Payment Currency" below.
Unless otherwise specified in the applicable Pricing Supplement, U.S.
dollar payments of interest on Registered Notes (other than interest payable at
Stated Maturity) will be made, except as provided below, by check mailed to the
Registered Holders of such Notes (which, in the case of Global Securities
representing Book-Entry Notes, will be a nominee of the Depositary); provided,
however, that, in the case of a Registered Note issued between a Regular Record
Date and the related Interest Payment Date, unless otherwise specified in the
related Pricing Supplement, interest for the period beginning on the Original
Issue Date for such Note and ending on such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the registered Holder of such
Note on the related Regular Record Date. A Holder of $10,000,000 (or the
equivalent thereof in a Specified Currency other than U.S. dollars) or more in
aggregate principal amount of Registered Notes of like tenor and term shall be
entitled to receive such U.S. dollar payments by wire transfer of immediately
available funds, but only if appropriate wire transfer instructions have been
received in writing by the Trustee for such Notes not later than fifteen
calendar days prior to the applicable Interest Payment Date. Simultaneously with
the election by any Holder to receive payments in a Specified Currency other
than U.S. dollars (as provided above), such Holder shall provide appropriate
wire transfer instructions to the Trustee for such Notes. Unless otherwise
specified in the applicable Pricing Supplement, principal and any premium and
interest payable at the Stated Maturity of a Registered Note will be paid in
immediately available funds upon surrender of such Note at the corporate trust
office or agency of the Trustee for such Note in The City of New York.
Unless otherwise specified in this Prospectus Supplement or the applicable
Pricing Supplement, any payment required to be made in respect of a Registered
Note on a date (including the day of Stated Maturity) that is not a Business Day
for such Note need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on such date,
and no additional interest shall accrue as a result of such delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described under "Description of Debt Securities -- Events of
Default" in the Prospectus, the amount of principal due and payable with respect
to such Note shall be limited to the aggregate principal amount (or face amount,
in the case of an Indexed Principal Note) of such Note multiplied by the sum of
its Issue Price (expressed as a percentage of the aggregate principal amount)
plus the original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
The Regular Record Date with respect to any Interest Payment Date for a
Floating Rate Note, Fixed Rate Note or an Indexed Rate Note shall be the date
(whether or not a Business Day) fifteen calendar days immediately preceding such
Interest Payment Date.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or
from the last Interest Payment Date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable Pricing Supplement
until the principal amount thereof is paid or made available for payment, except
as described below under "Subsequent Interest Periods" and "Extension of
Maturity", and except that if so specified in the applicable Pricing Supplement,
the rate of interest payable on certain Fixed Rate Notes may be subject to
adjustment from time to time as described in such Pricing Supplement. Unless
otherwise set forth in the applicable Pricing Supplement, interest on each Fixed
Rate Note will be payable semiannually in arrears on such dates as set forth in
the applicable Pricing Supplement (each such day being an "Interest
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<PAGE> 36
Payment Date") and at Stated Maturity. Unless otherwise specified in the
applicable Pricing Supplement, if an Interest Payment Date with respect to any
Fixed Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall not be postponed; provided, however, that any
payment required to be made in respect of such Note on a date (including the day
of Stated Maturity) that is not a Business Day for such Note need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment. However, if with respect to any
Fixed Rate Note, "Accrue to Pay" is specified in the applicable Pricing
Supplement, and any Interest Payment Date with respect to such Fixed Rate Note
would otherwise be a day that is not a Business Day, such Interest Payment Date
shall be postponed to the next succeeding Business Day. Each payment of interest
in respect of an Interest Payment Date shall include interest accrued through
the day before such Interest Payment Date. Unless otherwise specified in the
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months ("30 over 360").
FLOATING RATE NOTES
From its Original Issue Date to, but not including, the first Interest
Reset Date (the "Initial Interest Period"), each Floating Rate Note will bear
interest at the Initial Interest Rate set forth, or otherwise described, in the
Pricing Supplement. From each Interest Reset Date to, but not including, the
following Interest Reset Date (each such period, an "Interest Reset Period," and
together with the Initial Interest Period, the "Interest Periods"), the interest
rate for each Floating Rate Note will be determined by reference to an interest
rate basis (the "Base Rate"), plus or minus the Spread, if any, or multiplied by
the Spread Multiplier, if any. The "Spread" is the number of basis points that
may be specified in the applicable Pricing Supplement as being applicable to
such Note, and the "Spread Multiplier" is the percentage that may be specified
in the applicable Pricing Supplement as being applicable to such Note, except in
each case as described below under "Subsequent Interest Periods" and "Extension
of Maturity," and except that if so specified in the applicable Pricing
Supplement, the Spread or Spread Multiplier on certain Floating Rate Notes may
be subject to adjustment from time to time as described in such Pricing
Supplement. The applicable Pricing Supplement will designate one of the
following Base Rates as applicable to a Floating Rate Note: (i) LIBOR (a "LIBOR
Note"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (iii)
the Treasury Rate (a "Treasury Rate Note"), (iv) the Federal Funds Rate (a
"Federal Funds Rate Note"), (v) the CD Rate (a "CD Rate Note"), (vi) the Prime
Rate (a "Prime Rate Note"), (vii) the J.J. Kenny Rate (a "J.J. Kenny Rate
Note"), (viii) the Eleventh District Cost of Funds Rate (an "Eleventh District
Cost of Funds Rate Note"), or (ix) such other Base Rate as is set forth in such
Pricing Supplement and in such Note. The "Index Maturity" for any Floating Rate
Note is the period of maturity of the instrument or obligation from which the
Base Rate is calculated. "H.15(519)" means the publication entitled "Statistical
Release H.15(519), Selected Interest Rates," or any successor publication,
published by the Board of Governors of the Federal Reserve System. "Composite
Quotations" means the daily statistical release entitled "Composite 3:30 p.m.
Quotations for U.S. Government Securities" published by the Federal Reserve Bank
of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ("Maximum Interest
Rate") and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("Minimum Interest Rate"). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Notes will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law, with
certain exceptions, is 25% per annum on a simple interest basis. Such maximum
rate of interest only applies to obligations that are less than $2,500,000.
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The Company will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Series H Floating Rate Note and Bankers Trust Company
shall be the Calculation Agent for each Series I Floating Rate Note. All
determinations of interest by the Calculation Agent shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of the
Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (each day on which the interest
rate is reset, an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Dates will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under "Treasury Rate Notes"); in the case of Floating Rate Notes that
reset monthly, the third Wednesday of each month (with the exception of monthly
reset Eleventh District Cost of Funds Rate Notes, which reset on the first
calendar day of each month); in the case of Floating Rate Notes that reset
quarterly, the third Wednesday of March, June, September and December of each
year; in the case of Floating Rate Notes that reset semiannually, the third
Wednesday of each of two months of each year specified in the applicable Pricing
Supplement; and, in the case of Floating Rate Notes that reset annually, the
third Wednesday of one month of each year specified in the applicable Pricing
Supplement. If an Interest Reset Date for any Floating Rate Note would otherwise
be a day that is not a Business Day, such Interest Reset Date shall be postponed
to the next succeeding Business Day, except that, in the case of a LIBOR Note,
if such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day. If an auction of
direct obligations of United States Treasury Bills ("Treasury bills") falls on a
day that is an Interest Reset Date for Treasury Rate Notes, the Interest Reset
Date shall be the succeeding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest that goes into effect on any Interest Reset Date shall be determined
on a date (the "Rate Determination Date") preceding such Interest Reset Date, as
further described below. Such Rate Determination Date may be referred to below
as a "CD Rate Determination Date" in the case of a CD Rate Note, a "Commercial
Paper Rate Determination Date" in the case of a Commercial Paper Rate Note, a
"Federal Funds Rate Determination Date" in the case of a Federal Funds Rate
Note, a "LIBOR Determination Date" in the case of a LIBOR Note, a "Treasury Rate
Determination Date" or a "Constant Maturity Treasury Rate Determination Date" in
the case of a Treasury Rate Note, a "Prime Rate Determination Date" in the case
of a Prime Rate Note, a "J.J. Kenny Rate Determination Date" in the case of a
J.J. Kenny Rate Note, or an "Eleventh District Cost of Funds Rate Date" in the
case of Eleventh District Cost of Funds Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding the applicable Interest Payment Date.
In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue Date
or the last date to which interest has been accrued and paid, as the case may
be, to but excluding the Record Date immediately preceding the applicable
Interest Payment Date, except that, at Stated Maturity, interest payable will
include interest accrued to but excluding the date of Stated Maturity.
With respect to a Floating Rate Note with more than one Interest Reset Date
during any period for which accrued interest is being calculated, accrued
interest shall be calculated by multiplying the principal amount of such Note
(or, in the case of a Floating Rate Note that is an Indexed Principal Note, its
Face Amount, as indicated in the applicable Pricing Supplement) by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which accrued
interest is being calculated. The interest factor (expressed as a decimal
calculated to seven decimal places without rounding) for each such day is
computed, unless otherwise specified in the applicable Pricing Supplement, by
dividing the interest rate in effect on such day by 360 ("Actual over 360"), in
the case of LIBOR Notes, Prime Rate Notes, J.J. Kenny Rate Notes, Eleventh
District Cost of Funds Rate Notes,
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Commercial Paper Rate Notes, Federal Funds Rate Notes and CD Rate Notes, or by
the actual number of days in the year ("Actual over Actual"), in the case of
Treasury Rate Notes. For purposes of making the foregoing calculation, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date. With respect to all other Floating Rate Notes, accrued
interest shall be calculated by multiplying the principal amount of such Note
(or, in the case of a Floating Rate Note that is an Indexed Principal Note, its
Face Amount) by the interest rate in effect during the period for which accrued
interest is being calculated, and multiplying that product by the quotient
obtained by dividing the number of days in the period for which accrued interest
is being calculated by 360, in the case of LIBOR Notes, Prime Rate Notes, J.J.
Kenny Rate Notes, Eleventh District Cost of Funds Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes and CD Rate Notes, or by the actual number
of days in the year, in the case of Treasury Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, and
all currency amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest one-hundredth of a unit (with .005 of a
unit being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly (other than Eleventh District Cost of Funds
Rate Notes), on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in the applicable
Pricing Supplement or, in the case of Eleventh District Cost of Funds Rate
Notes, on the first calendar day of each March, June, September and December, as
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September,
and December of each year; in the case of Floating Rate Notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, on the third Wednesday of one month of each year
specified in the applicable Pricing Supplement, and in each case at Maturity
(each such day being an "Interest Payment Date"). If an Interest Payment Date
with respect to any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date shall be postponed to the next
succeeding Business Day, except that, in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day; provided, however, if with
respect to any Floating Rate Note, the applicable Pricing Supplement provides
that the Note does not Accrue to Pay, if an Interest Payment Date with respect
to such Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Payment Date shall not be postponed; provided, further, that any
payment required to be made in respect of a Floating Rate Note that does not
Accrue to Pay on a date (including the day of Stated Maturity) that is not a
Business Day for such Note need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made on such
dates, and no additional interest shall accrue as a result of such delayed
payment.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note.
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate
Determination Date") for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)." In the event that such
rate is not published prior to 3:00 p.m., New York City time, on
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<PAGE> 39
the Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the "CD Rate" for such Interest Reset Period will be the rate on such
CD Rate Determination Date for negotiable certificates of deposit of the Index
Maturity designated in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Certificates of Deposit." If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "CD Rate" for
such Interest Reset Period will be calculated by the Calculation Agent for such
CD Rate Note and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent for such CD
Rate Note for negotiable certificates of deposit of major United States money
center banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index Maturity
designated in the Pricing Supplement in a denomination of $5,000,000; provided,
however, that if the dealers selected as aforesaid by such Calculation Agent are
not quoting offered rates as mentioned in this sentence, the "CD Rate" for such
Interest Reset Period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall
be the tenth calendar day after such CD Rate Determination Date or, if such day
is not a Business Day, the next succeeding Business Day.
CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Note as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper." In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper." If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Rate Note for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the "Commercial Paper Rate" for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
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"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<C> <C> <S>
D X 360
----------------
Money Market Yield = X 100
360 - (DXM)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)." In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate." If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Federal Funds Rate" for such Interest Reset
Period shall be the rate on such Federal Funds Rate Determination Date made
publicly available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15(519) under the heading "Federal Funds
(Effective);" provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the "Federal Funds Rate" for such Interest Reset
Period will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate). In the case of a Federal Funds Rate Note that resets
daily, the interest rate on such Note for the period from and including a Monday
to but excluding the succeeding Monday will be reset by the Calculation Agent
for such Note on such second Monday (or, if not a Business Day, on the next
succeeding Business Day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
"LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent for such LIBOR Notes as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the offered rates for
deposits in the Specified Currency for the period of the Index Maturity
specified in the applicable Pricing Supplement, commencing on such Interest
Reset Date, which appear on the Designated LIBOR Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. If "LIBOR
Telerate" is designated in the applicable Pricing Supplement, "Designated
LIBOR Page" means the display designated as page "3750" on the Dow Jones
Telerate Service (or such other
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page as may replace page "3750" on such service or such other service as
may be nominated by the British Bankers' Association for the purpose of
displaying the London interbank offered rates of major banks), and LIBOR
for such Interest Reset Period will be the relevant offered rate as
determined by the Calculation Agent. If "LIBOR Reuters" is designated in
the applicable Pricing Supplement, "Designated LIBOR Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or such other page as may replace the LIBO page on such service or
such other service as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank offered rates of major
banks) provided that at least two such offered rates appear on the
Designated LIBOR Page, in which case, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of such offered rates as determined by
the Calculation Agent for such LIBOR Note.
(ii) If LIBOR cannot be determined as above (either because the
Designated LIBOR Page is no longer available or because less than two rates
appear on page "LIBO" on the Reuters Monitor Money Rate Services) on such
LIBOR Determination Date, the Calculation Agent for such LIBOR Note will
request the principal London offices of each of four major banks in the
London interbank market selected by such Calculation Agent to provide such
Calculation Agent with its offered quotations for deposits in the Specified
Currency for the period of the specified Index Maturity, commencing on such
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and
in a principal amount equal to an amount of not less than $1,000,000 or the
approximate equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time. If at
least two such quotations are provided, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of such quotations. If fewer than two
such quotations are provided, "LIBOR" for such Interest Reset Period will
be the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent for such LIBOR Note at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in the Specified Currency to leading European banks, for the
period of the specified Index Maturity, commencing on such Interest Reset
Date, and in a principal amount equal to an amount of not less than
$1,000,000 or the approximate equivalent thereof in the Specified Currency
that is representative of a single transaction in such market at such time;
provided, however, that if fewer than three banks selected as aforesaid by
such Calculation Agent are quoting rates as mentioned in this sentence,
"LIBOR" for such Interest Reset Period will be the same as LIBOR for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period
at the interest rate calculated with reference to the Treasury Rate and the
Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless "Constant Maturity" is specified or unless otherwise specified in
the applicable Pricing Supplement, the "Treasury Rate" for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct obligations of
the United States ("Treasury securities") having the Index Maturity specified in
the applicable Pricing Supplement, as such rate shall be published in H.15(519)
under the heading "U.S. Government Securities-Treasury bills-auction average
(investment)" or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury securities having the specified Index
Maturity are not published or reported as provided above by 3:00 p.m., New York
City time, on such Calculation Date, or if no such auction is held on such
Treasury Rate Determination Date, then the "Treasury Rate" for such Interest
Reset Period shall be calculated by the Calculation Agent for such Treasury Rate
Note and shall be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the
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arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury securities with a remaining maturity
closest to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week, unless that day
is legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction date
shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing Supplement,
the "Treasury Rate" for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
"U.S. Government/Securities/Treasury Constant Maturities/" in the Index Maturity
with respect to the applicable Constant Maturity Treasury Rate Determination
Date (as defined below). If the H.15(519) is not published, the "Treasury Rate"
shall be the rate that was set forth on Telerate Page 7055, or its successor
page (as determined by the Calculation Agent), on the applicable Constant
Maturity Treasury Rate Determination Date opposite the applicable Index
Maturity. If no such rate is set forth, then the Treasury Rate for such Interest
Reset Period shall be established by the Calculation Agent as follows: The
Calculation Agent will contact the Federal Reserve Board and request the
Treasury Rate, in the applicable Index Maturity, for the Constant Maturity
Treasury Rate Determination Date. If the Federal Reserve Board does not provide
such information, then the Treasury Rate for such Interest Reset Date will be
the arithmetic mean of bid-side quotations, expressed in terms of yield,
reported by three leading U.S. government securities dealers (one of which may
be an Agent), according to their written records, as of 3:00 p.m. (New York City
time) on the Constant Maturity Treasury Rate Determination Date, for the
noncallable U.S. Treasury Note that is nearest in maturity to the Index
Maturity, but not less than exactly the Index Maturity and for the noncallable
U.S. Treasury Note that is nearest in maturity to the Index Maturity, but not
more than exactly the Index Maturity. The Calculation Agent shall calculate the
Treasury Rate by interpolating to the Index Maturity based on an actual/actual
date count basis, the yield on the two Treasury Notes selected. If the
Calculation Agent cannot obtain three such adjusted quotations, the Treasury
Rate for such Interest Reset Date will be the arithmetic mean of all such
quotations, or if only one such quotation is obtained, such quotation, obtained
by the Calculation Agent. In all events, the Calculation Agent shall continue
polling dealers until at least one adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
The Treasury constant maturity rate for a Treasury security maturity (the
"CMT Rate") as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as of
any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the
over-the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include one or more of the Agents or
other affiliates of the Company. Certain constant maturity yield values are read
from the yield curve. Such interpolation from the yield curve provides a
theoretical yield for a Treasury security having ten years to maturity, for
example, even if no outstanding Treasury security has as of such date exactly
ten years remaining to maturity.
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The "Calculation Date" pertaining to any Treasury Rate Determination Date
or Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination Date or Constant Maturity
Rate Determination Date, as applicable, or, if such a day is not a Business Day,
the next succeeding Business Day.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, the "Prime
Rate" for each Interest Reset Period will be determined by the Calculation Agent
for such Prime Rate Note as of the second Business Day prior to the Interest
Reset Date for such Interest Reset Period (a "Prime Rate Determination Date")
and shall be the rate made available and subsequently published on such date in
H.15(519) under the heading "Bank Prime Loan." In the event that such rate has
not been made available prior to 3:00 P.M., New York City time, on the
Calculation Date (as defined below) pertaining to such Prime Rate Determination
Date, the Prime Rate will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime
rate or base lending rate as in effect for such Prime Rate Determination Date.
If fewer than four such rates but more than one such rate appear on the Reuters
Screen NYMF Page for the Prime Rate Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 360 as of the close of business on such Prime Rate
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate will be calculated by the Calculation
Agent and will be the arithmetic mean of the prime rates quoted in The City of
New York on such Prime Rate Determination Date by at least three substitute
banks or trust companies organized and doing business under the laws of the
United States, or any State thereof, having total equity capital of at least
U.S. $500,000,000 and being subject to supervision or examination by Federal or
State authority, selected by the Calculation Agent to provide such rate or
rates; provided, however, that if the banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate with respect to such Prime Rate Determination Date will
be the Prime Rate in effect on such Prime Rate Determination Date. "Reuters
Screen NYMF Page" means the display designated as page "NYMF" on the Reuters
Monitor Money Rates Service (or such other page as may replace the NYMF page on
that service for the purpose of displaying prime rates or base lending rates of
major United States banks).
The "Calculation Date" pertaining to any Prime Rate Determination Date
shall be the tenth calendar day after such Prime Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
J.J. Kenny Rate Notes
J.J. Kenny Rate Notes will bear interest at the interest rates (calculated
by reference to the J.J. Kenny Rate and the Spread or Spread Multiplier, if any)
specified in the J.J. Kenny Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, the "J.J.
Kenny Rate" for each Interest Reset Period will be determined by the Calculation
Agent for such J.J. Kenny Rate Note as of the second Business Day prior to the
Interest Reset Date for such Interest Reset Period (a "J.J. Kenny Rate
Determination Date") and shall be the per annum rate on such date equal to the
index made available and subsequently published by Kenny Information Systems or
its successor, based upon 30-day yield evaluations at par of bonds, the interest
on which is excludable from gross income for federal income tax purposes under
the Internal Revenue Code of 1986, as amended (the "Code"), of not less than
five "high grade" component issuers selected from time to time by Kenny
Information Systems, including without limitation, issuers of general obligation
bonds; provided, however, that the bonds on which the index is based shall not
include any
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bonds the interest on which is subject to an "alternate minimum tax" or similar
tax under the Code, unless all tax-exempt bonds are subject to such tax. If such
rate is not made available by 3:00 P.M., New York City time, on the Calculation
Date (as defined below) pertaining to such J.J. Kenny Rate Determination Date,
the J.J. Kenny Rate shall be the rate quoted by a successor indexing agent
selected by the Company equaling the prevailing rate for bonds rated in the
highest short-term rating category by Moody's Investors Service, Inc. and
Standard & Poor's Corporation in respect of issuers selected by such successor
indexing agent most closely resembling the "high grade" component issuers
selected by Kenny Information Systems that are subject to tender by the holders
thereof for purchase on not more than seven days' notice and the interest on
which is (A) variable on a weekly basis, (B) excludable from gross income for
federal income tax purposes under the Code, and (C) not subject to an "alternate
minimum tax" or similar tax under the Code, unless all tax-exempt bonds are
subject to such tax; provided, however, that if a successor indexing agent is
not available, the J.J. Kenny Rate with respect to such J.J. Kenny Rate
Determination Date will be the J.J. Kenny Rate for the immediately preceding
Interest Reset Period (or, if there was not such Interest Reset Period, the
Initial Interest Rate).
The "Calculation Date" pertaining to any J.J. Kenny Rate Determination Date
shall be the tenth calendar day after such J.J. Kenny Rate Determination Date
or, if such day is not a Business Day, the next succeeding Business Day.
Eleventh District Cost of Funds Rate Notes
Eleventh District Cost of Funds Rate Notes will bear interest at the
interest rates (calculated by reference to the Eleventh District Cost of Funds
Rate and the Spread or Spread Multiplier, if any) specified in the Eleventh
District Cost of Funds Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, the
"Eleventh District Cost of Funds Rate", for each Interest Reset Period will be
determined by the Calculation Agent for such Eleventh District Cost of Funds
Rate Note as of the last working day of the month immediately prior to such
Interest Reset Date for such Interest Reset Period on which the Federal Home
Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the Eleventh
District Cost of Funds Index (as defined below) (the "Eleventh District Cost of
Funds Rate Determination Date"), and shall be the rate equal to the monthly
weighted average cost of funds for the calendar month preceding such Eleventh
District Cost of Funds Interest Determination Date as set forth under the
caption "Eleventh District" on the Telerate Page 7058 as of 11:00 A.M., San
Francisco time, on such Eleventh District Cost of Funds Interest Determination
Date. If such rate does not appear on Telerate Page 7058 on any related Eleventh
District Cost of Funds Rate Determination Date, the Eleventh District Cost of
Funds Rate for such Eleventh District Cost of Funds Rate Determination Date
shall be the monthly weighted average cost of funds paid by member institutions
of the Eleventh Federal Home Loan Bank District that was most recently announced
(the "Eleventh District Cost of Funds Rate Index") by the FHLB of San Francisco
as such cost of funds for the calendar month preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for the
calendar month next preceding such Eleventh District Cost of Funds Rate
Determination Date, then the Eleventh District Cost of Funds Rate for such
Eleventh District Cost of Funds Rate Determination Date will be the Eleventh
District Cost of Funds Rate in effect on such Eleventh District Cost of Funds
Rate Determination Date.
Inverse Floating Rate Notes
Any Floating Rate Note may be designated in the applicable Pricing
Supplement as an "Inverse Floating Rate Note," in which event, unless otherwise
specified in the applicable Pricing Supplement, the interest rate on such
Floating Rate Note will be equal to (i) in the case of the period, if any,
commencing on the Issue Date (or the date on which such Note otherwise begins to
accrue interest (if different from the Issue Date)) up to the first Interest
Reset Date, a fixed rate of interest established by the Company as described in
the applicable Pricing Supplement and (ii) in the case of each period commencing
on an Interest Reset Date, a fixed rate of interest specified in the Pricing
Supplement minus the interest rate determined by reference to the Base Rate as
adjusted by the Spread or Spread Multiplier, if any; provided, however, that (x)
the interest rate thereon will not be less than zero and (y) the interest rate
in effect for the ten days immediately prior to
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the date of Maturity of such Inverse Floating Rate Note will be that in effect
on the tenth day preceding such date.
Floating Rate/Fixed Rate Notes
The applicable Pricing Supplement may provide that a Note will be a
Floating Rate Note for a specified portion of its term and a Fixed Rate Note for
the remainder of its term, in which event the interest rate on such Note will be
determined as herein provided as if it were a Floating Rate Note and a Fixed
Rate Note hereunder for each such respective period, all as specified in such
applicable Pricing Supplement.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each Registered Note will indicate
whether the Company has the option to reset the interest rate (in the case of a
Fixed Rate Note) with respect to such Registered Note or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) with respect to such Registered
Note and, if so, the date or dates on which such interest rate or such Spread or
Spread Multiplier, as the case may be, may be reset (each an "Optional Reset
Date").
The Company shall notify the Trustee for a Registered Note whether or not
it intends to exercise such option with respect to such Registered Note at least
45 but not more than 60 days prior to an Optional Reset Date for such Registered
Note. Not later than 40 days prior to such Optional Reset Date, the Trustee for
such Registered Note will mail to the Holder of such Registered Note a notice
(the "Reset Notice"), first class, postage prepaid, indicating whether the
Company has elected to reset the interest rate (in the case of a Fixed Rate
Note) or the Spread or Spread Multiplier (in the case of a Floating Rate Note)
and, if so, (i) such new interest rate or such new Spread or Spread Multiplier,
as the case may be; and (ii) the provisions, if any, for redemption during the
period from such Optional Reset Date to the next Optional Reset Date or, if
there is no such next Optional Reset Date, to the Stated Maturity of such
Registered Note (each such period a "Subsequent Interest Period"), including the
date or dates on which or the period or periods during which and the price or
prices at which such redemption may occur during such Subsequent Interest
Period. Upon the transmittal by the Trustee of a Reset Notice to the Holder of a
Note, such new interest rate or such new Spread and/or Spread Multiplier, as the
case may be, shall take effect automatically, and, except as modified by the
Reset Notice and as described below, such Note will have the same terms as prior
to the transmittal of such Reset Notice.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Registered Note, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Reset
Notice with respect to such Optional Reset Date and establish a higher interest
rate (in the case of a Fixed Rate Note) or a higher Spread or Spread Multiplier
(in the case of a Floating Rate Note) for the Subsequent Interest Period
commencing on such Optional Reset Date by causing the Trustee for such
Registered Note to mail notice of such higher interest rate or higher Spread or
Spread Multiplier, as the case may be, first class, postage prepaid, to the
Holder of such Registered Note. Such notice shall be irrevocable. All Registered
Notes with respect to which the interest rate or Spread or Spread Multiplier is
reset on an Optional Reset Date will bear such higher interest rate (in the case
of Fixed Rate Notes) or higher Spread or Spread Multiplier (in the case of
Floating Rate Notes), whether or not tendered for repayment.
The Holder of a Registered Note will have the option to elect repayment of
such Note by the Company on each Optional Reset Date at a price equal to the
principal amount thereof, plus interest accrued to such Optional Reset Date. In
order for a Registered Note to be repaid on an Optional Reset Date, the Holder
thereof must follow the procedures set forth below under "Optional Redemption,
Repayment and Repurchase" for optional repayment, except that the period for
delivery of such Registered Note or notification to the Trustee for such
Registered Note shall be at least 25 but not more than 35 days prior to such
Optional Reset Date, and except that a Holder who has tendered a Registered Note
for repayment pursuant to a Reset Notice may, by written notice to the Trustee
for such Registered Note, revoke any such tender for repayment until the close
of business on the tenth day prior to such Optional Reset Date.
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AMORTIZING NOTES
The Company may from time to time offer Registered Notes ("Amortizing
Notes") on which a portion or all the principal amount is payable prior to
Stated Maturity in accordance with a schedule, by application of a formula, or
by reference to an Index (as defined below). Further information concerning
additional terms and conditions of any Amortizing Notes, including terms for
repayment thereof, will be set forth in the applicable Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer Registered Notes ("Indexed Notes")
on which certain or all interest payments (in the case of an "Indexed Rate
Note"), and/or the principal amount payable at Stated Maturity or earlier
redemption or retirement (in the case of an "Indexed Principal Note"), is
determined by reference to the principal amount of such Notes (or, in the case
of an Indexed Principal Note, to the amount designated in the applicable Pricing
Supplement as the "Face Amount" of such Indexed Note) and by reference to
prices, changes in prices, or differences between prices, of securities,
currencies, intangibles, goods, articles or commodities or by such other
objective price, economic or other measures as are described in the applicable
Pricing Supplement (the "Index"). A description of the Index used in any
determination of an interest or principal payment, and the method or formula by
which interest or principal payments will be determined by reference to such
Index, will be set forth in the applicable Pricing Supplement.
In the case of a Fixed Rate Note, Floating Rate Note or Indexed Rate Note
that is also an Indexed Principal Note, the amount of any interest payment will
be determined by reference to the Face Amount of such Indexed Note unless
specified otherwise in the applicable Pricing Supplement. In the case of an
Indexed Principal Note, the principal amount payable at Stated Maturity or any
earlier redemption or repayment of the Indexed Note may be different from the
Face Amount.
If the determination of the Index on which any interest payment or the
principal amount of an Indexed Note is calculated or announced by a third party,
which may be an Agent or another affiliate of the Company, and such third party
either suspends the calculation or announcement of such Index or changes the
basis upon which such Index is calculated (other than changes consistent with
policies in effect at the time such Indexed Note was issued and permitted
changes described in the applicable Pricing Supplement), then such Index shall
be calculated for purposes of such Indexed Note by another third party selected
by the Company, which may be an Agent or another affiliate of the Company,
subject to the same conditions and controls as applied to the original third
party. If for any reason such Index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then the indexed interest payments, if any, or any indexed principal
amount of such Indexed Note shall be calculated in the manner set forth in the
applicable Pricing Supplement. Any determination of such third party shall, in
the absence of manifest error, be binding on all parties.
Unless otherwise specified in the applicable Pricing Supplement, (i) for
the purpose of determining whether Holders of the requisite principal amount of
Notes outstanding under the Indenture have made a demand or given a notice or
waiver or taken any other action, the outstanding principal amount of Indexed
Notes will be deemed to be the Face Amount thereof, and (ii) in the event of an
acceleration of the Stated Maturity of an Indexed Note, the principal amount
payable to the Holder of such Note upon acceleration will be the principal
amount determined by reference to the formula by which the principal amount of
such Note would be determined on the Stated Maturity thereof, as if the date of
acceleration were the Stated Maturity.
DUAL CURRENCY NOTES
The Company may from time to time offer Notes (the "Dual Currency Notes")
as to which the Company has a one time option, exercisable on any one of the
dates specified in the applicable Pricing Supplement (each an "Option Election
Date") in whole, but not in part, with respect to all Dual Currency Notes issued
on the same day and having the same terms (a "Tranche"), of thereafter making
all payments of principal, premium, if any, and interest (which payments would
otherwise be made in the Specified Currency of such Notes) in the optional
currency specified in the applicable Pricing Supplement (the "Optional
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Payment Currency"). Information as to the relative value of the Specified
Currency compared to the Optional Payment Currency will be set forth in the
applicable Pricing Supplement.
The Pricing Supplement for each issuance of Dual Currency Notes will
specify, among other things, the Specified Currency and Optional Payment
Currency of such issuance and the Designated Exchange Rate for such issuance,
which will be a fixed exchange rate used for converting amounts denominated in
the Specified Currency into amounts denominated in the Optional Payment Currency
(the "Designated Exchange Rate"). The Pricing Supplement will also specify the
Option Election Dates and Interest Payment Dates for the related issuance of
Dual Currency Notes. Each Option Election Date will be a certain number of days
before an Interest Payment Date or Stated Maturity, as set forth in the
applicable Pricing Supplement, and will be the date on which the Company may
select whether to make all scheduled payments due thereafter in the Optional
Payment Currency rather than in the Specified Currency.
If the Company makes such an election, the amount payable in the Optional
Payment Currency shall be determined using the Designated Exchange Rate
specified in the applicable Pricing Supplement. If such election is made, notice
of such election shall be mailed in accordance with the terms of the applicable
Tranche of Dual Currency Notes within two Business Days of the Option Election
Date and shall state (i) the first date, whether an Interest Payment Date and/or
Stated Maturity, in which scheduled payments in the Optional Payment Currency
will be made and (ii) the Designated Exchange Rate. Any such notice by the
Company, once given, may not be withdrawn. The equivalent value in the Specified
Currency of payments made after such an election may be less, at the then
current exchange rate, than if the Company had made such payment in the
Specified Currency.
For U.S. federal income tax purposes, holders of Dual Currency Notes may be
subject to rules which differ from the general rules applicable to holders of
other types of Notes offered hereby. The U.S. federal income tax consequences of
the purchase, ownership and disposition of Dual Currency Notes will be set forth
in the applicable Pricing Supplement.
RENEWABLE NOTES
The Company may from time to time offer Notes which will mature on an
Interest Payment Date specified in the applicable Pricing Supplement occurring
in or prior to the twelfth month following the Original Issue Date of such Notes
(the "Initial Maturity Date") unless the term of all or any portion of any such
Note (a "Renewable Note") is renewed in accordance with the procedures described
below.
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified in the
applicable Pricing Supplement) prior to the Initial Maturity Date of a Renewable
Note (the "Initial Renewal Date") and on the Interest Payment Date occurring in
each sixth month (or in the last month of each Special Election Interval) after
such Initial Renewal Date (each, together with the Initial Renewal Date, a
"Renewal Date"), the term of such Renewal Note may be extended to the Interest
Payment Date occurring in the twelfth month (or, if a Special Election Interval
is specified in the applicable Pricing Supplement, the last month in a period
equal to twice the Special Election Interval) after such Renewal Date, if the
holder of such Renewable Note elects to extend the term of such Renewable Note
or any portion thereof as described below. If a holder does not elect to extend
the term of any portion of the principal amount of a Renewable Note during the
specified period prior to any Renewal Date, such portion will become due and
payable on the Interest Payment Date occurring in the sixth month (or the last
month in the Special Election Interval) after such Renewal Date (the "New
Maturity Date").
A holder of a Renewable Note may elect to renew the term of such Renewable
Note, or if so specified in the applicable Pricing Supplement, any portion
thereof, by delivering a notice to such effect to the Trustee (or any duly
appointed paying agent) at the corporate trust office of the Trustee or agency
of the Trustee in the City of New York not less than 15 nor more than 30 days
prior to such Renewal Date (unless another period is specified in the applicable
Pricing Supplement as the "Special Election Period"). Such election will be
irrevocable and will be binding upon each subsequent holder of such Renewable
Note. An election to renew the term of a Renewable Note may be exercised with
respect to less than the entire principal amount of such Renewable Note only if
so specified in the applicable Pricing Supplement and only in such principal
amount,
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or any integral multiple in excess thereof, as is specified in the applicable
Pricing Supplement. Notwithstanding the foregoing, the term of the Renewable
Notes may not be extended beyond the Stated Maturity specified for such
Renewable Notes in the applicable Pricing Supplement.
If the holder does not elect to renew the term, such Renewable Note must be
presented to the Trustee (or any duly appointed paying agent) and, with respect
to a Renewable Note that is a certificate issued in definitive form, as soon as
practicable following receipt of such Renewable Note the Trustee (or any duly
appointed paying agent) shall issue in exchange therefore in the name of such
holder (i) a Note, in a principal amount equal to the principal amount of such
exchanged Renewable Note for which no election to renew the term thereof was
exercised, with terms identical to those specified on such Renewable Note
(except that such Note shall have a fixed, nonrenewable Stated Maturity on the
New Maturity Date) and (ii) if an election to renew is made with respect to less
than the full principal amount of such holder's Renewable Note, a replacement
Renewable Note, in a principal amount equal to the principal amount of such
exchanged Renewable Note for which the election to renew was made, with terms
identical to such exchanged Renewable Notes.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Registered Note will indicate
whether the Company has the option to extend the Stated Maturity of such Note
for one or more periods of whole years from one to five (each an "Extension
Period") up to but not beyond the date (the "Final Maturity") set forth in such
Pricing Supplement.
The Company may exercise such option with respect to a Registered Note by
notifying the Trustee for such Registered Note at least 45 but not more than 60
days prior to the old Stated Maturity of such Registered Note. Not later than 40
days prior to the old Stated Maturity of such Registered Note, the Trustee for
such Registered Note will mail to the Holder of such Registered Note a notice
(the "Extension Notice"), first class, postage prepaid. The Extension Notice
will set forth (i) the election of the Company to extend the Stated Maturity of
such Registered Note; (ii) the new Stated Maturity; (iii) in the case of a Fixed
Rate Note, the interest rate applicable to the Extension Period or, in the case
of a Floating Rate Note, the Spread or Spread Multiplier applicable to the
Extension Period; and (iv) the provisions, if any, for redemption during the
Extension Period, including the date or dates on which or the period or periods
during which and the price or prices at which such redemption may occur during
the Extension Period. Upon the mailing by such Trustee of an Extension Notice to
the Holder of a Registered Note, the Stated Maturity of such Registered Note
shall be extended automatically, and, except as modified by the Extension Notice
and as described in the next paragraph, such Registered Note will have the same
terms as prior to the mailing of such Extension Notice. Notwithstanding the
foregoing, not later than 20 days prior to the old Stated Maturity of such
Registered Note, the Company may, at its option, revoke the interest rate (in
the case of a Fixed Rate Note) or the Spread or Spread Multiplier (in the case
of a Floating Rate Note) provided for in the Extension Notice for such
Registered Note and establish a higher interest rate (in the case of a Fixed
Rate Note) or a higher Spread or Spread Multiplier (in the case of a Floating
Rate Note) for the Extension Period, by causing the Trustee for such Registered
Note to mail notice of such higher interest rate or higher Spread or Spread
Multiplier, as the case may be, first class, postage prepaid, to the Holder of
such Registered Note. Such notice shall be irrevocable. All Registered Notes
with respect to which the Stated Maturity is extended will bear such higher
interest rate (in the case of Fixed Rate Notes) or higher Spread or Spread
Multiplier (in the case of Floating Rate Notes) for the Extension Period,
whether or not tendered for repayment.
If the Company extends the Stated Maturity of a Registered Note, the Holder
of such Registered Note will have the option to elect repayment of such
Registered Note by the Company on the old Stated Maturity at a price equal to
the principal amount thereof, plus interest accrued to such date. In order for a
Registered Note to be repaid on the old Stated Maturity once the Company has
extended the Stated Maturity thereof, the Holder thereof must follow the
procedures set forth below under "Optional Redemption, Repayment and Repurchase"
for optional repayment, except that the period for delivery of such Registered
Note or notification to the Trustee for such Registered Note shall be at least
25 but not more than 35 days prior to the old Stated Maturity and except that a
Holder who has tendered a Registered Note for repayment pursuant to
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an Extension Notice may, by written notice to the Trustee for such Registered
Note, revoke any such tender for repayment until the close of business on the
tenth day before the old Stated Maturity.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Subsequent Interest Periods," "Extension of Maturity" and
"Renewable Notes."
BOOK-ENTRY SYSTEM
Upon issuance, and subject to the rules of the Depositary, all Fixed Rate
Book-Entry Notes having the same Original Issue Date and otherwise identical
terms will be represented by a single Global Security. Each Global Security
representing Book-Entry Notes will be deposited with, or on behalf of the
Depositary, and registered in the name of a nominee of the Depositary.
Book-Entry Notes will not be exchangeable for Certificated Notes and, except
under the circumstances described in the Prospectus under "Description of Debt
Securities -- Global Securities," will not otherwise be issuable as Certificated
Notes.
The Depositary has advised the Company and each of the Agents as follows:
The Depositary is a limited-purpose trust company organized under New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. The Depositary was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations, and certain other organizations, some of whom
(and/or their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly.
A further description of the Depositary's procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the Prospectus under
"Description of Debt Securities -- Global Securities." The Depositary has
confirmed to the Company, the Agents and the Trustees that it intends to follow
such procedures.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Registered Note will indicate
either that such Note cannot be redeemed prior to its Stated Maturity or that
such Note will be redeemable at the option of the Company, in whole or in part,
and the date or dates (each an "Optional Redemption Date") on which such Note
may be redeemed and the price (the "Redemption Price") at which (together with
accrued interest to such Optional Redemption Date) such Note may be redeemed on
each such Optional Redemption Date. Unless otherwise specified in the applicable
Pricing Supplement, the Company may exercise such option with respect to a
Registered Note by notifying the Trustee for such Note at least 45 days prior to
any Optional Redemption Date. Unless otherwise specified in the applicable
Pricing Supplement, at least 30 but not more than 60 days prior to the date of
redemption, such Trustee shall mail notice of such redemption, first class,
postage prepaid, to the Holder of such Registered Note. In the event of
redemption of a Registered Note in part only, a new Note or Notes for the
unredeemed portion thereof shall be issued to the Holder thereof upon the
cancellation thereof. The Registered Notes (other than Amortizing Notes) will
not be subject to any sinking fund.
The Pricing Supplement relating to each Registered Note will also indicate
whether the Holder of such Note will have the option to elect repayment of such
Note by the Company prior to its Stated Maturity, and, if so, such Pricing
Supplement will specify the date or dates on which such Note may be repaid (each
an "Optional Repayment Date") and the price (the "Optional Repayment Price") at
which, together with
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accrued interest to such Optional Repayment Date, such Note may be repaid on
each such Optional Repayment Date.
In order for a Registered Note to be repaid, the Trustee for such
Registered Note must receive, at least 30 but not more than 45 days prior to an
Optional Repayment Date (i) such Registered Note with the form entitled "Option
to Elect Repayment" on the reverse thereof duly completed, or (ii) a telegram,
telex, facsimile transmission or letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a commercial
bank or trust company in the United States setting forth the name of the Holder
of such Registered Note, the principal amount of such Registered Note to be
repaid, the certificate number or a description of the tenor and terms of such
Registered Note, a statement that the option to elect repayment is being
exercised thereby and a guarantee that the Registered Note to be repaid with the
form entitled "Option to Elect Repayment" on the reverse of the Registered Note
duly completed will be received by such Trustee not later than five Business
Days after the date of such telegram, telex, facsimile transmission or letter.
If the procedure described in clause (ii) of the preceding sentence is followed,
then such Registered Note and form duly completed must be received by such
Trustee by such fifth Business Day. Any tender of a Registered Note by the
Holder for repayment (except pursuant to a Reset Notice or an Extension Notice)
shall be irrevocable. The repayment option may be exercised by the Holder of a
Registered Note for less than the entire principal amount of such Note provided
that the principal amount of such Note remaining outstanding after repayment is
an authorized denomination. Upon such partial repayment, such Registered Note
shall be canceled and a new Note or Notes for the remaining principal amount
thereof shall be issued in the name of the Holder of such repaid Note.
If a Registered Note is represented by a Global Security, the Depositary's
nominee will be the Holder of such Note and therefore will be the only entity
that can exercise a right to repayment. In order to ensure that the Depositary's
nominee will timely exercise a right to repayment with respect to a particular
Registered Note, the beneficial owner of such Note must instruct the broker or
other direct or indirect participant through which it holds an interest in such
Note to notify the Depositary of its desire to exercise a right to repayment.
Different firms have different cut-off times for accepting instructions
from their customers and, accordingly, each beneficial owner should consult the
broker or other direct or indirect participant through which it holds an
interest in a Registered Note in order to ascertain the cut-off time by which
such an instruction must be given in order for timely notice to be delivered to
the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary, if
a Registered Note is an Original Issue Discount Note (other than an Indexed
Note), the amount payable on such Note in the event of redemption or repayment
prior to its Stated Maturity (other than pursuant to an optional redemption by
the Company at a stated Redemption Price) shall be the Amortized Face Amount of
such Note as of the date of redemption or the date of repayment, as the case may
be. The Amortized Face Amount of a Note on any date shall be the amount equal to
(i) the Issue Price set forth on the face of the applicable Pricing Supplement
plus (ii) that portion of the difference between such Issue Price and the stated
principal amount of such Note that has accrued by such date at (x) the Bond
Yield to Maturity set forth on the face of the applicable Pricing Supplement or
(y) if so specified in the applicable Pricing Supplement, the Bond Yield to Call
set forth on the face thereof (computed in each case in accordance with
generally accepted United States bond yield computation principles), provided,
however, that in no event shall the Amortized Face Amount of a Note exceed its
stated principal amount. The Bond Yield to Call listed on the face of a Pricing
Supplement shall be computed on the basis of the first occurring Optional
Redemption Date with respect to such Note and the amount payable on such
Optional Redemption Date. In the event that any such Note is not redeemed on
such first occurring Optional Redemption Date, the Bond Yield to Call with
respect to such Note shall be recomputed on such Optional Redemption Date on the
basis of the next occurring Optional Redemption Date and the amount payable on
such Optional Redemption Date, and shall continue to be so recomputed on each
succeeding Optional Redemption Date until the Note is so redeemed.
The Company may at any time purchase Registered Notes at any price in the
open market or otherwise. Registered Notes so purchased by the Company may, at
the discretion of the Company, be held or resold or surrendered to the Trustee
for such Notes for cancellation.
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OTHER PROVISIONS
Any provisions with respect to the determination of an interest rate basis,
the specification of an interest rate basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the terms
as specified under "Other Provisions" and in the applicable Pricing Supplement.
DEFEASANCE
The defeasance provisions described in the Prospectus will not be
applicable to the Registered Notes.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in a Specified Currency other
than U.S. dollars ("Foreign Currency Notes") entails significant risks that are
not associated with a similar investment in a security denominated in U.S.
dollars. Similarly, an investment in an Indexed Note on which all or a part of
any payment due is determined by reference to a currency other than U.S. dollars
entails significant risks that are not associated with a similar investment in
non-Indexed Notes. Such risks include, without limitation, the possibility of
significant market changes in rates of exchange between U.S. dollars and such
Specified Currency, the possibility of significant changes in rates of exchange
between U.S. dollars and such Specified Currency resulting from official
redenomination with respect to such Specified Currency and the possibility of
the imposition or modification of foreign exchange controls by either the United
States or foreign governments. Such risks generally depend on factors over which
the Company has no control and which cannot be readily foreseen, such as
economic and political events, and on the supply of and demand for the relevant
currencies. In recent years, rates of exchange between the U.S. dollar and
certain foreign currencies, and between certain foreign currencies and other
foreign currencies, have been volatile, and such volatility may be expected in
the future. Fluctuations that have occurred in any particular exchange rate in
the past are not necessarily indicative, however, of fluctuations that may occur
in the rate during the term of any Foreign Currency Note. Depreciation of the
Specified Currency of a Foreign Currency Note against U.S. dollars would result
in a decrease in the effective yield of such Foreign Currency Note below its
coupon rate and, in certain circumstances, could result in a substantial loss to
the investor on a U.S. dollar basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency (other than U.S. dollars) at the time of payment of
principal of, or premium, if any, or interest on, a Foreign Currency Note. There
can be no assurance that exchange controls will not restrict or prohibit
payments of principal (and premium, if any) or interest in any such Specified
Currency. Even if there are no actual exchange controls, it is possible that
such Specified Currency would not be available to the Company when payments on
such Note are due because of circumstances beyond the control of the Company. In
any such event, the Company will make required payments in U.S. dollars on the
basis described herein. See "Description of Notes -- Payment Currency" and
"Description of Notes -- Payment of Principal and Interest."
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT, AND ANY
PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL THE RISKS OF AN INVESTMENT IN
REGISTERED NOTES DENOMINATED IN, OR THE PAYMENT IN RESPECT OF WHICH IS RELATED
TO THE VALUE OF, A CURRENCY OTHER THAN U.S. DOLLARS, AND THE COMPANY DISCLAIMS
ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST
AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME
TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN REGISTERED NOTES
DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN
APPROPRIATE INVEST-
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MENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY
TRANSACTIONS.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers of Registered Notes who are United States residents, and
the Company disclaims any responsibility to advise prospective purchasers who
are residents of countries other than the United States with respect to any
matters that may affect the purchase or holding of, or receipt of payments of
principal, premium or interest in respect of, Registered Notes. Such persons
should consult their advisors with regard to such matters. Any Pricing
Supplement relating to Registered Notes having a Specified Currency other than
U.S. dollars will contain a description of any material exchange controls
affecting such currency and any other required information concerning such
currency.
PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Registered Note is
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of such Note shall be made in U.S.
dollars until such currency is again available or so used. The amounts so
payable on any date in such currency shall be converted into U.S. dollars on the
basis of the most recently available Market Exchange Rate for such currency or
as otherwise indicated in the applicable Pricing Supplement. Any payment in
respect of such Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture under which such Note shall
have been issued.
In the event of an official redenomination of the Specified Currency of a
Note including, without limitation, an official redenomination of any such
Specified Currency that is a composite currency), the obligations of the Company
with respect to payments on Notes denominated in such Specified Currency shall,
in all cases, be deemed immediately following such redenomination to provide for
the payment of that amount of redenominated currency representing the amount of
such obligations immediately before such redenomination. Notes will not provide
for any adjustment to any amount payable under such Notes as a result of (i) any
change in the value of the Specified Currency thereof relative to any other
currency due solely to fluctuations in exchange rates or (ii) any redenomination
of any component currency of any composite currency (unless such composite
currency is itself officially redenominated). The procedures described in this
section shall not apply in the event of European Monetary Union. For a
description of the procedure to be followed in connection with European Monetary
Union, see "European Monetary Union" in the Prospectus.
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks do
not generally offer non-U.S. dollar-denominated checking or savings account
facilities in the United States. Accordingly, payments on Notes made in a
currency other than U.S. dollars will be made from an account at a bank located
outside the United States unless otherwise specified in the applicable Pricing
Supplement.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at the rate of exchange prevailing on
the date of the entry of the judgment or decree.
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RISKS OF INDEXED NOTES
An investment in Indexed Notes may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either a
fixed rate or a floating rate determined by reference to nationally published
interest rate references. The risks of a particular Indexed Note will depend on
the terms of such Indexed Note, but may include, without limitation, the
possibility of significant changes in the prices of securities, currencies,
intangibles, goods, articles or commodities or of other objective price,
economic or other measures making up the relevant Index (the "Underlying
Assets"). Such risks generally depend on factors over which the Company has no
control and which cannot readily be foreseen, such as economic and political
events and the supply of and demand for the Underlying Assets. In recent years,
currency exchange rates and prices for various Underlying Assets have been
highly volatile, and such volatility may be expected in the future. Fluctuations
in any such rates or prices that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur during the term of any
Indexed Note.
In considering whether to purchase Indexed Notes, investors should be aware
that the calculation of amounts payable in respect of Indexed Notes may involve
reference to an Index determined by an affiliate of the Company or to prices
which are published solely by third parties or entities which are not subject to
regulation under the laws of the United States.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT, AND ANY
PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL THE RISKS ON AN INVESTMENT IN INDEXED
NOTES, AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE
PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT
OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. THE RISK OF LOSS AS A RESULT OF
THE LINKAGE OF PRINCIPAL OR INTEREST PAYMENTS ON INDEXED NOTES TO AN INDEX AND
TO THE UNDERLYING ASSETS CAN BE SUBSTANTIAL. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN
INVESTMENT IN INDEXED NOTES. AN INDEXED NOTE IS NOT AN APPROPRIATE INVESTMENT
FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO TRANSACTIONS IN THE
UNDERLYING ASSETS OF ANY INDEX RELEVANT TO THAT INDEXED NOTE.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations that may be relevant to a holder of a Registered Note. The
summary is based on laws, regulations, rulings and decisions now in effect, all
of which are subject to change, possibly with retroactive effect. This summary
deals only with holders that will hold Registered Notes as capital assets, and
does not address tax considerations applicable to investors that may be subject
to special tax rules, including, without limitation, banks, tax-exempt entities,
insurance companies, regulated investment companies, common trust funds or
dealers in securities or currencies, persons that will hold Registered Notes as
a part of an integrated investment (including a "straddle" or "conversion
transaction") comprised of a Registered Note and one or more other positions or
persons that have a "functional currency" other than the U.S. dollar. Any
special United States federal income tax considerations relevant to a particular
issue of Registered Notes, including any Indexed Notes, Dual Currency Notes or
Notes providing for contingent payments, will be provided in the applicable
Pricing Supplement. Purchasers of such Notes should carefully examine the
applicable Pricing Supplement and should consult with their tax advisors with
respect to such Notes.
Investors should consult their own tax advisors in determining the tax
consequences to them of holding Registered Notes, including the application to
their particular situation of the United States federal income tax
considerations discussed below, as well as the application of state, local,
foreign or other tax laws.
As used herein, the term "United States holder" means a holder of a
Registered Note that is a "United States person" (as defined below) or that
otherwise is subject to United States federal income taxation on a
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net income basis in respect of the Registered Note. The term "United States
person" means a person who is a citizen or resident of the United States, or
that is a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, an
estate the income of which is subject to United States federal income taxation
regardless of its source or a trust if (i) a U.S. court is able to exercise
primary supervision over the trust's administration and (ii) one or more United
States persons have the authority to control all of the trust's substantial
decisions, and the term "United States" means the United States of America
(including the States and the District of Columbia).
UNITED STATES HOLDERS
Payments of Interest
Payments of "qualified stated interest" (as defined below under "Original
Issue Discount") on a Registered Note will be taxable to a United States holder
as ordinary interest income at the time that such payments are accrued or are
received (in accordance with the United States holder's method of tax
accounting). If such payments of interest are made with respect to a Registered
Note that is denominated in a Specified Currency other than the U.S. dollar (a
"Foreign Currency Note"), the amount of interest income realized by a United
States holder that uses the cash method of tax accounting will be the U.S.
dollar value of the Specified Currency payment based on the spot rate of
exchange on the date of receipt regardless of whether the payment in fact is
converted into U.S. dollars. A United States holder that uses the accrual method
of tax accounting will accrue interest income on the Foreign Currency Note in
the relevant foreign currency and translate the amount accrued into U.S. dollars
based on the average exchange rate in effect during the interest accrual period
(or portion thereof within such holder's taxable year), or, at such holder's
election, at the spot rate of exchange on (i) the last day of the accrual period
(or the last day of the taxable year within such accrual period if the accrual
period spans more than one taxable year), or (ii) the date of receipt, if such
date is within five business days of the last day of the accrual period. Such
election must be applied consistently by the United States holder to all debt
instruments from year to year and cannot be changed the election without the
consent of the Internal Revenue Service (the "IRS"). A United States holder that
uses the accrual method of tax accounting will recognize foreign currency gain
or loss, which will be treated as ordinary income or loss, on the receipt of an
interest payment made with respect to a Foreign Currency Note if the spot rate
of exchange on the date the payment is received differs from the rate applicable
to a previous accrual of that interest income.
Purchase, Sale and Retirement of Registered Notes
A United States holder's tax basis in a Registered Note generally will
equal the cost of such Registered Note to such holder, increased by any amounts
includible in income by the holder as original issue discount ("OID") and market
discount and reduced by any amortized premium (each as described below) and any
payments other than payments of qualified stated interest (as described below)
made on such Registered Note. In the case of a Foreign Currency Note, the cost
of such Note to a United States holder will be the U.S. dollar value of the
foreign currency purchase price on the date of purchase. In the case of a
Foreign Currency Note that is traded on an established securities market, a
United States holder that uses the cash method of tax accounting (and, if it so
elects, a United States holder that uses the accrual method of tax accounting)
will determine the U.S. dollar value of the cost of such Note by translating the
amount paid at the spot rate of exchange on the settlement date of the purchase.
The amount of any subsequent adjustments to a United States holder's tax basis
in a Foreign Currency Note in respect of OID, market discount and premium
denominated in a Specified Currency other than the U.S. dollar will be
determined in the manner described under "Original Issue Discount," "Market
Discount" and "Notes Purchased at a Premium" below. The conversion of U.S.
dollars to another Specified Currency and the immediate use of such Specified
Currency to purchase a Foreign Currency Note generally will not result in
taxable gain or loss for a United States holder.
Upon the sale, exchange or retirement (collectively, a "disposition") of a
Registered Note, a United States holder generally will recognize gain or loss
equal to the difference between the amount realized on the disposition (less any
accrued qualified stated interest, which will be taxable as ordinary income) and
the United States holder's adjusted tax basis in such Registered Note. If a
United States holder receives a
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Specified Currency other than the U.S. dollar in respect of the disposition of a
Registered Note, the amount realized will be the U.S. dollar value of the
Specified Currency received calculated at the spot rate of exchange on the date
of disposition. In the case of a Foreign Currency Note that is traded on an
established securities market, a United States holder that uses the cash method
of tax accounting, and if it so elects, a United States holder that uses the
accrual method of tax accounting will determine the U.S. dollar value of the
amount realized by translating such amount at the spot rate of exchange on the
settlement date of the disposition. The election available to accrual basis
United States holders in respect of the purchase and sale of Foreign Currency
Notes traded on an established securities market, discussed above, must be
applied consistently by the United States holder to all debt instruments from
year to year and cannot be changed without the consent of the IRS.
Except as discussed below with respect to market discount, Short-Term Notes
(as defined below) and foreign currency gain or loss, gain or loss recognized by
a United States holder will generally be long term capital gain or loss if the
United States holder's holding period for the Registered Note exceeded one year
at the time of disposition. Recently enacted United States tax legislation
reduced the maximum United States federal income tax rate applicable to capital
gains recognized by individuals in respect of assets held for more than 18
months. Prospective investors should consult their tax advisers regarding the
possible effect of such legislation on such investors.
Gain or loss recognized by a United States holder on the disposition of a
Foreign Currency Note generally will be treated as ordinary income or loss to
the extent that the gain or loss is attributable to changes in exchange rates
during the period in which the holder held such Note.
Original Issue Discount
In General. Registered Notes with a term greater than one year may be
issued with OID for U.S. federal income tax purposes ("OID Notes"). For United
States federal income tax purposes, United States holders generally must accrue
OID in gross income over the term of the OID Notes on a constant yield basis,
regardless of their regular method of tax accounting. As a result, United States
holders generally will recognize taxable income in respect of an OID Note in
advance of the receipt of cash attributable to such income.
OID generally will arise if the "stated redemption price at maturity" of
the Note exceeds its "issue price" by more than a de minimis amount (0.25% of
the Note's "stated redemption price at maturity" multiplied by the number of
complete years to maturity), or if a Note has certain interest payment
characteristics (e.g., interest holidays, interest payable in additional
securities or stepped interest). For this purpose, the "issue price" of a Note
is the first price at which a substantial amount of Notes is sold for cash
(other than to bond houses, brokers or similar persons or organizations acting
in the capacity of underwriters, placement agents or wholesalers), and the
"stated redemption price at maturity" of a Note is the sum of all payments due
under the Note, other than payments of "qualified stated interest." The term
"qualified stated interest" generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments of the
issuer) at least annually during the entire term of the OID Note at a single
fixed rate of interest or, subject to certain conditions, based on one or more
interest indices.
For each taxable year of a United States holder, the amount of OID that
must be included in gross income in respect of an OID Note will be the sum of
the daily portions of OID for each day during such taxable year (or any portion
thereof) in which such a United States holder held the OID Note. Such daily
portions are determined by allocating to each day in an accrual period a pro
rata portion of the OID allocable to that accrual period. Accrual periods may be
of any length and may vary in length over the term of an OID Note, provided that
such accrual period is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the final day of such period.
The amount of OID allocable to any accrual period generally will equal the
product of the OID Note's "adjusted issue price" at the beginning of such
accrual period multiplied by its yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for the
length of the accrual period) and subtracting from that product the amount (if
any) of qualified stated interest allocable to that accrual period. The
"adjusted issue price" of
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an OID Note at the beginning of any accrual period will equal the issue price of
the OID Note, as defined above, increased by previously accrued OID from prior
accrual periods, and reduced by any payment made on such Note (other than
payments of qualified stated interest) on or before the first day of the accrual
period.
A United States holder generally may make an irrevocable election to
include in its income its entire return on a Registered Note (i.e., the excess
of all remaining payments to be received on the Registered Note, including
payments of qualified stated interest, over the amount paid by such United
States holder for such Registered Note) under the constant-yield method
described above. For Registered Notes purchased at a premium or bearing market
discount in the hands of the United States holder, the United States holder
making such election will also be deemed to have made the election (discussed
below in "Premium and Market Discount") to amortize premium or to accrue market
discount in income currently on a constant-yield basis.
Foreign Currency Note. In the case of an OID Note that is also a Foreign
Currency Note, a United States holder should determine the U.S. dollar amount
includible in income as OID for each accrual period by (a) calculating the
amount of OID allocable to each accrual period in the Specified Currency using
the constant-yield method described above, and (b) translating the amount of the
Specified Currency so derived at the average exchange rate in effect during that
accrual period (or portion thereof within a United States holder's taxable year)
or, at the United States holder's election (as described above under "Payments
of Interest"), at the spot rate of exchange on (i) the last day of the accrual
period (or the last day of the taxable year within such accrual period if the
accrual period spans more than one taxable year), or (ii) at the spot rate of
exchange on the date of receipt, if such date is within five business days of
the last day of the accrual period. All payments on an OID Note (other than
payments of qualified stated interest) will generally be viewed first as
payments of previously-accrued OID (to the extent thereof), with payments
attributed first to the earliest-accrued OID, and then as payments of principal.
Upon the receipt of an amount attributable to OID (whether in connection with a
payment of an amount that is not qualified stated interest or the disposition of
the OID Note), a United States holder will recognize ordinary income or loss
measured by the difference between the amount received (translated into U.S.
dollars at the spot rate of exchange on the date of receipt or on the date of
disposition of the OID Note, as the case may be) and the amount accrued (using
the spot rate of exchange applicable to such previous accrual).
Acquisition Premium. A United States holder that purchases an OID Note for
an amount less than or equal to the sum of all amounts payable on the OID Note
after the purchase date other than payments of qualified stated interest (the
"remaining redemption amount") but in excess of its adjusted issue price (any
such excess being "acquisition premium") generally is permitted to reduce the
daily portions of OID by a fraction, the numerator of which is the excess of the
United States holder's adjusted tax basis in the OID Note immediately after its
purchase over the adjusted issue price of the OID Note, and the denominator of
which is the excess of the sum of all amounts payable on the Registered Note
after the purchase date, other than payments of qualified stated interest, over
the Registered Note's adjusted issue price.
Certain of the Registered Notes may be subject to special redemption,
repayment or interest rate reset features, as indicated in the applicable
Pricing Supplement. Registered Notes containing such features, in particular OID
Notes, may be subject to special rules that differ from the general rules
discussed above. Accordingly, purchasers of Registered Notes with such features
should carefully examine the applicable Pricing Supplement and should consult
their tax advisors with respect to such Registered Notes.
MARKET DISCOUNT
If a United States holder purchases a Registered Note, other than a
Short-Term Note (as described below), for an amount that is less than the Note's
stated redemption price at maturity or, in the case of an OID Note, the Note's
"revised issue price" (i.e., the Note's issue price, increased by the amount of
accrued OID), the Note will be considered to have "market discount." The market
discount rules are subject to a de minimis rule similar to the rule relating to
de minimis OID, described above. Any gain recognized by the United States holder
on the disposition of a Note having market discount generally will be treated as
ordinary income to the extent of the market discount that accrued on the Note
while held by such United States holder.
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<PAGE> 57
Alternatively, the United States holder may elect to include market discount in
income currently over the life of the Note. Such an election will apply to
market discount Notes acquired by the United States holder on or after the first
day of the first taxable year to which such election applies and is revocable
only with the consent of the IRS. Market discount will accrue on a straight-line
basis unless the United States holder elects to accrue the market discount on a
constant-yield method. Such an election will apply to the Note to which it is
made and is irrevocable. Unless the United States holder elects to include
market discount in income on a current basis, as described above, the United
States holder could be required to defer the deduction of a portion of the
interest paid on any indebtedness incurred or maintained to purchase or carry
the Note.
Market discount on a Foreign Currency Note that is currently includible in
income will be translated into U.S. dollars at the average exchange rate for the
accrual period (or portion thereof within the United States holder's taxable
year).
Short-Term Notes
The rules set forth above also will generally apply to Registered Notes
having maturities of not more than one year ("Short-Term Notes"), but with
certain modifications.
First, none of the interest on a Short-Term Note is treated as qualified
stated interest (but instead such interest payments are treated as part of the
Short-Term Note's stated redemption price at maturity, thereby giving rise to
OID). Thus, all Short-Term Notes will be OID Notes. OID will be treated as
accruing on a Short-Term Note ratably, or at the election of a United States
holder, under a constant yield method.
Second, a United States holder of a Short-Term Note that uses the cash
method of tax accounting will generally not be required to include OID in
respect of the Short-Term Note in income on a current basis. Such a United
States holder may not be allowed to deduct all of the interest paid or accrued
on any indebtedness incurred or maintained to purchase or carry such Note until
the Maturity of the Note or its earlier disposition in a taxable transaction. In
addition, such a United States holder will be required to treat any gain
realized on a disposition of the Note as ordinary income to the extent of the
holder's accrued OID
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with respect to the Note. Notwithstanding the foregoing, a United States holder
of a Short-Term Note using the cash method of tax accounting may elect to accrue
OID into income on a current basis (in which case the limitation on the
deductibility of interest described above will not apply). A United States
holder using the accrual method of tax accounting generally will be required to
include OID on a Short-Term Note in income on a current basis.
Third, any United States holder of a Short-Term Note (whether using the
accrual method of tax accounting) can elect to accrue the "acquisition
discount," if any, with respect to the Registered Note on a current basis. If
such an election is made, the OID rules will not apply to the Registered Note.
Acquisition discount is the excess of the Registered Note is stated redemption
price at maturity over the holder's purchase price for the Registered Note.
Acquisition discount will be treated as accruing ratably or, at the election of
the United States holder, under a constant-yield method based on daily
compounding.
Finally, the market discount rules will not apply to a Short-Term Note.
As described above, certain of the Registered Notes may be subject to
special redemption features. These features may affect the determination of
whether a Registered Note has a maturity of not more than one year and thus is a
Short-Term Note. Purchasers of Notes with such features should carefully examine
the applicable Pricing Supplement and should consult their tax advisors with
respect to such features.
NOTES PURCHASED AT A PREMIUM
A United States holder that purchases a Registered Note for an amount in
excess of the remaining redemption amount will be considered to have purchased
the Registered Note at a premium. Such holder may elect to amortize such premium
(as an offset to interest income), using a constant-yield method, over the
remaining term of the Registered Note. Such election, once made, generally
applies to all debt instruments held or subsequently acquired by the United
States holder on or after the first taxable year to which the election applies
and may not be revoked without the consent of the IRS. A United States holder
that elects to amortize such premium must reduce its tax basis in a Registered
Note by the amount of the premium amortized during its holding period. With
respect to a United States holder that does not elect to amortize bond premium,
the amount of such premium will be included in the United States holder's tax
basis when the Registered Note matures or is disposed of by the United States
holder. Amortizable bond premium in respect of a Foreign Currency Note will be
computed in the Specified Currency and will reduce interest income in the
Specified Currency. At the time amortized bond premium offsets interest income,
exchange gain or loss, which will be taxable as ordinary income or loss, will be
realized with respect to amortized bond premium on such Note based on the
difference between the spot rate of exchange on the date or dates such premium
is recovered through interest payments on the Registered Note and the spot rate
of exchange on the date on which the United States holder acquired the
Registered Note. See "Original Issue Discount -- Acquisition Premium," above for
Registered Notes purchased for an amount less than or equal to the remaining
redemption amount but in excess of its adjusted issue price.
Information Reporting and Backup Withholding
The Trustee will be required to file information returns with the IRS with
respect to payments made to certain United States holders of Registered Notes.
In addition, certain United States holders may be subject to a 31 percent backup
withholding tax in respect of such payments if they do not provide their
taxpayer identification numbers to the Trustee.
NON-UNITED STATES PERSONS
Under current United States federal income tax law: (a) payment on a
Registered Note to a holder who is not a United States person (a "non-United
States person") will not be subject to withholding of United States federal
income tax, provided that, with respect to payments of interest on a Registered
Note having a maturity when issued greater than 183 days, (i) the holder does
not actually or constructively own 10 percent or more of the combined voting
power of all classes of stock of the Company and is not a controlled foreign
corporation related to the Company through stock ownership and (ii) the
beneficial owner provides a
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statement signed under penalties of perjury that includes its name and address
and certifies that it is a non-United States person in compliance with
applicable requirements; (b) a non-United States person will not be subject to
United States federal income tax on gain realized on the disposition of the
Registered Note unless (i) such gain is effectively connected with the conduct
by the holder of a trade or business in the United States or (ii) in the case of
gain realized by an individual holder, the holder is present in the United
States for 183 days or more in the taxable year of the sale and either (A) such
gain or income is attributable to an office or other fixed place of business
maintained in the United States by such holder or (B) such holder has a tax home
in the United States.
United States information reporting requirements and backup withholding tax
will not apply to payments on a Registered Note if the beneficial owner
certifies its non-U.S. status under penalties of perjury or otherwise
establishes an exemption. Information reporting requirements and backup
withholding tax will not apply to any payment of the proceeds of the sale of a
Registered Note effected outside the United States by a foreign office of a
foreign "broker" (as defined in applicable Treasury regulations), provided that
such broker (i) derives less than 50% of its gross income for certain periods
from the conduct of a trade or business in the United States and (ii) is not a
controlled foreign corporation for United States federal income tax purposes.
Payment of the proceeds of the sale of a Registered Note effected outside the
United States by a foreign office of any other broker will not be subject to
backup withholding tax, but will be subject to information reporting
requirements unless such broker has documentary evidence in its records that the
beneficial owner is a non-United States person and certain other conditions are
met, or the beneficial owner otherwise establishes an exemption. Payment of the
proceeds of a sale of a Registered Note by the U.S. office of a broker will be
subject to information reporting requirements and backup withholding tax unless
the beneficial owner certifies its non-U.S. status under penalties of perjury or
otherwise establishes an exemption.
On October 7, 1997, the U.S. Treasury Department issued final Treasury
regulations governing information reporting and the certification procedures
regarding withholding and backup withholding on certain amounts paid to
non-United States persons 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 Registered Note.
Prospective investors should consult their tax advisors regarding the effect, if
any, of such new Treasury regulations on an investment in the Notes.
PLAN OF DISTRIBUTION
The Registered Notes are being offered on a continuous basis by the Company
through one or both of the Agents, which have agreed to use their respective
reasonable efforts to solicit orders to purchase Registered Notes. The Company
will have the sole right to accept orders to purchase Registered Notes and may
reject proposed purchases in whole or in part. An Agent shall have the right, in
its discretion reasonably exercised and without notice to the Company, to reject
any proposed purchase of Registered Notes in whole or in part. The Company will
pay each Agent a commission of from not more than .125% to not more than .750%
of the principal amount of Registered Notes sold through it, depending upon the
Stated Maturity.
The Company may also sell Registered Notes at a discount to an Agent for
its own account or for resale to one or more purchasers at varying prices
related to prevailing market prices at the time of resale or, if set forth in
the applicable Pricing Supplement, at a fixed public offering price, as
determined by an Agent. After any initial public offering of Registered Notes to
be resold to purchasers at a fixed public offering price, the public offering
price and any concession or discount may be changed. In addition, an Agent may
offer Registered Notes purchased by it as principal to other dealers. Registered
Notes sold by an Agent to a dealer may be sold at a discount and, unless
otherwise specified in the applicable Pricing Supplement, such discount allowed
will not be in excess of the discount received by an Agent from the Company.
Unless otherwise specified in the applicable Pricing Supplement, any Registered
Note purchased by an Agent as principal will be purchased at 100% of the
principal amount or face amount thereof less a percentage equal to the
commission applicable to an agency sale of a Registered Note of identical
maturity.
No Registered Note will have an established trading market when issued.
Unless otherwise specified in the applicable Prospectus Supplement, the
Registered Notes will not be listed on any securities exchange. The
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Agents may make a market in the Registered Notes, but no Agent is not obligated
to do so and any Agent may discontinue any market-making at any time without
notice. There can be no assurance of a secondary market for any Registered
Notes, or that the maximum amount of Registered Notes will be sold. An Agent,
whether acting as agent or principal, may be deemed to be an "underwriter"
within the meaning of the Securities Act. The Company has agreed to indemnify
each of the Agents against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that such Agents may be required to
make in respect thereof and will reimburse each of the Agents for certain legal
and other expenses incurred by it in connection with the offer and sale of the
Notes.
The Registered Notes have not been and will not be registered under the
Securities and Exchange Law of Japan (the "Securities and Exchange Law").
Accordingly, each of the Agents will represent and agree that it has not,
directly or indirectly, offered or sold and will not, directly or indirectly,
offer or sell any Registered Notes in Japan or to a resident of Japan except
pursuant to an exemption from the registration requirements of, and otherwise in
compliance with the Securities and Exchange Law and other relevant laws and
regulations of, Japan. As used in this paragraph, "resident of Japan" means any
person resident in Japan, including any corporation or other entity organized
under the laws of Japan or located in Japan. In addition to the Registered Notes
being offered through an Agent as described herein, Bearer Notes that may have
terms identical or similar to the terms of the Registered Notes may be
concurrently offered by the Company on a continuous basis outside the United
States by affiliates of the Agents located outside the United States. Such
affiliates of the Agents may also purchase Bearer Notes as principal for their
own accounts or for resale. Any Bearer Notes so offered and sold will reduce
correspondingly the maximum aggregate principal amount of Registered Notes that
may be offered by this Prospectus Supplement and the Prospectus.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in New York City on the date of settlement.
Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Securities pursuant to the Indenture
referred to in the Prospectus.
Each of the Agents is a wholly owned subsidiary of the Company. The
offering of the Notes will comply with the requirements of Rule 2720 of the
Conduct Rules of the NASD regarding an NASD member firm's underwriting
securities of an affiliate.
This Prospectus Supplement, the related Pricing Supplement and the
accompanying Prospectus may be used by the Company, the Agents or other
affiliates of the Company in connection with offers and sales of the Registered
Notes offered hereby in market-making transactions at negotiated prices related
to prevailing market prices at the time of sale. Any Agent may act as principal
or agent in such transactions. No Agent has any obligation to make a market in
any of the Registered Notes and any Agent may discontinue any market-making
activities at any time without notice, at its sole discretion. The Registered
Notes issued hereunder will be new issues of securities with no established
trading market, and no assurance can be made as to the existence or liquidity of
a trading market for such Registered Notes.
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======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR AN AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT AND THE PROSPECTUS)
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT
(INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE PROSPECTUS. THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
The Company............................
Important Currency Information.........
Description of Registered Notes........
Currency Risks.........................
Risks of Indexed Notes.................
Certain United States Federal Income
Tax Considerations...................
Plan of Distribution...................
PROSPECTUS (Selected Provisions).......
Available Information..................
Incorporation of Certain Documents by
Reference............................
Prospectus Summary.....................
The Company............................
Description of Debt Securities.........
Description of Index Warrants..........
European Monetary Union................
Use of Proceeds and Hedging............
Plan of Distribution...................
ERISA Matters..........................
Experts................................
Legal Matters..........................
</TABLE>
======================================================
======================================================
$
SALOMON SMITH
BARNEY HOLDINGS INC.
MEDIUM-TERM NOTES,
SERIES H AND SERIES I
DUE MORE THAN NINE MONTHS
FROM DATE OF ISSUE
PROSPECTUS SUPPLEMENT
Dated , 1997
======================================================
<PAGE> 62
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 28, 1997
ON SEPTEMBER 24, 1997, SALOMON INC AND TRAVELERS GROUP INC. ("TRAVELERS
GROUP") ANNOUNCED THAT THEY HAD ENTERED INTO AN AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997, PURSUANT TO WHICH A NEWLY-FORMED, WHOLLY OWNED
SUBSIDIARY OF TRAVELERS GROUP WILL MERGE (THE "FIRST STEP MERGER") WITH AND INTO
SALOMON INC, WHICH WILL BECOME A WHOLLY OWNED SUBSIDIARY OF TRAVELERS GROUP AND
BE RENAMED SALOMON SMITH BARNEY HOLDINGS INC. (THE "COMPANY"). IMMEDIATELY
THEREAFTER, IT IS ANTICIPATED THAT SMITH BARNEY HOLDINGS INC., ANOTHER WHOLLY
OWNED SUBSIDIARY OF TRAVELERS GROUP, WILL BE MERGED WITH AND INTO THE COMPANY
(THE "SECOND STEP MERGER;" AND TOGETHER WITH THE FIRST STEP MERGER, REFERRED TO
COLLECTIVELY HEREIN AS THE "MERGER").
THIS PROSPECTUS SUPPLEMENT ASSUMES THE CONSUMMATION OF THE MERGER, WHICH IS
CURRENTLY ANTICIPATED TO BE COMPLETED ON OR ABOUT NOVEMBER 30, 1997. THE
SECURITIES OFFERED HEREBY ARE NOT INTENDED TO BE OFFERED, AND THIS PROSPECTUS
SUPPLEMENT IS NOT INTENDED TO BE USED, PRIOR TO THE CONSUMMATION OF THE MERGER.
PROSPECTUS SUPPLEMENT
$
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES H AND SERIES I
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
GENERAL TERMS OF SALE
The following terms will generally apply to the medium-term notes that we
will sell from time to time using this Prospectus Supplement and the attached
Prospectus. We will include information on the specific terms for each note in a
pricing supplement to this Prospectus Supplement (a "Pricing Supplement") that
we will deliver to prospective buyers of any note. We expect to receive between
$ and $ from the sale of the notes, after paying the agents
commissions of between $ and $ .
<TABLE>
<S> <C>
MATURITY: More than 9 Months TERMS OF SPECIFIC NOTES MAY PERMIT ONE OR MORE OF THESE
FEATURES. YOU SHOULD REVIEW THE PRICING SUPPLEMENT FOR
INTEREST RATES: Fixed, Floating, FEATURES THAT APPLY TO YOUR NOTES
or Zero Coupon - May be redeemable or repurchasable by us
BASE FLOATING LIBOR
RATES: Commercial Paper Rate - May be renewable at your option or extendible at our
Treasury Rate option
CD Rate
Prime Rate - Interest rate may be reset at our option from time to time
J.J. Kenny and redeemable by you at the time of any reset
Funds Rate Eleventh District Cost of - May be issued with Original Issue Discount for tax
INDEXED NOTES: Payments of interest or purposes
principal may be linked to - Portion of principal may be payable prior to maturity
the price of one or more
securities, currencies, - Notes may pay additional interest in the event they become
commodities or other goods subject to certain U.S. withholding taxes
PAYMENT Generally semi-annually for Notes will be issued in bearer form. Bearer Notes will not
DATES: Fixed Rate Notes be offered, sold or delivered to any U.S. person, except as
Interest on Floating Rate permitted under U.S. Treasury regulations
or Indexed Notes may be paid monthly, Notes will be sold through our broker-dealer subsidiaries,
quarterly, semi- annually or annually as Agents
CURRENCIES: U.S. Dollars and other Notes may be subject to certain indexation and currency
currencies risks
DENOMINATION: Minimum of $10,000, minimum Series H Notes are part of our Senior Indebtedness;
purchase of $25,000 Series I Notes are part of our Subordinated Indebtedness
</TABLE>
THESE 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 ANY ACCOMPANYING PROSPECTUS OR PRICING SUPPLEMENT IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus Supplement is dated , 1997.
<PAGE> 63
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
ACCOMPANYING PROSPECTUS (THE "PROSPECTUS") IN CONNECTION WITH THE OFFER
CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR AN AGENT. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING
SUPPLEMENT) AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
PROSPECTUS. THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING
SUPPLEMENT) AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
PURCHASES OF SUCH NOTES TO STABILIZE THEIR MARKET PRICE, PURCHASES OF SUCH NOTES
TO COVER ALL OR SOME OF A SHORT POSITION IN THE SECURITIES MAINTAINED BY THE
UNDERWRITERS FOR ANY OFFERING AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
THIS PROSPECTUS SUPPLEMENT, THE RELATED PRICING SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS MAY BE USED BY THE COMPANY, THE AGENTS OR OTHER
AFFILIATES OF THE COMPANY IN CONNECTION WITH OFFERS AND SALES RELATED TO
SECONDARY MARKET TRANSACTIONS IN THE BEARER NOTES OFFERED HEREBY. AN AGENT OR
OTHER SUCH COMPANY AFFILIATES MAY ACT AS PRINCIPAL OR AGENT IN SUCH
TRANSACTIONS. SUCH SALES WILL BE MADE AT VARYING PRICES RELATED TO PREVAILING
MARKET PRICES AT THE TIME OF SALE.
References herein to "U.S. dollars," "U.S.$," "dollar" or "$" are to the
lawful currency to the United States.
TABLE OF CONTENTS
<TABLE>
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PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by Reference.....................................
The Company.........................................................................
Description of Bearer Notes.........................................................
Governing Law.......................................................................
Currency Risks......................................................................
Risks of Indexed Notes..............................................................
Certain United States Federal Income Tax Considerations.............................
Plan of Distribution................................................................
General Information.................................................................
</TABLE>
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<TABLE>
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<S> <C>
PROSPECTUS
Available Information...............................................................
Incorporation of Certain Documents by Reference.....................................
Prospectus Summary..................................................................
The Company.........................................................................
The Offered Securities..............................................................
Description of Debt Securities......................................................
Description of Index Warrants.......................................................
European Monetary Union.............................................................
Use of Proceeds and Hedging.........................................................
Plan of Distribution................................................................
ERISA Matters.......................................................................
Experts.............................................................................
Legal Matters.......................................................................
</TABLE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act") (File
No. 1-4346), are incorporated herein by reference: (i) the Annual Report on Form
10-K for the year ended December 31, 1996 (the "1996 Form 10-K"); (ii) the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997 and June
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), October
21, 1997 and October 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 the Prospectus and prior to
the termination of the offering of the Notes (including the Bearer Notes) shall
be deemed to be incorporated by reference herein.
Any statement contained in the Prospectus or this Prospectus Supplement or
in a document incorporated or deemed to be incorporated by reference in the
Prospectus or this Prospectus Supplement shall be deemed to be modified or
superseded for purposes of the Prospectus and this Prospectus Supplement to the
extent that a statement contained in the Prospectus or this Prospectus
Supplement or in any subsequently filed document which also is or is deemed to
be incorporated by reference in the Prospectus or this Prospectus Supplement
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Prospectus and this Prospectus Supplement.
Copies of any documents incorporated herein by reference will be available
free of charge at the office of Kredietbank S.A. Luxembourgeoise (the "Listing
Agent"), 43 Boulevard Royal, Luxembourg City 2955, Luxembourg. Any person
receiving a copy of this Prospectus Supplement may obtain, without charge, upon
written or oral request, a copy of any document incorporated by reference
herein, except for the exhibits to such documents (unless such exhibits are
specifically incorporated by reference). Written or oral requests should be
addressed to Salomon Brothers International Limited, Victoria Plaza, 111
Buckingham Palace Road, London SW1W 0SB (telephone: 44-171-721-3625).
This Prospectus Supplement may be used for the offer, sale (including in
secondary market transactions) and listing of Bearer Notes with an aggregate
initial public offering price or purchase price of up to U.S.$ or
the equivalent thereof in other currencies, subject to reduction as a result of
the sale of other securities under the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part or under a
Registration Statement to which this Prospectus Supplement and the accompanying
Prospectus relate. Pursuant to the Global Selling Agency Agreement (the "Selling
Agency Agreement") among the Company and Salomon Brothers Inc, Smith Barney
Inc., Salomon Brothers
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International Limited, Salomon Brothers AG and Salomon Brothers Hong Kong
Limited (as well as any successor or successors thereto) (hereinafter referred
to from time to time as the "Agents"), the Company will represent to the Agents
that as of the Original Issue Date of any Bearer Note, neither the Prospectus
nor any amendment thereof or supplement thereto will contain an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading (subject to certain exceptions contained in the Selling
Agency Agreement). The Company has given an undertaking in connection with the
listing of the Bearer Notes on the Luxembourg Stock Exchange to the effect that,
so long as any Bearer Notes are issued by the Company, in the event of any
material adverse change in the business or financial position of the Company and
in the terms and conditions of the Notes that is not reflected in the Prospectus
as then amended or supplemented, the Company will prepare an amendment or
supplement to the Prospectus or publish a new Prospectus for use in connection
with any subsequent offering and listing by the Company of Bearer Notes.
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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"), which 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
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.
DESCRIPTION OF BEARER NOTES
The following description of the particular terms of the Bearer Notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made. Numerical references
in parentheses below are to sections in the Senior Debt Indenture and the
Subordinated Debt Indenture. Wherever particular sections or defined terms of
the Indentures are referred to, such sections or defined terms are incorporated
herein by reference as part of the statement made, and the statement is
qualified in its entirety by such reference.
GENERAL
The Company's Medium-Term Notes, Series H Notes (the "Series H Notes") are
a series of Debt Securities issued under the Senior Debt Indenture, and the
Company's Medium-Term Notes, Series I Notes (the "Series I Notes" and, together
with the Series H Notes, the "Notes") are a series of Debt Securities issued
under the Subordinated Debt Indenture. At the date of this Prospectus
Supplement, the Notes offered pursuant to this Prospectus Supplement are limited
to an aggregate initial public offering price or purchase price of up to U.S.
$ or the equivalent thereof in one or more other currencies, which
amount is subject to reduction as a result of the sale of other securities under
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part or under a Registration Statement to which
this Prospectus Supplement and the accompanying Prospectus relate. The amount of
Notes sold of either series will reduce the amount of Notes of the other series
that may be sold. The Company reserves the
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right to withdraw, cancel or modify the offer made hereby without notice. The
aggregate amount of Notes may be increased from time to time to such larger
amount as may be authorized by the Company. The U.S. dollar equivalent of the
public offering price or purchase price of a Note having a Specified Currency
other than U.S. dollars will be determined on the basis of the noon buying rate
in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York (the "Market Exchange
Rate") for such Specified Currency on the applicable issue date. Such
determination will be made by the Company or its agent, as exchange rate agent
for both series of Notes (the "Exchange Rate Agent").
The Series H Notes will constitute part of the Senior Indebtedness of the
Company and will rank pari passu with all other unsecured debt of the Company
except subordinated debt. The Series I Notes will be subordinate and junior in
the right of payment, to the extent and in the manner set forth in the
Subordinated Debt Indenture, to all Senior Indebtedness of the Company. See
"Description of Debt Securities -- Subordinated Debt" in the Prospectus. On a
combined basis, after giving effect to the merger of Smith Barney Holdings Inc.
with and into the Company, as of September 30, 1997, the aggregate principal
amount of Senior Indebtedness of the Company outstanding was $ billion,
consisting of the following: $ billion of term debt, $ billion in
commercial paper and $ billion in other short-term borrowings.
The Notes will consist of notes in bearer form ("Bearer Notes") and notes
in registered form ("Registered Notes"), each of which will be offered on a
continuous basis. Bearer Notes may not be exchanged for Registered Notes. In
connection with their original issuance or during the period of 40 days after
their Original Issue Dates, Bearer Notes will not be offered, sold or delivered,
directly or indirectly, to a U.S. Person or to any person within the United
States, except to the extent permitted under U.S. Treasury regulations, as more
fully set forth under "Plan of Distribution." As used herein, "U.S. Person"
means a person who is a citizen or resident of the United States, or that is a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, an estate the
income of which is subject to U.S. federal income taxation regardless of its
source or a trust if (i) a U.S. court is able to exercise primary supervision
over the trust's administration and (ii) one or more United States persons have
the authority to control all of the trust's substantial decisions, and term
"United States" means the United States of America (including the States and the
District of Columbia).
Payments in respect of Bearer Notes will be made without deduction for
United States withholding taxes to the extent described under "Payment of
Additional Interest" below. Each Bearer Note may be redeemed at the Redemption
Price applicable thereto, if certain events occur involving United States
withholding taxes or information reporting requirements. See "Tax Redemption"
and "Special Tax Redemption" below. The Bearer Notes (other than Amortizing
Notes) will not be subject to any sinking fund.
Unless otherwise specified in the applicable Pricing Supplement, each
Bearer Note will mature at par on a Business Day more than nine months from its
Original Issue Date (as defined below), as selected by the purchaser and agreed
to by the Company (the "Stated Maturity"). Each Bearer Note may also be subject
to redemption at the option of the Company, or to repayment at the option of the
Holder, at a price specified in the applicable Pricing Supplement prior to its
Stated Maturity. See "Optional Redemption, Repayment and Repurchase" below.
Notwithstanding the foregoing, each Bearer Note having a Specified Currency
of German deutsche marks will have a Stated Maturity of not less than two years
from the Original Issue Date and will not be subject to optional redemption or
repayment prior to such time. Each Bearer Note having a Specified Currency of
Pounds Sterling will mature in compliance with such regulations as the Bank of
England may promulgate from time to time. No Bearer Note will be issued without
a final maturity.
The Pricing Supplement relating to a Bearer Note will describe the
following terms: (i) the Specified Currency for such Note; (ii) whether such
Note bears interest at a fixed rate (a "Fixed Rate Note," which may be zero in
the case of certain Original Issue Discount Notes, as defined below), a floating
rate (a "Floating Rate Note"), an amortizing note (an "Amortizing Note") on
which a portion or all the principal amount is payable prior to Stated Maturity
in accordance with a schedule, by application of a formula, or by reference to
an index and/or an indexed note (an "Indexed Note") on which the amount of any
interest payment, in the case of an Indexed Rate Note (as defined below), and/or
the principal amount payable at
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maturity, in the case of an Indexed Principal Note (as defined below), will be
determined by reference to the level of prices, or changes in prices, or
differences between prices, of securities, currencies, intangibles, goods,
articles or commodities or by application of a formula; (iii) the price
(expressed as a percentage of the aggregate principal amount or face amount
thereof) at which such Note will be issued (the "Issue Price"); (iv) the date on
which such Note will be issued (the "Original Issue Date"); (v) the date of the
Stated Maturity; (vi) if such Note is a Fixed Rate Note, the rate per annum at
which such Note will bear interest, if any, and whether, and the manner in
which, such rate may be changed prior to its Stated Maturity; (vii) if such Note
is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the Interest
Reset Period or the Interest Reset Dates, the Interest Payment Dates, and, if
applicable, the Index Maturity, the Maximum Interest Rate, the Minimum Interest
Rate, the Spread or Spread Multiplier (all as defined below), and any other
terms relating to the particular method of calculating the interest rate for
such Note and whether, and the manner in which, such Spread or Spread Multiplier
may be changed prior to Stated Maturity; (viii) whether such Note is an Original
Issue Discount Note (as defined below); (ix) if such Note is an Amortizing Note,
the terms for repayment prior to Stated Maturity; (x) if such Note is an Indexed
Note, in the case of an Indexed Rate Note, the manner in which the amount of any
interest payment will be determined or, in the case of an Indexed Principal
Note, its Face Amount and the manner in which the principal amount payable at
Stated Maturity will be determined; (xi) whether such Note may be redeemed at
the option of the Company, or repaid at the option of the Holder, prior to
Stated Maturity as described under "Optional Redemption, Repayment and
Repurchase" below and, if so, the provisions relating to such redemption or
repayment, including, in the case of an Original Issue Discount Note or Indexed
Note, the information necessary to determine the amount due upon redemption or
repayment; (xii) whether such Note is subject to an optional extension beyond
its Stated Maturity as described under "Extension of Maturity" below; (xiii)
whether such Note will be represented by a Global Security or a certificate
issued in definitive form; (xiv) certain special federal income tax consequences
of the purchase, ownership and disposition of certain Notes, if any; (xv)
whether such Note is a Renewable Note (as defined below), and, if so, the
specific terms thereof; (xvi) the use of proceeds, if such use materially
differs from that disclosed in the accompanying Prospectus; and (xvii) any other
terms of such Note provided in the accompanying Prospectus to be set forth in a
Pricing Supplement or otherwise not inconsistent with the provisions of the
Indenture under which such Note will be issued.
"Business Day" with respect to any Bearer Note means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which such Note or any Coupon
relating thereto is presented for payment or (d) if the Specified Currency for
such Note is other than U.S. dollars, the financial center of the country
issuing such Specified Currency (which, in the case of Euro, shall be Brussels,
Belgium) and (ii) if such Note is a LIBOR Note (as defined below), a London
Banking Day. "London Banking Day" with respect to any Bearer Notes means any day
on which dealings in deposits in the Specified Currency of such Note are
transacted in the London interbank market.
"Original Issue Discount Note" means (i) a Bearer Note, including any such
Note whose interest rate is zero, that has a stated redemption price at Stated
Maturity that exceeds its Issue Price by at least 0.25% of its stated redemption
price at Stated Maturity, multiplied by the number of full years from the
Original Issue Date to the Stated Maturity for such Note and (ii) any other
Bearer Note designated by the Company as issued with original issue discount for
U.S. federal income tax purposes.
A "basis point" or "bp" equals one one-hundredth of a percentage point.
DENOMINATION, FORM AND TRANSFER
Unless otherwise provided in the applicable Pricing Supplement, the minimum
aggregate principal amount of Bearer Notes that may be purchased is U.S. $25,000
or the approximate equivalent thereof in other currencies. Unless otherwise
provided in the applicable Pricing Supplement, the authorized denominations of
Bearer Notes denominated in U.S. dollars will be U.S. $10,000 and any larger
amount that is an integral multiple of U.S. $1,000, and the authorized
denominations of Bearer Notes having a Specified Currency other than U.S.
dollars will be the approximate equivalents thereof in the Specified Currency.
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All Bearer Notes that have the same Original Issue Date and otherwise
identical terms will be represented initially by interests in a single temporary
Global Security in bearer form, without Coupons (a "Temporary Global Note"), to
be deposited with a common depositary in London (the "Depositary") for Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System ("Euroclear") and Cedel Bank, S.A. ("CEDEL"), for credit to the
accounts designated by or on behalf of the purchasers thereof. On or after the
40th day following the issuance of a Temporary Global Note (the "Exchange
Date"), and subject to the receipt of a Certificate of Non-U.S. Beneficial
Ownership, beneficial interests in that Temporary Global Note will be
exchangeable for interests in a definitive Global Security in bearer form,
without Coupons (a "Permanent Global Note"), in a denomination equal to the
aggregate principal amount of all interests in the Temporary Global Note so
exchanged. A "Certificate of Non-U.S. Beneficial Ownership" is a certificate, to
the effect that a beneficial interest in a Temporary Global Note is owned by a
person that is not a U.S. Person or is owned by or through a financial
institution in compliance with applicable U.S. Treasury regulations, that is
delivered in respect of the Exchange Date or in respect of any Interest Payment
Date prior to the Exchange Date. Each Permanent Global Note will be deposited
with the Depositary for credit to the account or accounts designated by or on
behalf of the beneficial owner or owners thereof. Interests in a Permanent
Global Note may be exchanged in whole, or if permitted by such procedures as
Euroclear or CEDEL may prescribe from time to time, in part, for one or more
individual Bearer Notes, with appropriate Coupons attached, in any authorized
denomination or denominations. No Bearer Note will be delivered in or to the
United States and its possessions. References herein to "Bearer Notes" shall,
except where otherwise indicated, include interests in a Temporary or Permanent
Global Note as well as individual Bearer Notes and any appurtenant Coupons.
Transfers of interests in a Temporary or Permanent Global Note will be made
by Euroclear or CEDEL in accordance with their customary operating procedures.
Title to individual Bearer Notes and Coupons will pass by physical delivery. The
bearer of each Coupon, whether or not the Coupon is attached to an individual
Bearer Note, shall be subject to and bound by all the provisions contained in
the individual Bearer Note to which such Coupon relates. The bearer of any
individual Bearer Note and any Coupon may, to the fullest extent permitted by
applicable law, be treated at all times by all persons and for all purposes as
the absolute owner of such Note or Coupon, as the case may be, regardless of any
notice of ownership, theft or loss or of any writing thereon.
The following legend will appear on each Global Note and on all individual
Bearer Notes and any Coupons: "Any United States Person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code." The sections referred to in the legend provide that,
with certain exceptions, a U.S. Person who holds an interest in a Global Note or
an individual Bearer Note or Coupon will not be permitted to deduct any loss
with respect to, and will not be eligible for capital gain treatment with
respect to any gain realized on a sale, exchange, redemption or other
disposition of, an interest in such Global Note or such individual Bearer Note
or Coupon. See "Limitations on Issuance of Bearer Securities and Bearer
Warrants" in the accompanying Prospectus.
Bearer Notes may not be exchanged for Registered Notes.
PAYMENTS AND PAYING AGENTS
Unless otherwise specified in the applicable Pricing Supplement and except,
under certain circumstances, for Bearer Notes having Specified Currencies other
than U.S. dollars, payments of the principal of and any premium and interest on
a Bearer Note will be made only in the Specified Currency for such Note. See
"Currency Risks" below.
Interest on each Temporary Global Note will be paid to each of Euroclear
and CEDEL with respect to that portion of such Temporary Global Note held for
its account, but only upon receipt as of the relevant Interest Payment Date of a
Certificate of Non-U.S. Beneficial Ownership and upon notation thereon of such
payment. Each of Euroclear and CEDEL will undertake in such circumstances to
credit such interest received by it to the respective accounts having an
interest in such Temporary Global Note.
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The principal of and any premium or interest on each Permanent Global Note
will be paid to each of Euroclear and CEDEL with respect to that portion of such
Permanent Global Note held for its account upon notation thereon of such
payment. Each of Euroclear and CEDEL will undertake in such circumstances to
credit such principal, premium and interest received by it to the respective
accounts having an interest in such Permanent Global Note. All such payments
will be made to Euroclear and CEDEL in immediately available funds.
A payment in respect of an individual Bearer Note or any Coupon will be
made only against surrender of such Note or Coupon at the offices of such Paying
Agents outside the United States as the Company may from time to time appoint.
At the direction of the Holder of such a Note or Coupon, and subject to
applicable laws and regulations, such payments will be made by check drawn on a
bank in The City of New York (in the case of a U.S. dollar payment) or outside
the United States (in the case of a payment in a currency other than U.S.
dollars) mailed to an address outside the United States furnished by such Holder
or, at the option of such Holder, by wire transfer (pursuant to written
instructions supplied by such Holder) to an account maintained by the payee with
a bank located outside the United States. No payment in respect of an individual
Bearer Note or Coupon will be made upon presentation of such Note or Coupon at
any office or agency of either Trustee or any other paying agency maintained by
the Company in the United States, nor will any such payment be made by transfer
to an account, or by mail to an address, in the United States. Notwithstanding
the foregoing, if U.S. dollar payments in respect of Bearer Notes or any Coupons
at the offices of all Paying Agents outside the United States become illegal or
are effectively precluded because of the imposition of exchange controls or
similar restrictions on the full payment or receipt of such amounts in U.S.
dollars, the Company will appoint an office or agency (which may be a Trustee)
in the United States at which such payments may be made.
The specified offices of the Trustees and the names and offices of the
initial Paying Agents are set forth at the end of this Prospectus Supplement.
The Company reserves the right at any time to vary or terminate the appointment
of any Paying Agent and to appoint additional or other Paying Agents and to
approve any change in the office through which any Paying Agent acts, provided
that there will at all times be a Paying Agent (which may be a Trustee) in at
least one city in Europe, which, so long as any of the Bearer Notes are listed
on the Luxembourg Stock Exchange and the rules of that exchange shall so
require, shall include Luxembourg. Notice of any such termination or appointment
and of any changes in the specified offices of a Trustee or any Paying Agent
will be given to the Holders of Bearer Notes in accordance with "Notices" below.
Unless otherwise specified in the applicable Pricing Supplement, any
payment required to be made in respect of a Bearer Note on a date (including the
day of Stated Maturity) that is not a Business Day for such Note need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Discount Note is declared to be due and payable immediately as
described under "Description of Debt Securities -- Events of Default" in the
Prospectus, the amount of principal due and payable with respect to such Note
shall be limited to the aggregate principal amount (or face amount, in the case
of an Indexed Principal Note) of such Note multiplied by the sum of its Issue
Price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or
from the last Interest Payment Date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable Pricing Supplement
until the principal amount thereof is paid or made available for payment, except
as described below under "Subsequent Interest Periods" and "Extension of
Maturity," and except that, if so specified in the applicable Pricing
Supplement, the rate of interest payable on certain Fixed Rate Notes may
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be subject to adjustment from time to time as described in such Pricing
Supplement. Unless otherwise set forth in the applicable Pricing Supplement,
interest on each Fixed Rate Note will be payable annually in arrears on such
dates as set forth in the applicable Pricing Supplement (each such day being an
"Interest Payment Date") and at Stated Maturity. Unless otherwise specified in
the applicable Pricing Supplement, if an Interest Payment Date with respect to
any Fixed Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall not be postponed; provided, however, that any
payment required to be made in respect of such Note on a date (including the day
of Stated Maturity) that is not a Business Day for such Note need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment. However, if with respect to any
Fixed Rate Note, "Accrue to Pay" is specified in the applicable Pricing
Supplement, and any Interest Payment Date with respect to such Fixed Rate Note
would otherwise be a day that is not a Business Day, such Interest Payment Date
shall be postponed to the next succeeding Business Day. Each payment of interest
in respect of an Interest Payment Date shall include interest accrued through
the day before such Interest Payment Date. Unless otherwise specified in the
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months ("30 over 360").
FLOATING RATE NOTES
From its Original Issue Date to, but not including, the first Interest
Reset Date (the "Initial Interest Period"), each Floating Rate Note will bear
interest at the Initial Interest Rate set forth, or otherwise described, in the
Pricing Supplement. From each Interest Reset Date to, but not including, the
following Interest Reset Date (each such period, an "Interest Reset Period;" and
together with the Initial Interest Period, the "Interest Periods"), the interest
rate for each Floating Rate Note will be determined by reference to an interest
rate basis (the "Base Rate"), plus or minus the Spread, if any, or multiplied by
the Spread Multiplier, if any. The "Spread" is the number of basis points that
may be specified in the applicable Pricing Supplement as being applicable to
such Note, and the "Spread Multiplier" is the percentage that may be specified
in the applicable Pricing Supplement as being applicable to such Note, except,
in each case as described below under "Subsequent Interest Periods" and
"Extension of Maturity," and except that if so specified in the applicable
Pricing Supplement, the Spread or Spread Multiplier on certain Floating Rate
Notes may be subject to adjustment from time to time as described in such
Pricing Supplement. The applicable Pricing Supplement will designate one of the
following Base Rates as applicable to a Floating Rate Note: (i) LIBOR (a "LIBOR
Note"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (iii)
the Treasury Rate (a "Treasury Rate Note"), (iv) the Federal Funds Rate (a
"Federal Funds Rate Note"), (v) the CD Rate (a "CD Rate Note") , (vi) the Prime
Rate (a "Prime Rate Note"), (vii) the J.J. Kenny Rate (a "J.J. Kenny Rate
Note"), (viii) the Eleventh District Cost of Funds Rate (an "Eleventh District
Cost of Funds Rate Note"), or (ix) such other Base Rate as is set forth in such
Pricing Supplement and in such Note. The "Index Maturity" for any Floating Rate
Note is the period of maturity of the instrument or obligation from which the
Base Rate is calculated. "H.15(519)" means the publication entitled "Statistical
Release H.15(519), Selected Interest Rates," or any successor publication,
published by the Board of Governors of the Federal Reserve System. "Composite
Quotations" means the daily statistical release entitled "Composite 3:30 p.m.
Quotations for U.S. Government Securities" published by the Federal Reserve Bank
of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ("Maximum Interest
Rate") and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("Minimum Interest Rate"). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Notes will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law, with
certain
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exceptions, is 25% per annum on a simple interest basis. Such maximum rate of
interest only applies to obligations that are less than $2,500,000.
The Company will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Series H Floating Rate Note and Bankers Trust Company
shall be the Calculation Agent for each Series I Floating Rate Note. All
determinations of interest by the Calculation Agents shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of the
Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (each day on which the interest
rate is reset, an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Dates will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under "Treasury Rate Notes"); in the case of Floating Rate Notes that
reset monthly, the third Wednesday of each month (with the exception of monthly
reset Eleventh District Cost of Funds Rate Notes, which reset on the first
calendar day of each month); in the case of Floating Rate Notes that reset
quarterly, the third Wednesday of March, June, September and December of each
year; in the case of Floating Rate Notes that reset semiannually, the third
Wednesday of each of two months of each year specified in the applicable Pricing
Supplement; and, in the case of Floating Rate Notes that reset annually, the
third Wednesday of one month of each year specified in the applicable Pricing
Supplement. If an Interest Reset Date for any Floating Rate Note would otherwise
be a day that is not a Business Day, such Interest Reset Date shall be postponed
to the next succeeding Business Day, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day. If an auction of direct
obligations of United States Treasury Bills ("Treasury bills") falls on a day
that is an Interest Reset Date for Treasury Rate Notes, the Interest Reset Date
shall be the succeeding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest that goes into effect on any Interest Reset Date shall be determined
on a date (the "Rate Determination Date") preceding such Interest Reset Date, as
further described below. Such Rate Determination Date may be referred to below
as a "CD Rate Determination Date" in the case of a CD Rate Note, a "Commercial
Paper Rate Determination Date" in the case of a Commercial Paper Rate Note, a
"Federal Funds Rate Determination Date" in the case of a Federal Funds Rate
Note, a "LIBOR Determination Date" in the case of a LIBOR Note, a "Treasury Rate
Determination Date" or a "Constant Maturity Treasury Rate Determination Date" in
the case of a Treasury Rate Note, a "Prime Rate Determination Date" in the case
of a Prime Rate Note, a "J.J. Kenny Rate Determination Date" in the case of a
J.J. Kenny Rate Note, or an "Eleventh District Cost of Funds Rate Date" in the
case of Eleventh District Cost of Funds Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding the applicable Interest Payment Date.
In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue Date
or the last date to which interest has been accrued and paid, as the case may
be, to but excluding the date 15 calendar days immediately preceding the
applicable Interest Payment Date, except that, at Stated Maturity, interest
payable will include interest accrued to but excluding the date of Stated
Maturity.
With respect to a Floating Rate Note with more than one Interest Reset Date
during any period for which accrued interest is being calculated, accrued
interest shall be calculated by multiplying the principal amount of such Note
(or in the case of a Floating Rate Note that is an Indexed Principal Note, its
Face Amount, as indicated in the applicable Pricing Supplement) by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which accrued
interest is being calculated. The interest factor (expressed as a decimal
calculated to seven decimal
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places without rounding) for each such day is computed, unless otherwise
specified in the applicable Pricing Supplement, by dividing the interest rate in
effect on such day by 360 ("Actual over 360"), in the case of LIBOR Notes, Prime
Rate Notes, J.J. Kenny Rate Notes, Eleventh District Cost of Funds Rate Notes,
Commercial Paper Rate Notes, Federal Funds Rate Notes and CD Rate Notes, or by
the actual number of days in the year ("Actual over Actual"), in the case of
Treasury Rate Notes. For purposes of making the foregoing calculation, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date. With respect to all other Floating Rate Notes, accrued
interest shall be calculated by multiplying the principal amount of such Note
(or, in the case of a Floating Rate Note that is an Indexed Principal Note, its
Face Amount) by the interest rate in effect during the period for which accrued
interest is being calculated, and multiplying that product by the quotient
obtained by dividing the number of days in the period for which accrued interest
is being calculated by 360, in the case of LIBOR Notes, Prime Rate Notes, J.J.
Kenny Rate Notes, Eleventh District Cost of Funds Rate Notes, Commercial Paper
Rate Notes, Federal Funds Rate Notes and CD Rate Notes, or by the actual number
of days in the year, in the case of Treasury Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, and
all currency amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest one-hundredth of a unit (with .005 of a
unit being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly (other than Eleventh District Cost of Funds
Rate Notes), on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year as specified in the applicable
Pricing Supplement or, in the case of Eleventh District Cost of Funds Rate
Notes, on the first calendar day of each March, June, September and December, as
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September and
December of each year; in the case of Floating Rate Notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, on the third Wednesday of one month of each year
specified in the applicable Pricing Supplement, and in each case at Maturity
(each such day being an "Interest Payment Date"). If an Interest Payment Date
with respect to any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date shall be postponed to the next
succeeding Business Day, except that, in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day; provided, however, if with
respect to any Floating Rate Note, the applicable Pricing Supplement provides
that the Note does not Accrue to Pay, if an Interest Payment Date with respect
to such Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Payment Date shall not be postponed; provided, further, that any
payment required to be made in respect of a Floating Rate Note that does not
Accrue to Pay on a date (including the day of Stated Maturity) that is not a
Business Day for such Note need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made on such
dates, and no additional interest shall accrue as a result of such delayed
payment.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note. In addition, such
information will be communicated to the Luxembourg Stock Exchange and will be
made available at the offices of the Paying Agents in Luxembourg and at the
Luxembourg Stock Exchange as soon as possible after the determination of the
interest rate.
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
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Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate
Determination Date") for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)." In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
"CD Rate" for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit." If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate Note
and will be the arithmetic mean of the secondary market offered rates as of
10:00 a.m., New York City time, on such CD Rate Determination Date of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for such CD Rate Note for
negotiable certificates of deposit of major United States money center banks of
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity designated in
the Pricing Supplement in a denomination of $5,000,000; provided, however, that
if the dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "CD Rate" for such Interest
Reset Period will be the same as the CD Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall
be the tenth calendar day after such CD Rate Determination Date or, if such day
is not a Business Day, the next succeeding Business Day.
CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Note as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper". In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Rate Note for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the "Commercial Paper Rate" for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
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"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<C> <C> <S>
D X 360
----------------
Money Market Yield = X 100
360 - (DXM)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Federal Funds Rate" for such Interest Reset
Period shall be the rate on such Federal Funds Rate Determination Date made
publicly available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15(519) under the heading "Federal Funds
(Effective);" provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the "Federal Funds Rate" for such Interest Reset
Period will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate). In the case of a Federal Funds Rate Note that resets
daily, the interest rate on such Note for the period from and including a Monday
to but excluding the succeeding Monday will be reset by the Calculation Agent
for such Note on such second Monday (or, if not a Business Day, on the next
succeeding Business Day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
"LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent for such LIBOR Notes as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the offered rates for
deposits in the Specified Currency for the period of the Index Maturity
specified in the applicable Pricing Supplement, commencing on such Interest
Reset Date, which appear on the Designated LIBOR Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. If "LIBOR
Telerate" is designated in the applicable Pricing Supplement, "Designated
LIBOR Page" means the display designated as page "3750" on the Dow Jones
Telerate Service (or such other
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page as may replace page "3750" on such service or such other service as
may be nominated by the British Bankers' Association for the purpose of
displaying the London interbank offered rates of major banks), and LIBOR
for such Interest Reset Period will be the relevant offered rate as
determined by the Calculation Agent. If "LIBOR Reuters" is designated in
the applicable Pricing Supplement, "Designated LIBOR Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or such other page as may replace the LIBO page on such service or
such other service as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank offered rates of major
banks) provided that at least two such offered rates appear on the
Designated LIBOR Page, in which case, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of such offered rates as determined by
the Calculation Agent for such LIBOR Note.
(ii) If LIBOR cannot be determined as above (either because the
Designated LIBOR Page is no longer available or because less than two rates
appear on page "LIBO" on the Reuters Monitor Money Rate Services) on such
LIBOR Determination Date, the Calculation Agent for such LIBOR Note will
request the principal London offices of each of four major banks in the
London interbank market selected by such Calculation Agent to provide such
Calculation Agent with its offered quotations for deposits in the Specified
Currency for the period of the specified Index Maturity, commencing on such
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and
in a principal amount equal to an amount of not less than U.S.$1,000,000 or
the approximate equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time. If at
least two such quotations are provided, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of such quotations. If fewer than two
such quotations are provided, "LIBOR" for such Interest Reset Period will
be the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent for such LIBOR Note at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in the Specified Currency to leading European banks, for the
period of the specified Index Maturity, commencing on such Interest Reset
Date, and in a principal amount equal to an amount of not less than
U.S.$1,000,000 or the approximate equivalent thereof in the Specified
Currency that is representative of a single transaction in such market at
such time; provided, however, that if fewer than three banks selected as
aforesaid by such Calculation Agent are quoting rates as mentioned in this
sentence, "LIBOR" for such Interest Reset Period will be the same as LIBOR
for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period
at the interest rate calculated with reference to the Treasury Rate and the
Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless "Constant Maturity" is specified or unless otherwise specified in
the applicable Pricing Supplement, the "Treasury Rate" for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct obligations of
the United States ("Treasury securities") having the Index Maturity specified in
the applicable Pricing Supplement as such rate shall be published in H.15(519)
under the heading "U.S. Government Securities -- Treasury bills -- auction
average (investment)" or, in the event that such rate is not published prior to
3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the Treasury. In
the event that the results of the auction of Treasury securities having the
specified Index Maturity are not published or reported as provided above by 3:00
p.m., New York City time, on such Calculation Date, or if no such auction is
held on such Treasury Rate Determination Date, then the "Treasury Rate" for such
Interest Reset Period shall be calculated by the Calculation Agent for such
Treasury Rate Note and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the
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arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury securities with a remaining maturity
closest to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week, unless that day
is a legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction date
shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing Supplement,
the "Treasury Rate" for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
"U.S. Government/Securities/Treasury Constant Maturities/" in the Index Maturity
with respect to the applicable Constant Maturity Treasury Rate Determination
Date (as defined below). If the H.15(519) is not published, the Treasury Rate
shall be the rate that was set forth on Telerate Page 7055, or its successor
page (as determined by the Calculation Agent), on the applicable Constant
Maturity Treasury Rate Determination Date opposite the applicable Index
Maturity. If no such rate is set forth, then the Treasury Rate for such Interest
Reset Period shall be established by the Calculation Agent as follows: The
Calculation Agent will contact the Federal Reserve Board and request the
Treasury Rate, in the applicable Index Maturity, for the Constant Maturity
Treasury Rate Determination Date. If the Federal Reserve Board does not provide
such information, then the Treasury Rate for such Interest Reset Date will be
the arithmetic mean of bid-side quotations, expressed in terms of yield,
reported by three leading U.S. government securities dealers (one of which may
be an Agent), according to their written records, as of 3:00 p.m. (New York City
time) on the Constant Maturity Treasury Rate Determination Date, for the
noncallable U.S. Treasury Note that is nearest in maturity to the Index
Maturity, but not less than exactly the Index Maturity and for the noncallable
U.S. Treasury Note that is nearest in maturity to the Index Maturity, but not
more than exactly the Index Maturity. The Calculation Agent shall calculate the
Treasury Rate by interpolating to the Index Maturity, based on an actual/actual
date count basis, the yield on the two Treasury Notes selected. If the
Calculation Agent cannot obtain three such adjusted quotations, the Treasury
Rate for such Interest Reset Date will be the arithmetic mean of all such
quotations, or if only one such quotation is obtained, such quotation, obtained
by the Calculation Agent. In all events, the Calculation Agent shall continue
polling dealers until at least one adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
The Treasury constant maturity rate for a Treasury security maturity (the
"CMT Rate") as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as of
any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the
over-the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include one or more of the Agents or
other affiliates of the Company. Certain constant maturity yield values are read
from the yield curve. Such interpolation from the yield curve provides a
theoretical yield for a Treasury security having ten years to maturity, for
example, even if no outstanding Treasury security has as of such date exactly
ten years remaining to maturity.
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The "Calculation Date" pertaining to any Treasury Rate Determination Date
or Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination Date or Constant Maturity
Rate Determination Date, as applicable, or, if such a day is not a Business Day,
the next succeeding Business Day.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, the "Prime
Rate" for each Interest Reset Period will be determined by the Calculation Agent
for such Prime Rate Note as of the second Business Day prior to the Interest
Reset Date for such Interest Reset Period (a "Prime Rate Determination Date")
and shall be the rate made available and subsequently published on such date in
H.15(519) under the heading "Bank Prime Loan." In the event that such rate has
not been made available prior to 3:00 P.M., New York City time, on the
Calculation Date (as defined below) pertaining to such Prime Rate Determination
Date, the Prime Rate will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime
rate or base lending rate as in effect for such Prime Rate Determination Date.
If fewer than four such rates but more than one such rate appear on the Reuters
Screen NYMF Page for the Prime Rate Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 360 as of the close of business on such Prime Rate
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate will be calculated by the Calculation
Agent and will be the arithmetic mean of the prime rates quoted in The City of
New York on such Prime Rate Determination Date by at least three substitute
banks or trust companies organized and doing business under the laws of the
United States, or any State thereof, having total equity capital of at least
U.S. $500,000,000 and being subject to supervision or examination by Federal or
State authority, selected by the Calculation Agent to provide such rate or
rates; provided, however, that if the banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate with respect to such Prime Rate Determination Date will
be the Prime Rate in effect on such Prime Rate Determination Date. "Reuters
Screen NYMF Page" means the display designated as page "NYMF" on the Reuters
Monitor Money Rates Service (or such other page as may replace the NYMF page on
that service for the purpose of displaying prime rates or base lending rates of
major United States banks).
The "Calculation Date" pertaining to any Prime Rate Determination Date
shall be the tenth calendar day after such Prime Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
J.J. Kenny Rate Notes
J.J. Kenny Rate Notes will bear interest at the interest rates (calculated
by reference to the J.J. Kenny Rate and the Spread and/or Spread Multiplier, if
any) specified in the J.J. Kenny Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, the "J.J.
Kenny Rate" for each Interest Reset Period will be determined by the Calculation
Agent for such J.J. Kenny Rate Note as of the second Business Day prior to the
Interest Reset Date for such Interest Reset Period (a "J.J. Kenny Rate
Determination Date") and shall be the per annum rate on such date equal to the
index made available and subsequently published by Kenny Information Systems or
its successor, based upon 30-day yield evaluations at par of bonds, the interest
on which is excludable from gross income for federal income tax purposes under
the Internal Revenue Code of 1986, as amended (the "Code"), of not less than
five "high grade" component issuers selected from time to time by Kenny
Information Systems, including without limitation, issuers of general obligation
bonds; provided, however, that the bonds on which the index is based shall not
include any
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bonds the interest on which is subject to an "alternate minimum tax" or similar
tax under the Code, unless all tax-exempt bonds are subject to such tax. If such
rate is not made available by 3:00 P.M., New York City time, on the Calculation
Date (as defined below) pertaining to such J.J. Kenny Rate Determination Date,
the J.J. Kenny Rate shall be the rate quoted by a successor indexing agent
selected by the Company equaling the prevailing rate for bonds rated in the
highest short-term rating category by Moody's Investors Service, Inc. and
Standard & Poor's Corporation in respect of issuers selected by such successor
indexing agent most closely resembling the "high grade" component issuers
selected by Kenny Information Systems that are subject to tender by the holders
thereof for purchase on not more than seven days' notice and the interest on
which is (A) variable on a weekly basis, (B) excludable from gross income for
federal income tax purposes under the Code, and (C) not subject to an "alternate
minimum tax" or similar tax under the Code, unless all tax-exempt bonds are
subject to such tax; provided, however, that if a successor indexing agent is
not available, the J.J. Kenny Rate with respect to such J.J. Kenny Rate
Determination Date will be the J.J. Kenny Rate for the immediately preceding
Interest Reset Period (or, if there was not such Interest Reset Period, the
Initial Interest Rate).
The "Calculation Date" pertaining to any J.J. Kenny Rate Determination Date
shall be the tenth calendar day after such J.J. Kenny Rate Determination Date
or, if such day is not a Business Day, the next succeeding Business Day.
Eleventh District Cost of Funds Rate Notes
Eleventh District Cost of Funds Rate Notes will bear interest at the
interest rates (calculated by reference to the Eleventh District Cost of Funds
Rate and the Spread and/or Spread Multiplier, if any) specified in the Eleventh
District Cost of Funds Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, the
"Eleventh District Cost of Funds Rate," for each Interest Reset Period will be
determined by the Calculation Agent for such Eleventh District Cost of Funds
Rate Note as of the last working day of the month immediately prior to such
Interest Reset Date for such Interest Reset Period on which the Federal Home
Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the Eleventh
District Cost of Funds Index (as defined below) (the "Eleventh District Cost of
Funds Rate Determination Date"), and shall be the rate equal to the monthly
weighted average cost of funds for the calendar month preceding such Eleventh
District Cost of Funds Rate Determination Date as set forth under the caption
"Eleventh District" on the Telerate Page 7058 as of 11:00 A.M., San Francisco
time, on such Eleventh District Cost of Funds Rate Determination Date. If such
rate does not appear on Telerate Page 7058 on any related Eleventh District Cost
of Funds Rate Determination Date, the Eleventh District Cost of Funds Rate for
such Eleventh District Cost of Funds Rate Determination Date shall be the
monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Eleventh District Cost of Funds Rate Index") by the FHLB of San Francisco as
such cost of funds for the calendar month preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for the
calendar month next preceding such Eleventh District Cost of Funds Rate
Determination Date, then the Eleventh District Cost of Funds Rate for such
Eleventh District Cost of Funds Rate Determination Date will be the Eleventh
District Cost of Funds Rate in effect on such Eleventh District Cost of Funds
Rate Determination Date.
Inverse Floating Rate Notes
Any Floating Rate Note may be designated in the applicable Pricing
Supplement as an "Inverse Floating Rate Note," in which event, unless otherwise
specified in the applicable Pricing Supplement, the interest rate on such
Floating Rate Note will be equal to (i) in the case of the period, if any,
commencing on the Issue Date (or the date on which such Note otherwise begins to
accrue interest (if different from the Issue Date)) up to the first Interest
Reset Date, a fixed rate of interest established by the Company as described in
the applicable Pricing Supplement and (ii) in the case of each period commencing
on an Interest Reset Date, a fixed rate of interest specified in the Pricing
Supplement minus the interest rate determined by reference to the Base Rate as
adjusted by the Spread and/or Spread Multiplier, if any; provided, however, that
(x) the
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interest rate thereon will not be less than zero and (y) the interest rate in
effect for the ten days immediately prior to the date of Maturity of such
Inverse Floating Rate Note will be that in effect on the tenth day preceding
such date.
Floating Rate/Fixed Rate Notes
The applicable Pricing Supplement may provide that a Note will be a
Floating Rate Note for a specified portion of its term and a Fixed Rate Note for
the remainder of its term, in which event the interest rate on such Note will be
determined as herein provided as if it were a Floating Rate Note and a Fixed
Rate Note hereunder for each such respective period, all as specified in such
applicable Pricing Supplement.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each Bearer Note will indicate whether
the Company has the option to reset the interest rate (in the case of a Fixed
Rate Note) with respect to such Bearer Note or the Spread or Spread Multiplier
(in the case of a Floating Rate Note) with respect to such Bearer Note and, if
so, the date or dates on which such interest rate or such Spread or Spread
Multiplier, as the case may be, may be reset (each an "Optional Reset Date").
The Company shall notify the Paying Agent for a Bearer Note whether or not
it intends to exercise such option with respect to such Bearer Note at least 45
but not more than 60 days prior to an Optional Reset Date for such Bearer Note.
Not later than 40 days prior to such Optional Reset Date, the Paying Agent for
such Bearer Note will mail to the Holder of such Bearer Note a notice (the
"Reset Notice"), first class, postage prepaid, indicating whether the Company
has elected to reset the interest rate (in the case of a Fixed Rate Note) or the
Spread or Spread Multiplier (in the case of a Floating Rate Note) and, if so,
(i) such new interest rate or such new Spread or Spread Multiplier, as the case
may be; and (ii) the provisions, if any, for redemption during the period from
such Optional Reset Date to the next Optional Reset Date or, if there is no such
next Optional Reset Date, to the Stated Maturity of such Bearer Note (each such
period a "Subsequent Interest Period"), including the date or dates on which or
the period or periods during which and the price or prices at which such
redemption may occur during such Subsequent Interest Period. Upon the
transmittal by the Paying Agent of a Reset Notice to the Holder of a Note, such
new interest rate or such new Spread and/or Spread Multiplier, as the case may
be, shall take effect automatically, and, except as modified by the Reset Notice
and as described below, such Note will have the same terms as prior to the
transmittal of such Reset Notice.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Bearer Note, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Reset
Notice with respect to such Optional Reset Date and establish a higher interest
rate (in the case of a Fixed Rate Note) or a higher Spread or Spread Multiplier
(in the case of a Floating Rate Note) for the Subsequent Interest Period
commencing on such Optional Reset Date by causing the Paying Agent for such
Bearer Note to mail notice of such higher interest rate or higher Spread or
Spread Multiplier, as the case may be, first class, postage prepaid, to the
Holder of such Bearer Note. Such notice shall be irrevocable. All Bearer Notes
with respect to which the interest rate or Spread or Spread Multiplier is reset
on an Optional Reset Date will bear such higher interest rate (in the case of
Fixed Rate Notes) or higher Spread or Spread Multiplier (in the case of Floating
Rate Notes), whether or not tendered for repayment.
The Holder of a Bearer Note will have the option to elect repayment of such
Note by the Company on each Optional Reset Date at a price equal to the
principal amount thereof, plus interest accrued to such Optional Reset Date. In
order for a Bearer Note to be repaid on an Optional Reset Date, the Holder
thereof must follow the procedures set forth below under "Optional Redemption,
Repayment and Repurchase" for optional repayment, except that the period for
delivery of such Bearer Note or notification to the Paying Agent for such Bearer
Note shall be at least 25 but not more than 35 days prior to such Optional Reset
Date, and except that a Holder who has tendered a Bearer Note for repayment
pursuant to a Reset Notice may, by
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written notice to the Paying Agent for such Bearer Note, revoke any such tender
for repayment until the close of business on the tenth day prior to such
Optional Reset Date.
AMORTIZING NOTES
The Company may from time to time offer Bearer Notes ("Amortizing Notes")
on which a portion or all the principal amount is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an Index (as defined below). Further information concerning
additional terms and conditions of any Amortizing Notes, including terms for
repayment thereof, will be set forth in the applicable Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer Bearer Notes ("Indexed Notes") on
which certain or all interest payments (in the case of an "Indexed Rate Note"),
and/or the principal amount payable at Stated Maturity or earlier redemption or
retirement (in the case of an "Indexed Principal Note"), is determined by
reference to the principal amount of such Notes (or, in the case of an Indexed
Principal Note, to the amount designated in the applicable Pricing Supplement as
the "Face Amount" of such Indexed Note) and by reference to prices, changes in
prices, or differences between prices, of securities, currencies, intangibles,
goods, articles or commodities or by such other objective price, economic or
other measures as are described in the applicable Pricing Supplement (the
"Index"). The issuance of Indexed Notes denominated in German deutsche marks
will be made in compliance with the policy of the German Central Bank regarding
the indexation of deutsche mark denominated debt obligations. A description of
the Index used in any determination of an interest or principal payment, and the
method or formula by which interest or principal payments will be determined by
reference to such Index, will be set forth in the applicable Pricing Supplement.
In the case of a Fixed Rate Note, Floating Rate Note or Indexed Rate Note
that is also an Indexed Principal Note, the amount of any interest payment will
be determined by reference to the Face Amount of such Indexed Note unless
specified otherwise in the applicable Pricing Supplement. In the case of an
Indexed Principal Note, the principal amount payable at Stated Maturity or any
earlier redemption or repayment of the Indexed Note may be different from the
Face Amount.
If the determination of the Index on which any interest payment or the
principal amount of an Indexed Note is calculated or announced by a third party,
which may be an Agent or another affiliate of the Company, and such third party
either suspends the calculation or announcement of such Index or changes the
basis upon which such Index is calculated (other than changes consistent with
policies in effect at the time such Indexed Note was issued and permitted
changes described in the applicable Pricing Supplement), then such Index shall
be calculated for purposes of such Indexed Note by another third party selected
by the Company, which may be an Agent or another affiliate of the Company,
subject to the same conditions and controls as applied to the original third
party. If for any reason such Index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then the indexed interest payments, if any, or any indexed principal
amount of such Indexed Note shall be calculated in the manner set forth in the
applicable Pricing Supplement. Any determination of such third party shall, in
the absence of manifest error, be binding on all parties.
Unless otherwise specified in the applicable Pricing Supplement, (i) for
the purpose of determining whether Holders of the requisite principal amount of
Notes outstanding under the applicable Indenture have made a demand or given a
notice or waiver or taken any other action, the outstanding principal amount of
Indexed Notes will be deemed to be the Face Amount thereof, and (ii) in the
event of an acceleration of the Stated Maturity of an Indexed Note, the
principal amount payable to the Holder of such Note upon acceleration will be
the principal amount determined by reference to the formula by which the
principal amount of such Note would be determined on the Stated Maturity
thereof, as if the date of acceleration were the Stated Maturity.
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An investment in Indexed Notes entails significant risks, including wide
fluctuations in market value as well as in the amounts of payments due
thereunder, that are not associated with a similar investment in a conventional
debt security. Such risks depend on a number of factors including supply and
demand for the particular commodity and economic and political events over which
the Company has no control. Fluctuations in the price of any particular security
or commodity, in the rates of exchange between particular currencies or in
particular indices that have occurred in the past are not necessarily
indicative, however, of fluctuations in the price or rates of exchange that may
occur during the term of any Indexed Notes. Accordingly, prospective investors
should consult their own financial and legal advisors as to the risks entailed
by investment in Indexed Notes. Indexed Notes are not an appropriate investment
for investors who are unsophisticated with respect to securities, commodities
and/or foreign currency transactions.
DUAL CURRENCY NOTES
The Company may from time to time offer Notes (the "Dual Currency Notes")
as to which the Company has a one time option, exercisable on any one of the
dates specified in the applicable Pricing Supplement (each an "Option Election
Date") in whole, but not in part, with respect to all Dual Currency Notes issued
on the same day and having the same terms (a "Tranche"), of thereafter making
all payments of principal, premium, if any, and interest (which payments would
otherwise be made in the Specified Currency of such Notes) in the optional
currency specified in the applicable Pricing Supplement (the "Optional Payment
Currency"). Information as to the relative value of the Specified Currency
compared to the Optional Payment Currency will be set forth in the applicable
Pricing Supplement.
The Pricing Supplement for each issuance of Dual Currency Notes will
specify, among other things, the Specified Currency and Optional Payment
Currency of such issuance and the Designated Exchange Rate for such issuance,
which will be a fixed exchange rate used for converting amounts denominated in
the Specified Currency into amounts denominated in the Optional Payment Currency
(the "Designated Exchange Rate"). The Pricing Supplement will also specify the
Option Election Dates and Interest Payment Dates for the related issuance of
Dual Currency Notes. Each Option Election Date will be a certain number of days
before an Interest Payment Date or Stated Maturity, as set forth in the
applicable Pricing Supplement, and will be the date on which the Company may
select whether to make all scheduled payments due thereafter in the Optional
Payment Currency rather than in the Specified Currency.
If the Company makes such an election, the amount payable in the Optional
Payment Currency shall be determined using the Designated Exchange Rate
specified in the applicable Pricing Supplement. If such election is made, notice
of such election shall be mailed in accordance with the terms of the applicable
Tranche of Dual Currency Notes within two Business Days of the Option Election
Date and shall state (i) the first date, whether an Interest Payment Date and/or
Stated Maturity, in which scheduled payments in the Optional Payment Currency
will be made and (ii) the Designated Exchange Rate. Any such notice by the
Company, once given, may not be withdrawn. The equivalent value in the Specified
Currency of payments made after such an election may be less, at the then
current exchange rate, than if the Company had made such payment in the
Specified Currency.
For federal income tax purposes, holders of Dual Currency Notes may be
subject to rules which differ from the general rules applicable to holders of
other types of Notes offered hereby. The U.S. federal income tax consequences of
the purchase, ownership and disposition of Dual Currency Notes will be set forth
in the applicable Pricing Supplement.
RENEWABLE NOTES
The Company may from time to time offer Notes which will mature on an
Interest Payment Date specified in the applicable Pricing Supplement occurring
in or prior to the twelfth month following the Original Issue Date of such Notes
(the "Initial Maturity Date") unless the term of all or any portion of any such
Note (a "Renewable Note") is renewed in accordance with the procedures described
below.
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified in the
applicable Pricing Supplement) prior to the Initial Maturity Date of a
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Renewable Note (the "Initial Renewal Date") and on the Interest Payment Date
occurring in each sixth month (or in the last month of each Special Election
Interval) after such Initial Renewal Date (each, together with the Initial
Renewal Date, a "Renewal Date"), the term of such Renewal Note may be extended
to the Interest Payment Date occurring in the twelfth month (or, if a Special
Election Interval is specified in the applicable Pricing Supplement, the last
month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the holder of such Renewable Note elects to extend the term of
such Renewable Note or any portion thereof as described below. If a holder does
not elect to extend the term of any portion of the principal amount of a
Renewable Note during the specified period prior to any Renewal Date, such
portion will become due and payable on the Interest Payment Date occurring in
the sixth month (or the last month in the Special Election Interval) after such
Renewal Date (the "New Maturity Date").
A holder of a Renewable Note may elect to renew the term of such Renewable
Note, or if so specified in the applicable Pricing Supplement, any portion
thereof, by delivering a notice to such effect to the Trustee (or any duly
appointed paying agent) at the corporate trust office of the Trustee or agency
of the Trustee in the City of New York not less than 15 nor more than 30 days
prior to such Renewal Date (unless another period is specified in the applicable
Pricing Supplement as the "Special Election Period"). Such election will be
irrevocable and will be binding upon each subsequent holder of such Renewable
Note. An election to renew the term of a Renewable Note may be exercised with
respect to less than the entire principal amount of such Renewable Note only if
so specified in the applicable Pricing Supplement and only in such principal
amount, or any integral multiple in excess thereof, as is specified in the
applicable Pricing Supplement. Notwithstanding the foregoing, the term of the
Renewable Notes may not be extended beyond the Stated Maturity specified for
such Renewable Notes in the applicable Pricing Supplement.
If the holder does not elect to renew the term, such Renewable Note must be
presented to the Trustee (or any duly appointed paying agent) and, with respect
to a Renewable Note that is a certificate issued in definitive form, as soon as
practicable following receipt of such Renewable Note the Trustee (or any duly
appointed paying agent) shall issue in exchange therefore in the name of such
holder (i) a Note, in a principal amount equal to the principal amount of such
exchanged Renewable Note for which no election to renew the term thereof was
exercised, with terms identical to those specified on such Renewable Note
(except that such Note shall have a fixed, nonrenewable Stated Maturity on the
New Maturity Date) and (ii) if an election to renew is made with respect to less
than the full principal amount of such holder's Renewable Note, a replacement
Renewable Note, in a principal amount equal to the principal amount of such
exchanged Renewable Note for which the election to renew was made, with terms
identical to such exchanged Renewable Notes.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Bearer Note will indicate whether
the Company has the option to extend the Stated Maturity of such Note for one or
more periods of whole years from one to five (each an "Extension Period") up to
but not beyond the date (the "Final Maturity") set forth in such Pricing
Supplement.
The Company may exercise such option with respect to a Bearer Note by
notifying the Trustee (or any duly appointed paying agent) for such Bearer Note
at least 45 but not more than 60 days prior to the old Stated Maturity of such
Bearer Note. Not later than 40 days prior to the old Stated Maturity of such
Bearer Note, the Paying Agent for such Bearer Note will mail to the Holder of
such Bearer Note a notice (the "Extension Notice"), first class, postage
prepaid. The Extension Notice will set forth (i) the election of the Company to
extend the Stated Maturity of such Bearer Note; (ii) the new Stated Maturity;
(iii) in the case of a Fixed Rate Note, the interest rate applicable to the
Extension Period or, in the case of a Floating Rate Note, the Spread or Spread
Multiplier applicable to the Extension Period; and (iv) the provisions, if any,
for redemption during the Extension Period, including the date or dates on which
or the period or periods during which and the price or prices at which such
redemption may occur during the Extension Period. Upon the mailing by such
Paying Agent of an Extension Notice to the Holder of a Bearer Note, the Stated
Maturity of such Bearer Note shall be extended automatically, and, except as
modified by the Extension Notice and as described in the next paragraph, such
Bearer Note will have the same terms as prior to the mailing of such
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Extension Notice. Notwithstanding the foregoing, not later than 20 days prior to
the old Stated Maturity of such Bearer Note, the Company may, at its option,
revoke the interest rate (in the case of a Fixed Rate Note) or the Spread or
Spread Multiplier (in the case of a Floating Rate Note) provided for in the
Extension Notice for such Bearer Note and establish a higher interest rate (in
the case of a Fixed Rate Note) or a higher Spread or Spread Multiplier (in the
case of a Floating Rate Note) for the Extension Period, by causing the Paying
Agent for such Bearer Note to mail notice of such higher interest rate or higher
Spread or Spread Multiplier, as the case may be, first class, postage prepaid,
to the Holder of such Bearer Note. Such notice shall be irrevocable. All Bearer
Notes with respect to which the Stated Maturity is extended will bear such
higher interest rate (in the case of Fixed Rate Notes) or higher Spread or
Spread Multiplier (in the case of Floating Rate Notes) for the Extension Period,
whether or not tendered for repayment.
If the Company extends the Stated Maturity of a Bearer Note, the Holder of
such Bearer Note will have the option to elect repayment of such Bearer Note by
the Company on the old Stated Maturity at a price equal to the principal amount
thereof, plus interest accrued to such date. In order for a Bearer Note to be
repaid on the old Stated Maturity once the Company has extended the Stated
Maturity thereof, the Holder thereof must follow the procedures set forth below
under "Optional Redemption, Repayment and Repurchase" for optional repayment,
except that the period for delivery of such Bearer Note or notification to the
Paying Agent for such Bearer Note shall be at least 25 but not more than 35 days
prior to the old Stated Maturity and except that a Holder who has tendered a
Bearer Note for repayment pursuant to an Extension Notice may, by written notice
to the Paying Agent for such Bearer Note, revoke any such tender for repayment
until the close of business on the tenth day before the old Stated Maturity.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Subsequent Interest Periods," "Extension of Maturity" and
"Renewable Notes."
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Bearer Note will indicate either
that such Note cannot be redeemed (other than as provided under "Tax Redemption"
and "Special Tax Redemption" below) prior to its Stated Maturity or that such
Note will be redeemable at the option of the Company in whole or in part, and
the date or dates (each an "Optional Redemption Date") on which such Note may be
redeemed and the price (the "Redemption Price") at which (together with accrued
interest to such Optional Redemption Date) such Note may be redeemed on each
such Optional Redemption Date. Unless otherwise specified in the applicable
Pricing Supplement, the Company may exercise such option with respect to a
Bearer Note by notifying the Trustee for such Note at least 45 days prior to any
Optional Redemption Date. At least 30 but not more than 60 days prior to the
date of redemption, such Trustee shall provide notice of such redemption to the
Holder of such Bearer Note in accordance with "Notices" below. In the event of
redemption of a Bearer Note in part only, a new Note or Notes for the unredeemed
portion thereof shall be issued to the Holder thereof upon the cancellation
thereof. Bearer Notes redeemed prior to Stated Maturity must be presented for
payment together with all unmatured Coupons, if any, appertaining thereto,
failing which the amount of any missing unmatured Coupon will be deducted from
the sum due for payment. The Bearer Notes (other than Amortizing Notes) will not
be subject to any sinking fund.
The Pricing Supplement relating to each Bearer Note will also indicate
whether the Holder of such Note will have the option to elect repayment of such
Note by the Company prior to its Stated Maturity, and, if so, such Pricing
Supplement will specify the date or dates on which such Note may be repaid (each
an "Optional Repayment Date") and the price (the "Optional Repayment Price") at
which, together with accrued interest to such Optional Repayment Date, such Note
may be repaid on each such Optional Repayment Date. Bearer Notes that are to be
repaid prior to Stated Maturity must be presented for payment together with all
unmatured Coupons, if any, appertaining thereto, failing which the amount of any
missing unmatured Coupon will be deducted from the sum due for payment.
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In order for a Bearer Note to be repaid, the relevant Paying Agent must
receive the Bearer Note at least 30 but not more than 45 days prior to an
Optional Repayment Date. Any tender of a Bearer Note for repayment shall be
irrevocable. The repayment option may be exercised by the Holder of a Bearer
Note for less than the entire principal amount of such Note, provided that the
principal amount of such Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, such Bearer Note shall be
canceled and a new Note or Notes for the remaining principal amount thereof
shall be issued to the Holder of such repaid Note.
If a Bearer Note is represented by a Global Security, the Depositary will
be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary will
timely exercise a right to repayment with respect to a particular Bearer Note,
the beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Bearer
Note in order to ascertain the cut-off time by which such an instruction must be
given in order for timely notice to be delivered to the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary, if
a Bearer Note is an Original Issue Discount Note (other than an Indexed Note),
the amount payable on such Note in the event of redemption or repayment prior to
its Stated Maturity (other than pursuant to an optional redemption by the
Company at a stated Redemption Price) shall be the Amortized Face Amount of such
Note as of the date of redemption or the date of repayment, as the case may be.
The Amortized Face Amount of a Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face of the applicable Pricing Supplement plus
(ii) that portion of the difference between such Issue Price and the stated
principal amount of such Note that has accrued by such date at (x) the Bond
Yield to Maturity set forth on the face of the applicable Pricing Supplement or
(y) if so specified in the applicable Pricing Supplement, the Bond Yield to Call
set forth on the face thereof (computed in each case in accordance with
generally accepted United States bond yield computation principles), provided,
however, that in no event shall the Amortized Face Amount of a Note exceed its
stated principal amount. The Bond Yield to Call listed on the face of a Pricing
Supplement shall be computed on the basis of the first occurring Optional
Redemption Date with respect to such Note and the amount payable on such
Optional Redemption Date. In the event that any such Note is not redeemed on
such first occurring Optional Redemption Date, the Bond Yield to Call with
respect to such Note shall be recomputed on such Optional Redemption Date on the
basis of the next occurring Optional Redemption Date and the amount payable on
such Optional Redemption Date, and shall continue to be so recomputed on each
succeeding Optional Redemption Date until the Note is so redeemed.
The Company may at any time purchase Bearer Notes at any price in the open
market or otherwise. Bearer Notes so purchased by the Company may, at the
discretion of the Company, be held or resold (in which case the Company will
comply with applicable selling restrictions contained in the applicable Treasury
regulations as described herein) or surrendered to the Trustee for such Notes
for cancellation (together with any unmatured Coupons attached thereto or
purchased therewith).
OTHER PROVISIONS
Any provisions with respect to the determination of an interest rate basis,
the specification of an interest rate basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the terms
as specified under "Other Provisions" on the face of such Note, or in an
addendum relating thereto if so specified on the face thereof, and in the
applicable Pricing Supplement.
TAX REDEMPTION
The Bearer Notes of a series may be redeemed at the option of the Company
in whole, but not in part, at any time on giving at least 30 but not more than
60 days' notice in accordance with "Notices" below (which
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notice shall be irrevocable), at the respective Redemption Prices thereof, if
the Company has or will become obligated to pay additional interest on such
Notes as described under "Payment of Additional Interest" below as a result of
any change in, or amendment to, the laws (or any regulations or rulings
promulgated thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or any change in the application or
official interpretation of such laws, regulations or rulings, which change or
amendment becomes effective on or after their respective Original Issue Dates,
and such obligation cannot be avoided by the Company taking reasonable measures
available to it; provided that no such notice of redemption shall be given
earlier than 90 days prior to the earliest date on which the Company would be
obligated to pay such additional interest were a payment in respect of such
Notes then due. Prior to the publication of any notice of redemption pursuant to
this paragraph, the Company shall deliver to the Trustee for the Notes to be
redeemed a certificate stating that the Company is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Company so to redeem have occurred, and an opinion
of independent counsel to the effect that the Company has or will become
obligated to pay such additional interest as a result of such change or
amendment (Section 1302).
PAYMENT OF ADDITIONAL INTEREST
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of a Bearer Note or Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on such Note or Coupon, after deduction or withholding
for or on account of any present or future tax, assessment or other governmental
charge imposed upon or as a result of such payment by the United States (or any
political subdivision or taxing authority thereof or therein), will not be less
than the amount provided in such Note or Coupon to be then due and payable.
However, the Company will not be required to make any such payment of additional
interest to such Holder for or on account of:
(a) any tax, assessment or other governmental charge that would not
have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such Holder,
if such Holder is a partnership or a corporation) and the United States,
including, without limitation, such Holder (or such fiduciary, settlor,
beneficiary, person holding a power, member or shareholder) being or having
been a citizen or resident thereof or being or having been engaged in trade
or business or present therein or having or having had a permanent
establishment therein or (ii) such Holder's past or present status as a
passive foreign investment company, a personal holding company, a foreign
personal holding company, a controlled foreign corporation for U.S. federal
income tax purposes or a private foundation or other tax-exempt
organization with respect to the United States or as a corporation that
accumulates earnings to avoid U.S. federal income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge that would not
have been imposed but for the presentation by the Holder of a Bearer Note
or Coupon for payment more than 15 days after the date on which such
payment became due and payable or on which payment thereof was duly
provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is payable
otherwise than by deduction or withholding from a payment on a Bearer Note
or Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on a Bearer Note or
Coupon, if such payment can be made without such deduction or withholding
by any other Paying Agent; or
(f) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the
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Company or is a controlled foreign corporation related to the Company
through stock ownership; nor shall such additional interest be paid with
respect to a payment on a Bearer Note or Coupon to a Holder that is a
fiduciary or partnership or other than the sole beneficial owner of such
payment to the extent a beneficiary or settlor with respect to such
fiduciary or a member of such partnership or a beneficial owner would not
have been entitled to the additional interest had such beneficiary,
settlor, member or beneficial owner been the Holder of such Bearer Note or
Coupon (Section 1202).
The term "United States Alien" means any person who, for United States
federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust
(Section 101).
SPECIAL TAX REDEMPTION
If the Company shall determine that any payment made outside the United
States by the Company or any of its Paying Agents in respect of any Bearer Note
of a series that is not a Floating Rate Note or Coupon appertaining thereto (an
"Affected Security") would, under any present or future laws or regulations of
the United States, be subject to any certification, documentation, information
or other reporting requirement of any kind, the effect of which requirement is
the disclosure to the Company, any Paying Agent or any governmental authority of
the nationality, residence or identity of a beneficial owner of such Affected
Security that is a United States Alien (other than such a requirement (a) that
would not be applicable to a payment made by the Company or any one of its
Paying Agents (i) directly to the beneficial owner or (ii) to a custodian,
nominee or other agent of the beneficial owner or (b) that can be satisfied by
such custodian, nominee or other agent certifying to the effect that the
beneficial owner is a United States Alien; provided that, in any case referred
to in clause (a) (ii) or (b), payment by the custodian, nominee or agent to the
beneficial owner is not otherwise subject to any such requirement), then the
Company shall elect either (x) to redeem such Affected Securities in whole, but
not in part, at the Redemption Price thereof, or (y) if the conditions described
in the next succeeding paragraph are satisfied, to pay the additional interest
specified in such paragraph. The Company shall make such determination as soon
as practicable and publish prompt notice thereof (the "Determination Notice")
stating the effective date of such certification, documentation, information or
other reporting requirement, whether the Company elects to redeem the Affected
Securities or to pay the additional interest specified in the next succeeding
paragraph and (if applicable) the last date by which the redemption of the
Affected Securities must take place, as described in the next succeeding
sentence. If the Affected Securities are to be redeemed as described in this
paragraph, the redemption shall take place on such date, not later than one year
after the publication of the Determination Notice, as the Company shall specify
by notice given to the Trustee for the Notes to be redeemed at least 60 days
before the Redemption Date. Notice of such redemption shall be given to the
Holders of the Affected Securities at least 30 but not more than 60 days prior
to the Redemption Date. Notwithstanding the foregoing, the Company shall not so
redeem the Affected Securities if the Company shall subsequently determine, at
least 30 days prior to the Redemption Date, that subsequent payments on the
Affected Securities would not be subject to any such certification,
documentation, information or other reporting requirement, in which case the
Company shall publish prompt notice of such subsequent determination and any
earlier redemption notice given as described in this paragraph shall be revoked
and of no further effect. Prior to the publication of any Determination Notice
as described in this paragraph, the Company shall deliver to the Trustee for the
Notes to be redeemed a certificate stating that the Company is obligated to make
such determination and setting forth a statement of facts showing that the
conditions precedent to the obligation of the Company to redeem the Affected
Securities or to pay the additional interest specified in the next succeeding
paragraph have occurred, and an opinion of independent counsel to the effect
that such conditions have occurred.
If and so long as the certification, documentation, information or other
reporting requirement referred to in the preceding paragraph would be fully
satisfied by payment of a backup withholding tax or similar charge, the Company
may elect to pay as additional interest such amounts as may be necessary so that
every net payment made outside the United States following the effective date of
such requirement by the Company or
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any of its Paying Agents in respect of any Affected Security of which the
beneficial owner is a United States Alien (but without any requirement that the
nationality, residence or identity of such beneficial owner be disclosed to the
Company, any Paying Agent or any governmental authority), after deduction or
withholding for or on account of such backup withholding tax or similar charge
(other than a backup withholding tax or similar charge that (i) would not be
applicable in the circumstances referred to in the parenthetical clause of the
first sentence of the preceding paragraph or (ii) is imposed as a result of
presentation of such Affected Security for payment more than 15 days after the
date on which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later), will not be less than the
amount provided in such Affected Security to be then due and payable. If the
Company elects to pay additional interest as described in this paragraph, then
the Company shall have the right thereafter to redeem the Affected Securities at
any time in whole, but not in part, at the Redemption Price thereof, subject to
the provisions described in the last three sentences of the immediately
preceding paragraph. If the Company elects to pay additional interest as
described in this paragraph and the condition specified in the first sentence of
this paragraph should no longer be satisfied, then the Company shall redeem the
Affected Securities in whole, but not in part, at the Redemption Price thereof,
subject to the provisions of the last three sentences of the immediately
preceding paragraph. Any redemption payments made by the Company as described in
the two immediately preceding sentences shall be subject to the continuing
obligation of the Company to pay additional interest as described in this
paragraph (Section 1302).
DEFEASANCE
The defeasance provisions described in the Prospectus will not be
applicable to the Bearer Notes.
REPLACEMENT OF BEARER NOTES AND COUPONS
If an individual Bearer Note or Coupon is mutilated, destroyed, stolen or
lost it may be replaced at the specified office of the Principal Paying Agent
for such Note in London; or, so long as the Bearer Notes are listed on the
Luxembourg Stock Exchange, at the specified office of the Paying Agent in
Luxembourg, upon payment by the claimant of such expenses as may be incurred in
connection therewith and, in the case of destruction, theft or loss, on such
terms as to evidence and indemnity as the Company or the Trustee for such Note
may reasonably require. Mutilated or defaced Bearer Notes or Coupons must be
surrendered before replacements will be issued.
NOTICES
All notices to Holders of Bearer Notes will be deemed to have been duly
given if published on two separate Business Days in a leading London daily
newspaper (which is expected to be the Financial Times) and, so long as the
Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of such
exchange so require, in Luxembourg in a newspaper of general circulation in
Luxembourg (which is expected to be the Luxemburger Wort). Such notices shall be
deemed to have been given on the date of the first such publication.
UNCLAIMED MONIES
All monies paid by the Company to a Trustee or a Paying Agent for the
payment of principal of or any premium or interest on any Bearer Note or for the
payment of any Coupon which remain unclaimed at the end of two years after such
payments shall have become due and payable will be repaid to the Company, at its
written request, and the Holder of such Note or Coupon will thereafter look only
to the Company for payment, such payment to be made only outside the United
States.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
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CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Bearer Note having a Specified Currency other than the
currency of the country in which a purchaser is resident or the currency
(including ECU and any other such composite currency) in which a purchaser
conducts its business or activities (the "home currency") entails significant
risks that are not associated with a similar investment in a security
denominated in the home currency. Similarly, an investment in an Indexed Note on
which all or a part of any payment due is determined by reference to a currency
other than the home currency entails significant risks that are not associated
with a similar investment in non-Indexed Notes. Such risks include, without
limitation, the possibility of significant market changes in rates of exchange
between the home currency and such Specified Currency, the possibility of
significant changes in rates of exchange between the home currency and such
Specified Currency resulting from official redenomination of such Specified
Currency and the possibility of the imposition or modification of foreign
exchange controls with respect to such Specified Currency. Such risks generally
depend on factors over which the Company has no control and which cannot be
readily foreseen, such as economic and political events and the supply of and
demand for the relevant currencies. In recent years, rates of exchange for
certain currencies have been highly volatile, and such volatility may be
expected in the future. Fluctuations that have occurred in any particular
exchange rate in the past are not necessarily indicative, however, of
fluctuations that may occur in the rate during the term of any Bearer Note.
Depreciation of the Specified Currency for a Bearer Note against the relevant
home currency would result in a decrease in the effective yield of such Note
below its coupon rate and, in certain circumstances, could result in a
substantial loss to the investor on a home currency basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making payments in respect of Bearer Notes
denominated in such currency. There can be no assurances that exchange controls
will not restrict or prohibit payments of principal, premium or interest in any
Specified Currency. Even if there are no actual exchange controls, it is
possible that such Specified Currency would not be available to the Company when
payments on a particular Bearer Note are due because of circumstances beyond the
control of the Company. In any such event, the Company will make required
payments on the basis described herein. See "Description of Notes -- Payment
Currency" and "Description of Notes -- Payment of Principal and Interest."
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT, AND ANY
PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL THE RISKS OF AN INVESTMENT IN BEARER
NOTES DENOMINATED IN OR THE PAYMENT IN RESPECT OF WHICH IS RELATED TO THE VALUE
OF, A CURRENCY OTHER THAN A PROSPECTIVE PURCHASER'S HOME CURRENCY, AND THE
COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH
RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS
MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN BEARER
NOTES DENOMINATED IN A CURRENCY OTHER THAN THE PURCHASER'S HOME CURRENCY. SUCH
NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH
RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Any Pricing Supplement relating to Bearer Notes having a Specified Currency
other than U.S. dollars will contain a description of any material exchange
controls affecting such currency and any other required information concerning
such currency.
PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Bearer Note is
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls
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or other circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of such Note shall be made in U.S.
dollars until such currency is again available or so used. The amounts so
payable on any date in such currency shall be converted into U.S. dollars on the
basis of the most recently available Market Exchange Rate for such currency or
as otherwise indicated in the applicable Pricing Supplement. Any payment in
respect of such Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture under which such Note shall
have been issued. See also "European Monetary Union" in the Prospectus.
In the event of an official redenomination of the Specified Currency of a
Note (other than as a result of European Monetary Union, but including, without
limitation, an official redenomination of any such Specified Currency that is a
composite currency), the obligations of the Company with respect to payments on
Notes denominated in such Specified Currency shall, in all cases, be deemed
immediately following such redenomination to provide for the payment of that
amount of redenominated currency representing the amount of such obligations
immediately before such redenomination. Notes will not provide for any
adjustment to any amount payable under such Notes as a result of (i) any change
in the value of the Specified Currency thereof relative to any other currency
due solely to fluctuations in exchange rates or (ii) any redenomination of any
component currency of any composite currency (unless such composite currency is
itself officially redenominated). The procedures described in this section shall
not apply in the event of European Monetary Union. For a description of the
procedure to be followed in connection with European Monetary Union, see
"European Monetary Union" in the Prospectus.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at the rate of exchange prevailing on
the date of the entry of the judgment or decree.
RISKS OF INDEXED NOTES
An investment in Indexed Notes may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either a
fixed rate or a floating rate determined by reference to nationally published
interest rate references. The risks of a particular Indexed Note will depend on
the terms of such Indexed Note, but may include, without limitation, the
possibility of significant changes in the prices of securities, currencies,
intangibles, goods, articles or commodities or of other objective price,
economic or other measures making up the relevant Index (the "Underlying
Assets"). Such risks generally depend on factors over which the Company has no
control and which cannot readily be foreseen, such as economic and political
events and the supply of and demand for the Underlying Assets. In recent years,
currency exchange rates and prices for various Underlying Assets have been
highly volatile, and such volatility may be expected in the future. Fluctuations
in any such rates or prices that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur during the term of any
Indexed Note.
In considering whether to purchase Indexed Notes, investors should be aware
that the calculation of amounts payable in respect of Indexed Notes may involve
reference to an Index determined by an affiliate of the Company or to prices
which are published solely by third parties or entities which are not subject to
regulation under the laws of the United States.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT, AND ANY
PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL THE RISKS OF AN INVESTMENT IN INDEXED
NOTES, AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE
PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF
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THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. THE
RISK OF LOSS AS A RESULT OF THE LINKAGE OF PRINCIPAL OR INTEREST PAYMENTS ON
INDEXED NOTES TO AN INDEX AND TO THE UNDERLYING ASSETS CAN BE SUBSTANTIAL.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN INDEXED NOTES. AN INDEXED NOTE IS NOT
AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO
TRANSACTIONS IN THE UNDERLYING ASSETS OF ANY INDEX RELEVANT TO THAT INDEXED
NOTE.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax
considerations that may be relevant to a holder of Bearer Notes. The summary
does not address all of the tax considerations which might be relevant to such
holders. Therefore, holders should consult their tax advisors in determining the
tax consequences to them in holding Bearer Notes, including the application to
their particular situation of the U.S. federal income tax considerations
discussed below, as well as the application of state, local, foreign or other
tax law.
Under current U.S. federal income tax law, (a) payment on a Bearer Note or
Coupon by the Company or any paying agent to a holder that is a United States
Alien will not be subject to withholding of the United States federal income tax
provided that, with respect to payments of interest, including original issue
discount, the holder does not actually or constructively own ten percent or more
of the combined voting power of all classes of stock of the Company (taking into
account the applicable attribution of ownership rules under Section 871(h)(3) of
the Code) and is not a controlled foreign corporation related to the Company
through stock ownership; (b) a holder of a Bearer Note or Coupon that is a
United States Alien will not be subject to United States federal income tax on
gain realized on the sale, exchange or redemption of such Note or Coupon,
provided that such holder does not have a connection with or status with respect
to the United States described in clause (a) under "Payment of Additional
Interest"; (c) a beneficial owner of a Bearer Note or Coupon that is a United
States Alien will not be required to disclose its nationality, residence or
identity to the Company, a paying agent (acting in its capacity as such) or any
United States governmental authority in order to receive payment on such Note or
Coupon from the Company or a paying agent outside the United States (although
the beneficial owner of an interest in a Temporary Global Note will be required
to provide a Certificate of Non-U.S. Beneficial Ownership to Euroclear or Cedel
in order to exchange such interest or to receive interest payments with respect
thereto, as described in "Description of Bearer Notes -- Payments and Paying
Agents" above).
Special tax considerations may apply to certain Indexed Notes. Any such
considerations will be described in the applicable Pricing Supplement.
United States information reporting requirements and backup withholding tax
will not apply to payments on a Bearer Note or Coupon made outside the United
States by the Company or any paying agent (acting in its capacity as such) to a
Holder that is a United States Alien. Information reporting requirements and
backup withholding tax also will not apply to any payment on a Bearer Note or
Coupon outside the United States by a foreign office of a custodian, nominee or
other agent of the beneficial owner of such Note or Coupon, provided that such
custodian, nominee or agent (i) is not a U.S. Person, (ii) derives less than 50%
of its gross income for certain periods from the conduct of a trade or business
in the United States and (iii) is not a controlled foreign corporation as to the
United States (a person described in (i), (ii) and (iii) being hereinafter
referred to as a "foreign controlled person"). Payment in respect of a Bearer
Note or Coupon outside the United States to the beneficial owner thereof by a
foreign office of any custodian, nominee or agent that is not a foreign
controlled person will not be subject to backup withholding tax, but will be
subject to information reporting requirements unless such custodian, nominee or
agent has documentary evidence in its records that the beneficial owner is a
United States Alien or the beneficial owner otherwise establishes an exemption.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a Bearer Note or Coupon
effected outside the United States by a foreign office of a "broker" (as defined
in applicable Treasury regulations), provided that such broker is a foreign
controlled
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person. Payment of the proceeds of the sale of a Bearer Note or Coupon effected
outside the United States by a foreign office of any broker that is not a
foreign controlled person will not be subject to backup withholding tax, but
will be subject to information reporting requirements unless such broker has
documentary evidence in its records that the beneficial owner is a United States
Alien and certain other conditions are met, or the beneficial owner otherwise
establishes an exemption.
On October 7, 1997, the U.S. Treasury Department issued final Treasury
regulations governing information reporting and the certification procedures
regarding withholding and backup withholding on certain amounts paid to
non-United States persons 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 Bearer Note or
Coupon. Prospective investors should consult their tax advisors regarding the
effect, if any, of such new Treasury regulations on an investment in the Notes.
PLAN OF DISTRIBUTION
The Bearer Notes are being offered on a continuous basis by the Company
through one or more of the Agents, which have agreed to use their respective
reasonable efforts to solicit orders to purchase Bearer Notes. The Company will
have the sole right to accept orders to purchase Bearer Notes and may reject
proposed purchases in whole or in part. Each Agent shall have the right, in its
discretion reasonably exercised and without notice to the Company, to reject any
proposed purchase of Bearer Notes in whole or in part. The Company will pay each
Agent a commission of from not more than .125% to not more than .750% of the
principal amount of Bearer Notes sold through it, depending upon the Stated
Maturity.
The Company may also sell Bearer Notes at a discount to an Agent for its
own account or for resale to one or more purchasers at varying prices related to
prevailing market prices at the time of resale or, if set forth in the
applicable Pricing Supplement, at a fixed public offering price, all as
determined by the Agent. After any initial public offering of Bearer Notes to be
resold to purchasers at a fixed public offering price, the public offering price
and any concession or discount may be changed. In addition, an Agent may offer
Bearer Notes purchased by it as principal to other dealers. Bearer Notes sold by
an Agent to a dealer may be sold at a discount and, unless otherwise specified
in the applicable Pricing Supplement, such discount allowed will not be in
excess of the discount received by the Agent from the Company. Unless otherwise
specified in the applicable Pricing Supplement, any Bearer Note purchased by an
Agent as principal will be purchased at 100% of the principal amount or face
amount thereof less a percentage equal to the commission applicable to an agency
sale of a Bearer Note of identical maturity.
In compliance with U.S. federal income tax laws and regulations, the
Company and each Agent have agreed that in connection with the original issuance
of any Bearer Note and during the period ending 40 days after the Original Issue
Date of such Note they will not offer, sell or deliver such Note, directly or
indirectly, to a U.S. Person or to any person within the United States and its
possessions, except to the extent permitted under U.S. Treasury regulations.
Under those regulations, Bearer Notes may be offered and sold during that period
to international organizations, to foreign central banks and to foreign branches
of U.S. financial institutions that satisfy requirements prescribed by the
regulations. Confirmations sent by an Agent in connection with sales of Bearer
Notes need not contain certain purchaser representations.
The Bearer Notes have not been and will not be registered under the
Securities and Exchange Law of Japan (the "Securities and Exchange Law").
Accordingly, each of the Agents will represent and agree that it has not,
directly or indirectly, offered or sold and will not, directly or indirectly,
offer or sell any Bearer Notes in Japan or to a resident of Japan except
pursuant to an exemption from the registration requirements of, and otherwise in
compliance with the Securities and Exchange Law and other relevant laws and
regulations of, Japan. As used in this paragraph, "resident of Japan" means any
person resident in Japan, including any corporation or other entity organized
under the laws of Japan or located in Japan.
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Each Agent will agree that:
1. it has not offered or sold and will not offer or sell prior to the
date six months after their date of issue any Bearer Notes, having a
maturity of one year or greater, to persons in the United Kingdom, except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances that have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995;
2. it has complied with and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Bearer Notes in, from or otherwise involving the United
Kingdom; and
3. it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue
of the Bearer Notes to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements Exemptions)
Order 1995 or is a person to whom such document may otherwise lawfully be
issued or passed on.
Bearer Notes that are denominated in German deutsche marks will be offered
by the Company through Salomon Brothers AG. Each issue of Bearer Notes
denominated or payable in, or linked to, German deutsche marks will take place
only in compliance with the guidelines of the German central bank regarding the
issue of debt securities denominated in German deutsche marks. In particular,
only credit institutions domiciled in Germany will act as dealers in relation to
such Notes except in the case of a syndicated issue of Bearer Notes denominated
in German deutsche marks (where only the lead manager specified in the Pricing
Supplement need be such a credit institution). Each issue of Indexed Notes
denominated in German deutsche marks will be made in compliance with the policy
of the German central bank regarding the indexation of debt obligations
denominated in German deutsche marks of non-German issuers.
There can be no assurance as to the existence of a secondary market for any
Bearer Notes, or that the Bearer Notes will be sold.
Each of the Agents may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). The Company
has agreed to indemnify each of the Agents against certain liabilities,
including liabilities under the Securities Act, or to contribute to the payments
such Agent may be required to make in respect thereof, and will reimburse each
of the Agents for certain legal and other expenses incurred by it in connection
with the offer and sale of the Notes.
Concurrently with the offering of Notes through the Agents as described
herein, the Company may issue other Securities pursuant to the Indenture
referred to in the Prospectus.
Each of the Agents is a wholly owned subsidiary of the Company. The
offering of the Notes will comply with the requirements of Rule 2720 of the
Conduct Rules of the NASD regarding an NASD member firm's underwriting
securities of an affiliate.
In addition to the Bearer Notes being offered through the Agents as
described herein, Registered Notes that may have terms identical or similar to
the terms of the Bearer Notes may be concurrently offered by the Company on a
continuous basis in the United States by one or more broker-dealer affiliates of
the Company. Such affiliates may also purchase Registered Notes as principals
for their own accounts or for resale. Any Registered Notes so offered and sold
will reduce correspondingly the maximum aggregate principal amount of Bearer
Notes that may be offered by this Prospectus Supplement and the Prospectus.
This Prospectus Supplement, the related Pricing Supplement and the
accompanying Prospectus may be used by the Company, the Agents or other
affiliates of the Company in connection with offers and sales related to
secondary market transactions in the Bearer Notes offered hereby. An Agent or
other such Company affiliates may act as principal or agent in such
transactions. Such sales will be made at varying prices related to prevailing
market prices at the time of sale. Any Agent may act as principal or agent in
such transactions. No Agent has any obligation to make a market in any of the
Bearer Notes and any Agent may discontinue any market-making activities at any
time without notice, at its sole discretion. The Bearer Notes issued hereunder
S-32
<PAGE> 94
will be new issues of securities with no established trading market and no
assurance can be made as to the existence or liquidity of a trading market for
the Bearer Notes.
GENERAL INFORMATION
Application may be made to list certain series of the Bearer Notes on the
Luxembourg Stock Exchange. In connection with such listing, the Certificate of
Incorporation and By-Laws of the Company and a legal notice relating to the
issuance of the Bearer Notes have been deposited with the Chief Registrar of the
District Court of Luxembourg, where copies may be obtained upon request.
The issuance of the Notes was authorized by action of the Board of
Directors of the Company on September 7, 1988, March 7, 1990, May 2, 1990, June
5, 1991, September 5, 1991, June 2, 1993, December 1, 1993, May 4, 1994,
December 7, 1994, May 3, 1995 and October 29, 1997, and by action of the
executive committee of the Board of Directors on July 24, 1991 and by action of
an authorized officer of the Company on February 12, 1993, December 14, 1993,
October 12, 1994 and April 5, 1996.
So long as any series of Bearer Notes is listed on the Luxembourg Stock
Exchange, copies of the Pricing Supplements for such series of Notes, the
Registration Statement (and the documents incorporated by reference therein),
the annual and quarterly reports, Certificate of Incorporation and By-Laws of
the Company, the Indenture for such series of Notes and the Selling Agency
Agreement will be available for inspection at the office of the Listing Agent or
at the office of the Paying Agent for such series of Notes in Luxembourg during
the term of the Bearer Notes. In addition, copies of such annual and quarterly
reports and such Pricing Supplements may be obtained at such offices.
Except as otherwise disclosed or incorporated by reference herein, the
Company is not involved in any litigation or arbitration proceedings relating to
claims or amounts which it believes will be material in the context of the issue
of the Bearer Notes and is not aware that any such litigation or arbitration
proceedings are pending or threatened.
As of the date of this Prospectus Supplement, there has been no material
adverse change in the financial position of the Company since the date of the
latest audited financial statements contained or incorporated by reference in
the accompanying Prospectus.
The Bearer Notes have been accepted for clearance through Euroclear and
CEDEL.
Each Pricing Supplement will contain the following information in respect
of the issue of the Notes to which it relates:
(i) Principal Amount or Face Amount
(ii) Issue Price
(iii) Proceeds to Company on original issuance
(iv) Commission or Discount on original issuance
(v) Salomon Brothers International Limited's capacity on original
issuance
(vi) Issue Date
(vii) Stated Maturity
(viii) Specified Currency (If other than U.S. dollars)
(ix) Authorized Denominations (If other than as set forth in the
Prospectus Supplement)
(x) Interest Payment Dates: Accrue to pay: [ ] Yes [ ] No
(xi) Indexed Principal Note: [ ] Yes [ ] No
(xii) Type of Interest on Note (Fixed Rate, Floating Rate or
Indexed Rate)
S-33
<PAGE> 95
(xiii) Interest Rate (Fixed Rate Notes)
(xiv) Initial Interest Rate (Floating Rate Notes)
(xv) Base Rate (Floating Rate Notes)
(xvi) Calculation Agent (If other than Citibank)
(xvii) Computation of Interest
(xviii) Interest Reset Dates
(xix) Rate Determination Dates
(xx) Index Maturity
(xxi) Spread (+/-)
(xxii) Spread Multiplier
(xxiii) Change in Spread, Spread Multiplier or Fixed Interest Rate
prior to Stated Maturity: [ ] Yes [ ] No
(xxiv) Maximum Interest Rate
(xxv) Minimum Interest Rate
(xxvi) Amortizing Note: [ ] Yes [ ] No
(xxvii) Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates Redemption Prices Redemption: [
] In
whole
only
and
not
in
part
[
] May
be in
whole
or in
part
(xxviii) Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates
Optional Repayment Prices
(xxix) Discount Note: [ ] Yes [ ] No
Total Amount of OID Yield to Maturity
(xxx) Listed on Luxembourg Stock Exchange: [ ] Yes [ ] No
S-34
<PAGE> 96
REGISTERED OFFICE OF SALOMON SMITH BARNEY HOLDINGS INC.
388 Greenwich Street
New York, New York 10013
<TABLE>
<S> <C>
TRUSTEE FOR SERIES H NOTES TRUSTEE FOR SERIES I NOTES
Citibank, N.A. Bankers Trust Company
120 Wall Street Four Albany Street
New York, New York 10043 New York, New York 10015
PRINCIPAL PAYING AGENT FOR SERIES H PRINCIPAL PAYING AGENT FOR SERIES I
NOTES NOTES
Citibank, N.A. Bankers Trust Company
336 Strand 1 Appold Street, Broadgate
London, WC2R 1HB London, EC2A 2HE
PAYING AGENT FOR SERIES H NOTES PAYING AGENT FOR SERIES I NOTES
Citibank (Luxembourg) S.A. Bankers Trust Luxembourg, S.A.
58 Boulevard Grande-Duchesse F.D. Roosevelt
Charlotte
P.O. Box 807 14 Boulevard
L-1330 Luxembourg L-2450 Luxembourg
</TABLE>
LEGAL ADVISOR TO THE AGENTS
<TABLE>
<S> <C>
Cleary, Gottlieb, Steen & Hamilton Skadden, Arps, Slate, Meagher & Flom LLP
One Liberty Plaza 919 Third Avenue
New York, New York 10006 New York, New York 10022
</TABLE>
AUDITOR TO SALOMON SMITH BARNEY HOLDINGS INC.
LISTING AGENT
Kredietbank S.A.
43 Boulevard Royal Luxembourg
Luxembourgeoise
Luxembourg City 2955
<PAGE> 97
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED OCTOBER 28, 1997
ON SEPTEMBER 24, 1997, SALOMON INC AND TRAVELERS GROUP INC. ("TRAVELERS
GROUP") ANNOUNCED THAT THEY HAD ENTERED INTO AN AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997, PURSUANT TO WHICH A NEWLY-FORMED, WHOLLY OWNED
SUBSIDIARY OF TRAVELERS GROUP WILL MERGE (THE "FIRST STEP MERGER") WITH AND INTO
SALOMON INC, WHICH WILL BECOME A WHOLLY OWNED SUBSIDIARY OF TRAVELERS GROUP AND
BE RENAMED SALOMON SMITH BARNEY HOLDINGS INC. (THE "COMPANY"). IMMEDIATELY
THEREAFTER, IT IS ANTICIPATED THAT SMITH BARNEY HOLDINGS INC., ANOTHER WHOLLY
OWNED SUBSIDIARY OF TRAVELERS GROUP, WILL BE MERGED WITH AND INTO THE COMPANY
(THE "SECOND STEP MERGER;" AND TOGETHER WITH THE FIRST STEP MERGER, REFERRED TO
COLLECTIVELY HEREIN AS THE "MERGER").
THIS PROSPECTUS ASSUMES THE CONSUMMATION OF THE MERGER, WHICH IS CURRENTLY
ANTICIPATED TO BE COMPLETED ON OR ABOUT NOVEMBER 30, 1997. THE SECURITIES
OFFERED HEREBY ARE NOT INTENDED TO BE OFFERED, AND THIS PROSPECTUS IS NOT
INTENDED TO BE USED, PRIOR TO THE CONSUMMATION OF THE MERGER.
PROSPECTUS
$
SALOMON SMITH BARNEY HOLDINGS INC
NOTES, SERIES J
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
GENERAL TERMS OF SALE
The following terms will generally apply to the notes that we will sell
from time to time using this Prospectus. We will include information on the
specific terms for each note in a pricing supplement to this Prospectus (a
"Pricing Supplement") that we will deliver to prospective buyers of any note. We
expect to receive between $ and $ from the sale of the notes, after
paying the underwriters commissions of between $ and $ .
<TABLE>
<S> <C> <C>
MATURITY: More than 9 Months TERMS OF SPECIFIC NOTES MAY PERMIT ONE OR MORE OF THESE
FEATURES. YOU SHOULD REVIEW THE PRICING SUPPLEMENT FOR FEATURES
THAT APPLY TO YOUR NOTES
INTEREST RATES: Fixed, Floating, or Zero Coupon - May include a "Survivor's Option" allowing your
representative to require that the Company repurchase your note
prior to maturity in the event of your death
BASE FLOATING LIBOR - May be redeemable or repurchasable by us
RATES: Commercial Paper Rate
Treasury Rate - May be renewable at your option or extendible at our option
CD Rate
Prime Rate - Interest rate may be reset at our option from time to time
J.J. Kenny Rate and be redeemable by you at the time of reset
Eleventh District Cost of Funds
Rate - May be issued with Original Issue Discount for tax purposes
- Portion of principal may be payable prior to maturity
INDEXED NOTES: Payments of interest or principal Notes will be sold through our broker-dealer subsidiaries as
may be linked to the price of one Underwriters
or more securities, currencies,
commodities or other goods Notes may be subject to certain indexation and currency risks
Series J Notes are part of the Company's Senior Indebtedness
Notes will be issued in book-entry form
PAYMENT Generally semi-annually for Fixed
DATES: Rate Notes
Interest on Floating Rate or
Indexed Notes may be paid monthly,
quarterly, semi-annually or
annually
CURRENCIES: U.S. Dollars and other currencies
</TABLE>
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 PRICING SUPPLEMENT, IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 98
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS (INCLUDING THE PROSPECTUS SUPPLEMENT AND ACCOMPANYING PRICING
SUPPLEMENT) AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS (INCLUDING THE PROSPECTUS SUPPLEMENT AND
ACCOMPANYING PRICING SUPPLEMENT) NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS
PROSPECTUS (INCLUDING THE PROSPECTUS SUPPLEMENT AND ACCOMPANYING PRICING
SUPPLEMENT). THIS PROSPECTUS (INCLUDING THE PROSPECTUS SUPPLEMENT AND
ACCOMPANYING PRICING SUPPLEMENT) DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED
SECURITIES, INCLUDING PURCHASES OF SUCH SECURITIES TO STABILIZE THEIR MARKET
PRICE, PURCHASES OF SUCH SECURITIES TO COVER ALL OR SOME OF A SHORT POSITION IN
THE SECURITIES MAINTAINED BY THE UNDERWRITERS FOR ANY OFFERING AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF
DISTRIBUTION."
THIS PROSPECTUS, AND THE RELATED PRICING SUPPLEMENT, MAY BE USED BY THE
COMPANY, THE UNDERWRITERS OR OTHER AFFILIATES OF THE COMPANY IN CONNECTION WITH
OFFERS AND SALES RELATED TO SECONDARY MARKET TRANSACTIONS IN THE REGISTERED
NOTES OFFERED HEREBY. AN UNDERWRITER OR OTHER SUCH COMPANY AFFILIATE MAY ACT AS
PRINCIPAL OR AGENT IN SUCH TRANSACTIONS. SUCH SALES WILL BE MADE AT VARYING
PRICES RELATED TO PREVAILING MARKET PRICES AT THE TIME OF SALE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at Seven World Trade Center, 13th Floor, New York, New York 10048, and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained upon written request addressed to the Commission,
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. 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 concerning issuers, such as the
Company, that file electronically with the Commission. Such reports and other
information may also be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, and the American Stock
Exchange, 86 Trinity Place, New York, New York 10006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Notes (as defined below). This Prospectus
does not
2
<PAGE> 99
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, reference is hereby made to the
Registration Statement and to the exhibits thereto. Statements contained herein
concerning the provisions of certain documents are not necessarily complete, and
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to Section 13 of the Exchange Act (File No. 1-4346), are incorporated herein by
reference: (i) the Annual Report on Form 10-K for the year ended December 31,
1996 (the "1996 Form 10-K"), (ii) the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997 and June 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), October 21, 1997 and October 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 termination of the offering of the Notes shall be deemed to be incorporated
by reference in this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN
OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE, EXCEPT THE EXHIBITS TO SUCH DOCUMENTS (UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS).
WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE TREASURER, SALOMON
SMITH BARNEY HOLDINGS INC., 388 GREENWICH STREET, NEW YORK, NEW YORK 10013.
TELEPHONE REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE TREASURER AT (212)
816-6000.
References herein to "U.S. dollars," "U.S.$," "dollar" or "$" are to the
lawful currency of the United States.
3
<PAGE> 100
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 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 U.S. and foreign broker-dealer subsidiaries.
THE SECURITIES WE MAY OFFER
We may use this Prospectus to offer up to $ of Notes. A
Prospectus Supplement will describe the specific types, amounts, prices, and
detailed terms of any securities we offer.
THE NOTES
The Notes are senior unsecured general obligations of our Company. Senior
debt includes our notes, debt, and guarantees, which are for money borrowed and
not subordinated. Subordinated debt, designated at the time it is issued, is
entitled to interest and principal payments after the senior debt payments.
The Notes will be issued under an indenture (as amended or supplemented
from time to time, the "Indenture") between the Company and Citibank, N.A, a
national banking association (the "Trustee"). We have certain banking
relationships with the Trustee. We have summarized below the general features of
the Notes from the Indenture. We encourage you to read the Indenture, which is
an exhibit to our registration statement No. 333- , our recent annual
report on Form 10-K and our recent quarterly reports on Form 10-Q and our recent
Reports on Form 8-K. Directions on how you can receive copies of these documents
are provided on page .
GENERAL INDENTURE PROVISIONS THAT APPLY TO THE NOTES
- - The Indenture does not limit the amount of debt that we may issue or provide
holders any protection should there be a highly leveraged transaction
involving our company, although the Indenture does limit our company's ability
to pledge the stock of certain of our important subsidiaries.
- - The Indenture allows for different types of debt securities (including indexed
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 any of
these events occur, the other company will be required to assume our
responsibilities on the debt, and, assuming that the transaction has not
resulted in an event of default, we will be released from all liabilities and
obligations under the Notes.
- - The Indenture provides that holders of a majority of the total principal
amount of the Notes outstanding may vote to change certain of our obligations
or your rights concerning the Notes. However, every holder of a Note must
consent to certain important changes in that Note, including changes in the
payment of principal or interest on such Note or the currency of payment.
- - We may discharge Notes issued under the Indenture or be released from our
obligation to comply with the limitations discussed above at any time by
depositing sufficient amounts of cash or U.S. government
4
<PAGE> 101
securities with the Trustee to pay our obligations under the Notes when due.
If we choose to discharge Notes, all amounts due to you on the Notes will be
paid by the Trustee from the deposited funds.
- - The Indenture governs the actions of the Trustee with regard to the Notes,
including the circumstances under which the Trustee is required to give
notices to holders of the Notes and the procedures by which lost or stolen
Notes 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 60 days following notice.
- Certain events of insolvency or bankruptcy, whether voluntary or not.
REMEDIES
If we default in performing any of these obligations, the Trustee or
holders of 25% of the principal amount of Notes outstanding may declare the
principal immediately payable. However, holders of a majority in principal
amount of the Notes may rescind this action.
USE OF PROCEEDS
We will use the net proceeds we receive from the offering of the Notes 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. We will use a
portion of the proceeds from the sale of Indexed Notes to hedge our exposure to
payments that we may have to make on such Indexed Notes.
PLAN OF DISTRIBUTION
We may sell the Notes 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 we are selling the Notes,
including the names of any underwriters and details of the pricing of the Notes,
including the commissions, concessions or discounts we are granting the
underwriters, dealers or agents.
If we use underwriters in any sale, the underwriters will buy the Notes for
their own account and may resell the Notes 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, underwriters and selling
group members and their affiliates may engage in transactions to stabilize,
maintain or otherwise affect the market price of the Notes, 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
We file annual, quarterly and special reports, proxy statements and other
information with 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
5
<PAGE> 102
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 and June 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),
October 21, 1997 and October 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 Pricing Supplement. We have authorized no one
to provide you with different information. We are not making an offer of these
Notes in any state where the offer is not permitted. You should not assume that
the information in this Prospectus or the Pricing Supplement is accurate as of
any date other than the date on the front of the document.
6
<PAGE> 103
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"), which 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" and, together with Smith Barney (as
well as any successor or successors thereto) hereinafter referred to from time
to time as the "Underwriters").
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
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.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each Registered Note (as defined below)
in the currency designated by the Company (the "Specified Currency") for such
Note. If requested by a prospective purchaser of a Registered Note having a
Specified Currency other than U.S. dollars, each of the Agents may at its
discretion arrange for the exchange of U.S. dollars into such Specified Currency
to enable the purchaser to pay for such Note. Each such exchange will be made by
an Agent on such terms and subject to such conditions, limitations and charges
as an Agent may from time to time establish in accordance with its regular
foreign exchange practice. All costs of exchange will be borne by the purchaser.
References herein to "U.S. dollars" or "$" are to the lawful currency of
the United States.
DESCRIPTION OF THE NOTES
The Company's Notes, Series J (the "Notes") will be issued as a series
under the Indenture between the Company and the Trustee. The Notes will rank
pari passu with all other unsecured debt of the Company except subordinated
debt. A copy of the Indenture has previously been filed with the Commission and
is incorporated by reference as part of the Registration Statement. The
following summary of certain provisions of the Indenture and the Notes does not
purport to be complete and such summary is subject to the detailed provisions of
the Indenture, to which reference is hereby made for a full description of such
provisions, including the definition of certain capitalized terms used herein,
and for other information regarding the
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Notes. Numerical references in parentheses below are to sections in the
Indenture. Wherever particular sections or defined terms of the Indenture are
referred to, such sections or defined terms are incorporated herein by reference
as part of the statement made, and the statement is qualified in its entirety by
such reference.
GENERAL
At the date of this Prospectus, the Notes offered pursuant to this
Prospectus are limited to an aggregate initial public offering price or purchase
price of up to $ or the equivalent thereof in one or more foreign
or composite currencies, which amount is subject to reduction as a result of the
sale of other securities under the Registration Statement of which this
Prospectus forms a part or under a Registration Statement to which this
Prospectus relates. The Company reserves the right to withdraw, cancel or modify
the offer made hereby without notice. The aggregate amount of Notes may be
increased from time to time to such larger amount as may be authorized by the
Company. The Notes will be represented only by Global Certificates registered in
the name of The Depository Trust Company, as Depositary (a "Book-Entry Note"),
except as described below under "Certificated Notes." The nominal authorized
denominations of the Notes will be $1,000 and any larger amount that is an
integral multiple of $1,000. Each Note will mature more than nine months from
its date of issue on the day that is the final Interest Payment Date (as defined
below) for such Note. The U.S. dollar equivalent of the public offering price or
purchase price of a Note having a Specified Currency other than U.S. dollars
will be determined on the basis of the noon buying rate in New York City for
cable transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York (the "Market Exchange Rate") for such Specified
Currency on the applicable issue date. Such determination will be made by the
Company or its agent, as exchange rate agent for the Notes (the "Exchange Rate
Agent").
Unless otherwise specified in the applicable Pricing Supplement, each Note
will mature on a Business Day more than nine months from its date of issue, as
selected by the purchaser and agreed to by the Company (the "Stated Maturity"),
which maturity date may be subject to extension at the option of the Company.
Each Note may also be subject to redemption at the option of the Company, or to
repayment at the option of the Holder, prior to its Stated Maturity. Each Note
having a Specified Currency of Pounds Sterling will mature in compliance with
such regulations as the Bank of England may promulgate from time to time.
The Pricing Supplement relating to a Note will describe the following
terms: (i) the Specified Currency for such Note; (ii) whether such Note bears
interest at a fixed rate (a "Fixed Rate Note," which may be zero in the case of
certain Discount Notes), a floating rate (a "Floating Rate Note"), an amortizing
note (an "Amortizing Note") on which a portion or all the principal amount is
payable prior to Stated Maturity in accordance with a schedule, by application
of a formula, or by reference to an index and/or an indexed note (an "Indexed
Note") on which the amount of any interest payment, in the case of an Indexed
Rate Note, and/or the principal amount payable at maturity, in the case of an
Indexed Principal Note, will be determined by reference to the level of prices,
or changes in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities or by application of a formula;
(iii) the price (expressed as a percentage of the aggregate principal amount or
face amount thereof) at which such Note will be issued (the "Issue Price"); (iv)
the date on which such Note will be issued (the "Original Issue Date"); (v) the
date on which such Note will mature (the "Stated Maturity"); (vi) if such Note
is a Fixed Rate Note, the rate per annum at which such Note will bear interest,
if any, and whether, and the manner in which, such rate may be changed prior to
its Stated Maturity; (vii) if such Note is a Floating Rate Note, the Base Rate,
the Initial Interest Rate, the Interest Reset Period or the Interest Reset
Dates, the Interest Payment Dates, and, if applicable, the Index Maturity, the
Maximum Interest Rate, the Minimum Interest Rate, the Spread or Spread
Multiplier (all as defined below), and any other terms relating to the
particular method of calculating the interest rate for such Note and whether,
and the manner in which, such Spread or Spread Multiplier may be changed prior
to Stated Maturity; (viii) whether such Note is an Original Issue Discount Note
(as defined below); (ix) if such Note is an Amortizing Note, the terms for
repayment prior to Stated Maturity; (x) if such Note is an Indexed Note, in the
case of an Indexed Rate Note, the manner in which the amount of any interest
payment will be determined or, in the case of an Indexed Principal Note, its
Face Amount and the
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manner in which the principal amount payable at Stated Maturity will be
determined; (xi) whether such Note may be redeemed at the option of the Company,
or repaid at the option of the Holder, prior to Stated Maturity as described
under "Optional Redemption, Repayment and Repurchase" below and, if so, the
provisions relating to such redemption or repayment, including, in the case of
an Original Issue Discount Note or Indexed Note, the information necessary to
determine the amount due upon redemption or repayment; (xii) whether the Holder
of such Note has a Survivor's Option, as described below under "Repayment Upon
Death;" (xiii) whether such Note is subject to an optional extension beyond its
Stated Maturity as described under "Extension of Maturity" below; (xiv) whether
such Note will be represented by a Global Security or a certificate issued in
definitive form; (xv) certain special U.S. federal income tax consequences of
the purchase, ownership and disposition of certain Notes, if any; (xvi) whether
such Note is a Renewable Note (as defined below), and, if so, the specific terms
thereof; (xvii) the use of proceeds, if such use materially differs from that
disclosed in this Prospectus and (xviii) any other terms not inconsistent with
the provisions of the Indenture.
"Business Day" with respect to any Note means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York or (b) if the Specified Currency for such Note is other than U.S. dollars,
the financial center of the country issuing such Specified Currency (which, in
the case of the Euro, shall be Brussels, Belgium) and (ii) if such Note is a
LIBOR Note (as defined below), a London Banking Day. "London Banking Day" with
respect to any Note means any day on which dealings in deposits in the Specified
Currency of such Note are transacted in the London interbank market.
"Original Issue Discount Note" means (i) a Note, including any such Note
whose interest rate is zero, that has a stated redemption price at Stated
Maturity that exceeds its Issue Price by at least 0.25% of its stated redemption
price at Stated Maturity, multiplied by the number of full years from the
Original Issue Date to the Stated Maturity for such Note and (ii) any other Note
designated by the Company as issued with original issue discount for U.S.
federal income tax purposes.
A "basis point" or "bp" equals one one-hundredth of a percentage point.
REPAYMENT UPON DEATH
The Pricing Supplement relating to any Note will indicate whether the
Holder of such Note will have the option (the "Survivor's Option") to elect
repayment of such Note prior to its Stated Maturity in the event of the death of
the beneficial owner of such Note. SEE THE PRICING SUPPLEMENT TO DETERMINE
WHETHER THE SURVIVOR'S OPTION APPLIES TO ANY PARTICULAR NOTE.
Pursuant to exercise of the Survivor's Option, if applicable, the Company
will repay any Note properly tendered for repayment by or on behalf of the
person (the "Representative") that has authority to act on behalf of the
deceased beneficial owner of such Note under the laws of the appropriate
jurisdiction (including, without limitation, the personal representative,
executor, surviving joint tenant or surviving tenant by the entirety of such
deceased beneficial owner) at a price equal to the Amortized Face Amount
thereof, subject to the following limitations. The Company may, in its sole
discretion, limit to $2,500,000 the aggregate principal amount of Notes as to
which exercises of the Survivor's Option will be accepted in any calendar year
(the "Annual Put Limitation") and, in the event that the Annual Put Limitation
is applied, limit to $250,000 the aggregate principal amount of Notes (or
portions thereof) as to which exercise of the Survivor's Option will be accepted
in such calendar year with respect to any individual deceased beneficial owner
of Notes. Moreover, the Company will not make principal repayments pursuant to
exercise of the Survivor's Option in amounts that are less than $5,000, and, in
the event that the limitations described in the preceding sentence would result
in the partial repayment of any Note, the principal amount of such Note
remaining outstanding after repayment must be at least $5,000 (the minimum
authorized denomination of the Notes). Any Note tendered pursuant to exercise of
the Survivor's Option may be withdrawn by a written request of its Holder
received by the Trustee prior to its repayment.
The Amortized Face Amount of a Note on any date shall be the amount equal
to (i) the Issue Price set forth on the face of the applicable Pricing
Supplement plus (ii) that portion of the difference between such
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Issue Price and the stated principal amount of such Note that has accrued by
such date at (x) the Bond Yield to Maturity set forth on the face of the
applicable Pricing Supplement or (y) if so specified in the applicable Pricing
Supplement, the Bond Yield to Call set forth on the face thereof (computed in
each case in accordance with generally accepted United States bond yield
computation principles), provided, however, that in no event shall the Amortized
Face Amount of a Note exceed its stated principal amount. The Bond Yield to Call
listed on the face of a Pricing Supplement shall be computed on the basis of the
first occuring Optional Redemption Date with respect to such Note and the amount
payable on such Optional Redemption Date. In the event that any such Note is not
redeemed on such first occuring Optional Redemption Date, the Bond Yield to Call
with respect to such Note shall be recomputed on such Optional Redemption Date
on the basis of the next occurring Optional Redemption Date and the amount
payable on such Optional Redemption Date, and shall continue to be so recomputed
on each succeeding Optional Redemption Date until the Note is so redeemed.
Each Note that is tendered pursuant to valid exercise of the Survivor's
Option will be accepted promptly in the order all such Notes are tendered,
except for any Note (or portion thereof) the acceptance of which would (i)
contravene the Annual Put Limitation or (ii) result in the acceptance during the
then current calendar year of an aggregate principal amount of Notes (or
portions thereof) exceeding $250,000 with respect to the relevant individual
deceased beneficial owner. If as of the end of any calendar year the Company has
not imposed the Annual Put Limitation, or the aggregate principal amount of
Notes that have been accepted pursuant to exercise of the Survivor's Option
during such year has not exceeded the Annual Put Limitation for such year, any
exercise(s) of the Survivor's Option with respect to Notes (or portions thereof)
not accepted during such calendar year, because more than $250,000 aggregate
principal amount of Notes was tendered with respect to an individual deceased
beneficial owner, will be accepted in the order all such Notes were tendered, to
the extent that any such exercise would not trigger the Annual Put Limitation,
if any, for such calendar year. Any Note (or portion thereof) accepted for
repayment pursuant to exercise of the Survivor's Option will be repaid on the
first Interest Payment Date that occurs 20 or more calendar days after the date
of such acceptance. Each Note (or any portion thereof) tendered for repayment
that is not accepted in any calendar year due to the application of the Annual
Put Limitation will be deemed to be tendered in the following calendar year in
the order in which all such Notes were originally tendered, unless any such Note
is withdrawn by its Holder. In the event that a Note (or any portion thereof)
tendered for repayment pursuant to valid exercise of the Survivor's Option is
not accepted, the Trustee will deliver a notice to any affected Representative
by first-class mail to the broker or other entity that represents the deceased
beneficial owner of the Note or, in the case of a certificated Note, to the
registered Holder thereof at its last known address as indicated on the records
of the Security Registrar that states the reasons such Note (or portion thereof)
has not been accepted for repayment.
Subject to the foregoing, in order for a Survivor's Option to be validly
exercised, the Trustee must receive (i) a written request for repayment signed
by the Representative, and such signature must be guaranteed by a member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, (ii) tender of the Note to be repaid,
(iii) appropriate evidence satisfactory to the Company and the Trustee that (A)
the Representative has authority to act on behalf of the deceased beneficial
owner, (B) the death of such beneficial owner has occurred and (C) the deceased
was the beneficial owner of such Note at the time of death, (iv) if applicable,
a properly executed assignment or endorsement, and (v) if the Note is held by a
nominee of the deceased beneficial owner, a certificate satisfactory to the
Trustee from such nominee attesting to the beneficial ownership of such Note.
All questions as to the eligibility or validity of any exercise of the
Survivor's Option will be determined by the Company, in its sole discretion,
which determinations will be final and binding on all parties.
If a Note is represented by a Global Certificate, the Depositary's nominee
will be the Holder of such Note and therefore will be the only entity that can
exercise the Survivor's Option for such Note. To obtain repayment pursuant to
exercise of the Survivor's Option with respect to such Note, the Representative
must provide to the broker or other entity through which the deceased beneficial
owner holds an interest in such Note (i) the documents described in clauses (i)
and (iii) of the preceding paragraph and (ii) instructions to
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such broker or other entity to notify the Depositary of such Representative's
desire to obtain repayment pursuant to exercise of the Survivor's Option. Such
broker or other entity will provide to the Trustee (i) the documents received
from the Representative referred to in clause (i) of the preceding sentence,
(ii) its tender of such Note pursuant to exercise of the Survivor's Option and
(iii) a certificate satisfactory to the Trustee from such broker or other entity
stating that it represents the deceased beneficial owner. Such broker or other
entity will be responsible for disbursing any payments it receives pursuant to
exercise of the Survivor's Option to the appropriate Representative.
A REPRESENTATIVE MAY OBTAIN THE FORMS USED TO EXERCISE THE SURVIVOR'S
OPTION FROM CITIBANK, N.A., THE TRUSTEE, AT 111 WALL STREET, 5TH FLOOR, NEW
YORK, NEW YORK 10043 (TELEPHONE (212) 412-6206), DURING NORMAL BUSINESS HOURS.
PAYMENTS OF INTEREST AND PRINCIPAL
Payments of interest and principal on a Note payable on any Interest
Payment Date and at Stated Maturity will be made by the Company to the Trustee
in immediately available funds, unless such Note is represented by an individual
certificate. See "Certificated Notes" below. Thereafter on such Interest Payment
Date or at Stated Maturity, the Trustee will pay to the Depositary, in funds
immediately available to the Depositary, the amount of interest and principal
(if any) due on such date. Any payment required to be made in respect of a Note
on a day (including the day of Stated Maturity) that is not a Business Day need
not be made on such day, but may be made on the next succeeding Business Day
with the same force and effect as if made on such day, and no additional
interest shall accrue as a result of such delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described under "Description of the Notes -- Events of Default",
the amount of principal due and payable with respect to such Note shall be
limited to the aggregate principal amount of such Note multiplied by the sum of
the Issue Price (expressed as a percentage of the aggregate principal amount)
plus the original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
The Depositary will be responsible for crediting the payments on the Notes
that it receives from the Trustee to the accounts of Participants in accordance
with procedures that provide for payment in same-day funds. Each Participant
will be responsible for disbursing such payments to the Noteholders that it
represents and to each brokerage firm or other entity for which it acts as
agent. Each such brokerage firm or other entity will be responsible for
disbursing funds to the Noteholders that it represents.
All moneys paid by the Company to the Trustee or any other Paying Agent for
the payment of principal of or interest on any Note that remain unclaimed at the
end of two years after such principal or interest shall have become due and
payable will be repaid to the Company, and the Holder of such Note will
thereafter look only to the Company for payment thereof (Section 1204).
None of the Company, the Trustee or any other Paying Agent or Security
Registrar will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the Notes, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or
from the last Interest Payment Date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable Pricing Supplement
until the principal amount thereof is paid or made available for payment, except
as described below under "Subsequent Interest Periods" and "Extension of
Maturity," and except that if so specified in the applicable Pricing Supplement,
the rate of interest payable on certain Fixed Rate Notes may be subject to
adjustment from time to time as described in such Pricing Supplement. Unless
otherwise set forth in the applicable Pricing Supplement, interest on each Fixed
Rate Note will be payable semiannually in
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arrears on such dates as set forth in the applicable Pricing Supplement (each
such day being an "Interest Payment Date") and at Stated Maturity. Unless
otherwise specified in the applicable Pricing Supplement, if an Interest Payment
Date with respect to any Fixed Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date shall not be postponed; provided,
however, that any payment required to be made in respect of such Note on a date
(including the day of Stated Maturity) that is not a Business Day for such Note
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on such date, and no additional
interest shall accrue as a result of such delayed payment. However, if with
respect to any Fixed Rate Note, "Accrue to Pay" is specified in the applicable
Pricing Supplement, and any Interest Payment Date with respect to such Fixed
Rate Note would otherwise be a day that is not a Business Day, such Interest
Payment Date shall be postponed to the next succeeding Business Day. Each
payment of interest in respect of an Interest Payment Date shall include
interest accrued through the day before such Interest Payment Date. Unless
otherwise specified in the applicable Pricing Supplement, interest on Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day months
("30 over 360").
FLOATING RATE NOTES
From its Original Issue Date to, but not including, the first Interest
Reset Date (the "Initial Interest Period"), each Floating Rate Note will bear
interest at the Initial Interest Rate set forth, or otherwise described, in the
Pricing Supplement. From each Interest Reset Date to, but not including, the
following Interest Reset Date (each such period, an "Interest Reset Period," and
together with the Initial Interest Period, the "Interest Periods"), the interest
rate for each Floating Rate Note will be determined by reference to an interest
rate basis (the "Base Rate"), plus or minus the Spread, if any, or multiplied by
the Spread Multiplier, if any. The "Spread" is the number of basis points that
may be specified in the applicable Pricing Supplement as being applicable to
such Note, and the "Spread Multiplier" is the percentage that may be specified
in the applicable Pricing Supplement as being applicable to such Note, except in
each case as described below under "Subsequent Interest Periods" and "Extension
of Maturity," and except that if so specified in the applicable Pricing
Supplement, the Spread or Spread Multiplier on certain Floating Rate Notes may
be subject to adjustment from time to time as described in such Pricing
Supplement. The applicable Pricing Supplement will designate one of the
following Base Rates as applicable to a Floating Rate Note: (i) LIBOR (a "LIBOR
Note"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (iii)
the Treasury Rate (a "Treasury Rate Note"), (iv) the Federal Funds Rate (a
"Federal Funds Rate Note") or (v) the CD Rate (a "CD Rate Note"), (vi) the Prime
Rate (a "Prime Rate Note"), (vii) the J.J. Kenny Rate (a "J.J. Kenny Rate
Note"), (viii) the Eleventh District Cost of Funds Rate (an "Eleventh District
Cost of Funds Rate Note"), or (ix) such other Base Rate as is set forth in such
Pricing Supplement and in such Note. The "Index Maturity" for any Floating Rate
Note is the period of maturity of the instrument or obligation from which the
Base Rate is calculated. "H.15(519)" means the publication entitled "Statistical
Release H.15(519), Selected Interest Rates," or any successor publication,
published by the Board of Governors of the Federal Reserve System. "Composite
Quotations" means the daily statistical release entitled "Composite 3:30 p.m.
Quotations for U.S. Government Securities" published by the Federal Reserve Bank
of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ("Maximum Interest
Rate") and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("Minimum Interest Rate"). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Notes will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law, with
certain exceptions, is 25% per annum on a simple interest basis. Such maximum
rate of interest only applies to obligations that are less than $2,500,000.
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The Company will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Note. All determinations of interest by the
Calculation Agent shall, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of the Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (each day on which the interest
rate is reset, an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Dates will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under "Treasury Rate Notes"); in the case of Floating Rate Notes that
reset monthly, the third Wednesday of each month (with the exception of monthly
reset Eleventh District Cost of Funds Rate Notes, which reset on the first
calendar day of each month); in the case of Floating Rate Notes that reset
quarterly, the third Wednesday of March, June, September and December of each
year; in the case of Floating Rate Notes that reset semiannually, the third
Wednesday of each of two months of each year specified in the applicable Pricing
Supplement; and, in the case of Floating Rate Notes that reset annually, the
third Wednesday of one month of each year specified in the applicable Pricing
Supplement. If an Interest Reset Date for any Floating Rate Note would otherwise
be a day that is not a Business Day, such Interest Reset Date shall be postponed
to the next succeeding Business Day, except that, in the case of a LIBOR Note,
if such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day. If an auction of
direct obligations of United States Treasury Bills ("Treasury bills") falls on a
day that is an Interest Reset Date for Treasury Rate Notes, the Interest Reset
Date shall be the succeeding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest that goes into effect on any Interest Reset Date shall be determined
on a date (the "Rate Determination Date") preceding such Interest Reset Date, as
further described below. Such Rate Determination Date may be referred to below
as a "CD Rate Determination Date" in the case of a CD Rate Note, a "Commercial
Paper Rate Determination Date" in the case of a Commercial Paper Rate Note, a
"Federal Funds Rate Determination Date" in the case of a Federal Funds Rate
Note, a "LIBOR Determination Date" in the case of a LIBOR Note or a "Treasury
Rate Determination Date" or a "Constant Maturity Treasury Rate Determination
Date" in the case of a Treasury Rate Note, a "Prime Rate Determination Date" in
the case of a Prime Rate Note, a "J.J. Kenny Rate Determination Date" in the
case of a J.J. Kenny Rate Note, or an "Eleventh District Cost of Funds Rate
Date" in the case of Eleventh District Cost of Funds Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding the applicable Interest Payment Date.
In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue Date
or the last date to which interest has been accrued and paid, as the case may
be, to but excluding the Record Date immediately preceding the applicable
Interest Payment Date, except that, at Stated Maturity, interest payable will
include interest accrued to but excluding the date of Stated Maturity.
With respect to a Floating Rate Note with more than one Interest Reset Date
during any period for which accrued interest is being calculated, accrued
interest shall be calculated by multiplying the principal amount of such Note
(or, in the case of a Floating Rate Note that is an Indexed Principal Note, its
Face Amount, as indicated in the applicable Pricing Supplement) by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which accrued
interest is being calculated. The interest factor (expressed as a decimal
calculated to seven decimal places without rounding) for each such day is
computed, unless otherwise specified in the applicable Pricing Supplement, by
dividing the interest rate in effect on such day by 360 ("Actual over 360"), in
the case of LIBOR Notes, Prime Rate Notes, J.J. Kenny Rate Notes, Eleventh
District Cost of Funds Rate Notes, Commercial Paper Rate Notes, Federal Funds
Rate Notes and CD Rate Notes, or by the actual number of
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days in the year ("Actual over Actual"), in the case of Treasury Rate Notes. For
purposes of making the foregoing calculation, the interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such date. With
respect to all other Floating Rate Notes, accrued interest shall be calculated
by multiplying the principal amount of such Note (or, in the case of a Floating
Rate Note that is an Indexed Principal Note, its Face Amount) by the interest
rate in effect during the period for which accrued interest is being calculated,
and multiplying that product by the quotient obtained by dividing the number of
days in the period for which accrued interest is being calculated by 360, in the
case of LIBOR Notes, Prime Rate Notes, J.J. Kenny Rate Notes, Eleventh District
Cost of Funds Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes
and CD Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, and
all currency amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest one-hundredth of a unit (with .005 of a
unit being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly (other than Eleventh District Cost of Funds
Rate Notes), on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in the applicable
Pricing Supplement or, in the case of Eleventh District Cost of Funds Rate
Notes, on the first calendar day of each March, June, September and December, as
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September,
and December of each year; in the case of Floating Rate Notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, on the third Wednesday of one month of each year
specified in the applicable Pricing Supplement, and in each case at Maturity
(each such day being an "Interest Payment Date"). If an Interest Payment Date
with respect to any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date shall be postponed to the next
succeeding Business Day, except that, in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day; provided, however, if with
respect to any Floating Rate Note, the applicable Pricing Supplement provides
that the Note does not Accrue to Pay, if an Interest Payment Date with respect
to such Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Payment Date shall not be postponed; provided, further, that any
payment required to be made in respect of a Floating Rate Note that does not
Accrue to Pay on a date (including the day of Stated Maturity)that is not a
Business Day for such Note need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made on such
dates, and no additional interest shall accrue as a result of such delayed
payment.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note.
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate
Determination Date") for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)." In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
"CD
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<PAGE> 111
Rate" for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit." If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate Note
and will be the arithmetic mean of the secondary market offered rates as of
10:00 a.m., New York City time, on such CD Rate Determination Date of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for such CD Rate Note for
negotiable certificates of deposit of major United States money center banks of
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity designated in
the Pricing Supplement in a denomination of $5,000,000; provided, however, that
if the dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "CD Rate" for such Interest
Reset Period will be the same as the CD Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall
be the tenth calendar day after such CD Rate Determination Date or, if such day
is not a Business Day, the next succeeding Business Day.
CD Rate Notes, like other Notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Note as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519)under the
heading "Commercial Paper." In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper." If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Rate Note for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the "Commercial Paper Rate" for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C>
Money Market Yield = D X 360 X 100
--------------
360 - (D X M)
</TABLE>
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<PAGE> 112
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)." In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate." If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Federal Funds Rate" for such Interest Reset
Period shall be the rate on such Federal Funds Rate Determination Date made
publicly available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15(519) under the heading "Federal Funds
(Effective)," provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the "Federal Funds Rate" for such Interest Reset
Period will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate). In the case of a Federal Funds Rate Note that resets
daily, the interest rate on such Note for the period from and including a Monday
to but excluding the succeeding Monday will be reset by the Calculation Agent
for such Note on such second Monday (or, if not a Business Day, on the next
succeeding Business Day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
"LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent for such LIBOR Notes as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the offered rates for
deposits in the Specified Currency for the period of the Index Maturity
specified in the applicable Pricing Supplement, commencing on such Interest
Reset Date, which appear on the Designated LIBOR Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. If "LIBOR
Telerate" is designated in the applicable Pricing Supplement, "Designated
LIBOR Page" means the display designated as page "3750" on the Dow Jones
Telerate Service (or such other page as may replace page "3750" on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying the London interbank offered
rates of major banks), and LIBOR for such Interest Reset Period will be the
relevant offered rate as determined by the Calculation Agent. If "LIBOR
Reuters" is designated in the applicable Pricing Supplement, "Designated
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<PAGE> 113
LIBOR Page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on such service or such other service as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates of major banks) provided that at least two such offered rates
appear on the Designated LIBOR Page, in which case "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR Note.
(ii) If LIBOR cannot be determined as above (either because the
Designated LIBOR Page is no longer available or because less than two rates
appear on page "LIBO" on the Reuters Monitor Money Rate Services) on such
LIBOR Determination Date, the Calculation Agent for such LIBOR Note will
request the principal London offices of each of four major banks in the
London interbank market selected by such Calculation Agent to provide such
Calculation Agent with its offered quotations for deposits in the Specified
Currency for the period of the specified Index Maturity, commencing on such
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and
in a principal amount equal to an amount of not less than $1,000,000 or the
approximate equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time. If at
least two such quotations are provided, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of such quotations. If fewer than two
such quotations are provided, "LIBOR" for such Interest Reset Period will
be the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent for such LIBOR Note at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in the Specified Currency to leading European banks, for the
period of the specified Index Maturity, commencing on such Interest Reset
Date, and in a principal amount equal to an amount of not less than
$1,000,000 or the equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time;
provided, however, that if fewer than three banks selected as aforesaid by
such Calculation Agent are quoting rates as mentioned in this sentence,
"LIBOR" for such Interest Reset Period will be the same as LIBOR for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period
at the interest rate calculated with reference to the Treasury Rate and the
Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless "Constant Maturity" is specified or unless otherwise specified in
the applicable Pricing Supplement, the "Treasury Rate" for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct obligations of
the United States ("Treasury securities") having the Index Maturity specified in
the applicable Pricing Supplement, as such rate shall be published in H.15(519)
under the heading "U.S. Government Securities-Treasury bills-auction average
(investment)" or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury securities having the specified Index
Maturity are not published or reported as provided above by 3:00 p.m., New York
City time, on such Calculation Date, or if no such auction is held on such
Treasury Rate Determination Date, then the "Treasury Rate" for such Interest
Reset Period shall be calculated by the Calculation Agent for such Treasury Rate
Note and shall be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on such Treasury Rate Determination Date, of
three leading primary United States government securities dealers selected by
such Calculation Agent for the issue of Treasury securities with a remaining
maturity closest to the specified Index Maturity; provided, however, that if the
dealers selected as aforesaid by such Calculation
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<PAGE> 114
Agent are not quoting bid rates as mentioned in this sentence, then the
"Treasury Rate" for such Interest Reset Period will be the same as the Treasury
Rate for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week, unless that day
is a legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction date
shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing Supplement,
the "Treasury Rate" for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
"U.S. Government/Securities/Treasury Constant Maturities/" in the Index Maturity
with respect to the applicable Constant Maturity Treasury Rate Determination
Date (as defined below). If the H.15(519) is not published, the Treasury Rate
shall be the rate that was set forth on Telerate Page 7055, or its successor
page (as determined by the Calculation Agent), on the applicable Constant
Maturity Treasury Rate Determination Date opposite the applicable Index
Maturity. If no such rate is set forth, then the Treasury Rate for such Interest
Reset Period shall be established by the Calculation Agent as follows: The
Calculation Agent will contact the Federal Reserve Board and request the
Treasury Rate, in the applicable Index Maturity, for the Constant Maturity
Treasury Rate Determination Date. If the Federal Reserve Board does not provide
such information, then the Treasury Rate for such Interest Reset Date will be
the arithmetic mean of bid-side quotations, expressed in terms of yield,
reported by three leading U.S. government securities dealers (one of which may
be an Agent), according to their written records, as of 3:00 p.m. (New York City
time) on the Constant Maturity Treasury Rate Determination Date, for the
noncallable U.S. Treasury Note that is nearest in maturity to the Index
Maturity, but not less than exactly the Index Maturity and for the noncallable
U.S. Treasury Note that is nearest in maturity to the Index Maturity, but not
more than exactly the Index Maturity. The Calculation Agent shall calculate the
Treasury Rate by interpolating to the Index Maturity based on an actual/actual
date count basis, the yield on the two Treasury Notes selected. If the
Calculation Agent cannot obtain three such adjusted quotations, the Treasury
Rate for such Interest Reset Date will be the arithmetic mean of all such
quotations, or if only one such quotation is obtained, such quotation, obtained
by the Calculation Agent. In all events, the Calculation Agent shall continue
polling dealers until at least one adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
The Treasury constant maturity rate for a Treasury security maturity (the
"CMT Rate") as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as of
any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the
over-the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include one or more of the Agents or
other affiliates of the Company. Certain constant maturity yield values are read
from the yield curve. Such interpolation from the yield curve provides a
theoretical yield for a Treasury security having ten years to maturity, for
example, even if no outstanding Treasury security has as of such date exactly
ten years remaining to maturity.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
or Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination
18
<PAGE> 115
Date or Constant Maturity Rate Determination Date, as applicable, or, if such a
day is not a Business Day, the next succeeding Business Day.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, the "Prime
Rate" for each Interest Reset Period will be determined by the Calculation Agent
for such Prime Rate Note as of the second Business Day prior to the Interest
Reset Date for such Interest Reset Period (a "Prime Rate Determination Date")
and shall be the rate made available and subsequently published on such date in
H.15(519) under the heading "Bank Prime Loan." In the event that such rate has
not been made available prior to 3:00 P.M., New York City time, on the
Calculation Date (as defined below) pertaining to such Prime Rate Determination
Date, the Prime Rate will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime
rate or base lending rate as in effect for such Prime Rate Determination Date.
If fewer than four such rates but more than one such rate appear on the Reuters
Screen NYMF Page for the Prime Rate Determination Date, the rate shall be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by 360 as of the close of business on such Prime Rate
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate will be calculated by the Calculation
Agent and will be the arithmetic mean of the prime rates quoted in The City of
New York on such Prime Rate Determination Date by at least three substitute
banks or trust companies organized and doing business under the laws of the
United States, or any State thereof, having total equity capital of at least
U.S. $500,000,000 and being subject to supervision or examination by Federal or
State authority, selected by the Calculation Agent to provide such rate or
rates; provided, however, that if the banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate with respect to such Prime Rate Determination Date will
be the Prime Rate in effect on such Prime Rate Determination Date. "Reuters
Screen NYMF Page" means the display designated as page "NYMF" on the Reuters
Monitor Money Rates Service (or such other page as may replace the NYMF page on
that service for the purpose of displaying prime rates or base lending rates of
major United States banks).
The "Calculation Date" pertaining to any Prime Rate Determination Date
shall be the tenth calendar day after such Prime Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
J.J. Kenny Rate Notes
J.J. Kenny Rate Notes will bear interest at the interest rates (calculated
by reference to the J.J. Kenny Rate and the Spread or Spread Multiplier, if any)
specified in the J.J. Kenny Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, the "J.J.
Kenny Rate" for each Interest Reset Period will be determined by the Calculation
Agent for such J.J. Kenny Rate Note as of the second Business Day prior to the
Interest Reset Date for such Interest Reset Period (a "J.J. Kenny Rate
Determination Date") and shall be the per annum rate on such date equal to the
index made available and subsequently published by Kenny Information Systems or
its successor, based upon 30-day yield evaluations at par of bonds, the interest
on which is excludable from gross income for federal income tax purposes under
the Internal Revenue Code of 1986, as amended (the "Code"), of not less than
five "high grade" component issuers selected from time to time by Kenny
Information Systems, including, without limitation, issuers of general
obligation bonds; provided, however, that the bonds on which the index is based
shall not include any bonds the interest on which is subject to an "alternate
minimum tax" or similar tax under the Code, unless all tax-exempt bonds are
subject to such tax. If such rate is not made available by 3:00 P.M., New York
City
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time, on the Calculation Date (as defined below) pertaining to such J.J. Kenny
Rate Determination Date, the J.J. Kenny Rate shall be the rate quoted by a
successor indexing agent selected by the Company equaling the prevailing rate
for bonds rated in the highest short-term rating category by Moody's Investors
Service, Inc. and Standard & Poor's Corporation in respect of issuers selected
by such successor indexing agent most closely resembling the "high grade"
component issuers selected by Kenny Information Systems that are subject to
tender by the holders thereof for purchase on not more than seven days' notice
and the interest on which is (A) variable on a weekly basis, (B) excludable from
gross income for federal income tax purposes under the Code, and (C) not subject
to an "alternate minimum tax" or similar tax under the Code, unless all tax-
exempt bonds are subject to such tax; provided, however, that if a successor
indexing agent is not available, the J.J. Kenny Rate with respect to such J.J.
Kenny Rate Determination Date will be the J.J. Kenny Rate for the immediately
preceding Interest Reset Period (or, if there was not such Interest Reset
Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any J.J. Kenny Rate Determination Date
shall be the tenth calendar day after such J.J. Kenny Rate Determination Date
or, if such day is not a Business Day, the next succeeding Business Day.
Eleventh District Cost of Funds Rate Notes
Eleventh District Cost of Funds Rate Notes will bear interest at the
interest rates (calculated by reference to the Eleventh District Cost of Funds
Rate and the Spread or Spread Multiplier, if any) specified in the Eleventh
District Cost of Funds Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in an applicable Pricing Supplement, the
"Eleventh District Cost of Funds Rate," for each Interest Reset Period will be
determined by the Calculation Agent for such Eleventh District Cost of Funds
Rate Note as of the last working day of the month immediately prior to such
Interest Reset Date for such Interest Reset Period on which the Federal Home
Loan Bank of San Francisco (the "FHLB of San Francisco") publishes the Eleventh
District Cost of Funds Index (as defined below) (the "Eleventh District Cost of
Funds Rate Determination Date"), and shall be the rate equal to the monthly
weighted average cost of funds for the calendar month preceding such Eleventh
District Cost of Funds Rate Determination Date as set forth under the caption
"Eleventh District" on the Telerate Page 7058 as of 11:00 A.M., San Francisco
time, on such Eleventh District Cost of Funds Rate Determination Date. If such
rate does not appear on Telerate Page 7058 on any related Eleventh District Cost
of Funds Rate Determination Date, the Eleventh District Cost of Funds Rate for
such Eleventh District Cost of Funds Rate Determination Date shall be the
monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Eleventh District Cost of Funds Rate Index") by the FHLB of San Francisco as
such cost of funds for the calendar month preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for the
calendar month next preceding such Eleventh District Cost of Funds Rate
Determination Date, then the Eleventh District Cost of Funds Rate for such
Eleventh District Cost of Funds Rate Determination Date will be the Eleventh
District Cost of Funds Rate in effect on such Eleventh District Cost of Funds
Rate Determination Date.
Inverse Floating Rate Notes
Any Floating Rate Note may be designated in the applicable Pricing
Supplement as an "Inverse Floating Rate Note," in which event, unless otherwise
specified in the applicable Pricing Supplement, the interest rate on such
Floating Rate Note will be equal to (i) in the case of the period, if any,
commencing on the Issue Date (or the date on which such Note otherwise begins to
accrue interest (if different from the Issue Date)) up to the first Interest
Reset Date, a fixed rate of interest established by the Company as described in
the applicable Pricing Supplement and (ii) in the case of each period commencing
on an Interest Reset Date, a fixed rate of interest specified in the Pricing
Supplement minus the interest rate determined by reference to the Base Rate as
adjusted by the Spread or Spread Multiplier, if any; provided, however, that (x)
the interest rate thereon will not be less than zero and (y) the interest rate
in effect for the ten days immediately prior to
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the date of Maturity of such Inverse Floating Rate Note will be that in effect
on the tenth day preceding such date.
Floating Rate/Fixed Rate Notes
The applicable Pricing Supplement may provide that a Note will be a
Floating Rate Note for a specified portion of its term and a Fixed Rate Note for
the remainder of its term, in which event the interest rate on such Note will be
determined as herein provided as if it were a Floating Rate Note and a Fixed
Rate Note hereunder for each such respective period, all as specified in such
applicable Pricing Supplement.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each Note will indicate whether the
Company has the option to reset the interest rate (in the case of a Fixed Rate
Note) with respect to such Registered Note or the Spread or Spread Multiplier
(in the case of a Floating Rate Note) with respect to such Registered Note and,
if so, the date or dates on which such interest rate or such Spread or Spread
Multiplier, as the case may be, may be reset (each an "Optional Reset Date").
The Company shall notify the Trustee for a Note whether or not it intends
to exercise such option with respect to such Registered Note at least 45 but not
more than 60 days prior to an Optional Reset Date for such Registered Note. Not
later than 40 days prior to such Optional Reset Date, the Trustee for such
Registered Note will mail to the Holder of such Registered Note a notice (the
"Reset Notice"), first class, postage prepaid, indicating whether the Company
has elected to reset the interest rate (in the case of a Fixed Rate Note) or the
Spread or Spread Multiplier (in the case of a Floating Rate Note) and, if so,
(i) such new interest rate or such new Spread or Spread Multiplier, as the case
may be; and (ii) the provisions, if any, for redemption during the period from
such Optional Reset Date to the next Optional Reset Date or, if there is no such
next Optional Reset Date, to the Stated Maturity of such Registered Note (each
such period a "Subsequent Interest Period"), including the date or dates on
which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period. Upon the
transmittal by the Trustee of a Reset Notice to the Holder of a Note, such new
interest rate or such new Spread and/or Spread Multiplier, as the case may be,
shall take effect automatically, and, except as modified by the Reset Notice and
as described below, such Note will have the same terms as prior to the
transmittal of such Reset Notice.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Registered Note, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Reset
Notice with respect to such Optional Reset Date and establish a higher interest
rate (in the case of a Fixed Rate Note) or a higher Spread or Spread Multiplier
(in the case of a Floating Rate Note) for the Subsequent Interest Period
commencing on such Optional Reset Date by causing the Trustee for such
Registered Note to mail notice of such higher interest rate or higher Spread or
Spread Multiplier, as the case may be, first class, postage prepaid, to the
Holder of such Registered Note. Such notice shall be irrevocable. All Registered
Notes with respect to which the interest rate or Spread or Spread Multiplier is
reset on an Optional Reset Date will bear such higher interest rate (in the case
of Fixed Rate Notes) or higher Spread or Spread Multiplier (in the case of
Floating Rate Notes), whether or not tendered for repayment.
The Holder of a Registered Note will have the option to elect repayment of
such Note by the Company on each Optional Reset Date at a price equal to the
principal amount thereof, plus interest accrued to such Optional Reset Date. In
order for a Registered Note to be repaid on an Optional Reset Date, the Holder
thereof must follow the procedures set forth below under "Optional Redemption,
Repayment and Repurchase" for optional repayment, except that the period for
delivery of such Registered Note or notification to the Trustee for such
Registered Note shall be at least 25 but not more than 35 days prior to such
Optional Reset Date, and except that a Holder who has tendered a Registered Note
for repayment pursuant to a Reset Notice may, by written notice to the Trustee
for such Registered Note, revoke any such tender for repayment until the close
of business on the tenth day prior to such Optional Reset Date.
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AMORTIZING NOTES
The Company may from time to time offer Notes ("Amortizing Notes") on which
a portion or all the principal amount is payable prior to Stated Maturity in
accordance with a schedule or by application of a formula, or by reference to an
Index (as defined below). Further information concerning additional terms and
conditions of any Amortizing Notes, including terms for repayment thereof, will
be set forth in the applicable Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer Notes ("Indexed Notes") on which
certain or all interest payments (in the case of an "Indexed Rate Note"), and/or
the principal amount payable at Stated Maturity or earlier redemption or
retirement (in the case of an "Indexed Principal Note"), is determined by
reference to the principal amount of such Notes (or, in the case of an Indexed
Principal Note, to the amount designated in the applicable Pricing Supplement as
the "Face Amount" of such Indexed Note) and by reference to prices, changes in
prices, or differences between prices, of securities, currencies, intangibles,
goods, articles or commodities or by such other objective price, economic or
other measures as are described in the applicable Pricing Supplement (the
"Index"). A description of the Index used in any determination of an interest or
principal payment, and the method or formula by which interest or principal
payments will be determined by reference to such Index, will be set forth in the
applicable Pricing Supplement.
In the case of a Fixed Rate Note, Floating Rate Note or Indexed Rate Note
that is also an Indexed Principal Note, the amount of any interest payment will
be determined by reference to the Face Amount of such Indexed Note unless
specified otherwise in the applicable Pricing Supplement. In the case of an
Indexed Principal Note, the principal amount payable at Stated Maturity or any
earlier redemption or repayment of the Indexed Note may be different from the
Face Amount.
If the determination of the Index on which any interest payment or the
principal amount of an Indexed Note is calculated or announced by a third party,
which may be an Underwriter or another affiliate of the Company, and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Note was issued and permitted
changes described in the applicable Pricing Supplement), then such Index shall
be calculated for purposes of such Indexed Note by another third party selected
by the Company, which may be an Agent or another affiliate of the Company,
subject to the same conditions and controls as applied to the original third
party. If for any reason such Index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then the indexed interest payments, if any, or any indexed principal
amount of such Indexed Note shall be calculated in the manner set forth in the
applicable Pricing Supplement. Any determination of such third party shall, in
the absence of manifest error, be binding on all parties.
Unless otherwise specified in the applicable Pricing Supplement, (i) for
the purpose of determining whether Holders of the requisite principal amount of
Notes outstanding under the Indenture have made a demand or given a notice or
waiver or taken any other action, the outstanding principal amount of Indexed
Notes will be deemed to be the Face Amount thereof, and (ii) in the event of an
acceleration of the Stated Maturity of an Indexed Note, the principal amount
payable to the Holder of such Note upon acceleration will be the principal
amount determined by reference to the formula by which the principal amount of
such Note would be determined on the Stated Maturity thereof, as if the date of
acceleration were the Stated Maturity.
DUAL CURRENCY NOTES
The Company may from time to time offer Notes (the "Dual Currency Notes")
as to which the Company has a one time option, exercisable on any one of the
dates specified in the applicable Pricing Supplement (each an "Option Election
Date") in whole, but not in part, with respect to all Dual Currency Notes issued
on the same day and having the same terms (a "Tranche"), of thereafter making
all payments of principal, premium, if any, and interest (which payments would
otherwise be made in the Specified Currency of such Notes) in the optional
currency specified in the applicable Pricing Supplement (the "Optional
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Payment Currency"). Information as to the relative value of the Specified
Currency compared to the Optional Payment Currency will be set forth in the
applicable Pricing Supplement.
The Pricing Supplement for each issuance of Dual Currency Notes will
specify, among other things, the Specified Currency and Optional Payment
Currency of such issuance and the Designated Exchange Rate for such issuance,
which will be a fixed exchange rate used for converting amounts denominated in
the Specified Currency into amounts denominated in the Optional Payment Currency
(the "Designated Exchange Rate"). The Pricing Supplement will also specify the
Option Election Dates and Interest Payment Dates for the related issuance of
Dual Currency Notes. Each Option Election Date will be a certain number of days
before an Interest Payment Date or Stated Maturity, as set forth in the
applicable Pricing Supplement, and will be the date on which the Company may
select whether to make all scheduled payments due thereafter in the Optional
Payment Currency rather than in the Specified Currency.
If the Company makes such an election, the amount payable in the Optional
Payment Currency shall be determined using the Designated Exchange Rate
specified in the applicable Pricing Supplement. If such election is made, notice
of such election shall be mailed in accordance with the terms of the applicable
Tranche of Dual Currency Notes within two Business Days of the Option Election
Date and shall state (i) the first date, whether an Interest Payment Date and/or
Stated Maturity, in which scheduled payments in the Optional Payment Currency
will be made and (ii) the Designated Exchange Rate. Any such notice by the
Company, once given, may not be withdrawn. The equivalent value in the Specified
Currency of payments made after such an election may be less, at the then
current exchange rate, than if the Company had made such payment in the
Specified Currency.
For federal income tax purposes, holders of Dual Currency Notes may be
subject to rules which differ from the general rules applicable to holders of
other types of Notes offered hereby. The U.S. federal income tax consequences of
the purchase, ownership and disposition of Dual Currency Notes will be set forth
in the applicable Pricing Supplement.
RENEWABLE NOTES
The Company may from time to time offer Notes which will mature on an
Interest Payment Date specified in the applicable Pricing Supplement occurring
in or prior to the twelfth month following the Original Issue Date of such Notes
(the "Initial Maturity Date") unless the term of all or any portion of any such
Note (a "Renewable Note") is renewed in accordance with the procedures described
below.
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified in the
applicable Pricing Supplement) prior to the Initial Maturity Date of a Renewable
Note (the "Initial Renewal Date") and on the Interest Payment Date occurring in
each sixth month (or in the last month of each Special Election Interval) after
such Initial Renewal Date (each, together with the Initial Renewal Date, a
"Renewal Date"), the term of such Renewal Note may be extended to the Interest
Payment Date occurring in the twelfth month (or, if a Special Election Interval
is specified in the applicable Pricing Supplement, the last month in a period
equal to twice the Special Election Interval) after such Renewal Date, if the
holder of such Renewable Note elects to extend the term of such Renewable Note
or any portion thereof as described below. If a holder does not elect to extend
the term of any portion of the principal amount of a Renewable Note during the
specified period prior to any Renewal Date, such portion will become due and
payable on the Interest Payment Date occurring in the sixth month (or the last
month in the Special Election Interval) after such Renewal Date (the "New
Maturity Date").
A holder of a Renewable Note may elect to renew the term of such Renewable
Note, or if so specified in the applicable Pricing Supplement, any portion
thereof, by delivering a notice to such effect to the Trustee (or any duly
appointed paying agent) at the corporate trust office of the Trustee or agency
of the Trustee in the City of New York not less than 15 nor more than 30 days
prior to such Renewal Date (unless another period is specified in the applicable
Pricing Supplement as the "Special Election Period"). Such election will be
irrevocable and will be binding upon each subsequent holder of such Renewable
Note. An election to renew the term of a Renewable Note may be exercised with
respect to less than the entire principal amount of such Renewable Note only if
so specified in the applicable Pricing Supplement and only in such principal
amount,
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or any integral multiple in excess thereof, as is specified in the applicable
Pricing Supplement. Notwithstanding the foregoing, the term of the Renewable
Notes may not be extended beyond the Stated Maturity specified for such
Renewable Notes in the applicable Pricing Supplement.
If the holder does not elect to renew the term, such Renewable Note must be
presented to the Trustee (or any duly appointed paying agent) and, with respect
to a Renewable Note that is a certificate issued in definitive form, as soon as
practicable following receipt of such Renewable Note the Trustee (or any duly
appointed paying agent) shall issue in exchange therefore in the name of such
holder (i) a Note, in a principal amount equal to the principal amount of such
exchanged Renewable Note for which no election to renew the term thereof was
exercised, with terms identical to those specified on such Renewable Note
(except that such Note shall have a fixed, nonrenewable Stated Maturity on the
New Maturity Date) and (ii) if an election to renew is made with respect to less
than the full principal amount of such holder's Renewable Note, a replacement
Renewable Note, in a principal amount equal to the principal amount of such
exchanged Renewable Note for which the election to renew was made, with terms
identical to such exchanged Renewable Notes.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether the
Company has the option to extend the Stated Maturity of such Note for one or
more periods of whole years from one to five (each an "Extension Period") up to
but not beyond the date (the "Final Maturity") set forth in such Pricing
Supplement.
The Company may exercise such option with respect to a Note by notifying
the Trustee for such Registered Note at least 45 but not more than 60 days prior
to the old Stated Maturity of such Registered Note. Not later than 40 days prior
to the old Stated Maturity of such Registered Note, the Trustee for such
Registered Note will mail to the Holder of such Registered Note a notice (the
"Extension Notice"), first class, postage prepaid. The Extension Notice will set
forth (i) the election of the Company to extend the Stated Maturity of such
Registered Note; (ii) the new Stated Maturity; (iii) in the case of a Fixed Rate
Note, the interest rate applicable to the Extension Period or, in the case of a
Floating Rate Note, the Spread or Spread Multiplier applicable to the Extension
Period; and (iv) the provisions, if any, for redemption during the Extension
Period, including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur during the
Extension Period. Upon the mailing by such Trustee of an Extension Notice to the
Holder of a Registered Note, the Stated Maturity of such Registered Note shall
be extended automatically, and, except as modified by the Extension Notice and
as described in the next paragraph, such Registered Note will have the same
terms as prior to the mailing of such Extension Notice. Notwithstanding the
foregoing, not later than 20 days prior to the old Stated Maturity of such
Registered Note, the Company may, at its option, revoke the interest rate (in
the case of a Fixed Rate Note) or the Spread or Spread Multiplier (in the case
of a Floating Rate Note) provided for in the Extension Notice for such
Registered Note and establish a higher interest rate (in the case of a Fixed
Rate Note) or a higher Spread or Spread Multiplier (in the case of a Floating
Rate Note) for the Extension Period, by causing the Trustee for such Registered
Note to mail notice of such higher interest rate or higher Spread or Spread
Multiplier, as the case may be, first class, postage prepaid, to the Holder of
such Registered Note. Such notice shall be irrevocable. All Registered Notes
with respect to which the Stated Maturity is extended will bear such higher
interest rate (in the case of Fixed Rate Notes) or higher Spread or Spread
Multiplier (in the case of Floating Rate Notes) for the Extension Period,
whether or not tendered for repayment.
If the Company extends the Stated Maturity of a Registered Note, the Holder
of such Registered Note will have the option to elect repayment of such
Registered Note by the Company on the old Stated Maturity at a price equal to
the principal amount thereof, plus interest accrued to such date. In order for a
Registered Note to be repaid on the old Stated Maturity once the Company has
extended the Stated Maturity thereof, the Holder thereof must follow the
procedures set forth below under "Optional Redemption, Repayment and Repurchase"
for optional repayment, except that the period for delivery of such Registered
Note or notification to the Trustee for such Registered Note shall be at least
25 but not more than 35 days prior to the old Stated Maturity and except that a
Holder who has tendered a Registered Note for repayment pursuant to
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an Extension Notice may, by written notice to the Trustee for such Registered
Note, revoke any such tender for repayment until the close of business on the
tenth day before the old Stated Maturity.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Subsequent Interest Periods," "Extension of Maturity" and
"Renewable Notes."
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to its Stated Maturity or that such Note will be
redeemable at the option of the Company, in whole or in part, and the date or
dates (each an "Optional Redemption Date") on which such Note may be redeemed
and the price (the "Redemption Price") at which (together with accrued interest
to such Optional Redemption Date) such Note may be redeemed on each such
Optional Redemption Date. Unless otherwise specified in the applicable Pricing
Supplement, the Company may exercise such option with respect to a Note by
notifying the Trustee for such Note at least 45 days prior to any Optional
Redemption Date. Unless otherwise specified in the applicable Pricing
Supplement, at least 30 but not more than 60 days prior to the date of
redemption, such Trustee shall mail notice of such redemption, first class,
postage prepaid, to the Holder of such Note. In the event of redemption of a
Note in part only, a new Note or Notes for the unredeemed portion thereof shall
be issued to the Holder thereof upon the cancellation thereof. The Notes will
not be subject to any sinking fund.
The Pricing Supplement relating to each Note will also indicate whether the
Holder of such Note will have the option to elect repayment of such Note by the
Company prior to its Stated Maturity, and, if so, such Pricing Supplement will
specify the date or dates on which such Note may be repaid (each an "Optional
Repayment Date") and the price (the "Optional Repayment Price") at which,
together with accrued interest to such Optional Repayment Date, such Note may be
repaid on each such Optional Repayment Date.
In order for a Note to be repaid, the Trustee for such Note must receive,
at least 30 but not more than 45 days prior to an Optional Repayment Date (i)
such Note with the form entitled "Option to Elect Repayment" on the reverse
thereof duly completed, or (ii) a telegram, telex, facsimile transmission or
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States setting forth the name of the Holder of such Note, the
principal amount of such Note to be repaid, the certificate number or a
description of the tenor and terms of such Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid with the form entitled "Option to Elect Repayment" on the reverse of the
Note duly completed will be received by such Trustee not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter. If the procedure described in clause (ii) of the preceding sentence is
followed, then such Note and form duly completed must be received by such
Trustee by such fifth Business Day. Any tender of a Note by the Holder for
repayment (except pursuant to a Reset Notice or an Extension Notice) shall be
irrevocable. The repayment option may be exercised by the Holder of a Note for
less than the entire principal amount of such Note provided that the principal
amount of such Note remaining outstanding after repayment is an authorized
denomination. Upon such partial repayment, such Note shall be cancelled and a
new Note or Notes for the remaining principal amount thereof shall be issued in
the name of the Holder of such repaid Note.
If a Note is represented by a Global Security, the Depositary's nominee
will be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a
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Note in order to ascertain the cut-off time by which such an instruction must be
given in order for timely notice to be delivered to the Depositary.
Notwithstanding anything in this Prospectus to the contrary, if a Note is
an Original Issue Discount Note, the amount payable on such Note in the event of
redemption or repayment prior to its Stated Maturity (other than pursuant to an
optional redemption by the Company at a stated Redemption Price) shall be the
Amortized Face Amount of such Note as of the date of redemption or the date of
repayment, as the case may be.
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company, may, at the discretion of the
Company, be held or resold or surrendered to the Trustee for cancellation. The
Notes will not be subject to a sinking fund.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
The Notes offered hereby will be issued only in book-entry form from the
perspective of beneficial owners of Notes ("Noteholders"), except as described
below under "Certificated Notes." Notes having the same Original Issue Date,
interest rate and Stated Maturity will typically be issued in the form of a
single Global Certificate registered in the name of a nominee of the Depositary
(Section 303).
The Depositary's nominee will be considered the sole Holder of the Notes
represented by a Global Certificate for all purposes of the Indenture. Owners of
beneficial interests in a Global Certificate will not be entitled to have Notes
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in definitive form and will not be considered the Holders of
Notes under the Indenture (except as described below under "Certificated
Notes"). A Noteholder's beneficial ownership of a Note will be recorded on or
through the records of the brokerage firm or other entity that maintains such
Noteholder's account. In turn, the total number of Notes held by an individual
brokerage firm or other entity for its clients will be maintained on the records
of the Depositary in the name of such brokerage firm or other entity (or in the
name of a Participant (as defined below) that acts as the agent for the
Noteholder's brokerage firm or other entity if it is not a Participant).
Therefore, a Noteholder must rely upon the records of such brokerage firm or
other entity to evidence such Noteholder's beneficial ownership of a Note.
Transfer of ownership of any Note may be effected only through the selling
Noteholder's brokerage firm or such other entity.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under 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 Exchange Act. The Depositary was created to
hold securities of its Participants and to facilitate the clearance and
settlement of transactions among its Participants in such securities through
electronic book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including the
Underwriter), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
CERTIFICATED NOTES
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Notes in definitive form in exchange for each
Global Certificate. In addition, the Company may at any time and in its sole
discretion determine not to have Notes represented by Global Certificates and,
in such event, will issue individual Notes in definitive form in exchange for
Global Certificates. In either instance, a beneficial owner of Notes represented
by a Global Certificate will be entitled to have such Notes registered in its
name and will be entitled to physical
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delivery of such Notes in definitive form. Individual Notes so issued will be
issued as registered Debt Securities, without coupons, in one or more authorized
denominations as described above under "General" (Section 305). Payments of
interest on such Notes (other than interest payable at Stated Maturity) will be
made by check mailed to the registered Holders thereof. Principal and interest
payable at the Stated Maturity of any such Note will be paid in immediately
available funds upon surrender of such Note at the corporate trust office or
agency of the Trustee in the City of New York (Section 307). Certificated Notes
may be transferred or exchanged at the corporate trust office or agency of the
Trustee in the City of New York, subject to the limitations provided in the
Indenture, without the payment of any service charge, other than any tax or
governmental charge payable in connection therewith (Section 305).
If a certificated Note is mutilated, destroyed, lost or stolen, it may be
replaced at the corporate trust office or agency of the Trustee in the City of
New York upon payment by the Holder of such expenses as may be incurred by the
Company and the Trustee in connection therewith and the furnishing of such
evidence and indemnity as the Company and the Trustee may require. Mutilated
Notes must be surrendered before new Notes will be issued (Section 306).
LIMITATION ON LIENS
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, incur, issue, assume, guarantee or suffer to exist any
indebtedness for borrowed money if the payment of such indebtedness is secured
by a pledge of, lien on or security interest in any shares of stock of any
Restricted Subsidiary without effectively providing for the equal and ratable
securing of the payment of the Notes (Section 1205). The term "Restricted
Subsidiary" is defined in the Indenture to mean each of Salomon Brothers Inc,
Phibro Inc. and, with respect to the Company's Medium-Term Notes Series D and E,
Philipp Brothers, Inc. and any Subsidiary of the Company owning, directly or
indirectly, any of the common stock of, or succeeding to any substantial part of
the business now conducted by, any of such corporations.
EVENTS OF DEFAULT
The following will constitute Events of Default under the Indenture with
respect to the Notes: (i) default in the payment of the principal of (and
premium, if any, on) any Note when due; (ii) default for 30 days in the payment
of any interest on any Note when due; (iii) default in the deposit of any
sinking fund payment, when and as due by the terms of any Note; (iv) default in
the performance of any other covenant in the Indenture, continued for 60 days
after written notice thereof by the Trustee or the Holders of at least 25% in
principal amount of the Notes then Outstanding; and (v) certain events of
bankruptcy, insolvency or reorganization (Section 501).
The Indenture provides that if an Event of Default specified therein shall
occur and be continuing with respect to the Notes, either the Trustee or the
Holders of at least 25% in principal amount of the Notes then Outstanding may
declare the principal of and all accrued interest on all Notes to be due and
payable. In certain cases, the Holders of a majority in principal amount of the
Notes then Outstanding may, on behalf of the Holders of all Notes, rescind and
annul such declaration and its consequences (Section 502).
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during the continuance of a default to act with the required
standard of care, to be indemnified by the Holders of the Notes before
proceeding to exercise any right or power under such Indenture with respect to
the Notes at the request of such Holders (Section 603). The Indenture provides
that no Holder of a Note may institute any proceeding, judicial or otherwise, to
enforce the Indenture except in the case of failure of the Trustee, for 60 days,
to act after it receives (i) written notice of such default, (ii) a written
request to enforce the Indenture by the Holders of at least 25% in aggregate
principal amount of the Notes then Outstanding (and the Trustee receives no
direction inconsistent with such written request from the Holders of a majority
in aggregate principal amount of the Notes then outstanding) and (iii) an offer
of reasonable indemnity (Section 507). This provision will not prevent any
Holder of any Note from enforcing payment of the principal thereof (and premium,
if any, thereon) and any interest thereon from enforcing payment thereof at the
respective due dates thereof (Section 508). The Holders of a majority in
aggregate principal amount of the Notes then Outstanding
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may direct the time, method and place of conducting any proceedings for any
remedy available to the Trustee or of exercising any trust or power conferred on
it with respect to the Notes. However, such Trustee may refuse to follow any
direction that conflicts with law or the Indenture or that would be unjustly
prejudicial to Holders not joining therein (Section 512).
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to the Notes known to it, give to the
Holders of Notes notice of such default, unless such default shall have been
cured or waived; but, except in the case of a default in the payment of the
principal of (and premium, if any) or any interest on the Notes or in the
payment of any sinking fund installment with respect to the Notes, the Trustee
shall be protected in withholding such notice if it determines in good faith
that the withholding of such notice is in the interest of the Holders of the
Notes (Section 602).
The Company will be required to file annually with the Trustee a
certificate of an appropriate officer of the Company as to the absence of
certain defaults under the terms of the Indenture (Section 1206).
MODIFICATION AND WAIVER
The Indenture contains provisions for convening meetings of Holders to
consider matters affecting their interests (Article Nine).
Modifications of and amendments to the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in principal
amount of the outstanding Debt Securities (the "Outstanding Debt Securities") of
each series affected by such modification or amendment; provided, however, that
no such modification or amendment may, among other things, without the consent
of the Holder of each Outstanding Debt Security affected thereby: (i) change the
Stated Maturity of the principal of, or any installment of interest payable on,
any Debt Security; (ii) reduce the principal amount of, or any interest on or
any premium payable upon redemption of, any Debt Security; (iii) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Debt Security; or (iv) reduce the percentage of the principal amount of the
Outstanding Debt Securities of any series, the consent of the Holders of which
is required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or waiver of certain
defaults (Section 1102).
The Holders of a majority in principal amount of the Outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Indenture before the time for
such compliance (Section 1207). The Holders of a majority in principal amount of
the Outstanding Debt Securities of each series may, on behalf of all Holders of
Debt Securities of that series, waive any past default under the Indenture with
respect to the Debt Securities of that series, except a default in the payment
of the principal of (and premium, if any) or any interest on any Debt Securities
or in respect of a covenant or provision the modification or amendment of which
would require the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513).
CONSOLIDATION, MERGER AND TRANSFER OR LEASE OF ASSETS
The Indenture provides that the Company may not consolidate with or merge
into any corporation, or transfer or lease its assets substantially as an
entirety to any Person, unless (i) the successor corporation or transferee or
lessee (the "Successor Corporation") is a corporation organized under the laws
of the United States or any political subdivision thereof; (ii) the Successor
Corporation assumes the Company's obligations under the Indenture and on the
Notes; (iii) after giving effect to the transaction no Event of Default and no
event that, after notice or lapse of time, or both, would become an Event of
Default shall have occurred and be continuing; and (iv) certain other conditions
are met (Section 1001).
DEFEASANCE
The Indenture provides that the Company, at its option, (i) will be
discharged from any and all obligations in respect of the Notes (except for
certain obligations to register the transfer or exchange of Notes,
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replace stolen, lost or mutilated Notes, maintain paying agencies and hold
moneys for payment in trust) or (ii) will not be subject to provisions of the
Indenture described above under "Limitation on Liens" and "Consolidation, Merger
and Transfer or Lease of Assets" with respect to the Notes, in each case if the
Company deposits with the 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 Notes on the
dates such payments are due in accordance with the terms of the Notes. To
exercise any such option under the Indenture, the Company is required to deliver
to the Trustee an opinion of counsel to the effect that (1) the deposit and
related defeasance would not cause the Holders of the Notes to recognize income,
gain or loss for U.S. federal income tax purposes and, in the case of a
discharge pursuant to clause (i) above, a ruling to such effect received from or
published by the United States Internal Revenue Service, and (2) if the Notes
are then listed on the New York Stock Exchange, the Notes would not be delisted
from the New York Stock Exchange as a result of the exercise of such option
(Sections 1501 and 1502).
REPLACEMENT NOTES
If a Note is mutilated, destroyed, lost or stolen, it may be replaced at
the corporate trust office or agency of the Trustee in the City and State of New
York upon payment by the Holder of such expenses as may be incurred by the
Company and the Trustee in connection therewith and the furnishing of such
evidence and indemnity as the Company and Trustee may require. Mutilated Notes
must be surrendered before new Notes (with or without Coupons) will be issued
(Section 306).
NOTICES
Any notice required to be given to a Holder of a Note will be mailed to the
last address of such Holder set forth in the applicable security register
(Section 105).
CONCERNING THE TRUSTEE
The Company and certain of its subsidiaries maintain lines of credit and
have other customary banking relationships with the Trustee and certain of its
affiliates.
OTHER PROVISIONS
Any provisions with respect to the determination of an interest rate basis,
the specification of an interest rate basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the terms
as specified under "Other Provisions" and in the applicable Pricing Supplement.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in a Specified Currency other
than U.S. dollars ("Foreign Currency Notes") entails significant risks that are
not associated with a similar investment in a security denominated in U.S.
dollars. Similarly, an investment in an Indexed Note on which all or a part of
any payment due is determined by reference to a currency other than U.S. dollars
entails significant risks that are not associated with a similar investment in
non-Indexed Notes. Such risks include, without limitation, the possibility of
significant market changes in rates of exchange between U.S. dollars and such
Specified Currency, the possibility of significant changes in rates of exchange
between U.S. dollars and such Specified Currency resulting from official
redenomination with respect to such Specified Currency and the possibility of
the imposition or modification of foreign exchange controls by either the United
States or foreign governments. Such risks generally depend on factors over which
the Company has no control and which cannot be readily foreseen, such as
economic and political events, and on the supply of and demand for the relevant
currencies. In recent years, rates of exchange between the U.S. dollar and
certain foreign currencies, and
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between certain foreign currencies and other foreign currencies, have been
volatile, and such volatility may be expected in the future. Fluctuations that
have occurred in any particular exchange rate in the past are not necessarily
indicative, however, of fluctuations that may occur in the rate during the term
of any Foreign Currency Note. Depreciation of the Specified Currency of a
Foreign Currency Note against U.S. dollars would result in a decrease in the
effective yield of such Foreign Currency Note below its coupon rate and, in
certain circumstances, could result in a substantial loss to the investor on a
U.S. dollar basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency (other than U.S. dollars) at the time of payment of
principal of, or premium, if any, or interest on, a Foreign Currency Note. There
can be no assurance that exchange controls will not restrict or prohibit
payments of principal (and premium, if any) or interest in any such Specified
Currency. Even if there are no actual exchange controls, it is possible that
such Specified Currency would not be available to the Company when payments on
such Note are due because of circumstances beyond the control of the Company. In
any such event, the Company will make required payments in U.S. dollars on the
basis described herein. See "Description of Notes -- Payment Currency" and
"Description of Notes -- Payment of Principal and Interest."
THIS PROSPECTUS DOES NOT, AND ANY PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL
THE RISKS OF AN INVESTMENT IN REGISTERED NOTES DENOMINATED IN, OR THE PAYMENT IN
RESPECT OF WHICH IS RELATED TO THE VALUE OF, A CURRENCY OTHER THAN U.S. DOLLARS,
AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF
SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH
RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR
OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN
REGISTERED NOTES DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH NOTES
ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH
RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information set forth in this Prospectus is directed to prospective
purchasers of Notes who are United States residents, and the Company disclaims
any responsibility to advise prospective purchasers who are residents of
countries other than the United States with respect to any matters that may
affect the purchase or holding of, or receipt of payments of principal, premium
or interest in respect of, Notes. Such persons should consult their own advisors
with regard to such matters. Any Pricing Supplement relating to Notes having a
Specified Currency other than U.S. dollars will contain a description of any
material exchange controls affecting such currency and any other required
information concerning such currency.
PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Note is required to
be made in a Specified Currency other than U.S. dollars and such currency is
unavailable due to the imposition of exchange controls or other circumstances
beyond the Company's control or is no longer used by the government of the
country issuing such currency or for the settlement of transactions by public
institutions of or within the international banking community, then all payments
in respect of such Note shall be made in U.S. dollars until such currency is
again available or so used. The amounts so payable on any date in such currency
shall be converted into U.S. dollars on the basis of the most recently available
Market Exchange Rate for such currency or as otherwise indicated in the
applicable Pricing Supplement. Any payment in respect of such Note made under
such circumstances in U.S. dollars will not constitute an Event of Default under
the Indenture under which such Note shall have been issued.
In the event of an official redenomination of the Specified Currency of a
Note (other than as a result of European Monetary Union, but including, without
limitation, an official redenomination of any such Specified Currency that is a
composite currency), the obligations of the Company with respect to payments on
Notes denominated in such Specified Currency shall, in all cases, be deemed
immediately following such redenomination to provide for the payment of that
amount of redenominated currency representing the
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amount of such obligations immediately before such redenomination. Notes will
not provide for any adjustment to any amount payable under such Notes as a
result of (i) any change in the value of the Specified Currency thereof relative
to any other currency due solely to fluctuations in exchange rates or (ii) any
redenomination of any component currency of any composite currency (unless such
composite currency is itself officially redenominated). The procedures described
in this section shall not apply in the event of European Monetary Union. For a
description of the procedure to be followed in connection with European Monetary
Union, see "European Monetary Union" below.
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks do
not generally offer non-U.S. dollar-denominated checking or savings account
facilities in the United States. Accordingly, payments on Notes made in a
currency other than U.S. dollars will be made from an account at a bank located
outside the United States unless otherwise specified in the applicable Pricing
Supplement.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at the rate of exchange prevailing on
the date of the entry of the judgment or decree.
EUROPEAN MONETARY UNION
Stage III of the European Economic and Monetary Union ("Stage III") is
presently scheduled to commence on January 1, 1999 for those member states of
the European Union that satisfy the economic convergence criteria set forth in
the Treaty on European Union. Certain of the foreign currencies in which Notes
may be denominated or payments in respect of Notes may be due are signatories to
such Treaty (any such country, a "Relevant Jurisdiction" with respect to such
Notes). Stage III includes the introduction of a single currency (the "Euro")
which will be legal tender in such member states. It is anticipated that the
European Union will adopt regulations or other legislation providing specific
rules for the introduction of the Euro in substitution for the respective
current national currencies of such member states, which regulations or
legislation may be supplemented by legislation of the individual member states.
In the event that any Relevant Jurisdiction adopts the Euro, the laws and
regulations of the European Union (and, if any, of such Relevant Jurisdiction)
relating to the Euro implemented pursuant to or by virtue of the Treaty on
European Union shall apply to the Notes and Indenture or Indentures, and, except
as provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of the Notes at any time after the official
date of introduction of the Euro by the Relevant Jurisdiction shall be effected
in Euro in conformity with any such legally applicable measures.
If, following the introduction of the Euro by a Relevant Jurisdiction, the
Company has the option, pursuant to legally applicable measures, to make
payments of principal of, or interest on or any other amounts in respect of, the
Notes in either the current national currency of such Relevant Jurisdiction or
Euro, the Company will make such payments in such national currency or Euro at
its sole discretion. To the extent that the terms and conditions of the Notes
require the rounding up or down of certain amounts or quotations expressed in
Euro, such rounding will be made to the smallest currency unit of the Euro.
The circumstances and consequences described in this section and any
resultant amendment to the terms and conditions of the Notes will not entitle
any Holder of Notes (i) to any legal remedy, including, without limitation,
redemption, rescission, notice, repudiation, adjustment or renegotiation of the
terms and conditions of the Notes and Indenture or Indentures, or (ii) to raise
any defense or make any claim (including, without limitation, claims of breach,
force majeure, frustration or purpose or impracticability) or any other claim
for compensation, damages or any other relief, nor will any such events affect
any of the other obligations of the Company under the Notes and Indenture or
Indentures.
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RISKS OF INDEXED NOTES
An investment in Indexed Notes may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either a
fixed rate or a floating rate determined by reference to nationally published
interest rate references. The risks of a particular Indexed Note will depend on
the terms of such Indexed Note, but may include, without limitation, the
possibility of significant changes in the prices of securities, currencies,
intangibles, goods, articles or commodities or of other objective price,
economic or other measures making up the relevant Index (the "Underlying
Assets"). Such risks generally depend on factors over which the Company has no
control and which cannot readily be foreseen, such as economic and political
events and the supply of and demand for the Underlying Assets. In recent years,
currency exchange rates and prices for various Underlying Assets have been
highly volatile, and such volatility may be expected in the future. Fluctuations
in any such rates or prices that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur during the term of any
Indexed Note.
In considering whether to purchase Indexed Notes, investors should be aware
that the calculation of amounts payable in respect of Indexed Notes may involve
reference to an Index determined by an affiliate of the Company or to prices
which are published solely by third parties or entities which are not subject to
regulation under the laws of the United States.
THIS PROSPECTUS DOES NOT, AND ANY PRICING SUPPLEMENT WILL NOT, DESCRIBE ALL
THE RISKS ON AN INVESTMENT IN INDEXED NOTES, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. THE RISK OF LOSS AS A RESULT OF THE LINKAGE OF PRINCIPAL OR INTEREST
PAYMENTS ON INDEXED NOTES TO AN INDEX AND TO THE UNDERLYING ASSETS CAN BE
SUBSTANTIAL. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN INDEXED NOTES. AN INDEXED
NOTE IS NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH
RESPECT TO TRANSACTIONS IN THE UNDERLYING ASSETS OF ANY INDEX RELEVANT TO THAT
INDEXED NOTE.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations that may be relevant to a holder of a Note. The summary is based
on laws, regulations, rulings and decisions now in effect, all of which are
subject to change possibly with retroactive effect. This summary deals only with
holders that will hold Notes as capital assets, and does not address tax
considerations applicable to investors that may be subject to special tax rules,
including, without limitation, banks, tax-exempt entities, insurance companies,
regulated investment companies, common trust funds or dealers in securities or
currencies, persons that will hold Notes as a part of an integrated investment
(including a "straddle" or "conversion transaction") comprised of a Note and one
or more other positions or persons that have a "functional currency" other than
the U.S. dollar. Any special United States federal income tax considerations
relevant to a particular issue of Notes, including any Indexed Notes, Dual
Currency Notes or Notes providing for contingent payments, will be provided in
the applicable Pricing Supplement. Purchasers of such Notes should carefully
examine the applicable Pricing Supplement and should consult with their tax
advisors with respect to such Notes.
Investors should consult their tax advisors in determining the tax
consequences to them of holding Notes, including the application to their
particular situation of the United States federal income tax considerations
discussed below, as well as the application of state, local, foreign or other
tax laws.
As used herein, the term "United States holder" means a holder of a Note
that is a "United States person" (as defined below) or that otherwise is subject
to United States federal income taxation on a net income basis in respect of the
Note. The term "United States person" means a person who is a citizen or
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resident of the United States, or that is a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, an estate the income of which is subject to
United States federal income taxation regardless of its source or a trust if (i)
a U.S. court is able to exercise primary supervision over the trust's
administration and (ii) one or more United States persons have the authority to
control all of the trust's substantial decisions, and the term "United States"
means the United States of America (including the States and the District of
Columbia).
UNITED STATES HOLDERS
Payments of Interest
Payments of "qualified stated interest" (as defined below under "Original
Issue Discount") on a Note will be taxable to a United States holder as ordinary
interest income at the time that such payments are accrued or are received (in
accordance with the United States holder's method of tax accounting). If such
payments of interest are made with respect to a Note that is denominated in a
Specified Currency other than the U.S. dollar (a "Foreign Currency Note"), the
amount of interest income realized by a United States holder that uses the cash
method of tax accounting will be the U.S. dollar value of the Specified Currency
payment based on the spot rate of exchange on the date of receipt regardless of
whether the payment in fact is converted into U.S. dollars. A United States
holder that uses the accrual method of tax accounting will accrue interest
income on the Foreign Currency Note in the relevant foreign currency and
translate the amount accrued into U.S. dollars based on the average exchange
rate in effect during the interest accrual period (or portion thereof within
such holder's taxable year), or, at such holder's election, at the spot rate of
exchange on (i) the last day of the accrual period (or the last day of the
taxable year within such accrual period if the accrual period spans more than
one taxable year), or (ii) the date of receipt, if such date is within five
business days of the last day of the accrual period. Such election must be
applied consistently by the United States holder to all debt instruments from
year to year and the election cannot be changed without the consent of the
Internal Revenue Service (the "IRS"). A United States holder that uses the
accrual method of tax accounting will recognize foreign currency gain or loss,
which will be treated as ordinary income or loss, on the receipt of an interest
payment made with respect to a Foreign Currency Note if the spot rate of
exchange on the date the payment is received differs from the rate applicable to
a previous accrual of that interest income.
Purchase, Sale and Retirement of Registered Notes
A United States holder's tax basis in a Note generally will equal the cost
of such Note to such holder, increased by any amounts includible in income by
the holder as original issue discount ("OID") and market discount and reduced by
any amortized premium (each as described below) and any payments other than
payments of qualified stated interest (as described below) made on such Note. In
the case of a Foreign Currency Note, the cost of such Note to a United States
holder will be the U.S. dollar value of the foreign currency purchase price on
the date of purchase. In the case of a Foreign Currency Note that is traded on
an established securities market, a United States holder that uses the cash
method of tax accounting (and, if it so elects, a United States holder that uses
the accrual method of tax accounting) will determine the U.S. dollar value of
the cost of such Note by translating the amount paid at the spot rate of
exchange on the settlement date of the purchase. The amount of any subsequent
adjustments to a United States holder's tax basis in a Foreign Currency Note in
respect of OID, market discount and premium denominated in a Specified Currency
other than the U.S. dollar will be determined in the manner described under
"Original Issue Discount" and "Premium and Market Discount" below. The
conversion of U.S. dollars to another Specified Currency and the immediate use
of such Specified Currency to purchase a Foreign Currency Note generally will
not result in taxable gain or loss for a United States holder.
Upon the sale, exchange or retirement (collectively, a "disposition") of a
Note, a United States holder generally will recognize gain or loss equal to the
difference between the amount realized on the disposition (less any accrued
qualified stated interest, which will be taxable as ordinary income) and the
United States holder's adjusted tax basis in such Note. If a United States
holder receives a Specified Currency other than the U.S. dollar in respect of
the disposition of a Note, the amount realized will be the U.S. dollar value of
the Specified
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Currency received calculated at the spot rate of exchange on the date of
disposition. In the case of a Foreign Currency Note that is traded on an
established securities market, a United States holder that uses the cash method
of tax accounting, and if it so elects, a United States holder that uses the
accrual method of tax accounting will determine the U.S. dollar value of the
amount realized by translating such amount at the spot rate of exchange on the
settlement date of the disposition. The election available to accrual basis
United States holders in respect of the purchase and sale of Foreign Currency
Notes traded on an established securities market, discussed above, must be
applied consistently by the United States holder to all debt instruments from
year to year and cannot be changed without the consent of the IRS.
Except as discussed below with respect to market discount, Short-Term Notes
(as defined below) and foreign currency gain or loss, gain or loss recognized by
a United States holder will generally be long term capital gain or loss if the
United States holder's holding period for the Note exceeded one year at the time
of disposition. Recently enacted United States tax legislation reduced the
maximum United States federal income tax rate applicable to capital gains
recognized by individuals in respect of assets held for more than 18 months.
Prospective investors should consult their tax advisers regarding the possible
effect of such legislation on such investors.
Gain or loss recognized by a United States holder on the disposition of a
Foreign Currency Note generally will be treated as ordinary income or loss to
the extent that the gain or loss is attributable to changes in exchange rates
during the period in which the holder held such Note.
Original Issue Discount
In General. Notes with a term greater than one year may be issued with OID
for U.S. federal income tax purposes ("OID Notes"). For United States federal
income tax purposes, United States holders generally must accrue OID in gross
income over the term of the OID Notes on a constant yield basis, regardless of
their regular method of accounting. As a result, United States holders generally
will recognize taxable income in respect of an OID Note in advance of the
receipt of cash attributable to such income.
OID generally will arise if the "stated redemption price at maturity" of
the Note exceeds its "issue price" by more than a de minimis amount (0.25% of
the Note's "stated redemption price at maturity" multiplied by the number of
complete years to maturity), or if a Note has certain interest payment
characteristics (e.g., interest holidays, interest payable in additional
securities or stepped interest). For this purpose, the "issue price" of a Note
is the first price at which a substantial amount of Notes is sold for cash
(other than to bond houses, brokers or similar persons or organizations acting
in the capacity of underwriters, placement agents or wholesalers), and the
"stated redemption price at maturity" of a Note is the sum of all payments due
under the Note, other than payments of "qualified stated interest." The term
"qualified stated interest" generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments of the
issuer) at least annually during the entire term of the OID Note at a single
fixed rate of interest or, subject to certain conditions, based on one or more
interest indices.
For each taxable year of a United States holder, the amount of OID that
must be included in gross income in respect of an OID Note will be the sum of
the daily portions of OID for each day during such taxable year (or any portion
thereof) in which such a United States holder held the OID Note. Such daily
portions are determined by allocating to each day in an accrual period a pro
rata portion of the OID allocable to that accrual period. Accrual periods may be
of any length and may vary in length over the term of an OID Note, provided that
such accrual period is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the final day of such period.
The amount of OID allocable to any accrual period generally will equal the
product of the OID Note's "adjusted issue price" at the beginning of such
accrual period multiplied by its yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for the
length of the accrual period) and subtracting from that product the amount (if
any) of qualified stated interest allocable to that accrual period. The
"adjusted issue price" of an OID Note at the beginning of any accrual period
will equal the issue price of the OID Note, as defined above, increased by
previously accrued OID from prior accrual periods, and reduced by any payment
made on such Note (other than payments of qualified stated interest) on or
before the first day of the accrual period.
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A United States holder generally may make an irrevocable election to
include in its income its entire return on a Note (i.e., the excess of all
remaining payments to be received on the Note, including payments of qualified
stated interest, over the amount paid by such United States holder for such
Note) under the constant-yield method described above. For Notes purchased at a
premium or bearing market discount in the hands of the United States holder, the
United States holder making such election will also be deemed to have made the
election (discussed below in "Premium and Market Discount") to amortize premium
or to accrue market discount in income currently on a constant-yield basis.
Foreign Currency Note. In the case of an OID Note that is also a Foreign
Currency Note, a United States holder should determine the U.S. dollar amount
includible in income as OID for each accrual period by (a) calculating the
amount of OID allocable to each accrual period in the Specified Currency using
the constant-yield method described above, and (b) translating the amount of the
Specified Currency so derived at the average exchange rate in effect during that
accrual period (or portion thereof within a United States holder's taxable year)
or, at the United States holder's election (as described above under "Payments
of Interest"), at the spot rate of exchange on (i) the last day of the accrual
period (or the last day of the taxable year within such accrual period if the
accrual period spans more than one taxable year), or (ii) the date of receipt,
if such date is within five business days of the last day of the accrual period.
All payments on an OID Note (other than payments of qualified stated interest)
will generally be viewed first as payments of previously-accrued OID (to the
extent thereof), with payments attributed first to the earliest-accrued OID, and
then as payments of principal. Upon the receipt of an amount attributable to OID
(whether in connection with a payment of an amount that is not qualified stated
interest or the disposition of the OID Note), a United States holder will
recognize ordinary income or loss measured by the difference between the amount
received (translated into U.S. dollars at the spot rate of exchange on the date
of receipt or on the date of disposition of the OID Note, as the case may be)
and the amount accrued (using the spot rate of exchange applicable to such
previous accrual).
Acquisition Premium. A United States holder that purchases an OID Note for
an amount less than or equal to the sum of all amounts payable on the OID Note
after the purchase date other than payments of qualified stated interest (the
"remaining redemption amount") but in excess of its adjusted issue price (any
such excess being "acquisition premium") generally is permitted to reduce the
daily portions of OID by a fraction, the numerator of which is the excess of the
United States holder's adjusted tax basis in the OID Note immediately after its
purchase over the adjusted issue price of the OID Note, and the denominator of
which is the excess of the sum of all amounts payable on the Note after the
purchase date, other than payments of qualified stated interest, over the Note's
adjusted issue price.
Certain of the Notes may be subject to special redemption, repayment or
interest rate reset features, as indicated in the applicable Pricing Supplement.
Notes containing such features, in particular OID Notes, may be subject to
special rules that differ from the general rules discussed above. Accordingly,
purchasers of Notes with such features should carefully examine the applicable
Pricing Supplement and should consult their tax advisors with respect to such
Notes.
MARKET DISCOUNT
If a United States holder purchases a Note, other than a Short-Term Note
(as described below), for an amount that is less than the Note's stated
redemption price at maturity or, in the case of an OID Note, the Note's "revised
issue price" (i.e., the Note's issue price, increased by the amount of accrued
OID), the Note will be considered to have "market discount." The market discount
rules are subject to a de minimis rule similar to the rule relating to de
minimis OID, described above. Any gain recognized by the United States holder on
the disposition of a Note having market discount generally will be treated as
ordinary income to the extent of the market discount that accrued on the Note
while held by such United States holder. Alternatively, the United States holder
may elect to include market discount in income currently over the life of the
Note. Such an election will apply to market discount Notes acquired by the
United States holder on or after the first day of the first taxable year to
which such election applies and is revocable only with the consent of the IRS.
Market discount will accrue on a straight-line basis unless the United States
holder elects to accrue the market discount on a constant-yield method. Such an
election will apply to the Note to which it is
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made and is irrevocable. Unless the United States holder elects to include
market discount in income on a current basis, as described above, the United
States holder could be required to defer the deduction of a portion of the
interest paid on any indebtedness incurred or maintained to purchase or carry
the Note.
Market discount on a Foreign Currency Note that is currently includible in
income will be translated into U.S. dollars at the average exchange rate for the
accrual period (or portion thereof within the United States holder's taxable
year).
Short-Term Notes
The rules set forth above also will generally apply to Notes having
maturities of not more than one year ("Short-Term Notes"), but with certain
modifications.
First, none of the interest on a Short-Term Note is treated as qualified
stated interest (but instead such interest payments are treated as part of the
Short-Term Note's stated redemption price at maturity, thereby giving rise to
OID). Thus, all Short-Term Notes will be OID Notes. OID will be treated as
accruing on a Short-Term Note ratably, or at the election of a United States
holder, under a constant yield method.
Second, a United States holder of a Short-Term Note that uses the cash
method of tax accounting will generally not be required to include OID in
respect of the Short-Term Note in income on a current basis. Such a United
States holder may not be allowed to deduct all of the interest paid or accrued
on any indebtedness incurred or maintained to purchase or carry such Note until
the Maturity of the Note or its earlier disposition in a taxable transaction. In
addition, such a United States holder will be required to treat any gain
realized on a disposition of the Note as ordinary income to the extent of the
holder's accrued OID with respect to the Note. Notwithstanding the foregoing, a
United States holder of a Short-Term Note using the cash method of tax
accounting may elect to accrue OID into income on a current basis (in which case
the limitation on the deductibility of interest described above will not apply).
A United States holder using the accrual method of tax accounting generally will
be required to include OID on a Short-Term Note in income on a current basis.
Third, any United States holder of a Short-Term Note (whether using the
cash or accrual method of tax accounting) can elect to accrue the "acquisition
discount," if any, with respect to the Note on a current basis. If such an
election is made, the OID rules will not apply to the Note. Acquisition discount
is the excess of the Note's stated redemption price at maturity over the
holder's purchase price for the Note. Acquisition discount will be treated as
accruing ratably or, at the election of the United States holder, under a
constant-yield method based on daily compounding.
As described above, certain of the Notes may be subject to special
redemption features. These features may affect the determination of whether a
Note has a maturity of not more than one year and thus is a Short-Term Note.
Purchasers of Notes with such features should carefully examine the applicable
Pricing Supplement and should consult their tax advisors with respect to such
features.
NOTES PURCHASED AT A PREMIUM
A United States holder that purchases a Note for an amount in excess of the
remaining redemption amount will be considered to have purchased the Note at a
premium. Such holder may elect to amortize such premium (as an offset to
interest income), using a constant-yield method, over the remaining term of the
Note. Such election, once made, generally applies to all debt instruments held
or subsequently acquired by the United States holder on or after the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS. A United States holder that elects to amortize such premium
must reduce its tax basis in a Note by the amount of the premium amortized
during its holding period. With respect to a United States holder that does not
elect to amortize bond premium, the amount of such premium will be included in
the United States holder's tax basis when the Note matures or is disposed of by
the United States holder. Amortizable bond premium in respect of a Foreign
Currency Note will be computed in the Specified Currency and will reduce
interest income in the Specified Currency. At the time amortized bond premium
offsets interest income, exchange gain or loss, which will be taxable as
ordinary income or loss, will be realized
36
<PAGE> 133
with respect to amortized bond premium on such Note based on the difference
between the spot rate of exchange on the date or dates such premium is recovered
through interest payments on the Note and the spot rate of exchange on the date
on which the United States holder acquired the Note. See "Original Issue
Discount -- Acquisition Premium," above for Notes purchased for an amount less
than or equal to the remaining redemption amount but in excess of its adjusted
issue price.
Information Reporting and Backup Withholding
The Trustee will be required to file information returns with the IRS with
respect to payments made to certain United States holders of Notes. In addition,
certain United States holders may be subject to a 31% backup withholding tax in
respect of such payments if they do not provide their taxpayer identification
numbers to the Trustee.
NON-UNITED STATES PERSONS
Under current United States federal income tax law: (a) payment on a Note
to a holder who is not a United States person (a "non-United States person")
will not be subject to withholding of United States federal income tax, provided
that, with respect to payments of interest on a Note having a maturity when
issued greater than 183 days, (i) the holder does not actually or constructively
own 10 percent or more of the combined voting power of all classes of stock of
the Company and is not a controlled foreign corporation related to the Company
through stock ownership and (ii) the beneficial owner provides a statement
signed under penalties of perjury that includes its name and address and
certifies that it is a non-United States person in compliance with applicable
requirements; (b) a non-United States person will not be subject to United
States federal income tax on gain realized on the disposition of the Note unless
(i) such gain is effectively connected with the conduct by the holder of a trade
or business in the United States or (ii) in the case of gain realized by an
individual holder, the holder is present in the United States for 183 days or
more in the taxable year of the sale and either (A) such gain or income is
attributable to an office or other fixed place of business maintained in the
United States by such holder or (B) such holder has a tax home in the United
States.
United States information reporting requirements and backup withholding tax
will not apply to payments on a Note if the beneficial owner certifies its
non-U.S. status under penalties of perjury or otherwise establishes an
exemption. Information reporting requirements and backup withholding tax will
not apply to any payment of the proceeds of the sale of a Note effected outside
the United States by a foreign office of a foreign "broker" (as defined in
applicable Treasury regulations), provided that such broker (i) derives less
than 50% of its gross income for certain periods from the conduct of a trade or
business in the United States and (ii) is not a controlled foreign corporation
for United States federal income tax purposes. Payment of the proceeds of the
sale of a Note effected outside the United States by a foreign office of any
other broker will not be subject to backup withholding tax, but will be subject
to information reporting requirements unless such broker has documentary
evidence in its records that the beneficial owner is a non-United States person
and certain other conditions are met, or the beneficial owner otherwise
establishes an exemption. Payment of the proceeds of a sale of a Note by the
U.S. office of a broker will be subject to information reporting requirements
and backup withholding tax unless the beneficial owner certifies its non-U.S.
status under penalties of perjury or otherwise establishes an exemption.
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 non-United States persons 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 Note.
Prospective investors should consult their tax advisors regarding the effect, if
any, of such new Treasury regulations on an investment in the Notes.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") entered into by the Company and one or more of
the Underwriters, the Company has agreed to
37
<PAGE> 134
sell to one or more of the Underwriters and one or more of the Underwriters have
agreed to purchase, the Notes from time to time. Notes acquired by the
Underwriters pursuant to the Underwriting Agreement are expected to be offered
either directly to the public or to certain dealers (the "Dealers") that will
then reoffer the Notes to the public. Sales by the Underwriters to any Dealer
will be made pursuant to an agreement between the Underwriters and such Dealer
(each a "Dealer Agreement").
The Pricing Supplement with respect to each offering of Notes by the
Company will set forth, among other things, the fixed price to public of such
Notes, or that such Notes will be resold to one or more purchasers at varying
prices related to prevailing market prices at the time of resale, and the
proceeds to the Company from such sale, any underwriting discounts and other
items constituting Underwriters' compensation, and any discounts or concessions
allowed, reallowed or paid to Dealers. The Company will pay underwriting
compensation in connection with any issue of Notes of from not more than .500%
to not more than 2.750% of the principal amount of Notes sold by an underwriter,
depending upon the Stated Maturity. After any initial public offering of Notes,
the price to public of such Notes, and the related underwriting discount and
selling concession, may be changed.
Each of the Underwriters has advised the Company that all initial offers by
it and by the Dealers, unless otherwise set forth in the applicable Pricing
Supplement, are proposed to be made at prices equal to 100% of the principal
amount of the Notes being sold, less, in the case of an offer by an Underwriter
to a Dealer, a price concession not in excess of the amount set forth in the
applicable Pricing Supplement. Offers and sales by the Underwriters or Dealers
subsequent to the initial offering may be at varying prices determined at the
time of sale.
If specified in the applicable Pricing Supplement, Notes may also be sold
directly by the Company, through underwriters other than the Underwriters, or
through underwriters acting as agents, from time to time. Any underwriters other
than the Underwriters will agree to act in accordance with this Plan of
Distribution as if they were the Underwriters. Unless otherwise specified in
such Pricing Supplement, any underwriter acting as agent will be acting on a
best efforts basis for the period of its appointment. All commissions payable by
the Company to any such underwriter, whether acting as principal or as agent,
will be set forth in such Pricing Supplement.
The Notes will not be listed on any securities exchange and will not be
traded, when issued, on any other established trading market. The Underwriters
or any Dealer, may use this Prospectus Supplement together with the Prospectus
and Pricing Supplement in connection with offers and sales of the Notes in
market-making transactions at negotiated prices related to prevailing market
prices at the time of sale. Any Underwriter or Dealer may act as principal or
agent in such transactions. No Underwriter or Dealer has any obligation to make
a market in the Notes and any Underwriter or Dealer may discontinue any
market-making activities at any time without notice, at its sole discretion.
There can thus be no assurance that a secondary market for the Notes will exist
or as to the liquidity of any such market. Moreover, the Company reserves the
right to withdraw, cancel or modify the offer made hereby at any time without
notice, and any such withdrawal, cancellation or modification also may adversely
affect the liquidity of the Notes.
The Underwriting Agreement provides, and the terms of each Dealer Agreement
will provide, that the obligations of each of the Underwriters or a Dealer to
purchase Notes will be subject to certain conditions precedent. The Underwriters
will be obligated to purchase all the Notes offered by any Pricing Supplement
naming it if any such Notes are purchased.
The Company has agreed to indemnify each of the Underwriters against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that each Underwriter may be required to make in respect
thereof.
In connection with underwritten offerings of Notes, 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 Notes. 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 Notes for the purposes of stabilizing
their market price. The underwriters also may create a short position for
38
<PAGE> 135
their respective accounts by selling more Notes in connection with this offering
than they are committed to purchase from the Company, and in such case may
purchase Notes 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 Notes, 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 Notes 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 Notes 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 participation of any broker-dealer subsidiary of the Company in the
offer and sale of Notes complies 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. Each of the
Company's broker-dealer subsidiaries may act as an underwriter in an "at the
market" equity offering pursuant to Rule 415(a)(4) under the Securities Act and
may make a market in the Notes but is not obligated to do so.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of the Notes on behalf
of such Plan should determine whether such purchase is permitted under the
governing Plan documents and is prudent and appropriate for the Plan in view of
its overall investment policy and the composition and diversification of its
portfolio. Other provisions of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"), prohibit certain transactions involving
the assets of a Plan and persons who have certain specified relationships to the
Plan ("parties in interest" within the meaning of ERISA or "disqualified
persons" within the meaning of Section 4975 of the Code). Thus, a Plan fiduciary
considering the purchase of the Notes should consider whether such a purchase
might constitute or result in a prohibited transaction under ERISA or Section
4975 of the Code.
The Company, directly or through its affiliates, may be considered a "party
in interest" or a "disqualified person" with respect to many Plans that are
subject to ERISA. The purchase of Notes by a Plan that is subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of Section 4975 of the Code (including individual retirement accounts
and other plans described in Section 4975(e)(1) of the Code) and with respect to
which the Company is a party in interest or a disqualified person may constitute
or result in a prohibited transaction under ERISA or Section 4975 of the Code,
unless such Notes are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), or PTCE
95-60 (an exemption for certain transactions involving insurance company general
accounts). ANY PENSION OR OTHER EMPLOYEE BENEFIT PLAN PROPOSING TO ACQUIRE ANY
NOTES SHOULD CONSULT WITH ITS COUNSEL.
39
<PAGE> 136
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, have been 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 schedules of Travelers Group as
of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, included in the Company's Current Report on Form
8-K/A dated September 29, 1997, as amended by its Current Report on Form 8-K/A
dated October 28, 1997 have been incorporated by reference herein, in reliance
upon the report (also incorporated by reference herein) of KPMG Peat Marwick
LLP, 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 consolidated financial statements and schedules 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,
as amended by its Current Report on Form 8-K/A dated October 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. 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.
LEGAL MATTERS
Certain legal matters relating to the Notes will be passed upon for the
Company 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.
Certain legal matters relating to the Notes will be passed upon for any
underwriters or agents by Cleary, Gottlieb, Steen & Hamilton, New York or
Skadden, Arps, Slate, Meagher & Flom LLP, New York, 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.
40
<PAGE> 137
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE
PROSPECTUS (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) IN CONNECTION WITH
THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR AN AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS (INCLUDING THE ACCOMPANYING
PRICING SUPPLEMENT) NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS
(INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT). THIS PROSPECTUS (INCLUDING THE
ACCOMPANYING PRICING SUPPLEMENT) DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PROSPECTUS
Available Information..................
Incorporation of Certain Documents by
Reference ...........................
Prospectus Summary.....................
The Company............................
Important Currency Information.........
Description of the Notes...............
Currency Risks.........................
European Monetary Union................
Risks of Indexed Notes.................
Certain United States Federal Income
Tax Considerations...................
Plan of Distribution...................
ERISA Matters..........................
Experts................................
Legal Matters..........................
</TABLE>
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$
SALOMON SMITH BARNEY HOLDINGS INC.
NOTES, SERIES J
DUE MORE THAN NINE MONTHS
FROM DATE OF ISSUE
PROSPECTUS
Dated , 1997
======================================================
<PAGE> 138
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 28, 1997
ON SEPTEMBER 24, 1997, SALOMON INC AND TRAVELERS GROUP INC. ("TRAVELERS
GROUP") ANNOUNCED THAT THEY HAD ENTERED INTO AN AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997, PURSUANT TO WHICH A NEWLY-FORMED, WHOLLY OWNED
SUBSIDIARY OF TRAVELERS GROUP WILL MERGE (THE "FIRST STEP MERGER") WITH AND INTO
SALOMON INC, WHICH WILL BECOME A WHOLLY OWNED SUBSIDIARY OF TRAVELERS GROUP AND
BE RENAMED SALOMON SMITH BARNEY HOLDINGS INC. (THE "COMPANY"). IMMEDIATELY
THEREAFTER, IT IS ANTICIPATED THAT SMITH BARNEY HOLDINGS INC., ANOTHER WHOLLY
OWNED SUBSIDIARY OF TRAVELERS GROUP, WILL BE MERGED WITH AND INTO THE COMPANY
(THE "SECOND STEP MERGER;" AND TOGETHER WITH THE FIRST STEP MERGER, REFERRED TO
COLLECTIVELY HEREIN AS THE "MERGER").
THIS PROSPECTUS SUPPLEMENT ASSUMES THE CONSUMMATION OF THE MERGER, WHICH IS
CURRENTLY ANTICIPATED TO BE COMPLETED ON OR ABOUT NOVEMBER 30, 1997. THE
SECURITIES OFFERED HEREBY ARE NOT INTENDED TO BE OFFERED, AND THIS PROSPECTUS
SUPPLEMENT IS NOT INTENDED TO BE USED, PRIOR TO THE CONSUMMATION OF THE MERGER.
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
)
SHARES
SSBH CAPITAL I
% TRUST PREFERRED SECURITIES
$[NUMBER] LIQUIDATION AMOUNT
- --------------------------------------------------------------------------------
PRICE TO THE PUBLIC: $ PER SHARE (OR $ MILLION FOR ALL THE
SECURITIES), PLUS ACCRUED INTEREST. INTEREST ON THE SECURITIES WILL ACCRUE FROM
AND WILL BE PAID EACH MARCH 31, JUNE 30, SEPTEMBER 30 AND
DECEMBER 31, BEGINNING .
UNDERWRITING DISCOUNTS AND COMMISSIONS: % (OR $ FOR ALL THE
SECURITIES), TO BE PAID BY SALOMON SMITH BARNEY HOLDINGS INC. UNDERWRITING
COMPENSATION WILL BE LOWER IF SALES OF MORE THAN 10,000 SHARES ARE MADE TO A
SINGLE PURCHASER.
PROCEEDS TO SSBH CAPITAL I: 100% (OR $ MILLION FOR ALL THE SECURITIES),
BEFORE DEDUCTION OF SSBH CAPITAL I'S EXPENSES ESTIMATED AT $ .
Underwritten by
- --------------------------------------------------------------------------------
THE SECURITIES EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE TRUST
PREFERRED SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 139
SUMMARY
The following description of the Trust Preferred Securities supplements
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.
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 U.S. and foreign broker-dealer subsidiaries.
THE TRUST
SSBH Capital I (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 Holdings Inc. ("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 shares of Trust Preferred Securities (the "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. 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 Preferred
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 % of the $ liquidation amount
of each share of Preferred Securities. Distributions will accrue from
and will be payable in arrears on of each year,
beginning .
The Preferred Securities are scheduled to mature on . At
maturity, each Preferred Security will be redeemed for its liquidation value
plus any accrued distribution on the Security. The Preferred Securities may also
be redeemed before maturity, as described below.
Salomon Smith Barney intends to have the Preferred Securities listed on the
New York Stock Exchange and expects trading of the Preferred Securities on the
New York Stock Exchange to begin within 30 days after initial delivery of the
Preferred Securities.
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<PAGE> 140
PURCHASE OF SALOMON SMITH BARNEY JUNIOR SUBORDINATED DEBT SECURITIES
Securities
The Trust will use the entire proceeds of the offering of the Common
Securities and the Preferred Securities to purchase $ million 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 months. A postponement can not
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 % compounded.
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 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.
S-2
<PAGE> 141
Salomon Smith Barney can redeem some or all of the Junior Subordinated Debt
Securities
- from time to time after , and
- at any time if there are certain specific changes in tax or investment
company law (a "Special Event").
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.
RISK FACTORS
Before purchasing any Preferred Securities, you should carefully consider
the following special risk factors and other risk factors described on pages
.
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
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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 the 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 for 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 that 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 the 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 the 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"), which 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
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.
SSBH CAPITAL
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 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 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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<PAGE> 144
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 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. The Chase Manhattan Bank will act as indenture trustee under the Guarantee
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 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 enforcement (1) by the
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<PAGE> 145
Institutional Trustee 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 not exceeding consecutive 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, distributions on the Preferred Securities
would be deferred (but despite such deferral would continue to accrue with
interest thereon compounded ) 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 series of the
Company's capital stock, or (iii) the
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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
consecutive 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 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."
The junior subordinated debt securities issued from time to time in
connection with the issuance of trust preferred securities by a Trust 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 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, 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
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Securities. Upon the occurrence of a Tax Event, however, a dissolution of SSBH
Capital in which holders of 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 will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, SSBH Trustees, 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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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 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 Trusts
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,
MONTHS ENDED ----------------------------------------
, 1997 1996 1995 1994 1993 1992
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed
charges and preferred stock
dividends..........................
</TABLE>
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.
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<PAGE> 149
CAPITALIZATION
The following table sets forth the combined capitalization of the Company
at , 1997, 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 , 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 , 1997.
<TABLE>
<CAPTION>
AT , 1997
---------------------------
(UNAUDITED)
---------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings................................................ $
Notes payable........................................................
Long-term debt.......................................................
Subordinated indebtedness............................................
--------
Total debt................................................. $
--------
SSBH-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts holding solely Junior
Subordinated Debt Securities of SSBH(1)............................
Stockholder's equity
Common stock ($ par value;
authorized -- shares; issued and
outstanding -- shares)...............................
Additional paid-in capital...........................................
Retained earnings....................................................
Cumulative translation adjustment....................................
--------
Total stockholder's equity.................................
--------
Total capitalization................................................. $
--------
</TABLE>
- ---------------
(1) The sole asset of each trust will be junior subordinated deferrable interest
debentures of the Company. The sole asset of SSBH Capital will be $
million aggregate principal amount of % junior subordinated deferrable
interest debentures of the Company due , 20 .
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. The Institutional Trustee, The Chase Manhattan Bank, will act as
indenture trustee under the Declaration 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 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 Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees 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
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<PAGE> 150
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 The Chase Manhattan Bank, 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 % of the stated liquidation amount of $ 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 % thereof compounded . 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 , 199 , and will be payable in
arrears on of each year, commencing , 199 . 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 consecutive 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 to accrue with interest thereon compounded
, 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
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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 consecutive 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 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. 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" 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 , 203 , and may be redeemed, in whole
or in part, at any time on or after , 200 , 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
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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 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 nationally recognized independent tax counsel
experienced in such matters
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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 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 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
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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], 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 $ 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
, 205 , 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 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.
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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.
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
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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.
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.
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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."
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), 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
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,
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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 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.
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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 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
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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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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, dated as of
, 199 (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 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 $ ($ if the
Underwriters exercise the over-allotment option in full), 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 , 203 .
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 $ 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 address
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.
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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.
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 Preferred
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 ,
200 , 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
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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.
INTEREST
Each Junior Subordinated Debt Security shall bear interest at the rate of
% per annum, from and including the original date of issuance, payable
in arrears on of each year (each an "Interest
Payment Date"), commencing , 199 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 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
consecutive , 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 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 consecutive interest
periods (including the 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
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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) 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
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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 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.
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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. The Chase Manhattan Bank will act as indenture trustee
under the Guarantee (the "Guarantee Trustee"). 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 $ 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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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."
UNITED STATES FEDERAL INCOME TAXATION
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 by holders who purchase the Preferred Securities upon original
issuance. It does not deal with special classes of holders such as banks,
thrifts, real estate investment trusts, regulated investment companies,
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 on a retroactive basis.
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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 original issue discount ("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.
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
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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.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a non-resident fiduciary of a foreign estate or trust.
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
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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 U.S. 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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UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated , 199 (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>
........................................
........................................
--------------------
Total.............................................
==============
</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.
SSBH Capital has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus Supplement, to purchase up to an aggregate
of additional Preferred Securities at the initial public
offering price set forth on the cover page of this Prospectus Supplement. The
Company will pay Underwriters' Compensation in the amounts per Preferred
Security set forth on the cover page hereof with respect to such additional
Preferred Securities. The Underwriters may exercise such option to purchase
additional Preferred Securities solely for the purpose of covering
over-allotments, if any, incurred in connection with the sale of the Preferred
Securities offered hereby. To the extent such option is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional Preferred Securities as the
number of Preferred Securities set forth opposite such Underwriter's name in the
preceding table bears to the total number of Preferred Securities in such table.
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.
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, any preferred stock or any other securities (including any
backup undertakings of such preferred stock or other securities) of the Company
or of SSBH Capital, in each case that are substantially similar to the Preferred
Securities, or any securities 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 the Underwriters.
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 $ per Preferred Security
for the accounts of the several Underwriters; provided that such compensation
for sales of 10,000 or more Preferred Securities to a single purchaser will be
$ per Preferred Security. 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 , provided that such
concession for sales of 10,000 or more Preferred Securities to a single person
will not be in excess of per Preferred Security. The
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Underwriters may allow, and such dealers may reallow, a concession not in excess
of 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.
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 the Company, 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 Company intends to apply for listing of the Preferred Securities on the
New York Stock Exchange. Trading of the Preferred Securities on the New York
Stock Exchange is expected to commence within a 30-day period after the date of
this Prospectus Supplement.
The participation of any broker-dealer subsidiary of the Company in the
offer and sale of Preferred Securities complies 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.
Each of the Company's broker-dealer subsidiaries may act as an underwriter in an
"at the market" equity offering pursuant to Rule 415(a)(4) under the Securities
Act and may make a market in the Preferred Securities but is not obligated to do
so.
This Prospectus Supplement and the Prospectus may be used by the Company or
any of its broker-dealer subsidiaries 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 broker-dealer subsidiary
may act as principal or agent in such transactions. No such subsidiary has any
obligation to make a market in any of the Preferred Securities and such
subsidiary may discontinue any market-making activities at any time without
notice, at its sole discretion. The Preferred Securities issued hereunder will
be new issues of securities with no established trading market, and no assurance
can be made as to the existence or liquidity of a trading market for such
Preferred Securities, subsidiaries in connection with such transactions.
S-37
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LEGAL MATTERS
The validity of the Preferred Securities, 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. Mundeim 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 Trust
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> 177
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 28, 1997
PROSPECTUS
ON SEPTEMBER 24, 1997, SALOMON INC AND TRAVELERS GROUP INC. ("TRAVELERS
GROUP") ANNOUNCED THAT THEY HAD ENTERED INTO AN AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997, PURSUANT TO WHICH A NEWLY-FORMED, WHOLLY OWNED
SUBSIDIARY OF TRAVELERS GROUP WILL MERGE (THE "FIRST STEP MERGER") WITH AND INTO
SALOMON INC, WHICH WILL BECOME A WHOLLY OWNED SUBSIDIARY OF TRAVELERS GROUP AND
BE RENAMED SALOMON SMITH BARNEY HOLDINGS INC. (THE "COMPANY"). IMMEDIATELY
THEREAFTER, IT IS ANTICIPATED THAT SMITH BARNEY HOLDINGS INC., ANOTHER WHOLLY
OWNED SUBSIDIARY OF TRAVELERS GROUP, WILL BE MERGED WITH AND INTO THE COMPANY
(THE "SECOND STEP MERGER;" AND TOGETHER WITH THE FIRST STEP MERGER, REFERRED TO
COLLECTIVELY HEREIN AS THE "MERGER").
THIS PROSPECTUS ASSUMES THE CONSUMMATION OF THE MERGER, WHICH IS CURRENTLY
ANTICIPATED TO BE COMPLETED ON OR ABOUT NOVEMBER 30, 1997. THE SECURITIES
OFFERED HEREBY ARE NOT INTENDED TO BE OFFERED, AND THIS PROSPECTUS IS NOT
INTENDED TO BE USED, PRIOR TO THE CONSUMMATION OF THE MERGER.
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
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 that
Salomon Smith Barney Holdings Inc. has
guaranteed to the extent explained in
this prospectus.
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 PROSPECTUS SUPPLEMENT, IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is dated , 1997.
<PAGE> 178
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports 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 Securities Act of 1933, as amended (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."
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 (the "1996 Form
10-K"), (ii) the Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997 and June 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), October 21, 1997 and October 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 offering of the securities offered
hereby (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
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<PAGE> 179
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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<PAGE> 180
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 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 Trust 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 and
Preferred Stock in connection with an offering by one or more of the Trusts of
Preferred Securities. The Preferred Securities 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
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No. 333- , our recent annual report on Form 10-K, our recent quarterly
reports on Form 10-Q and our recent reports on Form 8-K. Directions on how you
can receive copies of these documents are provided on page .
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 U.S. 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
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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
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subsidiaries. We may use some of the proceeds to refinance or extend the
maturity of some of the Company's existing debt obligations.
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 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 and June 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),
October 21, 1997 and October 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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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"), which 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
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.
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"), 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.
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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 the % Junior Subordinated Deferrable Interest Debentures due
, 203 (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.
The Junior Subordinated Debt Securities may be issued, from time to time,
in one or more series, under an Indenture, dated as of , 199 (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
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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 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 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 Subordi-
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nated 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)
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
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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
U.S. 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.
Concerning the Indenture Trustee. The Indenture 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 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
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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.
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
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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 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 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.
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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 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
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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 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
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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.
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
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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 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.
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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 shares of Common Stock, par value $. per share (the "Common
Stock"), and 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 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 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.
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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.
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
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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 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.
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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. 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.
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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 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.
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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 of the Company's broker-dealer subsidiaries. The
Prospectus Supplement with respect to any 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 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.
24
<PAGE> 201
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 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 broker-dealer subsidiary of the Company in the
offer and sale of Offered Securities complies 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. Each of
the Company's broker-dealer subsidiaries may act as an underwriter in an "at the
market" equity offering pursuant to Rule 415(a)(4) under the Securities Act and
may make a market in the Offered Securities but is not obligated to do so.
This Prospectus Supplement and the related Prospectus may be used by the
Company or any of its broker-dealer subsidiaries, 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. Broker-dealer
subsidiaries of the Company may act as principal or agent in such transactions.
No such subsidiary has any obligation to make a market in any of the Offered
Securities and any such subsidiary may discontinue any market-making activities
at any time without notice, at its sole discretion. The Offered Securities
issued hereunder will be new issues of securities with no established trading
market, and no assurance can be made as to the existence or liquidity of a
trading market for such Offered Securities.
25
<PAGE> 202
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, or to contribution with respect to payments that such agents,
dealers or underwriters may be required to make in respect thereof. 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.
Each series of Offered Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom Offered
Securities are sold for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The Offered Securities
may or may not be listed on a national securities exchange. No assurance can be
given that there will be a market for the Offered Securities.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, have been 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 schedules of Travelers Group as
of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, included in the Company's Current Report on Form
8-K dated September 29, 1997 (as amended by the Current Report on Form 8-K/A
dated October 28, 1997), have been audited by KPMG Peat Marwick LLP, 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 consolidated financial statements and schedules 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
(as amended by the Current Report on Form 8-K/A dated October 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. 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.
LEGAL MATTERS
The validity of the Preferred Securities, the Junior Subordinated Debt
Securities, the Guarantees and certain matters relating thereto and certain
United States federal income tax matters will be passed upon for the Company and
the SSBH Trusts 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.
26
<PAGE> 203
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SALOMON
SMITH BARNEY HOLDINGS INC., SSBH CAPITAL I OR ANY UNDERWRITER, DEALER OR AGENT.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF SALOMON SMITH BARNEY HOLDINGS INC. OR SSBH CAPITAL I SINCE THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS SUPPLEMENT
Summary...............................................................................
Risk Factors..........................................................................
Use of Proceeds.......................................................................
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.............
Accounting Treatment..................................................................
Capitalization........................................................................
Description of the Preferred Securities...............................................
Description of the Junior Subordinated Debt Securities................................
Description of Guarantee..............................................................
Effect of Obligations Under the Junior Subordinated Debt Securities and the
Guarantee...........................................................................
United States Federal Income Taxation.................................................
Underwriting..........................................................................
Legal Matters.........................................................................
PROSPECTUS
Available Information.................................................................
Incorporation of Certain Documents by Reference.......................................
The Company...........................................................................
SSBH Trusts...........................................................................
Use of Proceeds.......................................................................
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.............
Description of Junior Subordinated Debt Securities....................................
Description of Preferred Securities...................................................
Description of Guarantees.............................................................
Description of Capital Stock..........................................................
Description of Preferred Stock........................................................
Description of Depositary Shares......................................................
Description of Common Stock...........................................................
Plan of Distribution..................................................................
Legal Matters.........................................................................
Experts...............................................................................
</TABLE>
27
<PAGE> 204
======================================================
------------------------
You should rely only on the information in this document or that Salomon
Smith Barney Holdings Inc. has referred
you to. We have not authorized anyone to provide you with different information.
Delivery of this document or any sale of Trust Preferred Securities does
not imply that there has been no change in our affairs since
.
======================================================
======================================================
Shares
SSBH Capital I
% Trust Preferred Securities
------------------
PROSPECTUS SUPPLEMENT
DATED , 199
(INCLUDING PROSPECTUS)
DATED , 199
------------------
======================================================
<PAGE> 205
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 17, 1997
PROSPECTUS
INTRODUCTORY NOTE
ON SEPTEMBER 24, 1997, SALOMON INC AND TRAVELERS GROUP INC. ("TRAVELERS
GROUP") ANNOUNCED THAT THEY HAD ENTERED INTO AN AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 24, 1997, PURSUANT TO WHICH A NEWLY-FORMED, WHOLLY OWNED
SUBSIDIARY OF TRAVELERS GROUP WILL MERGE (THE "FIRST STEP MERGER") WITH AND INTO
SALOMON INC, WHICH WILL BECOME A WHOLLY OWNED SUBSIDIARY OF TRAVELERS GROUP AND
BE RENAMED SALOMON SMITH BARNEY HOLDINGS INC. (THE "COMPANY"). IMMEDIATELY
THEREAFTER, IT IS ANTICIPATED THAT SMITH BARNEY HOLDINGS INC., ANOTHER WHOLLY
OWNED SUBSIDIARY OF TRAVELERS GROUP, WILL BE MERGED WITH AND INTO THE COMPANY
(THE "SECOND STEP MERGER;" AND TOGETHER WITH THE FIRST STEP MERGER, REFERRED TO
COLLECTIVELY HEREIN AS THE "MERGER").
THIS PROSPECTUS ASSUMES THE CONSUMMATION OF THE MERGER, WHICH IS CURRENTLY
ANTICIPATED TO BE COMPLETED ON OR ABOUT NOVEMBER 30, 1997. THE SECURITIES
OFFERED HEREBY ARE NOT INTENDED TO BE OFFERED, AND THIS PROSPECTUS IS NOT
INTENDED TO BE USED, PRIOR TO THE CONSUMMATION OF THE MERGER.
SALOMON SMITH BARNEY HOLDINGS INC.
$150,000,000 principal amount of 5 5/8% Notes due November 15, 1998
$200,000,000 principal amount of 5 1/2% Notes due January 15, 1999
$150,000,000 principal amount of 7 7/8% Notes due October 1, 1999
$148,500,000 principal amount of 6 5/8% Notes due June 1, 2000
$200,000,000 principal amount of 7.98% Notes due March 1, 2000
$150,000,000 principal amount of 7% Notes due May 15, 2000
$250,000,000 principal amount of 5 7/8% Notes due February 1, 2001
$40,072,410 principal amount of S&P 500 Equity Linked Notes due August 13, 2001
$150,000,000 principal amount of 6 1/2% Notes due October 15, 2002
$150,000,000 principal amount of 7.50% Notes due May 1, 2002
$200,000,000 principal amount of 6 5/8% Notes due November 15, 2003
$175,000,000 principal amount of 6 7/8% Notes due June 15, 2005
$200,000,000 principal amount of 7 1/8% Notes due October 1, 2006
$65,987,535 principal amount of S&P 500 Equity Linked Notes due March 11, 2002
$250,000,000 principal amount of 7% Notes due March 15, 2004
$200,000,000 principal amount of 7 3/8% Notes due May 15, 2007
$250,000,000 principal amount of 6 5/8% Notes due July 1, 2002
$25,000,000 principal amount of Floating Rate Medium-Term Notes due September
10, 2002
$62,318,445 principal amount of S&P 500 Equity Linked Notes due October 3, 2003
$200,000,000 principal amount of 6 3/8% Notes due October 1, 2004
------------------------
Salomon Smith Barney Holdings Inc. (the successor by merger to Smith Barney
Holdings Inc.) (the "Company") has issued $150,000,000 principal amount of
5 5/8% Notes due November 15, 1998, $200,000,000 principal amount of 5 1/2%
Notes due January 15, 1999, $150,000,000 principal amount of 7 7/8% Notes due
October 1, 1999, $148,500,000 principal amount of 6 5/8% Notes due June 1, 2000,
$200,000,000 principal amount of 7.98% Notes due March 1, 2000, $150,000,000
principal amount of 7% Notes due May 15, 2000, $250,000,000 principal amount of
5 7/8% Notes due February 1, 2001, $40,072,410 principal amount of S&P 500
Equity Linked Notes due August 13, 2001, $150,000,000 principal amount of 6 1/2%
Notes due October 15, 2002, $150,000,000 principal amount of 7.50% Notes due May
1, 2002, $200,000,000 principal amount of 6 5/8% Notes due November 15, 2003,
$175,000,000 principal amount of 6 7/8% Notes due June 15, 2005, $200,000,000
principal amount of 7 1/8% Notes due October 1, 2006, $65,987,535 principal
amount of S&P 500 Equity Linked Notes due March 11, 2002, $250,000,000 principal
amount of 7% Notes due March 15, 2004, $200,000,000 principal amount of 7 3/8%
Notes due May 15, 2007, $250,000,000 principal amount of 6 5/8% Notes due July
1, 2002, $25,000,000 principal amount of Floating Rate Medium-Term Notes due
September 10, 2002, $62,318,445 principal amount of S&P 500 Equity Linked Notes
due October 3, 2003 and $200,000,000 principal amount of 6 3/8% Notes due
October 1, 2004 (collectively, the "Outstanding Securities") which have been
registered under the Securities Act of 1933, as amended (the "Act"). This
Prospectus relates solely to the Outstanding Securities.
The Outstanding Securities are represented by one or more global notes
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Outstanding Securities will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Owners of beneficial interests in the Outstanding Securities
will be entitled to physical delivery of Outstanding Securities in certificated
form equal in principal amount to their respective beneficial interests only
under the limited circumstances described herein. See "Description of the
Outstanding Securities--Book-Entry Notes."
The Outstanding Securities will trade in the Same-Day Funds Settlement
System of DTC, and, to the extent that secondary market trading activity in the
Outstanding Securities is effected through the facilities of DTC, such trades
will be settled in immediately available funds. All payments of principal and
interest will be made by the Company in immediately available funds.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This Prospectus is to be used by Smith Barney Inc., Salomon Brothers Inc
and/or other broker-dealer subsidiaries of the Company and/or their respective
successors (the "SSBH Subsidiaries") in connection with offers and sales of the
Outstanding Securities in market-making transactions at negotiated prices
related to prevailing market prices at the time of sale. Any of the SSBH
Subsidiaries may act as principal or agent in such transactions.
, 1997
<PAGE> 206
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY SSBH SUBSIDIARY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THIS PROSPECTUS
RELATES, OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN
ANY CHANGE IN THE AFFAIRS OF THE COMPANY OR ITS SUBSIDIARIES SINCE THE DATE
HEREOF.
------------------------
AVAILABLE INFORMATION
Salomon Smith Barney Holdings Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information concerning
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained upon written request addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
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 concerning issuers, such as the Company, that file
electronically with the Commission. Such reports and other information may also
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005 and the American Stock Exchange, 86 Trinity
Place, New York, New York 10006.
------------------------
The Company has 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
Outstanding 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 and the Outstanding 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.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to Section 13 of the Exchange Act (File No. 1-4346), are incorporated herein by
reference (i) the Annual Report on Form 10-K for the year ended December 31,
1996 (the "1996 Form 10-K"), (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), October 21, 1997 and
October 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 termination of the offering of the Outstanding Securities shall be deemed to
be incorporated by reference in the Prospectus.
Any statements contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
2
<PAGE> 207
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY
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"), which 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
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 , 1997 1996 1995 1994 1993 1992
------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges..........................
</TABLE>
- ---------------
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.
DESCRIPTION OF THE OUTSTANDING SECURITIES
The Outstanding Securities were issued under an Indenture dated as of May
15, 1993, between Smith Barney Holdings Inc. ("Smith Barney Holdings") and
Citibank, N.A., as Trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture dated as of September 1, 1993, between Smith Barney
Holdings and the Trustee, the Second Supplemental Indenture dated as of December
12, 1996, between Smith Barney Holdings and the Trustee, and the Third
Supplemental Indenture dated as of November , 1997 among Smith Barney
Holdings, the Company and the Trustee pursuant to which the Company assumed all
obligations of Smith Barney Holdings with respect to the Outstanding
Securities(the indenture as so supplemented is hereinafter referred to as the
"Indenture"). The following summary of certain provisions of the Indenture does
not purport to be complete and is subject to, and qualified in its entirety by
reference to,
3
<PAGE> 208
the Indenture, a copy of which has been incorporated by reference or filed as an
exhibit to the Registration Statements of which this Prospectus forms a part.
Capitalized terms used and not otherwise defined in this section shall have the
meanings assigned to them in the Indenture. Parenthetical section references
refer to sections of the Indenture.
GENERAL
The Outstanding Securities are unsecured general obligations of the
Company. As a holding company, the Company's sources of funds are derived
principally from advances and dividends from subsidiaries, certain of which are
subject to regulatory restrictions, and from sales of assets and investments.
The Indenture provides that unsecured debt securities of the Company, without
limitation as to aggregate principal amount, may be issued in one or more
series, and a single series may be issued at various times, with different
maturity dates and different interest rates, in each case as authorized from
time to time by the Company. The provisions of the Indenture provide the Company
with the ability, in addition to the ability to issue securities with terms
different from those of securities previously issued, to "reopen" a previous
issue of a series of securities and to issue additional securities of such
series.
The Outstanding Securities were issued only in registered form and may only
be issued in denominations of $1,000 and integral multiples thereof. No service
charge will be made for any registration of transfer or exchange of Outstanding
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
BOOK-ENTRY NOTES
The Outstanding Securities were issued in the form of one or more global
notes (each, a "Book-Entry Note"), which were deposited with, or on behalf of,
DTC and registered in the name of DTC or its nominee. Except as set forth below,
Book-Entry Notes may not be transferred except as a whole by DTC to a nominee of
DTC, or by a nominee of DTC to DTC or another nominee of DTC, or by DTC or any
nominee to a successor of DTC, or a nominee of such successor.
DTC has advised the Company that it 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 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 a Direct Participant,
either directly or indirectly. The rules applicable to DTC and its Participants
are on file with the Commission.
Upon the issuance by the Company of a Book-Entry Note, DTC will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Outstanding Securities represented by such Book-Entry Note to the
accounts of Participants. Ownership of beneficial interests in a Book-Entry Note
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in Book-Entry Notes will be
shown on, and the transfer of such interests will be effected only through,
records maintained by DTC or its nominee (with respect to beneficial interests
of Participants), or by Participants or persons that may hold interests through
Participants (with respect to beneficial interests of beneficial ownership). The
laws of some states may require that certain purchasers of securities take
physical delivery of such securities in certificated form. Such limits and such
law may impair the ability to transfer beneficial interests in Book-Entry Notes.
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So long as DTC or its nominee is the registered owner of the Book-Entry
Notes, DTC or its nominee, as the case may be, will be considered the sole owner
or holder of the Outstanding Securities represented by such Book-Entry Notes for
all purposes under the Indenture. Except as provided below, owners of beneficial
interests in Book-Entry Notes will not be entitled to have Outstanding
Securities represented by such Book-Entry Notes registered in their names, will
not receive or be entitled to receive physical delivery of such Outstanding
Securities in certificated form and will not be considered the owners or holders
thereof under the Indenture.
Principal and interest payments on the Outstanding Securities represented
by one or more Book-Entry Notes will be made by the Company to DTC or its
nominee, as the case may be, as the registered owner of the related Book-Entry
Note or Notes. The Company expects that DTC or its nominee, upon receipt of any
payment of principal or interest in respect of Book-Entry Notes, will credit
immediately the accounts of the related Participants with payment in amounts
proportionate to their respective holdings in principal amount of beneficial
interests in such Book-Entry Notes as shown on the records of DTC. Neither the
Company nor the Trustee or any Paying Agent will have any responsibility or
liability for any aspect of the records relating to, or payments made on account
of, beneficial ownership interests of Book-Entry Notes, or for maintaining,
supervising or reviewing any records relating to such beneficial interests. The
Company also expects that payments by Participants to owners of beneficial
interests in Book-Entry Notes held through such Participants will be governed by
standing customer instructions and customary practices, as is now the case with
securities registered in "street name." Such payments will be the responsibility
of such Participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depository and a successor depositary is not appointed by the Company within 90
days, the Company will issue Outstanding Securities in certificated form in
exchange for beneficial interests in the Book-Entry Notes. In addition, the
Company may at any time determine not to have its Outstanding Securities
represented by one or more Book-Entry Notes, and, in such event, will issue
Outstanding Securities in certificated form in exchange for beneficial interests
in Book-Entry Notes. In any such instance, an owner of a beneficial interest in
a Book-Entry Note will be entitled to physical delivery in certificated form of
Outstanding Securities equal in principal amount to such beneficial interests
and to have such Outstanding Securities registered in its name. Outstanding
Securities so issued in certificated form will be issued in denominations of
$1,000 or any amount in excess thereof that is an integral multiple of $1,000
and will be issued in registered form only, without coupons.
Any certificated Outstanding Securities presented for registration of
transfer or exchange shall (if so required by the Company or the Trustee) be
duly endorsed by, or accompanied by a written instrument or instruments of
transfer (in a form satisfactory to the Company and the Trustee) duly executed
by, the registered holder or his attorney duly authorized in writing.
SAME-DAY SETTLEMENT AND PAYMENT
All payments of principal and interest on Outstanding Securities
represented by Book-Entry Notes will be made by the Company in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
Outstanding Securities are expected to trade in the Same-Day Funds Settlement
System of DTC, and, to the extent that secondary market trading activity in the
Outstanding Securities is effected through the facilities of DTC, such trades
will be settled in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Outstanding Securities.
PAYMENTS OF PRINCIPAL AND INTEREST
Principal of and interest on the Outstanding Securities will be payable at
the office or agency of the Company to be maintained in the Borough of
Manhattan, The City of New York, initially at the principal corporate trust
office of the Trustee, 111 Wall Street, Fifth Floor, New York, New York;
provided, however, that at the option of the Company, payment of interest may be
made by check mailed to the address of the person entitled thereto as such
address shall appear in the register of holders of Outstanding Securities.
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Notwithstanding the foregoing, payments of principal and interest on Book-Entry
Notes will be made as described above.
REDEMPTION
The Outstanding Securities offered hereby are not redeemable by the Company
at any time prior to maturity and are not subject to any sinking fund or other
analogous provision.
SUMMARY OF CERTAIN PROVISIONS OF INDENTURE
Payment and Paying Agents. Payment of principal of and premium, if any, on
the Outstanding Securities will be made in United States dollars against
surrender of such Outstanding Securities at the principal corporate trust office
of the Trustee in The City of New York. Payment of any installment of interest
on the Outstanding Securities will be made to the person in whose name such
Outstanding Securities are registered at the close of business on the Record
Date for such interest payment. Payments of such interest will be made at the
principal corporate trust office of the Trustee in The City of New York, or by a
check mailed to the holder at such holder's registered address (SECTIONS 307 AND
901). Notwithstanding the foregoing, payments of principal and interest on
Book-Entry Notes will be made as described above.
Limitations on Liens. The Company has agreed that it will not, and will
not permit any Subsidiary to, incur, issue, assume or guarantee any indebtedness
for money borrowed if such indebtedness is secured by a pledge of, lien on, or
security interest in, any shares of Voting Stock of any Significant Subsidiary,
whether such Voting Stock is now owned or is hereafter acquired, without
providing that each series of Securities issued under the Indenture (together
with, if the Company shall so determine, any other indebtedness or obligations
of the Company or any Subsidiary ranking equally with such Securities and then
existing or thereafter created) shall be secured equally and ratably with such
indebtedness. The foregoing limitation shall not apply to indebtedness secured
by a pledge of, lien on, or security interest in, any shares of Voting Stock of
any corporation at the time it becomes a Significant Subsidiary (SECTION 905).
Limitations on Mergers and Sales of Assets. The Company may not
consolidate or merge with or into any other corporation or sell, lease, transfer
or otherwise dispose of all or substantially all its assets to another Person
unless (a) the successor Person (if other than the Company) is organized and
existing under the laws of the United States of America or a State thereof or
the District of Columbia and assumes payment of the principal of and interest on
the Securities and the performance and the observance of the Indenture and (b)
such successor Person (or the Company) shall not, immediately after such merger
or consolidation, be in default in the performance of any covenant or condition
of the Indenture (SECTION 701).
Limitation on Indebtedness of a Subsidiary. As of September 1, 1993, the
First Supplemental Indenture, among other things, added a covenant of the
Company to the effect that for so long as any Securities are Outstanding, the
Company will not permit Smith Barney (Delaware) Inc. (formerly Smith Barney
Inc.), one of its Subsidiaries, to incur or suffer to exist any Indebtedness
(SECTION 908).
Certain Definitions. The term "Indebtedness" means any and all obligations
of a corporation for money borrowed which in accordance with generally accepted
accounting principles would be reflected on the balance sheet of such
corporation as a liability on the date as of which Indebtedness is to be
determined. The term "Significant Subsidiary" means a Subsidiary, including its
Subsidiaries, which meets any of the following conditions: (a) the Company's and
its other Subsidiaries' investments in and advances to the Subsidiary exceed 10
percent of the total assets of the Company and its Subsidiaries consolidated as
of the end of the most recently completed fiscal year; (b) the Company's and its
other Subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of the Subsidiary exceeds 10 percent of the total assets of the
Company and its Subsidiaries consolidated as of the end of the most recently
completed fiscal year; or (c) the Company's and its other Subsidiaries' equity
in the income from continuing operations before income taxes, extraordinary
items and cumulative effect of a change in accounting principles of the
Subsidiary exceeds 10 percent of such income of the Company and its Subsidiaries
consolidated for the most recently completed fiscal year. The term "Subsidiary"
means a corporation more than 50% of the outstanding Voting Stock of which is
owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. The term
"Voting Stock" means capital stock the holders of
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which have general voting power under ordinary circumstances to elect at least a
majority of the board of directors of a corporation, provided that, for the
purposes of such definition, capital stock which carries only the right to vote
conditioned on the happening of an event shall not be considered voting stock
whether or not such event shall have happened (SECTIONS 101 AND 905).
The use of the term "all or substantially all" in Indenture provisions such
as the covenant regarding the limitations on mergers and sales of assets has not
been interpreted under New York law (which is the governing law of the
Indenture) to represent a specific quantitative test. Accordingly, there may be
a degree of uncertainty in ascertaining whether a particular transaction would
involve a disposition of "all or substantially all" of the assets of a person,
which uncertainty should be considered by prospective purchasers of Outstanding
Securities.
Modification and Waiver of the Indenture. Modifications and amendments to
the Indenture may be made by the Company and the Trustee with the consent of the
Holders of a majority in principal amount of the Outstanding securities of each
series affected thereby; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding security
affected thereby, (a) change the stated maturity date of the principal of, or
any installment of principal of or interest on, any Security issued under the
Indenture, (b) reduce the principal amount of, or the premium, if any, or
interest, if any, on, any Security, (c) reduce the amount of principal of any
Original Issue Discount Security payable upon acceleration of the Maturity
thereof, (d) change the coin or currency in which any Securities or premium, if
any, or interest, if any, thereon is payable, or (e) reduce the percentage in
principal amount of Outstanding securities of any series, the consent of the
Holders of which is required for modification or amendment of the Indenture or
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults (SECTION 802).
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any Holder to evidence a successor to the
Company, to add to the Company's covenants or Events of Default, to permit or
facilitate Securities to be issued by book-entry or in bearer form or relating
to the place of payment thereof, to provide for a successor trustee, to
establish forms or terms of Securities, to change or eliminate any provision not
adversely affecting any interests of Holders of Outstanding securities in any
material respect or to cure any ambiguity or inconsistency (SECTION 801).
The Holders of a majority in principal amount of the Outstanding securities
of any series may on behalf of the Holders of all Securities of that series
waive, insofar as that series is concerned, compliance by the Company with
certain restrictive provisions of the Indenture (SECTION 906). The Holders of a
majority in principal amount of the Outstanding securities of any series may on
behalf of the Holders of all Securities of that series waive any past default
under the Indenture with respect to Securities of that series, except a default
in the payment of the principal of, or premium, if any, or interest, if any, on,
any Security of that series or in respect of any provision which under the
Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding security of that series affected (SECTION 511).
Events of Default. The following are Events of Default under the Indenture
with respect to Securities of any series: (a) failure to pay principal of or
premium, if any, on any Security of that series at its Maturity; (b) failure to
pay any interest on any Security of that series when due, continued for 30 days;
(c) failure to deposit any sinking fund payment, when due, in respect of any
Security of that series; (d) any other defaults in the performance, or breach,
of any covenant of the Company in the Indenture, continued for 60 days after
written notice of such default or breach from the Trustee or the Holders of at
least 25% in principal amount of the Outstanding securities of that series; (e)
the occurrence of a default in payment of any debt that results from borrowing
in excess of $50,000,000, or any interest thereon, for a period longer than the
specified period of grace, which default shall have resulted in acceleration of
the maturity of such debt without such acceleration having been rescinded after
due notice in writing to the Company of such default by the Trustee or by such
notice to the Company and the Trustee by Holders of at least 10% of the
principal amount of the Outstanding securities of that series; (f) certain
events of bankruptcy, insolvency or reorganization; and (g) any other Event of
Default provided with respect to Securities of that series (SECTION 501).
In accordance with applicable provisions of the Trust Indenture Act of
1939, as amended (the "TIA"), the Trustee is required to give the Holders notice
of all defaults known to the Trustee within 90 days after the
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occurrence thereof, in the manner and to the extent provided by the TIA. The TIA
further provides that except in the case of default in the payment of the
principal of or interest on any indenture security, or in the payment of any
sinking fund or purchase fund installment, the Trustee shall not be required to
give such notice if it determines that withholding the notice is in the
interests of the indenture security holders.
If an Event of Default with respect to Outstanding securities of any series
shall occur and be continuing, either the Trustee or the Holders of at least 25%
in principal amount of the Outstanding securities of that series may declare the
principal amount (or, if the Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all Securities of that series to be due and payable
immediately. However, at any time after a declaration of acceleration with
respect to Securities of any series has been made, but before a judgment or
decree based on such acceleration has been obtained, the Holders of a majority
in principal amount of Outstanding securities of that series may, under certain
circumstances, rescind and annul such acceleration (SECTION 502). For
information as to waiver of defaults, see "Modification and Waiver of the
Indenture."
The Indenture provides that, subject to the provisions of the TIA, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity (SECTION
601). Subject to such provisions for indemnification of the Trustee, the Holders
of a majority in principal amount of the Outstanding securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Securities of that series
(SECTION 510).
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (SECTION 907).
Defeasance. The Indenture provides that, if specified with respect to the
Securities of a particular series, the Company (a) shall be discharged from its
obligations in respect of the Securities of such series ("defeasance and
discharge"), or (b) may cease to comply with the restrictive covenants
("covenant defeasance") in Article Seven (Consolidation, Merger or Sale),
Section 905 (Limitations on Liens) and Section 908 (Limitation on Indebtedness
of Smith Barney (Delaware) Inc. (formerly Smith Barney Inc.)), and any such
omission shall not be an Event of Default with respect to the Securities of such
series, in each case at any time prior to the Stated Maturity or redemption
thereof, when the Company has irrevocably deposited with the Trustee, in trust,
(i) sufficient funds in the currency or currency unit in which the Securities
are denominated to pay the principal of (and premium, if any), and interest to
Stated Maturity (or redemption) on, the Securities of such series, or (ii) such
amount of direct obligations of, or obligations the principal of and interest on
which are fully guaranteed by, the government which issued the currency in which
the Securities are denominated, and which are not subject to prepayment,
redemption or call, as will, together with the predetermined and certain income
to accrue thereon without consideration of any reinvestment thereof, be
sufficient to pay when due the principal of (and premium, if any), and interest
to Stated Maturity (or redemption) on, the Securities of such series. Such
defeasance and discharge and covenant defeasance are conditioned upon the
Company's delivery of an opinion of counsel that the Holders of the Securities
of such series will have no federal income tax consequences as a result of such
deposit, and will be taxed in the same manner as if no defeasance and discharge
or covenant defeasance, as the case may be, had occurred. Upon such defeasance
and discharge, the Holders of the Securities of such series shall no longer be
entitled to the benefits of the Indenture, except for the purposes of
registration of transfer and exchange of the Securities of such series and
replacement of lost, stolen or mutilated Securities and shall look only to such
deposited funds or obligations for payment (SECTION 403).
Under current Federal income tax law, there is a substantial risk that the
defeasance and discharge contemplated in the preceding paragraph could be
treated as a taxable exchange of the Outstanding Securities for an interest in
the trust. As a consequence, each holder of the Outstanding Securities would
recognize gain or loss equal to the difference between the value of the holder's
interest in the trust and the holder's tax basis for the securities deemed
exchanged. Thereafter, each holder would be required to include in income his
share of any income, gain and loss recognized by the trust. Although a holder
could be subject to Federal income tax
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on the deemed exchange of the defeased Outstanding Securities for an interest in
the trust, such holder would not receive any cash until the maturity of such
Outstanding Securities. Prospective investors are urged to consult their own tax
advisors as to the specific consequences of a defeasance and discharge,
including the applicability and effect of tax laws other than the Federal income
tax law.
Concerning the Trustee. Citibank, N.A. is the Trustee under the Indenture.
The Company has and may from time to time in the future have banking
relationships with the Trustee in the ordinary course of business.
TERMS OF THE OUTSTANDING SECURITIES
5 5/8% NOTES DUE NOVEMBER 15, 1998. The Notes are limited to $150,000,000
in aggregate principal amount, will mature on November 15, 1998, and bear
interest at the rate of 5 5/8% per annum. Such interest is payable semiannually
on May 15 and November 15 of each year, commencing May 15, 1994, to the persons
in whose names the Notes are registered at the close of business on the April 30
and October 31, respectively, preceding the payment date.
5 1/2% NOTES DUE JANUARY 15, 1999. The Notes are limited to $200,000,000
in aggregate principal amount, will mature on January 15, 1999, and bear
interest at the rate of 5 1/2% per annum. Such interest is payable semiannually
on January 15 and July 15 of each year, commencing July 15, 1994, to the persons
in whose names the Notes are registered at the close of business on the December
31 and June 30, respectively, preceding the payment date.
7 7/8% NOTES DUE OCTOBER 1, 1999. The Notes are limited to $150,000,000 in
aggregate principal amount, will mature on October 1, 1999, and bear interest at
the rate of 7 7/8% per annum. Such interest is payable semiannually on April 1
and October 1 of each year, commencing April 1, 1995, to the persons in whose
names the Notes are registered at the close of business on the March 15 and
September 15, respectively, preceding the payment date.
6 5/8% NOTES DUE JUNE 1, 2000. The Notes are limited to $148,500,000 in
aggregate principal amount, will mature on June 1, 2000, and bear interest at
the rate of 6 5/8% per annum. Such interest is payable semiannually on June 1
and December 1 of each year, commencing June 1, 1994, to the persons in whose
names the Notes are registered at the close of business on the May 15 and
November 15, respectively, preceding the payment date.
7.98% NOTES DUE MARCH 1, 2000. The Notes are limited to $200,000,000 in
aggregate principal amount, will mature on March 1, 2000, and bear interest at
the rate of 7.98% per annum. Such interest is payable semiannually on March 1
and September 1 of each year, commencing September 1, 1995, to the persons in
whose names the Notes are registered at the close of business on the February 15
and August 15, respectively, preceding the payment date.
7% NOTES DUE MAY 15, 2000. The Notes are limited to $150,000,000 in
aggregate principal amount, will mature on May 15, 2000, and bear interest at
the rate of 7% per annum. Such interest is payable semiannually on May 15 and
November 15 of each year, commencing November 15, 1995, to the persons in whose
names the Notes are registered at the close of business on the April 30 and
October 31, respectively, preceding the payment date.
5 7/8% NOTES DUE FEBRUARY 1, 2001. The Notes are limited to $250,000,000
in aggregate principal amount, will mature on February 1, 2001, and bear
interest at the rate of 5 7/8% per annum. Such interest is payable semiannually
on February 1 and August 1 of each year, commencing August 1, 1996, to the
persons in whose names the Notes are registered at the close of business on the
January 15 and July 15, respectively, preceding the payment date.
S&P 500 EQUITY LINKED NOTES DUE AUGUST 13, 2001. The Notes are limited to
$40,072,410 in aggregate principal amount, will mature on August 13, 2001, and
will bear no periodic payments of interest. At Maturity, a Holder will be
entitled to receive with respect to each Security, the principal amount thereof
plus an interest payment based on the percentage increase in the S&P 500
Composite Stock Price Index over the Starting Index Value. All capitalized terms
have the meanings given them in the Prospectus Supplement relating to the Notes.
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6 1/2% NOTES DUE OCTOBER 15, 2002. The Notes are limited to $150,000,000
in aggregate principal amount, will mature on October 15, 2002, and bear
interest at the rate of 6 1/2% per annum. Such interest is payable semiannually
on April 15 and October 15 of each year, commencing April 15, 1996, to the
persons in whose names the Notes are registered at the close of business on the
March 30 and September 30, respectively, preceding the payment date.
7.50% NOTES DUE MAY 1, 2002. The Notes are limited to $150,000,000 in
aggregate principal amount, will mature on May 1, 2002, and bear interest at the
rate of 7.50% per annum. Such interest is payable semiannually on May 1 and
November 1 of each year, commencing November 1, 1995, to the persons in whose
names the Notes are registered at the close of business on the April 15 and
October 15, respectively, preceding the payment date.
6 5/8% NOTES DUE NOVEMBER 15, 2003. The Notes are limited to $200,000,000
in aggregate principal amount, will mature on November 15, 2003, and bear
interest at the rate of 6 5/8% per annum. Such interest is payable semiannually
on May 1 and November 1 of each year, commencing May 15, 1997, to the persons in
whose names the Notes are registered at the close of business on the April 15
and October 15, respectively, preceding the payment date.
6 7/8% NOTES DUE JUNE 15, 2005. The Notes are limited to $175,000,000 in
aggregate principal amount, will mature on June 15, 2005, and bear interest at
the rate of 6 7/8% per annum. Such interest is payable semiannually on June 15
and December 15 of each year, commencing December 15, 1995, to the persons in
whose names the Notes are registered at the close of business on the May 31 and
November 30, respectively, preceding the payment date.
7 1/8% NOTES DUE OCTOBER 1, 2006. The Notes are limited to $200,000,000 in
aggregate principal amount, will mature on October 1, 2006, and bear interest at
the rate of 7 1/8% per annum. Such interest is payable semiannually on April 1
and October 1 of each year, commencing April 1, 1997, to the persons in whose
names the Notes are registered at the close of business on the March 31 and
September 30, respectively, preceding the payment date.
S&P 500 EQUITY LINKED NOTES DUE MARCH 11, 2002. The Notes are limited to
$65,987,535 in aggregate principal amount, will mature on March 11, 2002, and
will bear no periodic payments of interest. At Maturity, a Holder will be
entitled to receive with respect to each Security, the principal amount thereof
plus an interest payment based on the percentage increase in the S&P 500
Composite Stock Price Index over the Starting Index Value. All capitalized terms
have the meanings given them in the Prospectus Supplement relating to the Notes.
7% NOTES DUE MARCH 15, 2004. The Notes are limited to $250,000,000 in
aggregate principal amount, will mature on March 15, 2004, and bear interest at
the rate of 7% per annum. Such interest is payable semiannually on March 15 and
September 15 of each year, commencing September 15, 1997, to the persons in
whose names the Notes are registered at the close of business on the February 28
and August 31, respectively, preceding the payment date.
7 3/8% NOTES DUE MAY 15, 2007. The Notes are limited to $200,000,000 in
aggregate principal amount, will mature on May 15, 2007, and bear interest at
the rate of 7 3/8% per annum. Such interest is payable semiannually on May 15
and November 15 of each year, commencing November 15, 1997, to the persons in
whose names the Notes are registered at the close of business on the April 30
and October 31, respectively, preceding the payment date.
6 5/8% NOTES DUE JULY 1, 2002. The Notes are limited to $250,000,000 in
aggregate principal amount, will mature on July 1, 2002, and bear interest at
the rate of 6 5/8% per annum. Such interest is payable semiannually on January 1
and July 1 of each year, commencing January 1, 1998, to the persons in whose
names the Notes are registered at the close of business on the December 31 and
August 31, respectively, preceding the payment date.
FLOATING RATE MEDIUM-TERM NOTES DUE SEPTEMBER 10, 2002. The Notes are
limited to $25,000,000 in aggregate principal amount, will mature on September
10, 2002, and bear interest at the rate of 15 basis points over LIBOR. Such
interest is payable on the third Wednesday of each March, June, September and
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December, commencing December 17, 1997, to the persons in whose names the Notes
are registered at the close of business on 15th day preceding the payment date.
S&P 500 EQUITY LINKED NOTES DUE OCTOBER 3, 2003. The Notes are limited to
$62,318,445 in aggregate principal amount, will mature on October 3, 2003, and
will bear no periodic payments of interest. At Maturity, a Holder will be
entitled to receive with respect to each Security, the principal amount thereof
plus an interest payment based on the percentage increase in the S&P 500
Composite Stock Price Index over the Starting Index Value. All capitalized terms
have the meanings given them in the Prospectus Supplement relating to the Notes.
6 3/8% NOTES DUE OCTOBER 1, 2004. The Notes are limited to $200,000,000 in
aggregate principal amount, will mature on October 1, 2004, and bear interest at
the rate of 6 3/8% per annum. Such interest is payable semiannually on April 1
and October 1 of each year, commencing April 1, 1998, to the persons in whose
names the Notes are registered at the close of business on the March 31 and
September 30, respectively, preceding the payment date.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Outstanding Securities offered hereby. All offers and sales of Outstanding
Securities pursuant to this Prospectus will be for the account of the respective
SSBH Subsidiary in connection with market-making transactions.
MARKET-MAKING ACTIVITIES
This Prospectus may be used by any SSBH Subsidiary in connection with
offers and sales of the Outstanding Securities in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale. Any
SSBH Subsidiary may act as principal or agent in such transactions. The SSBH
Subsidiaries have no obligation to make a market in any of the Outstanding
Securities and may discontinue their market-making activities at any time
without notice, at their sole discretion.
Each SSBH Subsidiary is a member of the National Association of Securities
Dealers, Inc. (the "NASD") and an affiliate of the Company and may participate
in distributions of the Outstanding Securities. Accordingly, the offerings of
Outstanding Securities will conform with the requirements of Rule 2720 of the
Conduct Rules of the NASD regarding a NASD member firm's underwriting of
securities of an affiliate.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of the Outstanding
Securities on behalf of such Plan should determine whether such purchase is
permitted under the governing Plan documents and is prudent and appropriate for
the Plan in view of its overall investment policy and the composition and
diversification of its portfolio. Other provisions of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ("parties in interest" within the meaning of
ERISA or "disqualified persons" within the meaning of Section 4975 of the Code).
Thus, a Plan fiduciary considering the purchase of the Outstanding Securities
should consider whether such a purchase might constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code.
The Company, directly or through its affiliates, may be considered a "party
in interest" or a "disqualified person" with respect to many Plans that are
subject to ERISA. The purchase of Outstanding Securities by a Plan that is
subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code (including individual
retirement accounts and other plans described in Section 4975(e)(1) of the Code)
and with respect to which the Company is a party in interest or a disqualified
person may constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code, unless such Outstanding Securities are acquired
pursuant to and in accordance with an applicable
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exemption, such as Prohibited Transaction Class Exemption ("PTCE") 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts, or PTCE 95-60
(an exemption for certain transactions involving insurance company general
accounts). ANY PENSION OR OTHER EMPLOYEE BENEFIT PLAN PROPOSING TO ACQUIRE ANY
OUTSTANDING SECURITIES SHOULD CONSULT WITH ITS COUNSEL.
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, 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 schedules of Travelers Group as
of December 31, 1996 and 1995, and for each of the years in the three-year
period ended December 31, 1996, included in the Company's Current Report on Form
8-K dated September 29, 1997, as amended by the Current Report on Form 8-K/A
dated October 28, 1997, have been audited by KPMG Peat Marwick LLP, 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 consolidated financial statements and schedules 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,
as amended by the Current Report on Form 8-K/A dated October 28, 1997, have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report therein, included thereon 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.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Commission Registration Fee.................................... $3,628,698.03
Accounting Fees................................................ *
Trustees' Fees and Expenses.................................... *
Blue Sky Fees and Expenses..................................... *
Printing and Engraving Fees.................................... *
Rating Agency Fees............................................. *
NASD Fee....................................................... $ 30,500
Legal Fees and Expenses........................................ *
Miscellaneous.................................................. *
----------
Total................................................ $ *
==========
</TABLE>
- ---------------
* To be specified in an amendment to this Registration Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware (the "DGCL") empowers a corporation to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful on the merits or otherwise in the
defense of any action, suit or proceeding referred to in subsections (a) and (b)
of Section 145, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that indemnification provided for by Section
145 shall, unless otherwise provided when authorized and ratified, continue as
to such person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of such person's heirs, executors and administrators;
and empowers the corporation to purchase and maintain insurance on behalf of a
director or officer of the
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corporation against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit. Article Fourteenth of
Salomon Inc's Certificate of Incorporation provides for indemnification of
directors and officers of Salomon Inc against certain liabilities incurred as a
result of their duties as such and Article Sixteenth of Salomon Inc's
Certificate of Incorporation provides for the elimination of the monetary
liability of directors for certain actions as such. Salomon Inc's Certificate of
Incorporation, as amended, is filed as Exhibit 4(a) to the Registration
Statement on Form S-3 (No. 2-84733) filed June 29, 1983, Exhibit 3 to the
Quarterly Report on Form 10-Q for the quarter ended June 30, 1986, Exhibit 3 to
the Quarterly Report on Form 10-Q for the quarter ended June 30, 1987, Exhibit 4
to Quarterly Report on Form 10-Q for the quarter ended September 30, 1987,
Exhibit A to Exhibit 1 to Registration Statement on Form 8-A filed February 11,
1988, Exhibit 3 to Current Report on Form 8-K dated June 13, 1991, Exhibit 4(a)
to Current Report on Form 8-K dated February 22, 1993, and Exhibit 4(a) to
Current Report on Form 8-K dated February 12, 1996.
Salomon Inc maintains insurance policies covering liabilities of directors
and officers to the extent not covered by indemnification from Salomon Inc,
subject to the conditions and exclusions of the policies, deductible provisions,
a maximum amount of coverage of $35 million and disputes with insurers about
availability of coverage.
The Declaration of each such SSBH Trust provides that no Institutional
Trustee or any of its affiliates, Delaware Trustee or any of its affiliates, or
officer, director, shareholder, member, partner, employee, representative
custodian, nominee or agent of the Institutional Trustee or the Delaware Trustee
(each a "Fiduciary Indemnified Person"), and no Regular Trustee, affiliate of
any Regular Trustee, or any officer, director, shareholder, member, partner,
employee, representative or agent of any regular Trustee, or any employee or
agent of such SSBH Trust or its affiliates (each a "Company Indemnified Person")
shall be liable, responsible or accountable in damages or otherwise to such SSBH
Trust, any Affiliate of such SSBH Trust or any holder of securities issued by
such SSBH Trust, or to any officer, director, shareholder, partner, member,
representative, employee or agent of such SSBH Trust or its Affiliates for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Fiduciary Indemnified Person or Company Indemnified Person in
good faith on behalf of such SSBH Trust and in a manner such Fiduciary
Indemnified Person or Company Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Fiduciary Indemnified Person
or Company Indemnified Person by such Declaration or by law, except that a
Fiduciary Indemnified Person or Company Indemnified Person shall be liable for
any loss, damage, or claim incurred by reason of such Fiduciary Indemnified
Person's or Company Indemnified Person's gross negligence (or in the case of a
Fiduciary Indemnified Person, negligence) or willful misconduct with respect to
such acts or omissions. The Declaration of each SSBH Trust also provides that,
to the full extent permitted by law, the Company shall indemnify any Company
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in right
of such SSBH Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the SSBH Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Declaration of each
SSBH Trust also provides that to the full extent permitted by law, the Company
shall indemnify any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened,
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pending or completed action or suit by or in right of such SSBH Trust to procure
a judgment in its favor by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the SSBH Trust and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such Company Indemnified Person shall have been adjudged to be liable to
the SSBH Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper. The Declaration of each SSBH Trust further provides that
expenses (including attorneys' fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in the immediately preceding two sentences shall be paid
by the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Company as authorized in the
Declaration. The directors and officers of the Company and the Regular Trustee
are covered by insurance policies indemnifying them against certain liabilities,
including certain liabilities arising under the Securities Act, which might be
incurred by them in such capacities and against which they cannot be indemnified
by the Company or the SSBH Trusts. Any agents, dealers or underwriters who
execute any of the agreements filed as Exhibit 1(e) to this Registration
Statement will agree to indemnify the Company's directors and their officers and
the SSBH Trustees who signed the Registration Statement against certain
liabilities that may arise under the Securities Act with respect to information
furnished to the Company or any of the SSBH Trusts by or on behalf of such
indemnifying party.
For the undertaking with respect to indemnification, see Item 17 herein.
See the Form of proposed Underwriting Agreement, the Form of Global Selling
Agency Agreement and the Form of Continuous Underwriting Agreement filed or to
be filed as Exhibit 1(a), (b), (c), (d), (e) and (f) for certain indemnification
provisions.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C> <C>
1(a) -- Proposed Form of Underwriting Agreement for Debt Securities to be distributed in
the United States.* A form of Underwriting Agreement relating to any other
offering of Securities (and not filed as an Exhibit hereto) will be filed as an
Exhibit to a Current Report on Form 8-K and incorporated herein by reference.
1(b) -- Form of Global Selling Agency Agreement.*
1(c) -- Form of Continuous Underwriting Agreement between Salomon Inc and Salomon
Brothers Inc relating to the Notes, Series J.*
1(d) -- Form of Underwriting Agreement for Index Warrants (incorporated by reference to
Exhibit 1(a) to Registration Statement 33-56481).
1(e) -- Form of Underwriting Agreement for Preferred Securities (incorporated by
reference to Exhibit 1 to Registration Statement 33-48199).
1(f) -- Form of Underwriting Agreement for Preferred Stock will be filed as an exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
4(a) -- Certificate of Incorporation of the Company, as amended (incorporated by
reference to Exhibits 3 to Quarterly Reports on Form 10-Q for the quarters ended
June 30, 1987 and June 30, 1986, Exhibit 4(a) to Registration Statement Number
2-84733 on Form S-3 filed June 30, 1983, Exhibit 4 to Quarterly Report on Form
10-Q for the quarter ended September 30, 1987, Exhibit A to Exhibit 1 to
Registration Statement on Form 8-A filed February 11, 1988, Exhibit 3 to Current
Report on Form 8-K dated June 13, 1991 Exhibit 4(a) to Current Report on Form 8-K
dated February 22, 1993 and Exhibit 4(a) to Current Report on Form 8-K dated
February 12, 1996).
4(b) -- By-laws of the Company, as amended (incorporated by reference to Exhibit 3(b) to
the Annual Report on Form 10-K for the year ended December 31, 1994).
</TABLE>
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<TABLE>
<S> <C> <C>
4(c) -- Senior Debt Indenture, dated as of December 1, 1988, between Salomon Inc and
Citibank, N.A., as Trustee (incorporated by reference to Exhibit 8 to the
Company's Current Report on Form 8-K dated December 29, 1988).
4(d) -- First Supplemental Indenture dated as of September 7, 1990 to Senior Debt
Indenture dated as of December 1, 1988 between Salomon Inc and Citibank, N.A.
(incorporated by reference to Exhibit 4(b) to Registration Statement No.
33-39502).
4(f) -- Second Supplemental Indenture dated June 12, 1991 to Senior Debt Indenture dated
as of December 1, 1988 between Salomon Inc and Citibank, N.A. (incorporated by
reference to Exhibit 4(c) to Registration Statement No. 33-41209).
4(e) -- Third Supplemental Indenture dated as of July 1, 1992 to Senior Debt Indenture,
dated as of December 1, 1988 between Salomon Inc and Citibank, N.A. (incorporated
by reference to Exhibit 4(d) to Registration Statement No. 33-49136).
4(f) -- Fourth Supplemental Indenture, dated as of October 29, 1992, between Salomon Inc
and Citibank, N.A. (incorporated by reference to Exhibit 4(e) to Registration
Statement No. 33-57922).
4(g) -- Fifth Supplemental Indenture dated as of December 14, 1993, between Salomon Inc
and Citibank, N.A. (incorporated by reference to Exhibit 4(f) to Registration
Statement No. 33-51269).
4(h) -- Sixth Supplemental Indenture dated as of December 29, 1994 between Salomon Inc
and Citibank, N.A. (incorporated by reference to Exhibit 4(j) to Registration
Statement No. 333-01807).
4(i) -- Seventh Supplemental Indenture dated as of February 1, 1996 between Salomon Inc
and Citibank, N.A. (incorporated by reference to Exhibit 4(k) to Registration
Statement No. 333-01807).
4(j) -- Eighth Supplemental Indenture dated as of May 8, 1996 between Salomon Inc. and
Citibank, N.A. (incorporated by reference to Exhibit 4 to the Company's Current
Report on Form 8-K dated April 29, 1996).
4(k) -- Ninth Supplemental Indenture dated as of November 22, 1996 between Salomon Inc.
and Citibank, N.A. (incorporated by reference to Exhibit 4 to the Company's
Current Report on Form 8-K dated November 20, 1996).
4(l) -- Subordinated Debt Indenture, dated as of December 1, 1988, between Salomon Inc
and Bankers Trust Company, as Trustee (incorporated by reference from Exhibit 7
to the Company's Current Report on Form 8-K dated August 2, 1989).
4(m) -- First Supplemental Indenture dated as of September 7, 1990 to Subordinated Debt
Indenture dated as of December 1, 1988 between Salomon Inc and Bankers Trust
Company (incorporated by reference from Exhibit 4(b) to Registration Statement
No. 33-39502).
4(n) -- Second Supplemental Indenture dated as of December 14, 1993, between Salomon Inc
and Bankers Trust Company. (incorporated by reference to Exhibit 4(n) to
Registration Statement No. 333-01807).
4(o) -- Senior Debt Indenture, dated as of October 27, 1993, between Salomon Inc and The
Bank of New York, as Trustee (incorporated by reference to Exhibit 3 to the
Company's Current Report on Form 8-K dated October 27, 1993).
4(p) -- Senior Debt Indenture, dated as of January 18, 1994, between Salomon Inc and
Chemical Bank, as Trustee (incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K dated January 18, 1994).
4(q) -- Forms of Medium-Term Registered Notes, Series H and Series I.*
4(r) -- Forms of Medium-Term Bearer Notes, Series H and Series I.*
4(s) -- Forms of Medium-Term Temporary Global Notes, Series H and Series I.*
4(w) -- Forms of Medium-Term Permanent Global Notes, Series H and Series I.*
4(x) -- Forms of Notes, Series J.*
4(t) -- Form of proposed Index Warrant Agreement for Index Warrants, with form of
proposed Index Warrant Certificate attached as Exhibit A thereto, for Index
Warrants in registered form (incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-56481).
4(u) -- Certificate of Trust of SSBH Capital I, as amended.
4(v) -- Certificate of Trust of SSBH Capital II, as amended.
4(w) -- Certificate of Trust of SSBH Capital III, as amended.
</TABLE>
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<TABLE>
<S> <C> <C>
4(x) -- Certificate of Trust of SSBH Capital IV.
4(y) -- Form of Amended and Restated Declaration of Trust for SSBH Capital I.
4(z) -- Form of Amended and Restated Declaration of Trust for SSBH Capital II.
4(aa) -- Form of Amended and Restated Declaration of Trust for SSBH Capital III.
4(bb) -- Form of Amended and Restated Declaration of Trust for SSBH Capital IV.
4(cc) -- Form of Indenture between the Company and The Chase Manhattan Bank, as Trustee.
4(dd) -- Form of Preferred Security (included in Exhibit 4(cc)).
4(ee) -- Form of Common Security (included in Exhibit 4(cc)).
4(ff) -- Form of Guarantee with respect to the Preferred Securities of SSBH Capital I.
4(gg) -- Form of Guarantee with respect to the Preferred Securities of SSBH Capital II.
4(hh) -- Form of Guarantee with respect to the Preferred Securities of SSBH Capital III.
4(ii) -- Form of Guarantee with respect to the Preferred Securities of SSBH Capital IV.
4(jj) -- Form of Junior Subordinated Debt Securities (included in Exhibit 4(cc).
4(kk) -- Form of Certificate for Preferred Stock will be filed as an exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
4(ll) -- Form of Deposit Agreement will be filed as an exhibit to a Current Report on Form
8-K and incorporated herein by reference.
4(mm) -- Form of Depositary Receipt will be filed as an exhibit to a Current Report on
Form 8-K and incorporated herein by reference.
5(a) -- Opinion of Robert H. Mundheim, Esq.*
5(b) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to the Trust
Preferred Securities.*
8(a) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to the Trust
Preferred Securities.*
12(a) -- Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends of Salomon Smith Barney Holdings Inc.*
23(a) -- Consent of Arthur Andersen LLP., independent public accountants.
23(b) -- Consent of Coopers & Lybrand L.L.P., independent certified public accountants.
23(c) -- Consent of KPMG Peat Marwick LLP independent certified public accountants.
23(d) -- Consent of Cleary, Gottlieb, Steen & Hamilton.*
23(e) -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibits 5(b)
and 8(a)).*
23(f) -- Consent of Robert H. Mundheim, Esq. (included in Exhibit 5(a)).*
24(a) -- Powers of Attorney.+
25(a) -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act
of 1939 of The Bank of New York under the Senior Debt Indenture (incorporated by
reference to Exhibit 25(b) to Registration Statement 333-01807).
25(b) -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act
of 1939 of The Chase Manhattan Bank under the Senior Debt Indenture.
25(c) -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act
of 1939 of Citibank, N.A. under the Senior Debt Indenture (incorporated by
reference to Exhibit 25(d) to Registration Statement 333-01807).
25(d) -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act
of 1939 of Bankers Trust Company under the Subordinated Debt Indenture
(incorporated by reference to Exhibit 25(g) to Registration Statement 333-01807).
25(e) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank under the Junior Subordinated Debt
Indenture.
25(f) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Declaration of Trust
of SSBH Capital I.
25(g) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Declaration of Trust
of SSBH Capital II.
25(h) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Declaration of Trust
of SSBH Capital III.
</TABLE>
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<TABLE>
<S> <C> <C>
25(i) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Trustee under the Declaration of Trust
of SSBH Capital IV.
25(j) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the Preferred
Securities Guarantee of Salomon Smith Barney Holdings Inc. for the benefit of
holders of Preferred Securities of SSBH Capital I.
25(k) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the Preferred
Securities Guarantee of Salomon Smith Barney Holdings Inc. for the benefit of
holders of Preferred Securities of SSBH Capital II.
25(l) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the Preferred
Securities Guarantee of Salomon Smith Barney Holdings Inc. for the benefit of
holders of Preferred Securities of SSBH Capital III.
25(m) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee under the Preferred
Securities Guarantee of Salomon Smith Barney Holdings Inc. for the benefit of
holders of Preferred Securities of SSBH Capital IV.
</TABLE>
- ---------------
+ Filed previously.
* To be filed by amendment.
** A Form T-1 Statement of Eligibility and Qualification of Trustees other than
those as to which Form T-1s are filed herewith may be filed as an Exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
Each of Salomon Inc, SSBH Capital I, SSBH Capital II, SSBH Capital III and
SSBH Capital IV hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by Salomon Inc pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of Salomon Inc's annual
report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934, as amended, that is incorporated by reference in this
registration statement shall
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be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of any such registrants pursuant to the provisions
described under Item 15 above, or otherwise, the registrants have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of
expenses incurred or paid by a director, officer or controlling person of
the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereby, the registrants
will, unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in such Act and will be governed by the final adjudication of
such issue.
(6) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(7) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-7
<PAGE> 224
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALOMON INC
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT OR AMENDMENT THERETO TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON THE
17TH DAY OF NOVEMBER, 1997.
SALOMON INC
By: /s/ ARNOLD S. OLSHIN
------------------------------------
Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES WITH SALOMON INC AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ---------------------------- --------------------
<C> <S> <C>
/s/ ROBERT E. DENHAM Chief Executive Officer, November 17, 1997
- ------------------------------------------ Chairman and Director
(Robert E. Denham)
/s/ JEROME H. BAILEY Chief Financial Officer and November 17, 1997
- ------------------------------------------ Principal Accounting
(Jerome H. Bailey) Officer
* Director November 17, 1997
- ------------------------------------------
(Warren E. Buffett)
* Director November 17, 1997
- ------------------------------------------
(Claire M. Fagin)
* Director November 17, 1997
- ------------------------------------------
(Gedale B. Horowitz)
* Director November 17, 1997
- ------------------------------------------
(Deryck C. Maughan)
* Director November 17, 1997
- ------------------------------------------
(David O. Maxwell)
* Director November 17, 1997
- ------------------------------------------
(Charles T. Munger)
</TABLE>
II-8
<PAGE> 225
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ ---------------------------- --------------------
<C> <S> <C>
* Director November 17, 1997
- ------------------------------------------
(Shigeru Myojin)
* Director November 17, 1997
- ------------------------------------------
(Louis A. Simpson)
* Director November 17, 1997
- ------------------------------------------
(Wesley S. Williams, Jr.)
* Director November 17, 1997
- ------------------------------------------
(A. Thomas Young)
</TABLE>
- ------------------------
* The undersigned, by signing his name hereto, does hereby sign this
registration statement or amendment thereto on behalf of each of the
above-indicated directors and officers of Salomon Inc pursuant to powers of
attorney executed on behalf of each such director and officer.
By: /s/ ARNOLD S. OLSHIN
----------------------------------
Arnold S. Olshin
Attorney-in-Fact
II-9
<PAGE> 226
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, EACH OF SSBH
CAPITAL I, SSBH CAPITAL II, SSBH CAPITAL III AND SSSBH CAPITAL IV CERTIFIES THAT
IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR
FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT
THERETO TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED,
IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON THE 17TH DAY OF NOVEMBER, 1997.
SSBH CAPITAL I
By: /s/ CHARLES W. SCHARF
------------------------------------
Charles W. Scharf, as Trustee
By: /s/ MICHAEL J. DAY
------------------------------------
Michael J. Day, as Trustee
SSBH CAPITAL II
By: /s/ CHARLES W. SCHARF
------------------------------------
Charles W. Scharf, as Trustee
By: /s/ MICHAEL J. DAY
------------------------------------
Michael J. Day, as Trustee
SSBH CAPITAL III
By: /s/ CHARLES W. SCHARF
------------------------------------
Charles W. Scharf, as Trustee
By: /s/ MICHAEL J. DAY
------------------------------------
Michael J. Day, as Trustee
SSBH CAPITAL IV
By: /s/ CHARLES W. SCHARF
------------------------------------
Charles W. Scharf, as Trustee
By: /s/ MICHAEL J. DAY
------------------------------------
Michael J. Day, as Trustee
II-10
<PAGE> 227
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ----------------------------------------------------------------------- ------------
<S> <C> <C> <C>
1(a) -- Proposed Form of Underwriting Agreement for Debt Securities to be
distributed in the United States.* A form of Underwriting Agreement
relating to any other offering of Securities (and not filed as an
Exhibit hereto) will be filed as an Exhibit to a Current Report on Form
8-K and incorporated herein by reference.
1(b) -- Form of Global Selling Agency Agreement.*
1(c) -- Form of Continuous Underwriting Agreement between Salomon Inc and
Salomon Brothers Inc relating to the Notes, Series J.*
1(d) -- Form of Underwriting Agreement for Index Warrants (incorporated by
reference to Exhibit 1(a) to Registration Statement 33-56481).
1(e) -- Form of Underwriting Agreement for Preferred Securities (incorporated
by reference to Exhibit 1 to Registration Statement 33-48199).
1(f) -- Form of Underwriting Agreement for Preferred Stock will be filed as an
exhibit to a Current Report on Form 8-K and incorporated herein by
reference.
4(a) -- Certificate of Incorporation of the Company, as amended (incorporated
by reference to Exhibits 3 to Quarterly Reports on Form 10-Q for the
quarters ended June 30, 1987 and June 30, 1986, Exhibit 4(a) to
Registration Statement Number 2-84733 on Form S-3 filed June 30, 1983,
Exhibit 4 to Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987, Exhibit A to Exhibit 1 to Registration Statement on
Form 8-A filed February 11, 1988, Exhibit 3 to Current Report on Form
8-K dated June 13, 1991 Exhibit 4(a) to Current Report on Form 8-K
dated February 22, 1993 and Exhibit 4(a) to Current Report on Form 8-K
dated February 12, 1996).
4(b) -- By-laws of the Company, as amended (incorporated by reference to
Exhibit 3(b) to the Annual Report on Form 10-K for the year ended
December 31, 1994).
4(c) -- Senior Debt Indenture, dated as of December 1, 1988, between Salomon
Inc and Citibank, N.A., as Trustee (incorporated by reference to
Exhibit 8 to the Company's Current Report on Form 8-K dated December
29, 1988).
4(d) -- First Supplemental Indenture dated as of September 7, 1990 to Senior
Debt Indenture dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference to Exhibit 4(b) to
Registration Statement No. 33-39502).
4(f) -- Second Supplemental Indenture dated June 12, 1991 to Senior Debt
Indenture dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference to Exhibit 4(c) to
Registration Statement No. 33-41209).
4(e) -- Third Supplemental Indenture dated as of July 1, 1992 to Senior Debt
Indenture, dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference to Exhibit 4(d) to
Registration Statement No. 33-49136).
4(f) -- Fourth Supplemental Indenture, dated as of October 29, 1992, between
Salomon Inc and Citibank, N.A. (incorporated by reference to Exhibit
4(e) to Registration Statement No. 33-57922).
4(g) -- Fifth Supplemental Indenture dated as of December 14, 1993, between
Salomon Inc and Citibank, N.A. (incorporated by reference to Exhibit
4(f) to Registration Statement No. 33-51269).
4(h) -- Sixth Supplemental Indenture dated as of December 29, 1994 between
Salomon Inc and Citibank, N.A. (incorporated by reference to Exhibit
4(j) to Registration Statement No. 333-01807).
4(i) -- Seventh Supplemental Indenture dated as of February 1, 1996 between
Salomon Inc and Citibank, N.A. (incorporated by reference to Exhibit
4(k) to Registration Statement No. 333-01807).
4(j) -- Eighth Supplemental Indenture dated as of May 8, 1996 between Salomon
Inc. and Citibank, N.A. (incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K dated April 29, 1996).
</TABLE>
<PAGE> 228
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ----------------------------------------------------------------------- ------------
<S> <C> <C> <C>
4(k) -- Ninth Supplemental Indenture dated as of November 22, 1996 between
Salomon Inc. and Citibank, N.A. (incorporated by reference to Exhibit 4
to the Company's Current Report on Form 8-K dated November 20, 1996).
4(l) -- Subordinated Debt Indenture, dated as of December 1, 1988, between
Salomon Inc and Bankers Trust Company, as Trustee (incorporated by
reference from Exhibit 7 to the Company's Current Report on Form 8-K
dated August 2, 1989).
4(m) -- First Supplemental Indenture dated as of September 7, 1990 to
Subordinated Debt Indenture dated as of December 1, 1988 between
Salomon Inc and Bankers Trust Company (incorporated by reference from
Exhibit 4(b) to Registration Statement No. 33-39502).
4(n) -- Second Supplemental Indenture dated as of December 14, 1993, between
Salomon Inc and Bankers Trust Company. (incorporated by reference to
Exhibit 4(n) to Registration Statement No. 333-01807).
4(o) -- Senior Debt Indenture, dated as of October 27, 1993, between Salomon
Inc and The Bank of New York, as Trustee (incorporated by reference to
Exhibit 3 to the Company's Current Report on Form 8-K dated October 27,
1993).
4(p) -- Senior Debt Indenture, dated as of January 18, 1994, between Salomon
Inc and Chemical Bank, as Trustee (incorporated by reference to Exhibit
4 to the Company's Current Report on Form 8-K dated January 18, 1994).
4(q) -- Forms of Medium-Term Registered Notes, Series H and Series I.*
4(r) -- Forms of Medium-Term Bearer Notes, Series H and Series I.*
4(s) -- Forms of Medium-Term Temporary Global Notes, Series H and Series I.*
4(w) -- Forms of Medium-Term Permanent Global Notes, Series H and Series I.*
4(x) -- Forms of Notes, Series J.*
4(t) -- Form of proposed Index Warrant Agreement for Index Warrants, with form
of proposed Index Warrant Certificate attached as Exhibit A thereto,
for Index Warrants in registered form (incorporated by reference to
Exhibit 4(a) to Registration Statement No. 33-56481).
4(u) -- Certificate of Trust of SSBH Capital I, as amended.
4(v) -- Certificate of Trust of SSBH Capital II, as amended.
4(w) -- Certificate of Trust of SSBH Capital III, as amended.
4(x) -- Certificate of Trust of SSBH Capital IV.
4(y) -- Form of Amended and Restated Declaration of Trust for SSBH Capital I.
4(z) -- Form of Amended and Restated Declaration of Trust for SSBH Capital II.
4(aa) -- Form of Amended and Restated Declaration of Trust for SSBH Capital III.
4(bb) -- Form of Amended and Restated Declaration of Trust for SSBH Capital IV.
4(cc) -- Form of Indenture between the Company and The Chase Manhattan Bank, as
Trustee.
4(dd) -- Form of Preferred Security (included in Exhibit 4(cc)).
4(ee) -- Form of Common Security (included in Exhibit 4(cc)).
4(ff) -- Form of Guarantee with respect to the Preferred Securities of SSBH
Capital I.
4(gg) -- Form of Guarantee with respect to the Preferred Securities of SSBH
Capital II.
4(hh) -- Form of Guarantee with respect to the Preferred Securities of SSBH
Capital III.
4(ii) -- Form of Guarantee with respect to the Preferred Securities of SSBH
Capital IV.
4(jj) -- Form of Junior Subordinated Debt Securities (included in Exhibit 4(cc).
4(kk) -- Form of Certificate for Preferred Stock will be filed as an exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
4(ll) -- Form of Deposit Agreement will be filed as an exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
4(mm) -- Form of Depositary Receipt will be filed as an exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
</TABLE>
<PAGE> 229
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ----------------------------------------------------------------------- ------------
<S> <C> <C> <C>
5(a) -- Opinion of Robert H. Mundheim, Esq.*
5(b) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to the
Trust Preferred Securities.*
8(a) -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to the
Trust Preferred Securities.*
12(a) -- Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of Salomon Smith Barney Holdings Inc.*
23(a) -- Consent of Arthur Andersen LLP., independent public accountants.
23(b) -- Consent of Coopers & Lybrand L.L.P., independent certified public
accountants.
23(c) -- Consent of KPMG Peat Marwick LLP independent certified public
accountants.
23(d) -- Consent of Cleary, Gottlieb, Steen & Hamilton.*
23(e) -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibits 5(b) and 8(a)).*
23(f) -- Consent of Robert H. Mundheim, Esq. (included in Exhibit 5(a)).*
24(a) -- Powers of Attorney.+
25(a) -- Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of The Bank of New York under the Senior Debt
Indenture (incorporated by reference to Exhibit 25(b) to Registration
Statement 333-01807).
25(b) -- Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank under the Senior Debt
Indenture.
25(c) -- Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Citibank, N.A. under the Senior Debt Indenture
(incorporated by reference to Exhibit 25(d) to Registration Statement
333-01807).
25(d) -- Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of Bankers Trust Company under the Subordinated
Debt Indenture (incorporated by reference to Exhibit 25(g) to
Registration Statement 333-01807).
25(e) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank under the Junior
Subordinated Debt Indenture.
25(f) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank, as Trustee under the
Declaration of Trust of SSBH Capital I.
25(g) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank, as Trustee under the
Declaration of Trust of SSBH Capital II.
25(h) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank, as Trustee under the
Declaration of Trust of SSBH Capital III.
25(i) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank, as Trustee under the
Declaration of Trust of SSBH Capital IV.
25(j) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee
under the Preferred Securities Guarantee of Salomon Smith Barney
Holdings Inc. for the benefit of holders of Preferred Securities of
SSBH Capital I.
25(k) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee
under the Preferred Securities Guarantee of Salomon Smith Barney
Holdings Inc. for the benefit of holders of Preferred Securities of
SSBH Capital II.
25(l) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee
under the Preferred Securities Guarantee of Salomon Smith Barney
Holdings Inc. for the benefit of holders of Preferred Securities of
SSBH Capital III.
</TABLE>
<PAGE> 230
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ----------------------------------------------------------------------- ------------
<S> <C> <C> <C>
25(m) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Chase Manhattan Bank, as Guarantee Trustee
under the Preferred Securities Guarantee of Salomon Smith Barney
Holdings Inc. for the benefit of holders of Preferred Securities of
SSBH Capital IV.
</TABLE>
- ---------------
+ Filed previously.
* To be filed by amendment.
** A Form T-1 Statement of Eligibility and Qualification of Trustees other than
those as to which Form T-1s are filed herewith may be filed as an Exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
<PAGE> 1
EXHIBIT 4(u)
CERTIFICATE OF AMENDMENT
OF
SBH CAPITAL I
1. The name of the Trust is SBH Capital I.
2. Pursuant to this Certificate of Amendment, the name of the Business
Trust will be changed to SSBH Capital I. To effect this change, Article 1. of
the Certificate of Trust is hereby amended to read as follows:
1. The name of the trust being formed hereby ("the Trust") is
SSBH Capital I.
IN WITNESS WHEREOF, this Certificate of Amendment has been duly
executed this 24th day of October, 1997.
/s/ Charles W. Scharf
----------------------------------------
Name: Charles W. Scharf, as
Regular Trustee
/s/ Michael J. Day
----------------------------------------
Name: Michael J. Day, as
Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Trustee
/s/ John J. Cashin
----------------------------------------
Name: John J. Cashin
Title: Vice President
<PAGE> 2
CERTIFICATE OF TRUST
The undersigned, the trustees of SBH Capital I, desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 Del. C. ss. 3810,
hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "SBH Capital I."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is as
follows:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
3. This Certificate of Trust shall be effective as of the date of
filing.
Dated: December 19, 1996
/s/ Charles W. Scharf
--------------------------------------------
Name: Charles W. Scharf, as Regular Trustee
/s/ Michael J. Day
--------------------------------------------
Name: Michael J. Day, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Trustee
By: /s/ John J. Cashin
-----------------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
<PAGE> 1
EXHIBIT 4(v)
CERTIFICATE OF AMENDMENT
OF
SBH CAPITAL II
1. The name of the Trust is SBH Capital II.
2. Pursuant to this Certificate of Amendment, the name of the Business
Trust will be changed to SSBH Capital II. To effect this change, Article 1. of
the Certificate of Trust is hereby amended to read as follows:
1. The name of the business trust being formed hereby (the
"Trust") is SSBH Capital II.
IN WITNESS WHEREOF, this Certificate of Amendment has been duly
executed this 24th day of October, 1997.
/s/ Charles W. Scharf
------------------------------------
Name: Charles W. Scharf, as
Regular Trustee
/s/ Michael J. Day
------------------------------------
Name: Michael J. Day, as
Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Trustee
/s/ John J. Cashin
------------------------------------
Name: John J. Cashin
Title: Vice President
<PAGE> 2
CERTIFICATE OF TRUST
The undersigned, the trustees of SBH Capital II, desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 Del. C. ss. 3810,
hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "SBH Capital II."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is as
follows:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
3. This Certificate of Trust shall be effective as of the date of
filing.
Dated: December 19, 1996
/s/ Charles W. Scharf
--------------------------------------------
Name: Charles W. Scharf, as Regular Trustee
/s/ Michael J. Day
--------------------------------------------
Name: Michael J. Day, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Trustee
By: /s/ John J. Cashin
-----------------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
<PAGE> 1
EXHIBIT 4(w)
CERTIFICATE OF AMENDMENT
OF
SBH CAPITAL III
1. The name of the Trust is SBH Capital III.
2. Pursuant to this Certificate of Amendment, the name of the Business
Trust will be changed to SSBH Capital III. To effect this change, Article 1.
of the Certificate of Trust is hereby amended to read as follows:
1. The name of the business trust being formed hereby ("the
Trust") is SSBH Capital III.
IN WITNESS WHEREOF, this Certificate of Amendment has been duly
executed this 24th day of October, 1997.
/s/ Charles W. Scharf
------------------------------------
Name: Charles W. Scharf, as
Regular Trustee
/s/ Michael J. Day
------------------------------------
Name: Michael J. Day, as
Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Trustee
/s/ John J. Cashin
------------------------------------
Name: John J. Cashin
Title: Vice President
<PAGE> 2
CERTIFICATE OF TRUST
The undersigned, the trustees of SBH Capital III, desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 Del. C. ss. 3810,
hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust")
is "SBH Capital III."
2. The name and business address of the trustee of the Trust which
has its principal place of business in the State of Delaware is as
follows:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
3. This Certificate of Trust shall be effective as of the date of
filing.
Dated: December 19, 1996
/s/ Charles W. Scharf
--------------------------------------------
Name: Charles W. Scharf, as Regular Trustee
/s/ Michael J. Day
--------------------------------------------
Name: Michael J. Day, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Trustee
By: /s/ John J. Cashin
-----------------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
<PAGE> 1
EXHIBIT 4(x)
CERTIFICATE OF TRUST
The undersigned, the trustees of SSBH Capital IV, desiring to
form a business trust pursuant to Delaware Business Trust Act, 12 Del. C.
Section 3810, hereby certify as follows:
(a) The name of the business trust being formed hereby (the
"Trust") is "SSBH Capital IV."
(b) The name and business address of the trustee of the Trust
which has its principal place of business in the State of Delaware is as
follows:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
(c) This Certificate of Trust shall be effective as of the
date of filing.
Dated: October 24, 1997
/s/ Charles W. Scharf
------------------------------------
Name: Charles W. Scharf, as
Regular Trustee
/s/ Michael J. Day
------------------------------------
Name: Michael J. Day, as
Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Trustee
/s/ John J. Cashin
------------------------------------
Name: John J. Cashin
Title: Vice President
<PAGE> 1
EXHIBIT 4(y)
================================================================================
AMENDED AND RESTATED DECLARATION
OF TRUST
SSBH CAPITAL I
Dated as of _________, __, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.............................................. 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 7
SECTION 2.2 Lists of Holders of Securities........................... 8
SECTION 2.3 Reports by the Institutional Trustee..................... 8
SECTION 2.4 Periodic Reports to Institutional Trustee................ 8
SECTION 2.5 Evidence of Compliance with Conditions Precedent......... 8
SECTION 2.6 Events of Default; Waiver................................ 9
SECTION 2.7 Event of Default; Notice................................. 10
ARTICLE III
ORGANIZATION
SECTION 3.1 Name..................................................... 11
SECTION 3.2 Office................................................... 11
SECTION 3.3 Purpose.................................................. 11
SECTION 3.4 Authority................................................ 12
SECTION 3.5 Title to Property of the Trust........................... 12
SECTION 3.6 Powers and Duties of the Regular Trustees................ 12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees..... 15
SECTION 3.8 Powers and Duties of the Institutional Trustee........... 16
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee.................................................. 18
SECTION 3.10 Certain Rights of Institutional Trustee.................. 20
SECTION 3.11 Delaware Trustee......................................... 22
SECTION 3.12 Execution of Documents................................... 22
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities... 22
SECTION 3.14 Duration of Trust........................................ 22
SECTION 3.15 Mergers.................................................. 22
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.................. 24
SECTION 4.2 Responsibilities of the Sponsor.......................... 24
i
<PAGE> 3
Page
----
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees....................................... 25
SECTION 5.2 Delaware Trustee......................................... 26
SECTION 5.3 Institutional Trustee; Eligibility....................... 26
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally................................................ 27
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees.. 27
SECTION 5.6 Appointment, Removal and Resignation of Trustees......... 28
SECTION 5.7 Vacancies among Trustees................................. 29
SECTION 5.8 Effect of Vacancies...................................... 30
SECTION 5.9 Meetings................................................. 30
SECTION 5.10 Delegation of Power...................................... 30
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Busi-
ness..................................................... 31
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................ 31
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.................. 31
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust..................................... 32
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities................................... 33
SECTION 9.2 Transfer of Certificates................................. 34
SECTION 9.3 Deemed Security Holders.................................. 34
SECTION 9.4 Book Entry Interests..................................... 34
SECTION 9.5 Notices to Clearing Agency............................... 35
SECTION 9.6 Appointment of Successor Clearing Agency................. 35
ii
<PAGE> 4
Page
----
SECTION 9.7 Definitive Preferred Security Certificates............... 36
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates........ 36
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................ 37
SECTION 10.2 Exculpation.............................................. 37
SECTION 10.3 Fiduciary Duty........................................... 38
SECTION 10.4 Indemnification.......................................... 39
SECTION 10.5 Outside Businesses....................................... 41
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.............................................. 42
SECTION 11.2 Certain Accounting Matters............................... 42
SECTION 11.3 Banking.................................................. 43
SECTION 11.4 Withholding.............................................. 43
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments............................................... 44
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.................................................. 46
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.. 47
SECTION 13.2 Representations and Warranties of Delaware Trustee....... 48
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.................................................. 49
SECTION 14.2 Governing Law............................................ 50
SECTION 14.3 Intention of the Parties................................. 50
iii
<PAGE> 5
Page
----
SECTION 14.4 Headings................................................. 50
SECTION 14.5 Successors and Assigns................................... 50
SECTION 14.6 Partial Enforceability................................... 50
SECTION 14.7 Counterparts............................................. 50
ANNEX I TERMS OF SECURITIES.................................I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE........................................A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE................A2-1
EXHIBIT B SPECIMEN OF DEBENTURE...............................B-1
EXHIBIT C UNDERWRITING AGREEMENT..............................C-1
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)............................................. 5.3(a)
310(c)............................................. Inapplicable
311(c)............................................. Inapplicable
312(a)............................................. 2.2(a)
312(b)............................................. 2.2(b)
313................................................ 2.3
314(a)............................................. 2.4
314(b)............................................. Inapplicable
314(c)............................................. 2.5
314(d)............................................. Inapplicable
314(f)............................................. Inapplicable
315(a)............................................. 3.9(b)
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Annex I
316(c)............................................. 3.6(e)
- ----------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SSBH CAPITAL I
_________ __, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of __________ __, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established SSBH Capital I
(the "Trust"), a trust under the Business Trust Act (as defined herein) pursuant
to a Declaration of Trust dated as of December 19, 1996 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on December 19, 1996, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
<PAGE> 8
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
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<PAGE> 9
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means _________ __, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means SSBH in its capacity as issuer of the
Debentures under the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Institutional Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 9.4.
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<PAGE> 10
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Distribution" has the meaning set forth in Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of _________ __, 1997,
between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in Section
3.8(c).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I
hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class,
4
<PAGE> 11
who are the record owners of an aggregate liquidation amount representing more
than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement dated
as of _________ __, 1997, of the Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such
5
<PAGE> 12
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Regular Trustee" has the meaning specified in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"SSBH" means Salomon Smith Barney Holdings Inc., a Delaware
Corporation.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means SSBH or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
5.6.
"Successor Entity" has the meaning set forth in Section 3.15(b).
"Successor Institutional Trustee" has the meaning set forth in
Section 5.6.
"Successor Securities" has the meaning set forth in Section 3.15(b).
6
<PAGE> 13
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of an aggregate liquidation amount representing 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
7
<PAGE> 14
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Institutional Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall
be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Institutional
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and (ii)
at any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Institutional Trustee. The Institutional Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the capacity
as Paying Agent (if acting in such capacity) provided that the Institutional
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Institutional Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after April 15 of each year, the Institutional
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by ss. 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by ss. 313 of the Trust Indenture Act. The Institutional
Trustee shall also comply with the requirements of ss. 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such documents, reports and
information as required by ss. 314 (if any) and the compliance certificate
required by ss. 314 of the Trust Indenture Act in the form, in the manner and at
the times required by ss. 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in ss. 314(c)
8
<PAGE> 15
of the Trust Indenture Act. Any certificate or opinion required to be given by
an officer pursuant to ss. 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of holders of more than a
majority in principal amount of the Debentures (a "Super Majority")
affected thereby, only the Holders of at least the proportion in aggregate
liquidation amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding may waive such Event of Default in respect of the Preferred
Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
9
<PAGE> 16
(ii) is waivable only with the consent of a Super Majority, except
where the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided in this Section 2.6(b),
only the Holders of at least the proportion in aggregate liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding
may waive such Event of Default in respect of the Common Securities under
the Declaration;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated, and until
such 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 in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
the waiver of an Event of Default by the Holders of a Majority in liquidation
amount of the Common Securities, any such default shall cease to exist and any
Event of Default with respect to the Common Securities arising therefrom shall
be deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of (i) all defaults with
respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of
such notice (the term "defaults" for the purposes of this Section 2.7(a) being
hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein) and (ii) any notice of default received
from the Indenture Trustee with respect to the Debentures, which notice from the
Institutional Trustee to the Holders shall state that an Event of Default under
10
<PAGE> 17
the Indenture also constitutes an Event of Default with respect to the
Securities; provided that, except for a default in the payment of principal of
(or premium, if any) or interest on any of the Debentures or in the payment of
any sinking fund installment established for the Debentures, the Institutional
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 5.1(1) and 5.1(2) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have
received written notice or of which a Responsible Officer of the
Institutional Trustee charged with the administration of the Declaration
shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "SSBH Capital I," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of Securities. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Salomon
Smith Barney Holdings Inc., 388 Greenwich Street, New York, New York 10013. On
ten Business Days written notice to the Holders of Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
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<PAGE> 18
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Institutional Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Preferred Securities and no
more than one series of Common Securities, and, provided further, that
there shall be no interests in the Trust other than the Securities, and
the issuance of Securities shall be limited to a simultaneous issuance of
both Preferred Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission on behalf of the
Trust a registration statement on Form S-3 or on another appropriate
form, or a registration statement under Rule 462(b) of the
Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the
registration under the Securities Act of the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in
order to qualify
12
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or register all or part of the Preferred Securities in any State in
which the Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc., any other national
stock exchange or the Nasdaq National Market for listing upon notice
of issuance of any Preferred Securities;
(iv) execute and file with the Commission on behalf of the
Trust a registration statement on Form 8-A, prepared by the Sponsor,
including any pre-effective or post-effective amendments thereto,
relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale
of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that
the Regular Trustees shall cause legal title to the Debentures to be held
of record in the name of the Institutional Trustee for the benefit of the
Holders of the Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Institutional Trustee
before taking or refraining from taking any Ministerial Action in relation
to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of ss.316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Preferred Securities and Holders of
Common Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Institutional Trustee has the exclusive power to bring such Legal Action;
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(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Preferred Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes,
provided that such action does not adversely affect the interests of
Holders;
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(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Institutional Trustee set forth in Section
3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall not, engage in any activity other than as required
or authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Institutional Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trust-
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ee with respect to the Debentures, (B) waive any past default that is waivable
under the Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required unless the Trust shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income
tax purposes.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Institutional
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Institutional Trustee in accordance with Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Institutional Trustee Account") in the name of and under the
exclusive control of the Institutional Trustee on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in respect
of the Debentures held by the Institutional Trustee, deposit such funds
into the Institutional Trustee Account and make payments to the Holders of
the Preferred Securities and Holders of the Common Securities from the
Institutional Trustee Account in accordance with Section 6.1. Funds in the
Institutional Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Institutional Trustee Account shall
be an account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness assigned by a "nationally
recognized statistical rating organization," as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least equal to
the rating assigned to the Preferred Securities by a nationally recognized
statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
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(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of Securities upon the
occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Institutional Trustee has actual knowledge or
the Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Institutional Trustee occurs and is continuing, the Institutional Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities, this Declaration, the Business Trust Act and the Trust
Indenture Act.
(h) The Institutional Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all securities and
any such Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
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The Institutional Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee.
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Institutional Trustee
shall be determined solely by the express provisions of this
Declaration and the Institutional Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants
or obligations shall be read into this Declaration against the
Institutional Trustee; and
(B) in the absence of bad faith on the part of the
Institutional Trustee, the Institutional Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Institutional Trustee,
the Institutional Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Declaration;
(ii) the Institutional Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Institutional
Trustee, unless it
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shall be proved that the Institutional Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Institutional Trustee against such risk or
liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Institutional Trustee Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Sponsor. Money held by the Institutional Trustee need not be segregated
from other funds held by it except in relation to the Institutional
Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
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SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other
experts and the advice or opinion of such counsel and experts with respect
to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion, such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of
its employees. The Institutional Trustee shall have the right at any time
to seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Institutional Trustee security and indemnity, reasonably
satisfactory to the Institutional Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Institutional Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Institutional Trustee provided, that, nothing contained in this
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Section 3.10(a)(vi) shall be taken to relieve the Institutional Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Institutional
Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Institutional
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Institutional Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Institutional Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Institutional Trustee under the terms of
the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in or accordance with such instructions;
and
(xi) except as otherwise expressly provided by this Declaration, the
Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance
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with applicable law, to perform any such act or acts, or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Institutional Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Institutional Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for fifty-five (55) years from the Closing
Date.
SECTION 3.15 Mergers.
(a) The Trust 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 in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders
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of the Securities, the Delaware Trustee or the Institutional Trustee,
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 (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the
same as the Preferred Securities rank with respect to Distributions
and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(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 any other
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 Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders'
interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust 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 Securities (including any Successor Securities)
in any material respect (other
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than with respect to any dilution of the Holders' interest in the
new entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, without
the consent of Holders of 100% in liquidation amount of the 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 the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date, the Sponsor will purchase all of the Common
Securities issued by the Trust in an amount equal to 3% or more of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 or on another appropriate form, or a
registration statement under Rule 462(b) of the Securities Act, including
any pre-effective or post-effective amendments thereto, relating to the
registration under the Securities Act of the Preferred Securities;
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(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange, any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any pre-effective or
post-effective amendments thereto, relating to the registration of the
Preferred Securities under Section 12(b) of the Exchange Act, including
any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing
for the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities,
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, shall be an entity which has its principal place of business in
the State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
"Regular Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements.
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SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable law,
then the Institutional Trustee shall also be the Delaware Trustee and Section
3.11 shall have no application.
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee that shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published; and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7 and to the extent Rule 3a-7 requires
a trustee having certain qualifications to hold title to the "eligible
assets" of the Trust, the Institutional Trustee shall possess those
qualifications.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
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(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee and the Holders of the Common Securities (as if
such Holders were the obligor referred to in ss. 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of ss. 310(b) of the Trust
Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in
Section 5.5 hereof.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees.
(a) The initial Regular Trustees shall be:
Charles W. Scharf
Michael J. Day
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
The initial Institutional Trustee shall be:
The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
(b) Except as expressly set forth in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
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(c) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall be signed by all of the
Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Institutional Trustee under Section 5.3 (a
"Successor Institutional Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Institutional
Trustee and delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
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(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Institutional Trustee and delivered to the Trust, the
Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of
the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor
Institutional Trustee as the case may be if the Institutional Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Institutional Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
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SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or
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otherwise as the Regular Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Debentures held by the Institutional Trustee (the amount of any such payment
being a "Payment Amount"), the Institutional Trustee shall and is directed to
make a distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities"). The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.
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(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Regular Trustees of the Trust, although
at the date of the execution and delivery of the Declaration any such person was
not such a Regular Trustee. Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate, or as may
be required to comply with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to any Holder of the Common Securities or the
Sponsor; the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
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(iii) upon the entry of a decree of judicial dissolution of any
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with the terms
of the Securities and all of the Debentures endorsed thereon shall have
been distributed to the Holders of Securities in exchange for all of the
Securities;
(vi) before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in
Section 3.14;
provided, that so long as any Preferred Securities are outstanding and are not
held entirely by SSBH, the Trust may not voluntarily liquidate, dissolve,
wind-up or terminate except in connection with the occurrence of a Special
Event.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided
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that, any such transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:
(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee
would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive
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a definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall have
no obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
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SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to such Preferred
Securities; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any delay
in delivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, said instructions of the Clearing
Agency. The Definitive Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which Preferred Securities
may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless.
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then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Preferred
Securities Guarantee and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss,
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damage or claim incurred by reason of such Indemnified Person's gross negligence
or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
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(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settle-
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ment of an action without admission of liability) in defense of any action, suit
or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a), or
in defense of any claim, issue or matter therein, he shall be indemnified, to
the full extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Regular Trustees
by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts
known to the Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal proceeding, that
such Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Preferred
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract
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between the Debenture Issuer and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or obligations
then existing.
(vii) The Debenture Issuer may purchase and maintain insurance on
behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the provisions of
this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Institutional
Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each
of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration or
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 10.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
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of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, to the extent, if any, required by the Trust
Indenture Act, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the
Trust as of the end of such Fiscal Year, and the related statements of income
or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trust-
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ees shall endeavor to deliver all such statements within 30 days after the end
of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Debentures held by the Institutional Trustee shall be made
directly to the Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Institutional
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Institutional
Trustee, the Institutional Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
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(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the right, preferences or privileges of the
Holders; and
(v) to modify, eliminate and add to any provision of the Declaration
to such extent as may be reasonably necessary to effectuate any of the
foregoing or to otherwise comply with applicable law.
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SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of
Securities representing at least 10% in liquidation amount of such class of
Securities. Such direction shall be given by delivering to the Regular Trustees
one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which
the meeting is to be called. Any Holders of Securities calling a meeting shall
specify in writing the Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those Securities specified shall
be counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of Securities. Any
action that may be taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting forth the action
so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the General
Corporation
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Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders of the Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Preferred Securities are then listed or trading,
otherwise provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders of Securities, waiver
of any such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Institutional Trustee represents and warrants to the Trust
and the Sponsor at the time of the Successor Institutional Trustee's acceptance
of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a national banking association with
trust powers, duly organized, validly existing and in good standing under
the laws of the United States, with trust power and authority to execute
and deliver, and to carry out and perform its obligations under the terms
of, the Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Institutional Trustee. The Declaration
has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law);
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(c) the execution, delivery and performance of the Declaration by
the Institutional Trustee does not conflict with or constitute a breach of
the Articles of Organization or By-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee, of the
Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration under Delaware law constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(c) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the
Declaration.
(d) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(e) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Securities):
SSBH Capital I
c/o Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: Charles W. Scharf
Michael J. Day
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of
to the Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
(c) if given to the Institutional Trustee, at its Corporate Trust
Office to the attention of The Institutional Trust Group (or such other
address as the Institutional Trustee may give notice of to the Holders of
the Securities).
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: A. George Saks, Secretary
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(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees
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to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and effect
as though all of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
--------------------------------------------
Charles W. Scharf, as Regular Trustee
--------------------------------------------
Michael J. Day, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By:
-----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Institutional Trustee
By:
-----------------------------------------
Name:
Title:
SALOMON SMITH BARNEY HOLDINGS INC.
as Sponsor
By:
-----------------------------------------
Name:
Title:
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____% TRUST PREFERRED SECURITIES
____% TRUST COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of _________ __, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. ______________ Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of _______ MILLION DOLLARS ($___,000,000) and a liquidation amount with
respect to the assets of the Trust of $25 per preferred security, are hereby
designated for the purposes of identification only as "__% Trust Preferred
Securities" (the "Preferred Securities"). The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange on which the Preferred Securities
are listed.
(b) Common Securities. _______ Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the Trust of
__________ MILLION DOLLARS ($____________) and a liquidation amount with respect
to the assets of the Trust of $25 per common security, are hereby designated for
the purposes of identification only as "__% Trust Common Securities" (the
"Common Securities"). The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate
per annum of __% (the "Coupon Rate") of the stated liquidation amount of $25 per
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears beyond the first
date such Distributions are payable (or would be payable if not for any
Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate
(to the extent permitted by applicable law). The term "Distributions" as used
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution
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is payable only to the extent that payments are made in respect of the
Debentures held by the Institutional Trustee and to the extent the Institutional
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from and including _________ __, 1997, and will be payable quarterly in arrears,
on March 31, June 30, September 30, and December 31 of each year, commencing on
_________ __, 1997. When, as and if available for payment, Distributions will be
made by the Institutional Trustee, except as otherwise described below. The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period from time to time on
the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period may extend beyond
the date of maturity of the Debentures. As a consequence of the Debenture
Issuer's extension of the interest payment period, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded quarterly during any such Extension Period. In the event that
the Debenture Issuer exercises its right to extend the interest payment period,
then (a) the Debenture Issuer 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 SSBH 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 SSBH's capital stock for any
other class or series of SSBH's capital stock, or (iii) the purchase of
fractional interests in shares of SSBH's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) and (b) the Debenture Issuer 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 Debenture Issuer that rank pari passu
with or junior to the Debentures. The foregoing, however, will not apply to any
stock dividends paid by SSBH where the dividend stock is the same stock as that
on which the dividend is being paid. Prior to the termination of any such
Extension Period, the Debenture Issuer 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 quarters; provided further,
that no Extension Period may extend beyond the maturity of the Debentures.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of the
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements. The Regular
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Trustees will give notice to each Holder of any Extension Period upon their
receipt of notice thereof from the Debenture Issuer.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust at the close of
business on the relevant record dates. While the Preferred Securities remain in
book-entry only form, the relevant record dates shall be one Business Day prior
to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Preferred Securities will be made as described under the heading
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company" in the Prospectus Supplement dated _________ __, 1997,
(the "Prospectus Supplement") to the Prospectus dated _________ __, 199_
(together, the "Prospectus"), of the Trust included in the Registration
Statement on Form S-3 of the Sponsor, the Trust and certain other business
trusts. The relevant record dates for the Common Securities shall be the same
record date as for the Preferred Securities. If the Preferred Securities shall
not continue to remain in book-entry only form, the relevant record dates for
the Preferred Securities shall conform to the rules of any securities exchange
on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least 14 days but no more than 60 days
before the relevant payment dates, which payment dates shall correspond to the
interest payment dates on the Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution 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, 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.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities of creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
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Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest
in an amount equal to the accrued and unpaid Distributions on, such Securities
outstanding at such time, have been distributed on a Pro Rata basis to the
Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event as described below), the proceeds from
such repayment or payment shall be simultaneously applied to redeem Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed at a redemption price of $25 per
Security plus an amount equal to accrued and unpaid Distributions thereon at the
date of the redemption, payable in cash (the "Redemption Price"). Holders shall
be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Securities will be redeemed Pro Rata and the Preferred Securities
to be redeemed will be as described in Section 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event
(each as defined below, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, except in certain limited circumstances
in relation to a Tax Event described in this Section 4(c), dissolve the Trust
and, after satisfaction of creditors, cause Debentures held by the Institutional
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate, and
with accrued and unpaid interest equal to accrued and unpaid Distributions on,
the Securities outstanding at such time, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in the Trust on a Pro Rata
basis, within 90 days following the occurrence of such Special Event (the "90
Day Period"); 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 a nationally recognized independent tax
counsel experienced in such matters (a "No Recognition Opinion"), which opinion
may rely on published revenue rulings of the Internal Revenue Service, to the
effect that the Holders of the Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of such dissolution
and distribution of Debentures, and provided further, that, if at the
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time there is available to the Debenture Issuer or the Trust the opportunity to
eliminate, within the 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 the
Trust, the Debenture Issuer or the Holders of the Securities ("Ministerial
Action"), the Debenture Issuer or the Trust will pursue such Ministerial Action
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Debenture
Issuer 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 Debenture
Issuer would be precluded from deducting the interest on the Debentures for
United States federal income tax purposes, even after the Debentures were
distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), 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 Debenture Issuer shall have
the right, upon not less than 30 nor more than 60 days notice, to redeem the
Debentures, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed shall be redeemed by the Trust at the Redemption Price on
a Pro Rata basis; provided, however, that if at the time there is available to
the Debenture Issuer or the Trust the opportunity to eliminate, within such 90
day period, the Tax Event by taking some Ministerial Action, the Trust or the
Debenture Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Tax Event 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 the Prospectus Supplement), in
either case after the date of the Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust would be subject to United States federal
income tax with respect to interest accrued or received on the Debentures, (ii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, or (iii) interest payable to the Trust on
the Debentures would not be deductible, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act (an "Investment Company
Event Opinion") to the effect
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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 a more than an insubstantial risk that the Trust is
or will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) DTC or its nominee (or any successor
Clearing Agency or its nominee), as the record Holder of the Preferred
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
certificates representing Securities, except for certificates representing
Preferred Securities held by DTC or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) If the Debentures are distributed to Holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with
re-
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spect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name of and held of
record by DTC or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or Person on
whose behalf such nominee holds such securities) in accordance with the
procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) while the Preferred Securities are in book-entry
only form, with respect to the Preferred Securities, by 12:00 noon, New
York City time, on the redemption date, provided, that the Debenture
Issuer has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will deposit irrevocably with DTC or its nominee (or
successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and
will give DTC (or any successor Clearing Agency) irrevocable instructions
and authority to pay the Redemption Price to the Holders of the Preferred
Securities, and (B) with respect to Preferred Securities issued in
definitive form and Common Securities, provided that the Debenture Issuer
has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on the redemption
date. If a Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the close
of business on the date of such deposit, or on the redemption date, as
applicable, distributions will cease to accrue on the Securities so called
for redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that
have been so called for redemption. If any date fixed for redemption of
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 (and 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 each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any
Securities is improperly
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withheld or refused and not paid either by the Institutional Trustee or by
the Sponsor as guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accrue from the original
redemption date to the actual 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.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, DTC or its nominee (or any successor Clearing Agency or its
nominee) if the Global Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued, to the Holder thereof,
and (B) in respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Debenture Issuer
or its affiliates may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in aggregate liquidation amount of the Preferred
Securities, voting separately as a class, may 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 Debentures, to (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercise any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past 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 Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required,
provided, however, that, where a consent or action under the Indenture would
require the consent or act of each holder of each Debenture affected thereby,
such consent or action under the Indenture shall not be effective until each
Holder of Preferred Securities shall have consented to such action or provided
such consent. The Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
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 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 coun-
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sel experienced in such matters to the effect that as a result of such action,
the Trust will not fail to be classified as a grantor trust for United States
federal income tax purposes. If the Institutional Trustee fails to enforce its
rights under the Debentures, any Holder of Preferred Securities may directly
institute a legal proceeding against the Debenture Issuer to enforce the
Institutional Trustee's rights under the Debentures without first instituting a
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 Debenture Issuer to pay
interest or principal on the Debentures 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 (a "Direct Action") of the principal
of or interest on the Debentures 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 Debentures without first (i)
directing the Institutional Trustee to enforce the terms of the Debentures or
(ii) instituting a legal proceeding directly against the Debenture Issuer to
enforce the Institutional Trustee's rights under the Debentures. Except as
provided in the preceding sentence, the Holders of Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, SSBH will be subrogated to
the rights of such holder of Preferred Securities under the Declaration to the
extent of any payment made by SSBH to such holder of Preferred Securities in
such Direct Action.
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 Securities in
the Trust 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 (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 the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with this Declaration and the terms of
the Securities.
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 by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
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6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the
Event of Default with respect to the Preferred Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may 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 (i) directing
the time, method, place of conducting any proceeding for any remedy available to
the Debenture Trustee, or exercising any trust or power conferred on the
Debenture Trustee with respect to the Debentures, (ii) waiving any past default
and its consequences that is waivable under Section 5.13 of the Indenture, or
(iii) exercising any right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable, provided that, where a consent
or action under the Indenture would require the consent or act of the Holders of
greater than a majority in principal amount of Debentures affected thereby (a
"Super Majority"), the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of
the Common Securities under this paragraph unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are enti-
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tled 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 Common
Securities. Each such notice will include a statement setting forth (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 the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration 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 Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only 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 a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination on the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
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 Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of the holders of greater than a majority in aggregate principal
amount of the Debentures (a "Super Majority"), the Institutional Trustee may
only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Institutional Trustee shall not take
any action in accordance with the directions of the Holders of the Securities
under this Section 7(b) unless the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust on
account of such action.
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8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon shall
be made Pro Rata with the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed on the New York Stock Exchange, Inc.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee, including the subordination provisions therein and to the provisions
of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
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The Sponsor will provide a copy of the Declaration or the Preferred
Securities Guarantee, and the Indenture to a Holder without charge on written
request to the Sponsor at its principal place of business.
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<PAGE> 72
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
THIS PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS
PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED
SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Certificate Number Number of Preferred Securities
CUSIP NO. _____________
Certificate Evidencing Preferred Securities
of
SSBH CAPITAL I
____% Trust Preferred Securities
(Liquidation Amount $25 per Preferred Security)
SSBH CAPITAL I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that ___________ (the
"Holder") is the registered owner of ________ (____) preferred securities of the
Trust representing undivided beneficial
A1-1
<PAGE> 73
interests in the assets of the Trust designated the [___]% Trust Preferred
Securities (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of [________],
199 , as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Preferred Securities as set forth
in Annex I thereto. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Preferred Securities Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Preferred Securities Guarantee and
the Indenture to a Holder without charge upon written request to the Sponsor at
its principal place of business.
The Holder of this certificate, by accepting this certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) and (ii) agreed to the
terms of the Preferred Securities Guarantee, including that the Preferred
Securities Guarantee is (A) subordinate and junior in right of payment to all
other liabilities of SSBH, (B) pari passu with the most senior preferred or
preference stock now or hereafter issued by SSBH and with any guarantee now or
hereafter issued by SSBH with respect to preferred or preference stock of SSBH's
affiliates and (C) senior to SSBH's common stock.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
A1-2
<PAGE> 74
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of _______, ____.
-----------------------------------
Charles W. Scharf, as Trustee
-----------------------------------
Michael J. Day, as Trustee
A1-3
<PAGE> 75
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
__________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
__________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-4
<PAGE> 76
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
SSBH CAPITAL I
[ ]% Trust Common Securities
(Liquidation Amount $25 per Common Security)
SSBH CAPITAL I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Salomon Smith Barney
Holdings Inc., a Delaware corporation, (the "Holder") is the registered owner of
__________ (________) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the [ ]% Trust Common
Securities (the "Common Securities"). The Common Securities are transferable on
the books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
and satisfaction of the other conditions set forth in the Declaration (as
defined below), including, without limitation, Section 9.1 thereof. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of [ ], 199 , as the same may be
amended from time to time (the "Declaration"), including the designation of the
terms of the Common Securities as set forth in Annex I thereto. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Sponsor will provide a copy of the Declaration and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A2-1
<PAGE> 77
The Holder of this certificate, by accepting this certificate, is
deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
A2-2
<PAGE> 78
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of _________, ____.
-----------------------------------
Charles W. Scharf, as Trustee
-----------------------------------
Michael J. Day, as Trustee
A2-3
<PAGE> 79
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
___________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
___________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-4
<PAGE> 80
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 81
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4(z)
================================================================================
AMENDED AND RESTATED DECLARATION
OF TRUST
SSBH CAPITAL II
Dated as of _________, __, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.............................................. 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application......................... 7
SECTION 2.2 Lists of Holders of Securities........................... 8
SECTION 2.3 Reports by the Institutional Trustee..................... 8
SECTION 2.4 Periodic Reports to Institutional Trustee................ 8
SECTION 2.5 Evidence of Compliance with Conditions Precedent......... 8
SECTION 2.6 Events of Default; Waiver................................ 9
SECTION 2.7 Event of Default; Notice................................. 10
ARTICLE III
ORGANIZATION
SECTION 3.1 Name..................................................... 11
SECTION 3.2 Office................................................... 11
SECTION 3.3 Purpose.................................................. 11
SECTION 3.4 Authority................................................ 12
SECTION 3.5 Title to Property of the Trust........................... 12
SECTION 3.6 Powers and Duties of the Regular Trustees................ 12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees..... 15
SECTION 3.8 Powers and Duties of the Institutional Trustee........... 16
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee.................................................. 18
SECTION 3.10 Certain Rights of Institutional Trustee.................. 20
SECTION 3.11 Delaware Trustee......................................... 22
SECTION 3.12 Execution of Documents................................... 22
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities... 22
SECTION 3.14 Duration of Trust........................................ 22
SECTION 3.15 Mergers.................................................. 22
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.................. 24
SECTION 4.2 Responsibilities of the Sponsor.......................... 24
i
<PAGE> 3
Page
----
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees....................................... 25
SECTION 5.2 Delaware Trustee......................................... 26
SECTION 5.3 Institutional Trustee; Eligibility....................... 26
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally................................................ 27
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees.. 27
SECTION 5.6 Appointment, Removal and Resignation of Trustees......... 28
SECTION 5.7 Vacancies among Trustees................................. 29
SECTION 5.8 Effect of Vacancies...................................... 30
SECTION 5.9 Meetings................................................. 30
SECTION 5.10 Delegation of Power...................................... 30
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Busi-
ness..................................................... 31
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................ 31
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.................. 31
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust..................................... 32
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities................................... 33
SECTION 9.2 Transfer of Certificates................................. 34
SECTION 9.3 Deemed Security Holders.................................. 34
SECTION 9.4 Book Entry Interests..................................... 34
SECTION 9.5 Notices to Clearing Agency............................... 35
SECTION 9.6 Appointment of Successor Clearing Agency................. 35
ii
<PAGE> 4
Page
----
SECTION 9.7 Definitive Preferred Security Certificates............... 36
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates........ 36
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................ 37
SECTION 10.2 Exculpation.............................................. 37
SECTION 10.3 Fiduciary Duty........................................... 38
SECTION 10.4 Indemnification.......................................... 39
SECTION 10.5 Outside Businesses....................................... 41
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.............................................. 42
SECTION 11.2 Certain Accounting Matters............................... 42
SECTION 11.3 Banking.................................................. 43
SECTION 11.4 Withholding.............................................. 43
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments............................................... 44
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.................................................. 46
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.. 47
SECTION 13.2 Representations and Warranties of Delaware Trustee....... 48
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.................................................. 49
SECTION 14.2 Governing Law............................................ 50
SECTION 14.3 Intention of the Parties................................. 50
iii
<PAGE> 5
Page
----
SECTION 14.4 Headings................................................. 50
SECTION 14.5 Successors and Assigns................................... 50
SECTION 14.6 Partial Enforceability................................... 50
SECTION 14.7 Counterparts............................................. 50
ANNEX I TERMS OF SECURITIES..................................... I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE............................................ A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE.................... A2-1
EXHIBIT B SPECIMEN OF DEBENTURE................................... B-1
EXHIBIT C UNDERWRITING AGREEMENT.................................. C-1
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)............................................. 5.3(a)
310(c)............................................. Inapplicable
311(c)............................................. Inapplicable
312(a)............................................. 2.2(a)
312(b)............................................. 2.2(b)
313................................................ 2.3
314(a)............................................. 2.4
314(b)............................................. Inapplicable
314(c)............................................. 2.5
314(d)............................................. Inapplicable
314(f)............................................. Inapplicable
315(a)............................................. 3.9(b)
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Annex I
316(c)............................................. 3.6(e)
- ----------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SSBH CAPITAL II
_________ __, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of __________ __, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established SSBH Capital II
(the "Trust"), a trust under the Business Trust Act (as defined herein) pursuant
to a Declaration of Trust dated as of December 19, 1996 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on December 19, 1996, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
<PAGE> 8
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
2
<PAGE> 9
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means _________ __, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means SSBH in its capacity as issuer of the
Debentures under the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Institutional Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 9.4.
3
<PAGE> 10
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Distribution" has the meaning set forth in Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of _________ __, 1997,
between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in Section
3.8(c).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I
hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class,
4
<PAGE> 11
who are the record owners of an aggregate liquidation amount representing more
than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement dated
as of _________ __, 1997, of the Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such
5
<PAGE> 12
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Regular Trustee" has the meaning specified in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"SSBH" means Salomon Smith Barney Holdings Inc., a Delaware
Corporation.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means SSBH or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
5.6.
"Successor Entity" has the meaning set forth in Section 3.15(b).
"Successor Institutional Trustee" has the meaning set forth in
Section 5.6.
"Successor Securities" has the meaning set forth in Section 3.15(b).
6
<PAGE> 13
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of an aggregate liquidation amount representing 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
7
<PAGE> 14
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Institutional Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall
be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Institutional
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and (ii)
at any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Institutional Trustee. The Institutional Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the capacity
as Paying Agent (if acting in such capacity) provided that the Institutional
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Institutional Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after April 15 of each year, the Institutional
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by ss. 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by ss. 313 of the Trust Indenture Act. The Institutional
Trustee shall also comply with the requirements of ss. 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such documents, reports and
information as required by ss. 314 (if any) and the compliance certificate
required by ss. 314 of the Trust Indenture Act in the form, in the manner and at
the times required by ss. 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in ss. 314(c)
8
<PAGE> 15
of the Trust Indenture Act. Any certificate or opinion required to be given by
an officer pursuant to ss. 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of holders of more than a
majority in principal amount of the Debentures (a "Super Majority")
affected thereby, only the Holders of at least the proportion in aggregate
liquidation amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding may waive such Event of Default in respect of the Preferred
Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
9
<PAGE> 16
(ii) is waivable only with the consent of a Super Majority, except
where the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided in this Section 2.6(b),
only the Holders of at least the proportion in aggregate liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding
may waive such Event of Default in respect of the Common Securities under
the Declaration;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated, and until
such 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 in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
the waiver of an Event of Default by the Holders of a Majority in liquidation
amount of the Common Securities, any such default shall cease to exist and any
Event of Default with respect to the Common Securities arising therefrom shall
be deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of (i) all defaults with
respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of
such notice (the term "defaults" for the purposes of this Section 2.7(a) being
hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein) and (ii) any notice of default received
from the Indenture Trustee with respect to the Debentures, which notice from the
Institutional Trustee to the Holders shall state that an Event of Default under
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the Indenture also constitutes an Event of Default with respect to the
Securities; provided that, except for a default in the payment of principal of
(or premium, if any) or interest on any of the Debentures or in the payment of
any sinking fund installment established for the Debentures, the Institutional
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 5.1(1) and 5.1(2) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have
received written notice or of which a Responsible Officer of the
Institutional Trustee charged with the administration of the Declaration
shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "SSBH Capital II," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of Securities. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Salomon
Smith Barney Holdings Inc., 388 Greenwich Street, New York, New York 10013. On
ten Business Days written notice to the Holders of Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
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SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Institutional Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Preferred Securities and no
more than one series of Common Securities, and, provided further, that
there shall be no interests in the Trust other than the Securities, and
the issuance of Securities shall be limited to a simultaneous issuance of
both Preferred Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission on behalf of the
Trust a registration statement on Form S-3 or on another appropriate
form, or a registration statement under Rule 462(b) of the
Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the
registration under the Securities Act of the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in
order to qualify
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or register all or part of the Preferred Securities in any State in
which the Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc., any other national
stock exchange or the Nasdaq National Market for listing upon notice
of issuance of any Preferred Securities;
(iv) execute and file with the Commission on behalf of the
Trust a registration statement on Form 8-A, prepared by the Sponsor,
including any pre-effective or post-effective amendments thereto,
relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale
of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that
the Regular Trustees shall cause legal title to the Debentures to be held
of record in the name of the Institutional Trustee for the benefit of the
Holders of the Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Institutional Trustee
before taking or refraining from taking any Ministerial Action in relation
to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of ss.316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Preferred Securities and Holders of
Common Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Institutional Trustee has the exclusive power to bring such Legal Action;
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(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Preferred Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes,
provided that such action does not adversely affect the interests of
Holders;
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(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Institutional Trustee set forth in Section
3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall not, engage in any activity other than as required
or authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Institutional Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trust-
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ee with respect to the Debentures, (B) waive any past default that is waivable
under the Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required unless the Trust shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income
tax purposes.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Institutional
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Institutional Trustee in accordance with Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Institutional Trustee Account") in the name of and under the
exclusive control of the Institutional Trustee on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in respect
of the Debentures held by the Institutional Trustee, deposit such funds
into the Institutional Trustee Account and make payments to the Holders of
the Preferred Securities and Holders of the Common Securities from the
Institutional Trustee Account in accordance with Section 6.1. Funds in the
Institutional Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Institutional Trustee Account shall
be an account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness assigned by a "nationally
recognized statistical rating organization," as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least equal to
the rating assigned to the Preferred Securities by a nationally recognized
statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
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(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of Securities upon the
occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Institutional Trustee has actual knowledge or
the Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Institutional Trustee occurs and is continuing, the Institutional Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities, this Declaration, the Business Trust Act and the Trust
Indenture Act.
(h) The Institutional Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all securities and
any such Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
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The Institutional Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee.
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Institutional Trustee
shall be determined solely by the express provisions of this
Declaration and the Institutional Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants
or obligations shall be read into this Declaration against the
Institutional Trustee; and
(B) in the absence of bad faith on the part of the
Institutional Trustee, the Institutional Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Institutional Trustee,
the Institutional Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Declaration;
(ii) the Institutional Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Institutional
Trustee, unless it
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shall be proved that the Institutional Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Institutional Trustee against such risk or
liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Institutional Trustee Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Sponsor. Money held by the Institutional Trustee need not be segregated
from other funds held by it except in relation to the Institutional
Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
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SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other
experts and the advice or opinion of such counsel and experts with respect
to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion, such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of
its employees. The Institutional Trustee shall have the right at any time
to seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Institutional Trustee security and indemnity, reasonably
satisfactory to the Institutional Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Institutional Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Institutional Trustee provided, that, nothing contained in this
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Section 3.10(a)(vi) shall be taken to relieve the Institutional Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Institutional
Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Institutional
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Institutional Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Institutional Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Institutional Trustee under the terms of
the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in or accordance with such instructions;
and
(xi) except as otherwise expressly provided by this Declaration, the
Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance
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with applicable law, to perform any such act or acts, or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Institutional Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Institutional Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for fifty-five (55) years from the Closing
Date.
SECTION 3.15 Mergers.
(a) The Trust 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 in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders
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of the Securities, the Delaware Trustee or the Institutional Trustee,
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 (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the
same as the Preferred Securities rank with respect to Distributions
and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(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 any other
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 Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders'
interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust 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 Securities (including any Successor Securities)
in any material respect (other
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than with respect to any dilution of the Holders' interest in the
new entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, without
the consent of Holders of 100% in liquidation amount of the 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 the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date, the Sponsor will purchase all of the Common
Securities issued by the Trust in an amount equal to 3% or more of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 or on another appropriate form, or a
registration statement under Rule 462(b) of the Securities Act, including
any pre-effective or post-effective amendments thereto, relating to the
registration under the Securities Act of the Preferred Securities;
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(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange, any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any pre-effective or
post-effective amendments thereto, relating to the registration of the
Preferred Securities under Section 12(b) of the Exchange Act, including
any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing
for the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities,
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, shall be an entity which has its principal place of business in
the State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
"Regular Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements.
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SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable law,
then the Institutional Trustee shall also be the Delaware Trustee and Section
3.11 shall have no application.
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee that shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published; and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7 and to the extent Rule 3a-7 requires
a trustee having certain qualifications to hold title to the "eligible
assets" of the Trust, the Institutional Trustee shall possess those
qualifications.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
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(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee and the Holders of the Common Securities (as if
such Holders were the obligor referred to in ss. 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of ss. 310(b) of the Trust
Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in
Section 5.5 hereof.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees.
(a) The initial Regular Trustees shall be:
Charles W. Scharf
Michael J. Day
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
The initial Institutional Trustee shall be:
The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
(b) Except as expressly set forth in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
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(c) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall be signed by all of the
Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Institutional Trustee under Section 5.3 (a
"Successor Institutional Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Institutional
Trustee and delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
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(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Institutional Trustee and delivered to the Trust, the
Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of
the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor
Institutional Trustee as the case may be if the Institutional Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Institutional Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
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SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or
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otherwise as the Regular Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Debentures held by the Institutional Trustee (the amount of any such payment
being a "Payment Amount"), the Institutional Trustee shall and is directed to
make a distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities"). The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.
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(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Regular Trustees of the Trust, although
at the date of the execution and delivery of the Declaration any such person was
not such a Regular Trustee. Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate, or as may
be required to comply with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to any Holder of the Common Securities or the
Sponsor; the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
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(iii) upon the entry of a decree of judicial dissolution of any
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with the terms
of the Securities and all of the Debentures endorsed thereon shall have
been distributed to the Holders of Securities in exchange for all of the
Securities;
(vi) before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in
Section 3.14;
provided, that so long as any Preferred Securities are outstanding and are not
held entirely by SSBH, the Trust may not voluntarily liquidate, dissolve,
wind-up or terminate except in connection with the occurrence of a Special
Event.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided
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that, any such transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:
(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee
would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive
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a definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall have
no obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
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SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to such Preferred
Securities; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any delay
in delivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, said instructions of the Clearing
Agency. The Definitive Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which Preferred Securities
may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless.
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then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Preferred
Securities Guarantee and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss,
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damage or claim incurred by reason of such Indemnified Person's gross negligence
or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
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(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settle-
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ment of an action without admission of liability) in defense of any action, suit
or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a), or
in defense of any claim, issue or matter therein, he shall be indemnified, to
the full extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Regular Trustees
by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts
known to the Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal proceeding, that
such Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Preferred
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract
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between the Debenture Issuer and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or obligations
then existing.
(vii) The Debenture Issuer may purchase and maintain insurance on
behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the provisions of
this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Institutional
Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each
of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration or
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 10.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
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of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, to the extent, if any, required by the Trust
Indecnture Act, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the
Trust as of the end of such Fiscal Year, and the related statements of income
or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trust-
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ees shall endeavor to deliver all such statements within 30 days after the end
of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Debentures held by the Institutional Trustee shall be made
directly to the Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the Institutional
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Institutional
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Institutional
Trustee, the Institutional Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
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(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the right, preferences or privileges of the
Holders; and
(v) to modify, eliminate and add to any provision of the Declaration
to such extent as may be reasonably necessary to effectuate any of the
foregoing or to otherwise comply with applicable law.
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SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of
Securities representing at least 10% in liquidation amount of such class of
Securities. Such direction shall be given by delivering to the Regular Trustees
one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which
the meeting is to be called. Any Holders of Securities calling a meeting shall
specify in writing the Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those Securities specified shall
be counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of Securities. Any
action that may be taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting forth the action
so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the General
Corporation
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Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders of the Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Preferred Securities are then listed or trading,
otherwise provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders of Securities, waiver
of any such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Institutional Trustee represents and warrants to the Trust
and the Sponsor at the time of the Successor Institutional Trustee's acceptance
of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a national banking association with
trust powers, duly organized, validly existing and in good standing under
the laws of the United States, with trust power and authority to execute
and deliver, and to carry out and perform its obligations under the terms
of, the Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Institutional Trustee. The Declaration
has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law);
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(c) the execution, delivery and performance of the Declaration by
the Institutional Trustee does not conflict with or constitute a breach of
the Articles of Organization or By-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee, of the
Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration under Delaware law constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(c) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the
Declaration.
(d) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(e) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Securities):
SSBH Capital II
c/o Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: Charles W. Scharf
Michael J. Day
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of
to the Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
(c) if given to the Institutional Trustee, at its Corporate Trust
Office to the attention of The Institutional Trust Group (or such other
address as the Institutional Trustee may give notice of to the Holders of
the Securities).
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: A. George Saks, Secretary
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(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees
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to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and effect
as though all of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
______________________________________
Charles W. Scharf, as Regular Trustee
______________________________________
Michael J. Day, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By:___________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Institutional Trustee
By:___________________________________
Name:
Title:
SALOMON SMITH BARNEY HOLDINGS INC.
as Sponsor
By:___________________________________
Name:
Title:
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____% TRUST PREFERRED SECURITIES
____% TRUST COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of _________ __, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. ______________ Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of _______ MILLION DOLLARS ($___,000,000) and a liquidation amount with
respect to the assets of the Trust of $25 per preferred security, are hereby
designated for the purposes of identification only as "__% Trust Preferred
Securities" (the "Preferred Securities"). The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange on which the Preferred Securities
are listed.
(b) Common Securities. _______ Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the Trust of
__________ MILLION DOLLARS ($____________) and a liquidation amount with respect
to the assets of the Trust of $25 per common security, are hereby designated for
the purposes of identification only as "__% Trust Common Securities" (the
"Common Securities"). The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate
per annum of __% (the "Coupon Rate") of the stated liquidation amount of $25 per
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears beyond the first
date such Distributions are payable (or would be payable if not for any
Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate
(to the extent permitted by applicable law). The term "Distributions" as used
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution
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is payable only to the extent that payments are made in respect of the
Debentures held by the Institutional Trustee and to the extent the Institutional
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from and including _________ __, 1997, and will be payable quarterly in arrears,
on March 31, June 30, September 30, and December 31 of each year, commencing on
_________ __, 1997. When, as and if available for payment, Distributions will be
made by the Institutional Trustee, except as otherwise described below. The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period from time to time on
the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period may extend beyond
the date of maturity of the Debentures. As a consequence of the Debenture
Issuer's extension of the interest payment period, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded quarterly during any such Extension Period. In the event that
the Debenture Issuer exercises its right to extend the interest payment period,
then (a) the Debenture Issuer 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 SSBH 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 SSBH's capital stock for any
other class or series of SSBH's capital stock, or (iii) the purchase of
fractional interests in shares of SSBH's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) and (b) the Debenture Issuer 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 Debenture Issuer that rank pari passu
with or junior to the Debentures. The foregoing, however, will not apply to any
stock dividends paid by SSBH where the dividend stock is the same stock as that
on which the dividend is being paid. Prior to the termination of any such
Extension Period, the Debenture Issuer 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 quarters; provided further,
that no Extension Period may extend beyond the maturity of the Debentures.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of the
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements. The Regular
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Trustees will give notice to each Holder of any Extension Period upon their
receipt of notice thereof from the Debenture Issuer.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust at the close of
business on the relevant record dates. While the Preferred Securities remain in
book-entry only form, the relevant record dates shall be one Business Day prior
to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Preferred Securities will be made as described under the heading
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company" in the Prospectus Supplement dated _________ __, 1997,
(the "Prospectus Supplement") to the Prospectus dated _________ __, 199_
(together, the "Prospectus"), of the Trust included in the Registration
Statement on Form S-3 of the Sponsor, the Trust and certain other business
trusts. The relevant record dates for the Common Securities shall be the same
record date as for the Preferred Securities. If the Preferred Securities shall
not continue to remain in book-entry only form, the relevant record dates for
the Preferred Securities shall conform to the rules of any securities exchange
on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least 14 days but no more than 60 days
before the relevant payment dates, which payment dates shall correspond to the
interest payment dates on the Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution 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, 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.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities of creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
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Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest
in an amount equal to the accrued and unpaid Distributions on, such Securities
outstanding at such time, have been distributed on a Pro Rata basis to the
Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event as described below), the proceeds from
such repayment or payment shall be simultaneously applied to redeem Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed at a redemption price of $25 per
Security plus an amount equal to accrued and unpaid Distributions thereon at the
date of the redemption, payable in cash (the "Redemption Price"). Holders shall
be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Securities will be redeemed Pro Rata and the Preferred Securities
to be redeemed will be as described in Section 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event
(each as defined below, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, except in certain limited circumstances
in relation to a Tax Event described in this Section 4(c), dissolve the Trust
and, after satisfaction of creditors, cause Debentures held by the Institutional
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate, and
with accrued and unpaid interest equal to accrued and unpaid Distributions on,
the Securities outstanding at such time, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in the Trust on a Pro Rata
basis, within 90 days following the occurrence of such Special Event (the "90
Day Period"); 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 a nationally recognized independent tax
counsel experienced in such matters (a "No Recognition Opinion"), which opinion
may rely on published revenue rulings of the Internal Revenue Service, to the
effect that the Holders of the Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of such dissolution
and distribution of Debentures, and provided further, that, if at the
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time there is available to the Debenture Issuer or the Trust the opportunity to
eliminate, within the 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 the
Trust, the Debenture Issuer or the Holders of the Securities ("Ministerial
Action"), the Debenture Issuer or the Trust will pursue such Ministerial Action
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Debenture
Issuer 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 Debenture
Issuer would be precluded from deducting the interest on the Debentures for
United States federal income tax purposes, even after the Debentures were
distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), 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 Debenture Issuer shall have
the right, upon not less than 30 nor more than 60 days notice, to redeem the
Debentures, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed shall be redeemed by the Trust at the Redemption Price on
a Pro Rata basis; provided, however, that if at the time there is available to
the Debenture Issuer or the Trust the opportunity to eliminate, within such 90
day period, the Tax Event by taking some Ministerial Action, the Trust or the
Debenture Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Tax Event 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 the Prospectus Supplement), in
either case after the date of the Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust would be subject to United States federal
income tax with respect to interest accrued or received on the Debentures, (ii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, or (iii) interest payable to the Trust on
the Debentures would not be deductible, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act (an "Investment Company
Event Opinion") to the effect
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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 a more than an insubstantial risk that the Trust is
or will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) DTC or its nominee (or any successor
Clearing Agency or its nominee), as the record Holder of the Preferred
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
certificates representing Securities, except for certificates representing
Preferred Securities held by DTC or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) If the Debentures are distributed to Holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with
re-
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spect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name of and held of
record by DTC or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or Person on
whose behalf such nominee holds such securities) in accordance with the
procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) while the Preferred Securities are in book-entry
only form, with respect to the Preferred Securities, by 12:00 noon, New
York City time, on the redemption date, provided, that the Debenture
Issuer has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will deposit irrevocably with DTC or its nominee (or
successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and
will give DTC (or any successor Clearing Agency) irrevocable instructions
and authority to pay the Redemption Price to the Holders of the Preferred
Securities, and (B) with respect to Preferred Securities issued in
definitive form and Common Securities, provided that the Debenture Issuer
has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on the redemption
date. If a Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the close
of business on the date of such deposit, or on the redemption date, as
applicable, distributions will cease to accrue on the Securities so called
for redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that
have been so called for redemption. If any date fixed for redemption of
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 (and 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 each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any
Securities is improperly
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withheld or refused and not paid either by the Institutional Trustee or by
the Sponsor as guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accrue from the original
redemption date to the actual 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.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, DTC or its nominee (or any successor Clearing Agency or its
nominee) if the Global Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued, to the Holder thereof,
and (B) in respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Debenture Issuer
or its affiliates may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in aggregate liquidation amount of the Preferred
Securities, voting separately as a class, may 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 Debentures, to (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercise any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past 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 Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required,
provided, however, that, where a consent or action under the Indenture would
require the consent or act of each holder of each Debenture affected thereby,
such consent or action under the Indenture shall not be effective until each
Holder of Preferred Securities shall have consented to such action or provided
such consent. The Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
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 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 coun-
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sel experienced in such matters to the effect that as a result of such action,
the Trust will not fail to be classified as a grantor trust for United States
federal income tax purposes. If the Institutional Trustee fails to enforce its
rights under the Debentures, any Holder of Preferred Securities may directly
institute a legal proceeding against the Debenture Issuer to enforce the
Institutional Trustee's rights under the Debentures without first instituting a
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 Debenture Issuer to pay
interest or principal on the Debentures 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 (a "Direct Action") of the principal
of or interest on the Debentures 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 Debentures without first (i)
directing the Institutional Trustee to enforce the terms of the Debentures or
(ii) instituting a legal proceeding directly against the Debenture Issuer to
enforce the Institutional Trustee's rights under the Debentures. Except as
provided in the preceding sentence, the Holders of Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, SSBH will be subrogated to
the rights of such holder of Preferred Securities under the Declaration to the
extent of any payment made by SSBH to such holder of Preferred Securities in
such Direct Action.
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 Securities in
the Trust 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 (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 the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with this Declaration and the terms of
the Securities.
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 by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
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6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the
Event of Default with respect to the Preferred Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may 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 (i) directing
the time, method, place of conducting any proceeding for any remedy available to
the Debenture Trustee, or exercising any trust or power conferred on the
Debenture Trustee with respect to the Debentures, (ii) waiving any past default
and its consequences that is waivable under Section 5.13 of the Indenture, or
(iii) exercising any right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable, provided that, where a consent
or action under the Indenture would require the consent or act of the Holders of
greater than a majority in principal amount of Debentures affected thereby (a
"Super Majority"), the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of
the Common Securities under this paragraph unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are enti-
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tled 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 Common
Securities. Each such notice will include a statement setting forth (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 the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration 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 Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only 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 a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination on the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
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 Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of the holders of greater than a majority in aggregate principal
amount of the Debentures (a "Super Majority"), the Institutional Trustee may
only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Institutional Trustee shall not take
any action in accordance with the directions of the Holders of the Securities
under this Section 7(b) unless the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust on
account of such action.
I-11
<PAGE> 70
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon shall
be made Pro Rata with the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed on the New York Stock Exchange, Inc.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee, including the subordination provisions therein and to the provisions
of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
I-12
<PAGE> 71
The Sponsor will provide a copy of the Declaration or the Preferred
Securities Guarantee, and the Indenture to a Holder without charge on written
request to the Sponsor at its principal place of business.
I-13
<PAGE> 72
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
THIS PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS
PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED
SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Certificate Number Number of Preferred Securities
CUSIP NO. _____________
Certificate Evidencing Preferred Securities
of
SSBH CAPITAL II
____% Trust Preferred Securities
(Liquidation Amount $25 per Preferred Security)
SSBH CAPITAL II, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that ___________ (the
"Holder") is the registered owner of ________ (____) preferred securities of the
Trust representing undivided
A1-1
<PAGE> 73
beneficial interests in the assets of the Trust designated the [ ]% Trust
Preferred Securities (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of [ ],
199_, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Preferred Securities as set forth
in Annex I thereto. Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Preferred Securities Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Preferred Securities Guarantee and
the Indenture to a Holder without charge upon written request to the Sponsor at
its principal place of business.
The Holder of this certificate, by accepting this certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) and (ii) agreed to the
terms of the Preferred Securities Guarantee, including that the Preferred
Securities Guarantee is (A) subordinate and junior in right of payment to all
other liabilities of SSBH, (B) pari passu with the most senior preferred or
preference stock now or hereafter issued by SSBH and with any guarantee now or
hereafter issued by SSBH with respect to preferred or preference stock of SSBH's
affiliates and (C) senior to SSBH's common stock.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
A1-2
<PAGE> 74
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of _______, ____.
___________________________________
Charles W. Scharf, as Trustee
___________________________________
Michael J. Day, as Trustee
A1-3
<PAGE> 75
----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-4
<PAGE> 76
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
SSBH CAPITAL II
[ ]% Trust Common Securities
(Liquidation Amount $25 per Common Security)
SSBH CAPITAL II, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Salomon Smith Barney
Holdings Inc., a Delaware corporation, (the "Holder") is the registered owner of
__________ (________) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the [ ]% Trust
Common Securities (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer and satisfaction of the other conditions set forth in
the Declaration (as defined below), including, without limitation, Section 9.1
thereof. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of [ ], 199 , as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I
thereto. Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Sponsor will provide a copy of the
Declaration and the Indenture to a Holder without charge upon written request to
the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A2-1
<PAGE> 77
The Holder of this certificate, by accepting this certificate, is
deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
A2-2
<PAGE> 78
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of _________, ____.
___________________________________
Charles W. Scharf, as Trustee
___________________________________
Michael J. Day, as Trustee
A2-3
<PAGE> 79
----------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
_________________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-4
<PAGE> 80
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 81
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4(aa)
======================================
AMENDED AND RESTATED DECLARATION
OF TRUST
SSBH CAPITAL III
Dated as of _________, __, 1997
======================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions..................................................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................ 7
SECTION 2.2 Lists of Holders of Securities.................................. 8
SECTION 2.3 Reports by the Institutional Trustee............................ 8
SECTION 2.4 Periodic Reports to Institutional Trustee....................... 8
SECTION 2.5 Evidence of Compliance with Conditions Precedent................ 8
SECTION 2.6 Events of Default; Waiver....................................... 9
SECTION 2.7 Event of Default; Notice........................................ 10
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................................ 11
SECTION 3.2 Office.......................................................... 11
SECTION 3.3 Purpose......................................................... 11
SECTION 3.4 Authority....................................................... 12
SECTION 3.5 Title to Property of the Trust.................................. 12
SECTION 3.6 Powers and Duties of the Regular Trustees....................... 12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees............ 15
SECTION 3.8 Powers and Duties of the Institutional Trustee.................. 16
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee......................................................... 18
SECTION 3.10 Certain Rights of Institutional Trustee......................... 20
SECTION 3.11 Delaware Trustee................................................ 22
SECTION 3.12 Execution of Documents.......................................... 22
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.......... 22
SECTION 3.14 Duration of Trust............................................... 22
SECTION 3.15 Mergers......................................................... 22
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities......................... 24
SECTION 4.2 Responsibilities of the Sponsor................................. 24
i
<PAGE> 3
Page
----
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.............................................. 25
SECTION 5.2 Delaware Trustee................................................ 26
SECTION 5.3 Institutional Trustee; Eligibility.............................. 26
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally....................................................... 27
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees......... 27
SECTION 5.6 Appointment, Removal and Resignation of Trustees................ 28
SECTION 5.7 Vacancies among Trustees........................................ 29
SECTION 5.8 Effect of Vacancies............................................. 30
SECTION 5.9 Meetings........................................................ 30
SECTION 5.10 Delegation of Power............................................. 30
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business..... 31
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions................................................... 31
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities......................... 31
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust............................................ 32
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.......................................... 33
SECTION 9.2 Transfer of Certificates........................................ 34
SECTION 9.3 Deemed Security Holders......................................... 34
SECTION 9.4 Book Entry Interests............................................ 34
SECTION 9.5 Notices to Clearing Agency...................................... 35
SECTION 9.6 Appointment of Successor Clearing Agency........................ 35
ii
<PAGE> 4
Page
----
SECTION 9.7 Definitive Preferred Security Certificates...................... 36
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates............... 36
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability....................................................... 37
SECTION 10.2 Exculpation..................................................... 37
SECTION 10.3 Fiduciary Duty.................................................. 38
SECTION 10.4 Indemnification................................................. 39
SECTION 10.5 Outside Businesses.............................................. 41
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year..................................................... 42
SECTION 11.2 Certain Accounting Matters...................................... 42
SECTION 11.3 Banking......................................................... 43
SECTION 11.4 Withholding..................................................... 43
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments...................................................... 44
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent......................................................... 46
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee......... 47
SECTION 13.2 Representations and Warranties of Delaware Trustee.............. 48
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices......................................................... 49
SECTION 14.2 Governing Law................................................... 50
SECTION 14.3 Intention of the Parties........................................ 50
iii
<PAGE> 5
Page
----
SECTION 14.4 Headings........................................................ 50
SECTION 14.5 Successors and Assigns.......................................... 50
SECTION 14.6 Partial Enforceability.......................................... 50
SECTION 14.7 Counterparts.................................................... 50
ANNEX I TERMS OF SECURITIES.............................................I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE....................................................A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE............................A2-1
EXHIBIT B SPECIMEN OF DEBENTURE...........................................B-1
EXHIBIT C UNDERWRITING AGREEMENT..........................................C-1
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)............................................. 5.3(a)
310(c)............................................. Inapplicable
311(c)............................................. Inapplicable
312(a)............................................. 2.2(a)
312(b)............................................. 2.2(b)
313................................................ 2.3
314(a)............................................. 2.4
314(b)............................................. Inapplicable
314(c)............................................. 2.5
314(d)............................................. Inapplicable
314(f)............................................. Inapplicable
315(a)............................................. 3.9(b)
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Annex I
316(c)............................................. 3.6(e)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SSBH CAPITAL III
_________ __, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of __________ __, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established SSBH Capital III
(the "Trust"), a trust under the Business Trust Act (as defined herein) pursuant
to a Declaration of Trust dated as of December 19, 1996 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on December 19, 1996, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
<PAGE> 8
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
2
<PAGE> 9
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means _________ __, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means SSBH in its capacity as issuer of the
Debentures under the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Institutional Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 9.4.
3
<PAGE> 10
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Distribution" has the meaning set forth in Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of _________ __, 1997,
between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in Section
3.8(c).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I
hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class,
4
<PAGE> 11
who are the record owners of an aggregate liquidation amount representing more
than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement dated
as of _________ __, 1997, of the Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such
5
<PAGE> 12
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Regular Trustee" has the meaning specified in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"SSBH" means Salomon Smith Barney Holdings Inc., a Delaware
Corporation.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means SSBH or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
5.6.
"Successor Entity" has the meaning set forth in Section 3.15(b).
"Successor Institutional Trustee" has the meaning set forth in
Section 5.6.
"Successor Securities" has the meaning set forth in Section 3.15(b).
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"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of an aggregate liquidation amount representing 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
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(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Institutional Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall
be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Institutional
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and (ii)
at any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Institutional Trustee. The Institutional Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the capacity
as Paying Agent (if acting in such capacity) provided that the Institutional
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Institutional Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after April 15 of each year, the Institutional
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by ss. 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by ss. 313 of the Trust Indenture Act. The Institutional
Trustee shall also comply with the requirements of ss. 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such documents, reports and
information as required by ss. 314 (if any) and the compliance certificate
required by ss. 314 of the Trust Indenture Act in the form, in the manner and at
the times required by ss. 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in ss. 314(c)
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of the Trust Indenture Act. Any certificate or opinion required to be given by
an officer pursuant to ss. 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of holders of more than a
majority in principal amount of the Debentures (a "Super Majority")
affected thereby, only the Holders of at least the proportion in aggregate
liquidation amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding may waive such Event of Default in respect of the Preferred
Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
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(ii) is waivable only with the consent of a Super Majority, except
where the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided in this Section 2.6(b),
only the Holders of at least the proportion in aggregate liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding
may waive such Event of Default in respect of the Common Securities under
the Declaration;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated, and until
such 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 in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
the waiver of an Event of Default by the Holders of a Majority in liquidation
amount of the Common Securities, any such default shall cease to exist and any
Event of Default with respect to the Common Securities arising therefrom shall
be deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of (i) all defaults with
respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of
such notice (the term "defaults" for the purposes of this Section 2.7(a) being
hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein) and (ii) any notice of default received
from the Indenture Trustee with respect to the Debentures, which notice from the
Institutional Trustee to the Holders shall state that an Event of Default under
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the Indenture also constitutes an Event of Default with respect to the
Securities; provided that, except for a default in the payment of principal of
(or premium, if any) or interest on any of the Debentures or in the payment of
any sinking fund installment established for the Debentures, the Institutional
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 5.1(1) and 5.1(2) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have
received written notice or of which a Responsible Officer of the
Institutional Trustee charged with the administration of the Declaration
shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "SSBH Capital III," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of Securities. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Salomon
Smith Barney Holdings Inc., 388 Greenwich Street, New York, New York 10013. On
ten Business Days written notice to the Holders of Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
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SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Institutional Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Preferred Securities and no
more than one series of Common Securities, and, provided further, that
there shall be no interests in the Trust other than the Securities, and
the issuance of Securities shall be limited to a simultaneous issuance of
both Preferred Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission on behalf of the
Trust a registration statement on Form S-3 or on another appropriate
form, or a registration statement under Rule 462(b) of the
Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the
registration under the Securities Act of the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in
order to qualify
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or register all or part of the Preferred Securities in any State in
which the Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc., any other national
stock exchange or the Nasdaq National Market for listing upon notice
of issuance of any Preferred Securities;
(iv) execute and file with the Commission on behalf of the
Trust a registration statement on Form 8-A, prepared by the Sponsor,
including any pre-effective or post-effective amendments thereto,
relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale
of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that
the Regular Trustees shall cause legal title to the Debentures to be held
of record in the name of the Institutional Trustee for the benefit of the
Holders of the Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Institutional Trustee
before taking or refraining from taking any Ministerial Action in relation
to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of ss.316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Preferred Securities and Holders of
Common Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Institutional Trustee has the exclusive power to bring such Legal Action;
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(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Preferred Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes,
provided that such action does not adversely affect the interests of
Holders;
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(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Institutional Trustee set forth in Section
3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall not, engage in any activity other than as required
or authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Institutional Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trust-
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ee with respect to the Debentures, (B) waive any past default that is waivable
under the Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required unless the Trust shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income
tax purposes.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Institutional
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Institutional Trustee in accordance with Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Institutional Trustee Account") in the name of and under the
exclusive control of the Institutional Trustee on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in respect
of the Debentures held by the Institutional Trustee, deposit such funds
into the Institutional Trustee Account and make payments to the Holders of
the Preferred Securities and Holders of the Common Securities from the
Institutional Trustee Account in accordance with Section 6.1. Funds in the
Institutional Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Institutional Trustee Account shall
be an account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness assigned by a "nationally
recognized statistical rating organization," as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least equal to
the rating assigned to the Preferred Securities by a nationally recognized
statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
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(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of Securities upon the
occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Institutional Trustee has actual knowledge or
the Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Institutional Trustee occurs and is continuing, the Institutional Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities, this Declaration, the Business Trust Act and the Trust
Indenture Act.
(h) The Institutional Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all securities and
any such Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
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The Institutional Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee.
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Institutional Trustee
shall be determined solely by the express provisions of this
Declaration and the Institutional Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants
or obligations shall be read into this Declaration against the
Institutional Trustee; and
(B) in the absence of bad faith on the part of the
Institutional Trustee, the Institutional Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Institutional Trustee,
the Institutional Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Declaration;
(ii) the Institutional Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Institutional
Trustee, unless it
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shall be proved that the Institutional Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Institutional Trustee against such risk or
liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Institutional Trustee Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Sponsor. Money held by the Institutional Trustee need not be segregated
from other funds held by it except in relation to the Institutional
Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
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SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other
experts and the advice or opinion of such counsel and experts with respect
to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion, such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of
its employees. The Institutional Trustee shall have the right at any time
to seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Institutional Trustee security and indemnity, reasonably
satisfactory to the Institutional Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Institutional Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Institutional Trustee provided, that, nothing contained in this
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Section 3.10(a)(vi) shall be taken to relieve the Institutional Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Institutional
Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Institutional
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Institutional Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Institutional Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Institutional Trustee under the terms of
the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in or accordance with such instructions;
and
(xi) except as otherwise expressly provided by this Declaration, the
Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance
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with applicable law, to perform any such act or acts, or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Institutional Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Institutional Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for fifty-five (55) years from the Closing
Date.
SECTION 3.15 Mergers.
(a) The Trust 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 in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders
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of the Securities, the Delaware Trustee or the Institutional Trustee,
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 (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the
same as the Preferred Securities rank with respect to Distributions
and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(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 any other
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 Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders'
interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust 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 Securities (including any Successor Securities)
in any material respect (other
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than with respect to any dilution of the Holders' interest in the
new entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, without
the consent of Holders of 100% in liquidation amount of the 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 the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date, the Sponsor will purchase all of the Common
Securities issued by the Trust in an amount equal to 3% or more of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 or on another appropriate form, or a
registration statement under Rule 462(b) of the Securities Act, including
any pre-effective or post-effective amendments thereto, relating to the
registration under the Securities Act of the Preferred Securities;
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(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange, any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any pre-effective or
post-effective amendments thereto, relating to the registration of the
Preferred Securities under Section 12(b) of the Exchange Act, including
any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing
for the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities,
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, shall be an entity which has its principal place of business in
the State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
"Regular Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements.
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SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable law,
then the Institutional Trustee shall also be the Delaware Trustee and Section
3.11 shall have no application.
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee that shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published; and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7 and to the extent Rule 3a-7 requires
a trustee having certain qualifications to hold title to the "eligible
assets" of the Trust, the Institutional Trustee shall possess those
qualifications.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
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(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee and the Holders of the Common Securities (as if
such Holders were the obligor referred to in ss. 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of ss. 310(b) of the Trust
Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in
Section 5.5 hereof.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees.
(a) The initial Regular Trustees shall be:
Charles W. Scharf
Michael J. Day
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
The initial Institutional Trustee shall be:
The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
(b) Except as expressly set forth in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
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(c) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall be signed by all of the
Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Institutional Trustee under Section 5.3 (a
"Successor Institutional Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Institutional
Trustee and delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
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(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Institutional Trustee and delivered to the Trust, the
Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of
the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor
Institutional Trustee as the case may be if the Institutional Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Institutional Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
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SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or
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otherwise as the Regular Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Debentures held by the Institutional Trustee (the amount of any such payment
being a "Payment Amount"), the Institutional Trustee shall and is directed to
make a distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities"). The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.
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(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Regular Trustees of the Trust, although
at the date of the execution and delivery of the Declaration any such person was
not such a Regular Trustee. Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate, or as may
be required to comply with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to any Holder of the Common Securities or the
Sponsor; the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
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(iii) upon the entry of a decree of judicial dissolution of any
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with the terms
of the Securities and all of the Debentures endorsed thereon shall have
been distributed to the Holders of Securities in exchange for all of the
Securities;
(vi) before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in
Section 3.14;
provided, that so long as any Preferred Securities are outstanding and are not
held entirely by SSBH, the Trust may not voluntarily liquidate, dissolve,
wind-up or terminate except in connection with the occurrence of a Special
Event.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided
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that, any such transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:
(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee
would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive
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a definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall have
no obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
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SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to such Preferred
Securities; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any delay
in delivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, said instructions of the Clearing
Agency. The Definitive Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which Preferred Securities
may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless.
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then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Preferred
Securities Guarantee and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss,
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damage or claim incurred by reason of such Indemnified Person's gross negligence
or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
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(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settle-
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ment of an action without admission of liability) in defense of any action, suit
or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a), or
in defense of any claim, issue or matter therein, he shall be indemnified, to
the full extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Regular Trustees
by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts
known to the Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal proceeding, that
such Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Preferred
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract
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between the Debenture Issuer and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or obligations
then existing.
(vii) The Debenture Issuer may purchase and maintain insurance on
behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the provisions of
this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Institutional
Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each
of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration or
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 10.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
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of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, to the extent, if any, required by the Trust
Indenture Act, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the
Trust as of the end of such Fiscal Year, and the related statements of income
or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trust-
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ees shall endeavor to deliver all such statements within 30 days after the end
of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Debentures held by the Institutional Trustee shall be made
directly to the Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Institutional
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Institutional
Trustee, the Institutional Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
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(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the right, preferences or privileges of the
Holders; and
(v) to modify, eliminate and add to any provision of the Declaration
to such extent as may be reasonably necessary to effectuate any of the
foregoing or to otherwise comply with applicable law.
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SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of
Securities representing at least 10% in liquidation amount of such class of
Securities. Such direction shall be given by delivering to the Regular Trustees
one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which
the meeting is to be called. Any Holders of Securities calling a meeting shall
specify in writing the Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those Securities specified shall
be counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of Securities. Any
action that may be taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting forth the action
so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the General
Corporation
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Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders of the Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Preferred Securities are then listed or trading,
otherwise provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders of Securities, waiver
of any such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Institutional Trustee represents and warrants to the Trust
and the Sponsor at the time of the Successor Institutional Trustee's acceptance
of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a national banking association with
trust powers, duly organized, validly existing and in good standing under
the laws of the United States, with trust power and authority to execute
and deliver, and to carry out and perform its obligations under the terms
of, the Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Institutional Trustee. The Declaration
has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law);
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(c) the execution, delivery and performance of the Declaration by
the Institutional Trustee does not conflict with or constitute a breach of
the Articles of Organization or By-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee, of the
Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration under Delaware law constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(c) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the
Declaration.
(d) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(e) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Securities):
SSBH Capital III
c/o Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: Charles W. Scharf
Michael J. Day
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of
to the Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
(c) if given to the Institutional Trustee, at its Corporate Trust
Office to the attention of The Institutional Trust Group (or such other
address as the Institutional Trustee may give notice of to the Holders of
the Securities).
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: A. George Saks, Secretary
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(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees
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to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and effect
as though all of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
----------------------------------------
Charles W. Scharf, as Regular Trustee
----------------------------------------
Michael J. Day, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Institutional Trustee
By:
-------------------------------------
Name:
Title:
SALOMON SMITH BARNEY HOLDINGS INC.
as Sponsor
By:
-------------------------------------
Name:
Title:
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____% TRUST PREFERRED SECURITIES
____% TRUST COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of _________ __, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. ______________ Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of _______ MILLION DOLLARS ($___,000,000) and a liquidation amount with
respect to the assets of the Trust of $25 per preferred security, are hereby
designated for the purposes of identification only as "__% Trust Preferred
Securities" (the "Preferred Securities"). The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange on which the Preferred Securities
are listed.
(b) Common Securities. _______ Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the Trust of
__________ MILLION DOLLARS ($____________) and a liquidation amount with respect
to the assets of the Trust of $25 per common security, are hereby designated for
the purposes of identification only as "__% Trust Common Securities" (the
"Common Securities"). The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate
per annum of __% (the "Coupon Rate") of the stated liquidation amount of $25 per
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears beyond the first
date such Distributions are payable (or would be payable if not for any
Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate
(to the extent permitted by applicable law). The term "Distributions" as used
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution
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is payable only to the extent that payments are made in respect of the
Debentures held by the Institutional Trustee and to the extent the Institutional
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from and including _________ __, 1997, and will be payable quarterly in arrears,
on March 31, June 30, September 30, and December 31 of each year, commencing on
_________ __, 1997. When, as and if available for payment, Distributions will be
made by the Institutional Trustee, except as otherwise described below. The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period from time to time on
the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period may extend beyond
the date of maturity of the Debentures. As a consequence of the Debenture
Issuer's extension of the interest payment period, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded quarterly during any such Extension Period. In the event that
the Debenture Issuer exercises its right to extend the interest payment period,
then (a) the Debenture Issuer 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 SSBH 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 SSBH's capital stock for any
other class or series of SSBH's capital stock, or (iii) the purchase of
fractional interests in shares of SSBH's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) and (b) the Debenture Issuer 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 Debenture Issuer that rank pari
passu with or junior to the Debentures. The foregoing, however, will not apply
to any stock dividends paid by SSBH where the dividend stock is the same stock
as that on which the dividend is being paid. Prior to the termination of any
such Extension Period, the Debenture Issuer 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 quarters;
provided further, that no Extension Period may extend beyond the maturity of
the Debentures. Payments of accrued Distributions will be payable to Holders
as they appear on the books and records of the Trust on the first record date
after the end of the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements. The Regular
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Trustees will give notice to each Holder of any Extension Period upon their
receipt of notice thereof from the Debenture Issuer.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust at the close of
business on the relevant record dates. While the Preferred Securities remain in
book-entry only form, the relevant record dates shall be one Business Day prior
to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Preferred Securities will be made as described under the heading
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company" in the Prospectus Supplement dated _________ __, 1997,
(the "Prospectus Supplement") to the Prospectus dated _________ __, 199_
(together, the "Prospectus"), of the Trust included in the Registration
Statement on Form S-3 of the Sponsor, the Trust and certain other business
trusts. The relevant record dates for the Common Securities shall be the same
record date as for the Preferred Securities. If the Preferred Securities shall
not continue to remain in book-entry only form, the relevant record dates for
the Preferred Securities shall conform to the rules of any securities exchange
on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least 14 days but no more than 60 days
before the relevant payment dates, which payment dates shall correspond to the
interest payment dates on the Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution 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, 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.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities of creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
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Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest
in an amount equal to the accrued and unpaid Distributions on, such Securities
outstanding at such time, have been distributed on a Pro Rata basis to the
Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event as described below), the proceeds from
such repayment or payment shall be simultaneously applied to redeem Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed at a redemption price of $25 per
Security plus an amount equal to accrued and unpaid Distributions thereon at the
date of the redemption, payable in cash (the "Redemption Price"). Holders shall
be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Securities will be redeemed Pro Rata and the Preferred Securities
to be redeemed will be as described in Section 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event
(each as defined below, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, except in certain limited circumstances
in relation to a Tax Event described in this Section 4(c), dissolve the Trust
and, after satisfaction of creditors, cause Debentures held by the Institutional
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate, and
with accrued and unpaid interest equal to accrued and unpaid Distributions on,
the Securities outstanding at such time, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in the Trust on a Pro Rata
basis, within 90 days following the occurrence of such Special Event (the "90
Day Period"); 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 a nationally recognized independent tax
counsel experienced in such matters (a "No Recognition Opinion"), which opinion
may rely on published revenue rulings of the Internal Revenue Service, to the
effect that the Holders of the Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of such dissolution
and distribution of Debentures, and provided further, that, if at the
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time there is available to the Debenture Issuer or the Trust the opportunity to
eliminate, within the 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 the
Trust, the Debenture Issuer or the Holders of the Securities ("Ministerial
Action"), the Debenture Issuer or the Trust will pursue such Ministerial Action
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Debenture
Issuer 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 Debenture
Issuer would be precluded from deducting the interest on the Debentures for
United States federal income tax purposes, even after the Debentures were
distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), 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 Debenture Issuer shall have
the right, upon not less than 30 nor more than 60 days notice, to redeem the
Debentures, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed shall be redeemed by the Trust at the Redemption Price on
a Pro Rata basis; provided, however, that if at the time there is available to
the Debenture Issuer or the Trust the opportunity to eliminate, within such 90
day period, the Tax Event by taking some Ministerial Action, the Trust or the
Debenture Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Tax Event 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 the Prospectus Supplement), in
either case after the date of the Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust would be subject to United States federal
income tax with respect to interest accrued or received on the Debentures, (ii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, or (iii) interest payable to the Trust on
the Debentures would not be deductible, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act (an "Investment Company
Event Opinion") to the effect
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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 a more than an insubstantial risk that the Trust is
or will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) DTC or its nominee (or any successor
Clearing Agency or its nominee), as the record Holder of the Preferred
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
certificates representing Securities, except for certificates representing
Preferred Securities held by DTC or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) If the Debentures are distributed to Holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with
re-
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spect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name of and held of
record by DTC or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or Person on
whose behalf such nominee holds such securities) in accordance with the
procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) while the Preferred Securities are in book-entry
only form, with respect to the Preferred Securities, by 12:00 noon, New
York City time, on the redemption date, provided, that the Debenture
Issuer has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will deposit irrevocably with DTC or its nominee (or
successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and
will give DTC (or any successor Clearing Agency) irrevocable instructions
and authority to pay the Redemption Price to the Holders of the Preferred
Securities, and (B) with respect to Preferred Securities issued in
definitive form and Common Securities, provided that the Debenture Issuer
has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on the redemption
date. If a Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the close
of business on the date of such deposit, or on the redemption date, as
applicable, distributions will cease to accrue on the Securities so called
for redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that
have been so called for redemption. If any date fixed for redemption of
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 (and 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 each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any
Securities is improperly
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withheld or refused and not paid either by the Institutional Trustee or by
the Sponsor as guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accrue from the original
redemption date to the actual 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.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, DTC or its nominee (or any successor Clearing Agency or its
nominee) if the Global Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued, to the Holder thereof,
and (B) in respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Debenture Issuer
or its affiliates may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in aggregate liquidation amount of the Preferred
Securities, voting separately as a class, may 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 Debentures, to (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercise any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past 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 Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required,
provided, however, that, where a consent or action under the Indenture would
require the consent or act of each holder of each Debenture affected thereby,
such consent or action under the Indenture shall not be effective until each
Holder of Preferred Securities shall have consented to such action or provided
such consent. The Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
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 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 coun-
I-8
<PAGE> 67
sel experienced in such matters to the effect that as a result of such action,
the Trust will not fail to be classified as a grantor trust for United States
federal income tax purposes. If the Institutional Trustee fails to enforce its
rights under the Debentures, any Holder of Preferred Securities may directly
institute a legal proceeding against the Debenture Issuer to enforce the
Institutional Trustee's rights under the Debentures without first instituting a
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 Debenture Issuer to pay
interest or principal on the Debentures 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 (a "Direct Action") of the principal
of or interest on the Debentures 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 Debentures without first (i)
directing the Institutional Trustee to enforce the terms of the Debentures or
(ii) instituting a legal proceeding directly against the Debenture Issuer to
enforce the Institutional Trustee's rights under the Debentures. Except as
provided in the preceding sentence, the Holders of Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, SSBH will be subrogated to
the rights of such holder of Preferred Securities under the Declaration to the
extent of any payment made by SSBH to such holder of Preferred Securities in
such Direct Action.
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 Securities in
the Trust 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 (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 the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with this Declaration and the terms of
the Securities.
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 by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
I-9
<PAGE> 68
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the
Event of Default with respect to the Preferred Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may 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 (i) directing
the time, method, place of conducting any proceeding for any remedy available to
the Debenture Trustee, or exercising any trust or power conferred on the
Debenture Trustee with respect to the Debentures, (ii) waiving any past default
and its consequences that is waivable under Section 5.13 of the Indenture, or
(iii) exercising any right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable, provided that, where a consent
or action under the Indenture would require the consent or act of the Holders of
greater than a majority in principal amount of Debentures affected thereby (a
"Super Majority"), the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of
the Common Securities under this paragraph unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are enti-
I-10
<PAGE> 69
tled 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 Common
Securities. Each such notice will include a statement setting forth (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 the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration 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 Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only 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 a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination on the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
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 Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of the holders of greater than a majority in aggregate principal
amount of the Debentures (a "Super Majority"), the Institutional Trustee may
only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Institutional Trustee shall not take
any action in accordance with the directions of the Holders of the Securities
under this Section 7(b) unless the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust on
account of such action.
I-11
<PAGE> 70
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon shall
be made Pro Rata with the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed on the New York Stock Exchange, Inc.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee, including the subordination provisions therein and to the provisions
of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
I-12
<PAGE> 71
The Sponsor will provide a copy of the Declaration or the Preferred
Securities Guarantee, and the Indenture to a Holder without charge on written
request to the Sponsor at its principal place of business.
I-13
<PAGE> 72
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
THIS PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS
PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED
SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Certificate Number Number of Preferred Securities
CUSIP NO. _____________
Certificate Evidencing Preferred Securities
of
SSBH CAPITAL III
____% Trust Preferred Securities
(Liquidation Amount $25 per Preferred Security)
SSBH CAPITAL III, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that ___________ (the
"Holder") is the registered owner of ________ (____) preferred securities of the
Trust representing undivided
A1-1
<PAGE> 73
beneficial interests in the assets of the Trust designated the [ ]% Trust
Preferred Securities (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of [ ], 199 , as
the same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Preferred Securities as set forth in Annex I
thereto. Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Holder is entitled to the benefits of the
Preferred Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Preferred Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
The Holder of this certificate, by accepting this certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) and (ii) agreed to the
terms of the Preferred Securities Guarantee, including that the Preferred
Securities Guarantee is (A) subordinate and junior in right of payment to all
other liabilities of SSBH, (B) pari passu with the most senior preferred or
preference stock now or hereafter issued by SSBH and with any guarantee now or
hereafter issued by SSBH with respect to preferred or preference stock of SSBH's
affiliates and (C) senior to SSBH's common stock.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
A1-2
<PAGE> 74
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of _______, ____.
______________________________________
Charles W. Scharf, as Trustee
______________________________________
Michael J. Day, as Trustee
A1-3
<PAGE> 75
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-4
<PAGE> 76
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
SSBH CAPITAL III
[ ]% Trust Common Securities
(Liquidation Amount $25 per Common Security)
SSBH CAPITAL III, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that Salomon Smith
Barney Holdings Inc., a Delaware corporation, (the "Holder") is the registered
owner of __________ (________) common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the [ ]%
Trust Common Securities (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer and satisfaction of the other conditions set forth in
the Declaration (as defined below), including, without limitation, Section 9.1
thereof. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of [ ], 199 , as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I
thereto. Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Sponsor will provide a copy of the
Declaration and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A2-1
<PAGE> 77
The Holder of this certificate, by accepting this certificate, is
deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
A2-2
<PAGE> 78
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of ______________, ____.
_____________________________________
Charles W. Scharf, as Trustee
_____________________________________
Michael J. Day, as Trustee
A2-3
<PAGE> 79
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A2-4
<PAGE> 80
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 81
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4(bb)
======================================
AMENDED AND RESTATED DECLARATION
OF TRUST
SSBH CAPITAL IV
Dated as of _________, __, 1997
======================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions..................................................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................ 7
SECTION 2.2 Lists of Holders of Securities.................................. 8
SECTION 2.3 Reports by the Institutional Trustee............................ 8
SECTION 2.4 Periodic Reports to Institutional Trustee....................... 8
SECTION 2.5 Evidence of Compliance with Conditions Precedent................ 8
SECTION 2.6 Events of Default; Waiver....................................... 9
SECTION 2.7 Event of Default; Notice........................................ 10
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................................ 11
SECTION 3.2 Office.......................................................... 11
SECTION 3.3 Purpose......................................................... 11
SECTION 3.4 Authority....................................................... 12
SECTION 3.5 Title to Property of the Trust.................................. 12
SECTION 3.6 Powers and Duties of the Regular Trustees....................... 12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees............ 15
SECTION 3.8 Powers and Duties of the Institutional Trustee.................. 16
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee......................................................... 18
SECTION 3.10 Certain Rights of Institutional Trustee......................... 20
SECTION 3.11 Delaware Trustee................................................ 22
SECTION 3.12 Execution of Documents.......................................... 22
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.......... 22
SECTION 3.14 Duration of Trust............................................... 22
SECTION 3.15 Mergers......................................................... 22
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities......................... 24
SECTION 4.2 Responsibilities of the Sponsor................................. 24
i
<PAGE> 3
Page
----
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.............................................. 25
SECTION 5.2 Delaware Trustee................................................ 26
SECTION 5.3 Institutional Trustee; Eligibility.............................. 26
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally....................................................... 27
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees......... 27
SECTION 5.6 Appointment, Removal and Resignation of Trustees................ 28
SECTION 5.7 Vacancies among Trustees........................................ 29
SECTION 5.8 Effect of Vacancies............................................. 30
SECTION 5.9 Meetings........................................................ 30
SECTION 5.10 Delegation of Power............................................. 30
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business..... 31
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions................................................... 31
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities......................... 31
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust............................................ 32
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.......................................... 33
SECTION 9.2 Transfer of Certificates........................................ 34
SECTION 9.3 Deemed Security Holders......................................... 34
SECTION 9.4 Book Entry Interests............................................ 34
SECTION 9.5 Notices to Clearing Agency...................................... 35
SECTION 9.6 Appointment of Successor Clearing Agency........................ 35
ii
<PAGE> 4
Page
----
SECTION 9.7 Definitive Preferred Security Certificates...................... 36
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates............... 36
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability....................................................... 37
SECTION 10.2 Exculpation..................................................... 37
SECTION 10.3 Fiduciary Duty.................................................. 38
SECTION 10.4 Indemnification................................................. 39
SECTION 10.5 Outside Businesses.............................................. 41
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year..................................................... 42
SECTION 11.2 Certain Accounting Matters...................................... 42
SECTION 11.3 Banking......................................................... 43
SECTION 11.4 Withholding..................................................... 43
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments...................................................... 44
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent......................................................... 46
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee......... 47
SECTION 13.2 Representations and Warranties of Delaware Trustee.............. 48
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices......................................................... 49
SECTION 14.2 Governing Law................................................... 50
SECTION 14.3 Intention of the Parties........................................ 50
iii
<PAGE> 5
Page
----
SECTION 14.4 Headings........................................................ 50
SECTION 14.5 Successors and Assigns.......................................... 50
SECTION 14.6 Partial Enforceability.......................................... 50
SECTION 14.7 Counterparts.................................................... 50
ANNEX I TERMS OF SECURITIES.............................................I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY
CERTIFICATE....................................................A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE............................A2-1
EXHIBIT B SPECIMEN OF DEBENTURE...........................................B-1
EXHIBIT C UNDERWRITING AGREEMENT..........................................C-1
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)............................................. 5.3(a)
310(c)............................................. Inapplicable
311(c)............................................. Inapplicable
312(a)............................................. 2.2(a)
312(b)............................................. 2.2(b)
313................................................ 2.3
314(a)............................................. 2.4
314(b)............................................. Inapplicable
314(c)............................................. 2.5
314(d)............................................. Inapplicable
314(f)............................................. Inapplicable
315(a)............................................. 3.9(b)
315(c)............................................. 3.9(a)
315(d)............................................. 3.9(a)
316(a)............................................. Annex I
316(c)............................................. 3.6(e)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SSBH CAPITAL IV
_________ __, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of __________ __, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established SSBH Capital IV
(the "Trust"), a trust under the Business Trust Act (as defined herein) pursuant
to a Declaration of Trust dated as of December 19, 1996 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on December 19, 1996, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
<PAGE> 8
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
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"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means _________ __, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means SSBH in its capacity as issuer of the
Debentures under the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Institutional Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 9.4.
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"Delaware Trustee" has the meaning set forth in Section 5.2.
"Distribution" has the meaning set forth in Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of _________ __, 1997,
between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in Section
3.8(c).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I
hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class,
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who are the record owners of an aggregate liquidation amount representing more
than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement dated
as of _________ __, 1997, of the Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such
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Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Exhibit A-1.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Regular Trustee" has the meaning specified in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"SSBH" means Salomon Smith Barney Holdings Inc., a Delaware
Corporation.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means SSBH or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
5.6.
"Successor Entity" has the meaning set forth in Section 3.15(b).
"Successor Institutional Trustee" has the meaning set forth in
Section 5.6.
"Successor Securities" has the meaning set forth in Section 3.15(b).
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"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of an aggregate liquidation amount representing 10% or more of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
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(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Institutional Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall
be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Institutional
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and (ii)
at any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Institutional Trustee. The Institutional Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the capacity
as Paying Agent (if acting in such capacity) provided that the Institutional
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Institutional Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after April 15 of each year, the Institutional
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by ss. 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by ss. 313 of the Trust Indenture Act. The Institutional
Trustee shall also comply with the requirements of ss. 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such documents, reports and
information as required by ss. 314 (if any) and the compliance certificate
required by ss. 314 of the Trust Indenture Act in the form, in the manner and at
the times required by ss. 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in ss. 314(c)
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of the Trust Indenture Act. Any certificate or opinion required to be given by
an officer pursuant to ss. 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of holders of more than a
majority in principal amount of the Debentures (a "Super Majority")
affected thereby, only the Holders of at least the proportion in aggregate
liquidation amount of the Preferred Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding may waive such Event of Default in respect of the Preferred
Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
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(ii) is waivable only with the consent of a Super Majority, except
where the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided in this Section 2.6(b),
only the Holders of at least the proportion in aggregate liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding
may waive such Event of Default in respect of the Common Securities under
the Declaration;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated, and until
such 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 in accordance with the terms of the Securities. The
foregoing provisions of this Section 2.6(b) shall be in lieu of ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
the waiver of an Event of Default by the Holders of a Majority in liquidation
amount of the Common Securities, any such default shall cease to exist and any
Event of Default with respect to the Common Securities arising therefrom shall
be deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of (i) all defaults with
respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of
such notice (the term "defaults" for the purposes of this Section 2.7(a) being
hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein) and (ii) any notice of default received
from the Indenture Trustee with respect to the Debentures, which notice from the
Institutional Trustee to the Holders shall state that an Event of Default under
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the Indenture also constitutes an Event of Default with respect to the
Securities; provided that, except for a default in the payment of principal of
(or premium, if any) or interest on any of the Debentures or in the payment of
any sinking fund installment established for the Debentures, the Institutional
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 5.1(1) and 5.1(2) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have
received written notice or of which a Responsible Officer of the
Institutional Trustee charged with the administration of the Declaration
shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "SSBH Capital IV," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of Securities. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Salomon
Smith Barney Holdings Inc., 388 Greenwich Street, New York, New York 10013. On
ten Business Days written notice to the Holders of Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
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SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Institutional Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Preferred Securities and no
more than one series of Common Securities, and, provided further, that
there shall be no interests in the Trust other than the Securities, and
the issuance of Securities shall be limited to a simultaneous issuance of
both Preferred Securities and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission on behalf of the
Trust a registration statement on Form S-3 or on another appropriate
form, or a registration statement under Rule 462(b) of the
Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the
registration under the Securities Act of the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in
order to qualify
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or register all or part of the Preferred Securities in any State in
which the Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc., any other national
stock exchange or the Nasdaq National Market for listing upon notice
of issuance of any Preferred Securities;
(iv) execute and file with the Commission on behalf of the
Trust a registration statement on Form 8-A, prepared by the Sponsor,
including any pre-effective or post-effective amendments thereto,
relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale
of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that
the Regular Trustees shall cause legal title to the Debentures to be held
of record in the name of the Institutional Trustee for the benefit of the
Holders of the Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Institutional Trustee
before taking or refraining from taking any Ministerial Action in relation
to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of ss.316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Preferred Securities and Holders of
Common Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Institutional Trustee has the exclusive power to bring such Legal Action;
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(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Preferred Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes,
provided that such action does not adversely affect the interests of
Holders;
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(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Institutional Trustee set forth in Section
3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall not, engage in any activity other than as required
or authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Institutional Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall promptly distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trust-
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ee with respect to the Debentures, (B) waive any past default that is waivable
under the Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required unless the Trust shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income
tax purposes.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Institutional
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Institutional Trustee in accordance with Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Institutional Trustee Account") in the name of and under the
exclusive control of the Institutional Trustee on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in respect
of the Debentures held by the Institutional Trustee, deposit such funds
into the Institutional Trustee Account and make payments to the Holders of
the Preferred Securities and Holders of the Common Securities from the
Institutional Trustee Account in accordance with Section 6.1. Funds in the
Institutional Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Institutional Trustee Account shall
be an account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness assigned by a "nationally
recognized statistical rating organization," as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least equal to
the rating assigned to the Preferred Securities by a nationally recognized
statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Preferred Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
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(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of Securities upon the
occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Institutional Trustee has actual knowledge or
the Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Institutional Trustee occurs and is continuing, the Institutional Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities, this Declaration, the Business Trust Act and the Trust
Indenture Act.
(h) The Institutional Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all securities and
any such Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
Trustees set forth in Section 3.6.
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The Institutional Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee.
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Institutional Trustee
shall be determined solely by the express provisions of this
Declaration and the Institutional Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants
or obligations shall be read into this Declaration against the
Institutional Trustee; and
(B) in the absence of bad faith on the part of the
Institutional Trustee, the Institutional Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Institutional Trustee,
the Institutional Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Declaration;
(ii) the Institutional Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Institutional
Trustee, unless it
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shall be proved that the Institutional Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Institutional Trustee against such risk or
liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Institutional Trustee Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Sponsor. Money held by the Institutional Trustee need not be segregated
from other funds held by it except in relation to the Institutional
Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
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SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other
experts and the advice or opinion of such counsel and experts with respect
to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion, such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of
its employees. The Institutional Trustee shall have the right at any time
to seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Institutional Trustee security and indemnity, reasonably
satisfactory to the Institutional Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Institutional Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Institutional Trustee provided, that, nothing contained in this
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Section 3.10(a)(vi) shall be taken to relieve the Institutional Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Institutional
Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Institutional
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Institutional Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Institutional Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Institutional Trustee under the terms of
the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in or accordance with such instructions;
and
(xi) except as otherwise expressly provided by this Declaration, the
Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance
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with applicable law, to perform any such act or acts, or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Institutional Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Institutional Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for fifty-five (55) years from the Closing
Date.
SECTION 3.15 Mergers.
(a) The Trust 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 in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders
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of the Securities, the Delaware Trustee or the Institutional Trustee,
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 (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the
same as the Preferred Securities rank with respect to Distributions
and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(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 any other
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 Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders'
interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust 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 Securities (including any Successor Securities)
in any material respect (other
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than with respect to any dilution of the Holders' interest in the
new entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, without
the consent of Holders of 100% in liquidation amount of the 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 the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date, the Sponsor will purchase all of the Common
Securities issued by the Trust in an amount equal to 3% or more of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 or on another appropriate form, or a
registration statement under Rule 462(b) of the Securities Act, including
any pre-effective or post-effective amendments thereto, relating to the
registration under the Securities Act of the Preferred Securities;
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(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New
York Stock Exchange, any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any pre-effective or
post-effective amendments thereto, relating to the registration of the
Preferred Securities under Section 12(b) of the Exchange Act, including
any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing
for the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities,
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, shall be an entity which has its principal place of business in
the State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
"Regular Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements.
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SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable law,
then the Institutional Trustee shall also be the Delaware Trustee and Section
3.11 shall have no application.
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee that shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published; and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7 and to the extent Rule 3a-7 requires
a trustee having certain qualifications to hold title to the "eligible
assets" of the Trust, the Institutional Trustee shall possess those
qualifications.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
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(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee and the Holders of the Common Securities (as if
such Holders were the obligor referred to in ss. 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of ss. 310(b) of the Trust
Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in
Section 5.5 hereof.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees.
(a) The initial Regular Trustees shall be:
Charles W. Scharf
Michael J. Day
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
The initial Institutional Trustee shall be:
The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
(b) Except as expressly set forth in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
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(c) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall be signed by all of the
Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities.
(b)(i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Institutional Trustee under Section 5.3 (a
"Successor Institutional Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Institutional
Trustee and delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
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(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Institutional Trustee and delivered to the Trust, the
Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of
the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor
Institutional Trustee as the case may be if the Institutional Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Institutional Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
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SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or
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otherwise as the Regular Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Debentures held by the Institutional Trustee (the amount of any such payment
being a "Payment Amount"), the Institutional Trustee shall and is directed to
make a distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities"). The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.
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(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such Regular
Trustee before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed such
Certificates had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Regular Trustees of the Trust, although
at the date of the execution and delivery of the Declaration any such person was
not such a Regular Trustee. Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate, or as may
be required to comply with any law or with any rule or regulation of any stock
exchange on which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to any Holder of the Common Securities or the
Sponsor; the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
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(iii) upon the entry of a decree of judicial dissolution of any
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with the terms
of the Securities and all of the Debentures endorsed thereon shall have
been distributed to the Holders of Securities in exchange for all of the
Securities;
(vi) before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in
Section 3.14;
provided, that so long as any Preferred Securities are outstanding and are not
held entirely by SSBH, the Trust may not voluntarily liquidate, dissolve,
wind-up or terminate except in connection with the occurrence of a Special
Event.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided
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that, any such transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:
(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee
would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities,
the Preferred Securities Certificates, on original issuance, will be issued in
the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive
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a definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Certificates, except as provided in
Section 9.7. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall have
no obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until Definitive
Preferred Security Certificates shall have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all
such notices and communications specified herein to be given to the Preferred
Security Holders to the Clearing Agency, and shall have no notice obligations to
the Preferred Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
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SECTION 9.7 Definitive Preferred Security Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities,
then:
(c) Definitive Preferred Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to such Preferred
Securities; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any delay
in delivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, said instructions of the Clearing
Agency. The Definitive Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which Preferred Securities
may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless.
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then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Preferred
Securities Guarantee and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss,
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damage or claim incurred by reason of such Indemnified Person's gross negligence
or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
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(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settle-
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ment of an action without admission of liability) in defense of any action, suit
or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a), or
in defense of any claim, issue or matter therein, he shall be indemnified, to
the full extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the circumstances
because he has met the applicable standard of conduct set forth in paragraphs
(i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Regular Trustees
by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts
known to the Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal proceeding, that
such Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Preferred
Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract
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between the Debenture Issuer and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or obligations
then existing.
(vii) The Debenture Issuer may purchase and maintain insurance on
behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the provisions of
this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Institutional
Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each
of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration or
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 10.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
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of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, to the extent, if any, required by the Trust
Indenture Act, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the
Trust as of the end of such Fiscal Year, and the related statements of income
or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trust-
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ees shall endeavor to deliver all such statements within 30 days after the end
of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Debentures held by the Institutional Trustee shall be made
directly to the Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed overwithholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Institutional
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Institutional
Trustee, the Institutional Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
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<PAGE> 51
(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the right, preferences or privileges of the
Holders; and
(v) to modify, eliminate and add to any provision of the Declaration
to such extent as may be reasonably necessary to effectuate any of the
foregoing or to otherwise comply with applicable law.
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<PAGE> 52
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of
Securities representing at least 10% in liquidation amount of such class of
Securities. Such direction shall be given by delivering to the Regular Trustees
one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which
the meeting is to be called. Any Holders of Securities calling a meeting shall
specify in writing the Security Certificates held by the Holders of Securities
exercising the right to call a meeting and only those Securities specified shall
be counted for purposes of determining whether the required percentage set forth
in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of Securities. Any
action that may be taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting forth the action
so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the General
Corporation
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<PAGE> 53
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders of the Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Preferred Securities are then listed or trading,
otherwise provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders of Securities, waiver
of any such notice, action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Institutional Trustee represents and warrants to the Trust
and the Sponsor at the time of the Successor Institutional Trustee's acceptance
of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a national banking association with
trust powers, duly organized, validly existing and in good standing under
the laws of the United States, with trust power and authority to execute
and deliver, and to carry out and perform its obligations under the terms
of, the Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Institutional Trustee. The Declaration
has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law);
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<PAGE> 54
(c) the execution, delivery and performance of the Declaration by
the Institutional Trustee does not conflict with or constitute a breach of
the Articles of Organization or By-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee, of the
Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration under Delaware law constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(c) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the
Declaration.
(d) The Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under
the laws of the State of Delaware, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under
the terms of, the Declaration.
(e) No consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the
Declaration.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Securities):
SSBH Capital III
c/o Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: Charles W. Scharf
Michael J. Day
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of
to the Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
(c) if given to the Institutional Trustee, at its Corporate Trust
Office to the attention of The Institutional Trust Group (or such other
address as the Institutional Trustee may give notice of to the Holders of
the Securities).
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: A. George Saks, Secretary
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<PAGE> 56
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 14.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees
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<PAGE> 57
to one of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and effect
as though all of the signers had signed a single signature page.
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<PAGE> 58
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
----------------------------------------
Charles W. Scharf, as Regular Trustee
----------------------------------------
Michael J. Day, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Institutional Trustee
By:
-------------------------------------
Name:
Title:
SALOMON SMITH BARNEY HOLDINGS INC.
as Sponsor
By:
-------------------------------------
Name:
Title:
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<PAGE> 59
____% TRUST PREFERRED SECURITIES
____% TRUST COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of _________ __, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. ______________ Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of _______ MILLION DOLLARS ($___,000,000) and a liquidation amount with
respect to the assets of the Trust of $25 per preferred security, are hereby
designated for the purposes of identification only as "__% Trust Preferred
Securities" (the "Preferred Securities"). The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange on which the Preferred Securities
are listed.
(b) Common Securities. _______ Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the Trust of
__________ MILLION DOLLARS ($____________) and a liquidation amount with respect
to the assets of the Trust of $25 per common security, are hereby designated for
the purposes of identification only as "__% Trust Common Securities" (the
"Common Securities"). The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate
per annum of __% (the "Coupon Rate") of the stated liquidation amount of $25 per
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears beyond the first
date such Distributions are payable (or would be payable if not for any
Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate
(to the extent permitted by applicable law). The term "Distributions" as used
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution
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is payable only to the extent that payments are made in respect of the
Debentures held by the Institutional Trustee and to the extent the Institutional
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from and including _________ __, 1997, and will be payable quarterly in arrears,
on March 31, June 30, September 30, and December 31 of each year, commencing on
_________ __, 1997. When, as and if available for payment, Distributions will be
made by the Institutional Trustee, except as otherwise described below. The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period from time to time on
the Debentures for a period not exceeding 20 consecutive quarters (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period may extend beyond
the date of maturity of the Debentures. As a consequence of the Debenture
Issuer's extension of the interest payment period, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded quarterly during any such Extension Period. In the event that
the Debenture Issuer exercises its right to extend the interest payment period,
then (a) the Debenture Issuer 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 SSBH 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 SSBH's capital stock for any
other class or series of SSBH's capital stock, or (iii) the purchase of
fractional interests in shares of SSBH's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) and (b) the Debenture Issuer 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 Debenture Issuer that rank pari
passu with or junior to the Debentures. The foregoing, however, will not apply
to any stock dividends paid by SSBH where the dividend stock is the same stock
as that on which the dividend is being paid. Prior to the termination of any
such Extension Period, the Debenture Issuer 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 quarters;
provided further, that no Extension Period may extend beyond the maturity of
the Debentures. Payments of accrued Distributions will be payable to Holders
as they appear on the books and records of the Trust on the first record date
after the end of the Extension Period. Upon the termination of any Extension
Period and the payment of all amounts then due, the Debenture Issuer may
commence a new Extension Period, subject to the above requirements. The Regular
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Trustees will give notice to each Holder of any Extension Period upon their
receipt of notice thereof from the Debenture Issuer.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust at the close of
business on the relevant record dates. While the Preferred Securities remain in
book-entry only form, the relevant record dates shall be one Business Day prior
to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Preferred Securities will be made as described under the heading
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company" in the Prospectus Supplement dated _________ __, 1997,
(the "Prospectus Supplement") to the Prospectus dated _________ __, 199_
(together, the "Prospectus"), of the Trust included in the Registration
Statement on Form S-3 of the Sponsor, the Trust and certain other business
trusts. The relevant record dates for the Common Securities shall be the same
record date as for the Preferred Securities. If the Preferred Securities shall
not continue to remain in book-entry only form, the relevant record dates for
the Preferred Securities shall conform to the rules of any securities exchange
on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least 14 days but no more than 60 days
before the relevant payment dates, which payment dates shall correspond to the
interest payment dates on the Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution 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, 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.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders of the Securities on the date of the
dissolution, winding-up or termination, as the case may be, will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of liabilities of creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
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Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest
in an amount equal to the accrued and unpaid Distributions on, such Securities
outstanding at such time, have been distributed on a Pro Rata basis to the
Holders of the Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part,
whether at maturity or upon redemption (either at the option of the Debenture
Issuer or pursuant to a Special Event as described below), the proceeds from
such repayment or payment shall be simultaneously applied to redeem Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Debentures so repaid or redeemed at a redemption price of $25 per
Security plus an amount equal to accrued and unpaid Distributions thereon at the
date of the redemption, payable in cash (the "Redemption Price"). Holders shall
be given not less than 30 nor more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Securities will be redeemed Pro Rata and the Preferred Securities
to be redeemed will be as described in Section 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event
(each as defined below, and each a "Special Event") shall occur and be
continuing, the Regular Trustees shall, except in certain limited circumstances
in relation to a Tax Event described in this Section 4(c), dissolve the Trust
and, after satisfaction of creditors, cause Debentures held by the Institutional
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate, and
with accrued and unpaid interest equal to accrued and unpaid Distributions on,
the Securities outstanding at such time, to be distributed to the Holders of the
Securities in liquidation of such Holders' interests in the Trust on a Pro Rata
basis, within 90 days following the occurrence of such Special Event (the "90
Day Period"); 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 a nationally recognized independent tax
counsel experienced in such matters (a "No Recognition Opinion"), which opinion
may rely on published revenue rulings of the Internal Revenue Service, to the
effect that the Holders of the Securities will not recognize any gain or loss
for United States federal income tax purposes as a result of such dissolution
and distribution of Debentures, and provided further, that, if at the
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time there is available to the Debenture Issuer or the Trust the opportunity to
eliminate, within the 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 the
Trust, the Debenture Issuer or the Holders of the Securities ("Ministerial
Action"), the Debenture Issuer or the Trust will pursue such Ministerial Action
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the Debenture
Issuer 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 Debenture
Issuer would be precluded from deducting the interest on the Debentures for
United States federal income tax purposes, even after the Debentures were
distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), 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 Debenture Issuer shall have
the right, upon not less than 30 nor more than 60 days notice, to redeem the
Debentures, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed shall be redeemed by the Trust at the Redemption Price on
a Pro Rata basis; provided, however, that if at the time there is available to
the Debenture Issuer or the Trust the opportunity to eliminate, within such 90
day period, the Tax Event by taking some Ministerial Action, the Trust or the
Debenture Issuer will pursue such Ministerial Action in lieu of redemption.
"Tax Event" means that the Regular Trustees shall have received an
opinion of a nationally recognized independent tax counsel experienced in such
matters (a "Tax Event 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 the Prospectus Supplement), in
either case after the date of the Prospectus Supplement, there is more than an
insubstantial risk that (i) the Trust would be subject to United States federal
income tax with respect to interest accrued or received on the Debentures, (ii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, or (iii) interest payable to the Trust on
the Debentures would not be deductible, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent counsel
experienced in practice under the Investment Company Act (an "Investment Company
Event Opinion") to the effect
I-5
<PAGE> 64
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 a more than an insubstantial risk that the Trust is
or will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) DTC or its nominee (or any successor
Clearing Agency or its nominee), as the record Holder of the Preferred
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
certificates representing Securities, except for certificates representing
Preferred Securities held by DTC or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent beneficial interests in the
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(e) If the Debentures are distributed to Holders of the Securities,
pursuant to the terms of the Indenture, the Debenture Issuer will use its best
efforts to have the Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(f)(i), a
Redemption/ Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid, to
Holders of Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with
re-
I-6
<PAGE> 65
spect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name of and held of
record by DTC or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to each Clearing Agency Participant (or Person on
whose behalf such nominee holds such securities) in accordance with the
procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then (A) while the Preferred Securities are in book-entry
only form, with respect to the Preferred Securities, by 12:00 noon, New
York City time, on the redemption date, provided, that the Debenture
Issuer has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will deposit irrevocably with DTC or its nominee (or
successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and
will give DTC (or any successor Clearing Agency) irrevocable instructions
and authority to pay the Redemption Price to the Holders of the Preferred
Securities, and (B) with respect to Preferred Securities issued in
definitive form and Common Securities, provided that the Debenture Issuer
has paid the Institutional Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price to the
Holders of such Securities by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on the redemption
date. If a Redemption/Distribution Notice shall have been given and funds
deposited as required, if applicable, then immediately prior to the close
of business on the date of such deposit, or on the redemption date, as
applicable, distributions will cease to accrue on the Securities so called
for redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that
have been so called for redemption. If any date fixed for redemption of
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 (and 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 each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any
Securities is improperly
I-7
<PAGE> 66
withheld or refused and not paid either by the Institutional Trustee or by
the Sponsor as guarantor pursuant to the relevant Securities Guarantee,
Distributions on such Securities will continue to accrue from the original
redemption date to the actual 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.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, DTC or its nominee (or any successor Clearing Agency or its
nominee) if the Global Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued, to the Holder thereof,
and (B) in respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Debenture Issuer
or its affiliates may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in aggregate liquidation amount of the Preferred
Securities, voting separately as a class, may 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 Debentures, to (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercise any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past 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 Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required,
provided, however, that, where a consent or action under the Indenture would
require the consent or act of each holder of each Debenture affected thereby,
such consent or action under the Indenture shall not be effective until each
Holder of Preferred Securities shall have consented to such action or provided
such consent. The Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
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 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 coun-
I-8
<PAGE> 67
sel experienced in such matters to the effect that as a result of such action,
the Trust will not fail to be classified as a grantor trust for United States
federal income tax purposes. If the Institutional Trustee fails to enforce its
rights under the Debentures, any Holder of Preferred Securities may directly
institute a legal proceeding against the Debenture Issuer to enforce the
Institutional Trustee's rights under the Debentures without first instituting a
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 Debenture Issuer to pay
interest or principal on the Debentures 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 (a "Direct Action") of the principal
of or interest on the Debentures 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 Debentures without first (i)
directing the Institutional Trustee to enforce the terms of the Debentures or
(ii) instituting a legal proceeding directly against the Debenture Issuer to
enforce the Institutional Trustee's rights under the Debentures. Except as
provided in the preceding sentence, the Holders of Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, SSBH will be subrogated to
the rights of such holder of Preferred Securities under the Declaration to the
extent of any payment made by SSBH to such holder of Preferred Securities in
such Direct Action.
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 Securities in
the Trust 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 (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 the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with this Declaration and the terms of
the Securities.
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 by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
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<PAGE> 68
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the
Event of Default with respect to the Preferred Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may 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 (i) directing
the time, method, place of conducting any proceeding for any remedy available to
the Debenture Trustee, or exercising any trust or power conferred on the
Debenture Trustee with respect to the Debentures, (ii) waiving any past default
and its consequences that is waivable under Section 5.13 of the Indenture, or
(iii) exercising any right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable, provided that, where a consent
or action under the Indenture would require the consent or act of the Holders of
greater than a majority in principal amount of Debentures affected thereby (a
"Super Majority"), the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of
the Common Securities under this paragraph unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are enti-
I-10
<PAGE> 69
tled 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 Common
Securities. Each such notice will include a statement setting forth (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 the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration 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 Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only 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 a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination on the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
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 Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of the holders of greater than a majority in aggregate principal
amount of the Debentures (a "Super Majority"), the Institutional Trustee may
only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Institutional Trustee shall not take
any action in accordance with the directions of the Holders of the Securities
under this Section 7(b) unless the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust on
account of such action.
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<PAGE> 70
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank pari passu and payment thereon shall
be made Pro Rata with the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Institutional Trustee, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed on the New York Stock Exchange, Inc.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee, including the subordination provisions therein and to the provisions
of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
I-12
<PAGE> 71
The Sponsor will provide a copy of the Declaration or the Preferred
Securities Guarantee, and the Indenture to a Holder without charge on written
request to the Sponsor at its principal place of business.
I-13
<PAGE> 72
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
THIS PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS
PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS PREFERRED
SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Certificate Number Number of Preferred Securities
CUSIP NO. _____________
Certificate Evidencing Preferred Securities
of
SSBH CAPITAL IV
____% Trust Preferred Securities
(Liquidation Amount $25 per Preferred Security)
SSBH CAPITAL IV, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that ___________ (the
"Holder") is the registered owner of ________ (____) preferred securities of the
Trust representing undivided
A1-1
<PAGE> 73
beneficial interests in the assets of the Trust designated the [ ]% Trust
Preferred Securities (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of [ ], 199 , as
the same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Preferred Securities as set forth in Annex I
thereto. Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Holder is entitled to the benefits of the
Preferred Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Preferred Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
The Holder of this certificate, by accepting this certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) and (ii) agreed to the
terms of the Preferred Securities Guarantee, including that the Preferred
Securities Guarantee is (A) subordinate and junior in right of payment to all
other liabilities of SSBH, (B) pari passu with the most senior preferred or
preference stock now or hereafter issued by SSBH and with any guarantee now or
hereafter issued by SSBH with respect to preferred or preference stock of SSBH's
affiliates and (C) senior to SSBH's common stock.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
A1-2
<PAGE> 74
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of _______, ____.
______________________________________
Charles W. Scharf, as Trustee
______________________________________
Michael J. Day, as Trustee
A1-3
<PAGE> 75
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A1-4
<PAGE> 76
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
SSBH CAPITAL IV
[ ]% Trust Common Securities
(Liquidation Amount $25 per Common Security)
SSBH CAPITAL IV, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that Salomon Smith
Barney Holdings Inc., a Delaware corporation, (the "Holder") is the registered
owner of __________ (________) common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the [ ]%
Trust Common Securities (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer and satisfaction of the other conditions set forth in
the Declaration (as defined below), including, without limitation, Section 9.1
thereof. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of [ ], 199 , as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I
thereto. Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Sponsor will provide a copy of the
Declaration and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A2-1
<PAGE> 77
The Holder of this certificate, by accepting this certificate, is
deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
A2-2
<PAGE> 78
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of ______________, ____.
_____________________________________
Charles W. Scharf, as Trustee
_____________________________________
Michael J. Day, as Trustee
A2-3
<PAGE> 79
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
A2-4
<PAGE> 80
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 81
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4(cc)
================================================================================
SALOMON SMITH BARNEY HOLDINGS INC.
TO
THE CHASE MANHATTAN BANK
Trustee
---------------
INDENTURE
Dated as of ________, __, 1997
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TABLE OF CONTENTS
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PARTIES........................................................... 1
RECITALS OF THE COMPANY........................................... 1
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions ......................................... 1
Act ........................................................ 2
Additional Interest......................................... 2
Affiliate................................................... 2
Authenticating Agent........................................ 2
Board of Directors.......................................... 2
Board Resolution............................................ 2
Book Entry Interest......................................... 2
Business Day................................................ 2
Commission.................................................. 2
Common Securities........................................... 3
Company .................................................... 3
Company Request............................................. 3
Company Order............................................... 3
Compounded Interest......................................... 3
Corporate Trust Office...................................... 3
Coupon Rate................................................. 3
Covenant Defeasance......................................... 3
Declaration................................................. 3
Defaulted Interest.......................................... 3
Defeasance.................................................. 3
Deferred Interest........................................... 3
Delaware Trustee............................................ 3
Depositary.................................................. 3
Direct Action............................................... 3
Dissolution Event........................................... 4
Distributions............................................... 4
Event of Default............................................ 4
Exchange Act................................................ 4
Extended Interest Payment Period............................ 4
Floating or Adjustable Rate Provision....................... 4
Floating or Adjustable Rate Security........................ 4
Global Security............................................. 4
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Holder...................................................... 4
Indenture................................................... 4
Institutional Trustee....................................... 4
Interest Payment Date....................................... 4
Maturity.................................................... 4
Non Book-Entry Preferred Securities......................... 5
No Recognition Opinion...................................... 5
Officers' Certificate....................................... 5
Opinion of Counsel.......................................... 5
Outstanding................................................. 5
Paying Agent................................................ 6
Person ..................................................... 6
Place of Payment............................................ 6
Predecessor Security........................................ 6
Preferred Securities........................................ 6
Preferred Security Certificate.............................. 6
Redemption Date............................................. 6
Redemption Option Date...................................... 6
Redemption Price............................................ 6
Redemption Tax Opinion...................................... 6
Regular Record Date......................................... 7
Regular Trustees............................................ 7
Responsible Officer......................................... 7
Securities.................................................. 7
SBH Trust................................................... 7
Security Beneficial Owner................................... 7
Security Register........................................... 7
Security Registrar.......................................... 7
Senior Indebtedness......................................... 7
Special Event............................................... 8
Special Record Date......................................... 8
Stated Maturity............................................. 8
Tax Event................................................... 8
Tax Event Opinion........................................... 8
Trust Indenture Act......................................... 8
Trust Securities............................................ 8
Trustee .................................................... 8
Underwriting Agreement...................................... 8
U.S. Government Obligations................................. 8
Vice President.............................................. 9
SECTION 1.2. Compliance Certificates and Opinions................. 9
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SECTION 1.3. Form of Documents Delivered to Trustee.............. 9
SECTION 1.4. Acts of Holders; Record Dates....................... 10
SECTION 1.5. Notices, Etc., to Trustee and Company............... 11
SECTION 1.6. Notice to Holders; Waiver........................... 11
SECTION 1.7. Conflict with Trust Indenture Act................... 11
SECTION 1.8. Effect of Headings and Table of Contents............ 12
SECTION 1.9. Successors and Assigns.............................. 12
SECTION 1.10. Separability Clause................................. 12
SECTION 1.11. Benefits of Indenture............................... 12
SECTION 1.12. Governing Law....................................... 12
SECTION 1.13. Legal Holidays...................................... 12
SECTION 1.14. Tax Characterization................................ 13
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally..................................... 13
SECTION 2.2. Form of Face of Security............................ 13
SECTION 2.3. Form of Reverse of Security......................... 16
SECTION 2.4. Form of Trustee's Certificate of
Authentication. .................................... 20
ARTICLE III
THE SECURITIES
SECTION 3.1. Amount Unlimited; Issuable in Series................ 20
SECTION 3.2. Denominations....................................... 22
SECTION 3.3. Execution, Authentication, Delivery and
Dating ............................................. 22
SECTION 3.4. Temporary Securities................................ 23
SECTION 3.5. Registration, Registration of Transfer and
Exchange ........................................... 24
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen
Securities ......................................... 25
SECTION 3.7. Payment of Interest; Interest Rights
Preserved .......................................... 26
SECTION 3.8. Persons Deemed Owners............................... 27
SECTION 3.9. Cancellation........................................ 27
SECTION 3.10. Interest............................................ 27
SECTION 3.11. Form and Payment.................................... 28
SECTION 3.12. Global Securities................................... 29
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ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.1. Satisfaction and Discharge of Indenture............. 30
SECTION 4.2. Defeasance and Discharge............................ 31
SECTION 4.3. Covenant Defeasance................................. 32
SECTION 4.4. Conditions to Defeasance or Covenant
Defeasance ......................................... 33
SECTION 4.5. Application of Trust Money.......................... 34
SECTION 4.6. Indemnity for U.S. Government Obligations........... 34
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default................................... 34
SECTION 5.2. Acceleration of Maturity; Rescission
and Annulment ...................................... 36
SECTION 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee.......................... 37
SECTION 5.4. Trustee May File Proofs of Claim.................... 38
SECTION 5.5. Trustee May Enforce Claims Without
Possession of Securities ........................... 38
SECTION 5.6. Application of Money Collected...................... 39
SECTION 5.7. Limitation on Suits................................. 39
SECTION 5.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest..................... 40
SECTION 5.9. Restoration of Rights and Remedies.................. 40
SECTION 5.10. Rights and Remedies Cumulative...................... 40
SECTION 5.11. Delay or Omission Not Waiver........................ 40
SECTION 5.12. Control by Holders.................................. 41
SECTION 5.13. Waiver of Past Defaults............................. 41
SECTION 5.14. Undertaking for Costs............................... 42
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities................. 42
SECTION 6.2. Notice of Defaults.................................. 43
SECTION 6.3. Certain Rights of Trustee........................... 44
SECTION 6.4. Not Responsible for Recitals or Issuance
of Securities ...................................... 44
SECTION 6.5. May Hold Securities................................. 45
SECTION 6.6. Money Held in Trust................................. 45
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SECTION 6.7. Compensation and Reimbursement...................... 45
SECTION 6.8. Disqualification; Conflicting Interests............. 46
SECTION 6.9. Corporate Trustee Required; Eligibility............. 51
SECTION 6.10. Resignation and Removal; Appointment
of Successor ....................................... 51
SECTION 6.11. Acceptance of Appointment by Successor.............. 52
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business ............................. 53
SECTION 6.13. Preferential Collection of Claims
Against Company .................................... 54
SECTION 6.14. Appointment of Authenticating Agent................. 57
ARTICLE VII
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and
Addresses of Holders ............................... 60
SECTION 7.2. Preservation of Information;
Communications to Holders .......................... 60
SECTION 7.3. Reports by Trustee.................................. 61
SECTION 7.4. Reports by Company.................................. 62
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only
on Certain Terms ................................... 63
SECTION 8.2. Successor Corporation Substituted................... 64
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent
of Holders ......................................... 64
SECTION 9.2. Supplemental Indentures with Consent
of Holders ......................................... 65
SECTION 9.3. Execution of Supplemental Indentures................ 66
SECTION 9.4. Effect of Supplemental Indentures................... 67
SECTION 9.5. Conformity with Trust Indenture Act................. 67
SECTION 9.6. Reference in Securities to Supplemental
Indentures ......................................... 67
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.......... 67
SECTION 10.2. Maintenance of Office or Agency..................... 67
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SECTION 10.3. Money for Securities Payments to Be
Held in Trust ...................................... 68
SECTION 10.4. Statement by Officers as to Default................. 69
SECTION 10.5. Covenants as to SSBH Trusts......................... 69
SECTION 10.6. Payment of Expenses................................. 70
SECTION 10.7. Listing on an Exchange.............................. 71
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of Article............................ 71
SECTION 11.2. Election to Redeem; Notice to Trustee............... 71
SECTION 11.3. Selection by Trustee of Securities to
Be Redeemed ........................................ 72
SECTION 11.4. Notice of Redemption................................ 72
SECTION 11.5. Deposit of Redemption Price......................... 73
SECTION 11.6. Securities Payable on Redemption Date............... 73
SECTION 11.7. Securities Redeemed in Part......................... 73
SECTION 11.8. Tax Event Redemption................................ 74
ARTICLE XII
SINKING FUNDS
SECTION 12.1. Applicability of Article............................ 74
SECTION 12.2. Satisfaction of Sinking Fund Payments
with Securities .................................... 75
SECTION 12.3. Redemption of Securities for Sinking Fund........... 75
ARTICLE XIII
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 13.1. Extension of Interest Payment Period................ 76
SECTION 13.2. Notice of Extension................................. 76
SECTION 13.3. Limitation of Transactions.......................... 77
ARTICLE XIV
SUBORDINATION OF SECURITIES
SECTION 14.1. Agreement to Subordinate............................ 77
SECTION 14.2. Default on Senior Indebtedness...................... 78
SECTION 14.3. Liquidation; Dissolution; Bankruptcy................ 78
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SECTION 14.4. Subrogation......................................... 80
SECTION 14.5. Trustee to Effectuate Subordination................. 81
SECTION 14.6. Notice by the Company............................... 81
SECTION 14.7. Rights of the Trustee; Holders of
Senior Indebtedness ................................ 82
SECTION 14.8. Subordination May Not Be Impaired................... 82
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Acknowledgement of Rights........................... 83
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Salomon Smith Barney Holdings Inc.
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of ______________ __, 199_
Trust Indenture
Act Section Indenture Section
ss. 310 (a)(1)........................................ 6.9
(a)(2)........................................ 6.9
(a)(3)........................................ Not Applicable
(a)(4)........................................ Not Applicable
(b)........................................... 6.8
.............................................. 6.10
ss. 311 (a)........................................... 6.13(a)
(b)........................................... 6.13(b)
(b)(2)........................................ 7.3(a)(2)
.............................................. 7.3(b)
ss. 312 (a)........................................... 7.1
.............................................. 7.2(a)
(b)........................................... 7.2(b)
(c)........................................... 7.2(c)
ss. 313 (a)........................................... 7.3(a)
(b)........................................... 7.3(b)
(c)........................................... 7.3(a), 7.3(b)
(d)........................................... 7.3(c)
ss. 314 (a)........................................... 7.4
(b)........................................... Not Applicable
(c)(1)........................................ 1.2
(c)(2)........................................ 1.2
(c)(3)........................................ Not Applicable
(d)........................................... Not Applicable
(e)........................................... 1.2
ss. 315 (a)........................................... 6.1(a)
(b)........................................... 6.2
.............................................. 7.3(a)(6)
(c)........................................... 6.1(b)
(d)........................................... 6.1(c)
(d)(1)........................................ 6.1(a)(1)
(d)(2)........................................ 6.1(c)(2)
(d)(3)........................................ 6.1(c)(3)
(e)........................................... 5.14
ss. 316 (a)........................................... 1.1
(a)(1)(A)..................................... 5.2
.............................................. 5.12
(a)(1)(B)..................................... 5.13
(a)(2)........................................ Not Applicable
(b)........................................... 5.8
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ss. 317 (a)(1)........................................ 5.3
(a)(2)........................................ 5.4
(b)........................................... 10.3
ss. 318 (a)........................................... 1.7
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NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
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INDENTURE, dated as of [_______], 199_, between SALOMON SMITH BARNEY
HOLDINGS INC., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
388 Greenwich Street, New York, New York 10013, and THE CHASE MANHATTAN BANK, a
New York banking association duly organized and existing under the laws of the
State of New York, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (herein called
the "Securities"), to be issued in one or more series as in this Indenture
provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting
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principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted
at the date of such computation; and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act," when used with respect to any Holder, has the meaning specified in
Section 1.4.
"Additional Interest" has the meaning specified in Section 3.10(c).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to act
on behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book Entry Interest" means a beneficial interest in a Global Security,
ownership of which shall be maintained and transfers of which shall be made
through book entries by the Depositary.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in New York, New York are authorized or
obligated by any applicable law to close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
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"Common Securities" means undivided beneficial interests in the assets of
a SSBH Trust which rank, except upon the occurrence and continuation of an Event
of Default, pari passu with Preferred Securities issued by such SSBH Trust.
"Company" means the Person named as the "Company' in the first paragraph
of this instrument until a successor corporation shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman or a Vice Chairman of the
Board, its President, a Vice President, its Chief Financial Officer or its Chief
Accounting Officer, and by its Treasurer, a Deputy Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Compounded Interest" has the meaning specified in Section 12.1.
"Corporate Trust Office" means the principal office of the Trustee in the
City of New York, New York at which at any particular time its corporate trust
business shall be principally administered, which at the date hereof is located
at 450 West 33rd Street - 15th Floor, New York, New York 10001.
"Coupon Rate" has the meaning specified in Section 3.10.
"Covenant Defeasance" has the meaning specified in Section 4.3.
"Declaration" means, with respect to a SSBH Trust, the amended and
restated declaration of trust or any other governing instrument of such SSBH
Trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Defeasance" has the meaning specified in Section 4.2.
"Deferred Interest" has the meaning specified in Section 12.1.
"Delaware Trustee" has the meaning specified in the Declaration of the
applicable SSBH Trust.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 3.1.
"Direct Action" has the meaning specified in Section 15.1.
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"Dissolution Event" means, with respect to a SSBH Trust, that as a result
of the occurrence and continuation of a Special Event with respect to such SSBH
Trust, such SSBH Trust is to be dissolved in accordance with its Declaration.
"Distributions" on Trust Securities of a SSBH Trust has the meaning set
forth in the Declaration of such SSBH Trust.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor legislation.
"Extended Interest Payment Period" has the meaning specified in Section
12.1.
"Floating or Adjustable Rate Provision" means a formula or provision,
specified in a Board Resolution or an indenture supplemental hereto, providing
for the determination, whether pursuant to objective factors or pursuant to the
sole discretion of any Person (including the Company), and periodic adjustment
of the interest rate per annum borne by a Floating or Adjustable Rate Security.
"Floating or Adjustable Rate Security" means any Security which provides
for interest to be payable thereon at a rate per annum that may vary from time
to time over the term thereof in accordance with a Floating or Adjustable Rate
Provision.
"Global Security" means a Security that evidences all or part of the
Securities of any series and is authenticated and delivered to, and registered
in the name of, the Depositary for such Securities or a nominee thereof.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 3.1.
"Institutional Trustee" has the meaning set forth in the Declaration of
the applicable SSBH Trust.
"Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or
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herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Non Book-Entry Preferred Securities" has the meaning specified in Section
3.12(a).
"No Recognition Opinion," with respect to a SSBH Trust, has the meaning
specified in the Declaration of such SSBH Trust.
"Officers' Certificate" means a certificate signed by the Chairman or Vice
Chairman of the Board, the President, a Vice President, the Chief Financial
Officer or the Chief Accounting Officer, and by the Treasurer a Deputy
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made; and
(iii) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided that in determining whether the Holders of the requisite principal
amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding; provided, however, that, in determining whether the Trustee shall
be protected in relying, upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded and
provided, further, that Securities held by the Institutional
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Trustee for the benefit of the holders of the Trust Securities shall not be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (or premium, if any) or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest on the Securities of that series are payable as specified as
contemplated by Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" means undivided beneficial interests in the assets
of a SSBH Trust which rank, except upon the occurrence and continuation of an
Event of Default, pari passu with Common Securities issued by such SSBH Trust.
"Preferred Security Certificate" has the meaning specified in the
Declaration of the applicable SSBH Trust.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Option Date" means, with respect to a series of Securities,
the date specified as contemplated by Section 3.1 on or after which, from time
to time, the Company, at its option, may redeem such series of Securities in
whole or in part.
"Redemption Price," when used with respect to any Security to be redeemed,
means such percentage of the principal amount of such Security that is specified
pursuant to Section 3.1 plus any accrued and unpaid interest thereon to the date
of redemption.
"Redemption Tax Opinion," with respect to a SSBH Trust, has the meaning
set forth in the Declaration of the applicable SSBH Trust.
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"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified as such pursuant
to Section 3.1.
"Regular Trustees" has the meaning set forth in the Declaration of the
applicable SSBH Trust.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any vice-president,
any assistant vice-president, any assistant secretary, the treasurer, any
assistant treasurer or other officer of the Corporate Trust Office of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"SSBH Trust" means each of SSBH Capital I, SSBH Capital II, SSBH Capital
III and SSBH IV, each a Delaware statutory business trust, or any other similar
trust created for the purpose of issuing preferred securities in connection with
the issuances of Securities under this Indenture.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Security Beneficial Owner" means, with respect to a Book Entry Interest,
a person who is the beneficial owner of such Book Entry Interest, as reflected
on the books of the Depositary, or on the books of a Person maintaining an
account with such Depositary (directly as a Depositary participant or as an
indirect participant, in each case in accordance with the rules of the
Depositary).
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5.
"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 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) 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) of
other Persons secured by any lien
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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 Securities, and (2) any
indebtedness between or among such obligor and its Affiliates, including all
other debt securities and guarantees in respect of those debt securities, issued
to (x) any SSBH Trust or (y) any other trust, or a trustee of such trust,
partnership or other entity affiliated with the Company which is a financing
vehicle of the Company (a "Financing Entity") in connection with the issuance by
such Financial Entity of preferred securities or other securities which rank
pari passu with, or junior to, the Preferred Securities.
"Special Event," with respect to a SSBH Trust, has the meaning specified
in the Declaration of such SSBH Trust.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Tax Event," with respect to a SSBH Trust, has the meaning set forth in
the Declaration of the applicable SSBH Trust.
"Tax Event Opinion," with respect to a SSBH Trust, has the meaning set
forth in the Declaration of the applicable SSBH Trust.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as in force
at the date as of which this instrument was executed, except as provided in
Section 9.5.
"Trust Securities" means Common Securities and Preferred Securities of any
SSBH Trust.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the Trustee with respect to Securities of that series.
"Underwriting Agreement" has the meaning set forth in the Declaration of
the applicable SSBH Trust.
"U.S. Government Obligations" has the meaning specified in Section 4.4.
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"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.2. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officer's Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or
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<PAGE> 20
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders shall be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
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SECTION 1.5. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention:
Institutional Trust Group; provided, however, that such instrument will be
considered properly given if submitted in an electronic format, i.e., by
facsimile, E-Mail or otherwise, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company; provided, however,
that such instrument will be considered properly given if submitted in an
electronic format, i.e., by facsimile, E-Mail or otherwise.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
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<PAGE> 22
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
This Indenture and the Securities shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York, and all
rights and remedies shall be governed by such laws without regard for the
principles of its conflicts of laws.
SECTION 1.13. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, provided that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date
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<PAGE> 23
or Stated Maturity, as the case may be, 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 date.
SECTION 1.14. Tax Characterization.
The Company, the Trustee and each Holder of a Security (by acceptance
thereof) agrees to treat the Securities as debt instruments for United States
federal, state and local income and franchise tax purposes and agrees not to
take any contrary position before any taxing authority or on any tax return
unless otherwise required by law.
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of such Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.3 for the
authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article.
The definitive Securities may be produced in any manner as determined by
the officers executing such Securities, as evidenced by their execution of such
Securities.
SECTION 2.2. Form of Face of Security.
[IF THE SECURITY IS TO BE A GLOBAL SECURITY, INSERT - This
Security is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depositary or a nominee of a
Depositary. This Security is exchangeable for Securities registered in the name
of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this
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<PAGE> 24
Security (other than a transfer of this Security as a whole by the Depositary to
a nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary) may be registered except in limited
circumstances.
Unless this Security is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the issuer
or its agent for registration of transfer, exchange or payment, and any Security
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
No. _________________
SALOMON SMITH BARNEY HOLDINGS INC.
[INSERT TITLE OF SERIES OF SECURITY]
SALOMON SMITH BARNEY HOLDINGS INC., a Delaware corporation (the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
______________ or registered assigns, the principal sum of _____________ Dollars
($___________) on _________, ____, and to pay interest on said principal sum
from ____________, ____, or from the most recent interest payment date (each
such date, an "Interest Payment Date") to which interest has been paid or duly
provided for, [quarterly] [(subject to deferral as set forth herein)] in arrears
on [___________, ___________, ___________ and ___________] of each year
commencing ________, ____, at [If the Security is to bear interest at a fixed
rate, insert -a rate of ..% per annum,] [If the Security is a Floating or
Adjustable Rate Security, insert -a rate per annum [computed-determined] in
accordance with the [insert defined name of Floating or Adjustable Rate
Provision] set forth below] until the principal hereof shall have become due and
payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the same rate per
annum compounded [quarterly]. The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on this Security
is not a Business Day, then payment of 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, 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. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, which
shall be the
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<PAGE> 25
close of business on the Business Day next preceding such Interest Payment Date.
[IF PURSUANT TO THE PROVISIONS OF THE INDENTURE THE SECURITIES ARE NO LONGER
REPRESENTED BY A GLOBAL SECURITY -- which shall be the close of business on the
____ Business Day next preceding such Interest Payment Date.] Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holders on such regular record date and may be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a special record date to be fixed by
the Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered Holders of this series of Securities not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture. Payments on this
Global Security will be made to the Depository Trust Company, or to a successor
Depositary. [IF PURSUANT TO THE PROVISIONS OF THE INDENTURE THE SECURITIES ARE
NO LONGER REPRESENTED BY A GLOBAL SECURITY --The principal of (and premium, if
any) and the interest on this Security shall be payable at the office or agency
of the Trustee maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered Holder at
such address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of this Security is the Institutional Trustee
of a SSBH Trust, the payment of the principal of (and premium, if any) and
interest on this Security will be made at such place and to such account as may
be designated by such Institutional Trustee.]
[At this point in the Security Form of any series of Floating or
Adjustable Rate Securities, the text of the Floating or Adjustable Rate
Provision relating thereto should be inserted.]
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness of the Company, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by, such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness of the Company, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
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<PAGE> 26
The provisions of this Security are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated: _______________
SALOMON SMITH BARNEY HOLDINGS INC.
By:_________________________
Name:
Title:
By:_______________________
Name:
Title:
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized series of securities of
the Company (herein sometimes referred to as the "Securities"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of [_______], 1997 (the "Indenture"), duly executed and
delivered between the Company and The Chase Manhattan Bank, as Trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a description of the respective rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Securities. By the terms of the Indenture, the
Securities are issuable in series that may vary as to amount, date of maturity,
rate of interest and in other respects as provided in the Indenture. This series
of Securities is limited in aggregate principal amount to $ _________ (, plus up
to an additional $ aggregate principal amount which may be issued upon exercise
of the over-allotment option contemplated by the Underwriting Agreement).
Because of the occurrence and continuation of a Tax Event, in
certain circumstances, this Security may become due and payable at [specify
redemption prices]% of the principal amount thereof, together with any interest
accrued thereon (the "Redemption
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<PAGE> 27
Price"). The Redemption Price shall be paid prior to 12:00 noon, New York City
time, on the date of such redemption or at such earlier time as the Company
determines. The Company shall have the right to redeem this Security at the
option of the Company, without premium or penalty, in whole or in part at any
time on or after ________, ____ (an "Optional Redemption"), or at any time in
certain circumstances upon the occurrence of a Tax Event, at a redemption price
equal to [specify redemption prices]% of the principal amount thereof, plus any
accrued but unpaid interest to the date of such redemption (the "Optional
Redemption Price"). Any redemption pursuant to this paragraph will be made upon
not less than 30 days nor more than 60 days notice, at the Optional Redemption
Price. If the Securities are only partially redeemed by the Company pursuant to
an Optional Redemption, the Securities will be redeemed pro rata or by lot or by
any other method utilized by the Trustee; provided that if, at the time of
redemption, the Securities are registered as a Global Security, the Depositary
shall determine the principal amount of such Securities held by each Security
Beneficial Owner to be redeemed in accordance with its procedures.
[The Securities of this series are subject to redemption upon not
less than 30 days' nor more than 60 days' notice by mail, (1) on _________ in
any year commencing with the year ____ and ending with the year _____ through
operation of the sinking fund for this series at a Redemption Price of _____,
(2) at any time [on or after ________, 199__, as a whole or in part, at the
election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [on or before ________, ___%,
and if redeemed during the 12-month period beginning ___________ of the years
indicated, and thereafter at a Redemption Price equal to ____% of the principal
amount, together in the case of any such redemption (whether through operation
of the sinking fund or otherwise) with accrued interest to the Redemption Date,
but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to
______, redeem any Securities of this series as contemplated by Clause (2) of
the preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of monies borrowed having
an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than ____% per annum.]
[The sinking fund for this series provides for the redemption on
_______ in each year beginning with the year _______ and ending with the
year________ of [not less than] $_________ ("mandatory sinking fund") and not
more than $__________ aggregate principal amount of Securities of this series.
Securities of this series acquired or redeemed by the Company otherwise than
through [mandatory] sinking fund payments may be credited against subsequent
[mandatory] sinking fund payments otherwise required to be made in the [inverse]
order in which they become due.]
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<PAGE> 28
In the event of redemption of this Security in part only, a new
Security or Securities of this series for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities; provided,
however, that no such supplemental indenture shall (i) extend the fixed maturity
of any Securities of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, without the consent of the Holder
of each Security so affected, or (ii) reduce the aforesaid percentage of
Securities, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Security then
outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Securities of any series at the time outstanding affected thereby, on behalf of
all of the Holders of the Securities of such series, to waive any past default
in the performance of any of the covenants contained in the Indenture, or
established pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any of the Securities of such series. Any such consent or
waiver by the registered Holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Security and of any Security issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Security at the time and place and at the
rate and in the money herein prescribed.
The Company shall have the right at any time during the term of the
Securities and from time to time to extend the interest payment period of such
Securities for up to 20 consecutive quarters (an "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Securities to the extent that payment of such interest is enforceable under
applicable law); provided, that no such Extended Interest Payment Period shall
extend beyond
18
<PAGE> 29
the maturity of the Securities; and provided further that during any such
Extended Interest Payment 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 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.
Before the termination of any such Extended Interest Payment Period, the Company
may further extend such Extended Interest Payment Period, provided that such
Extended Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters. At the termination of any such
Extended Interest Payment Period and upon the payment of all accrued and unpaid
interest and any additional amounts then due, the Company may commence a new
Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Security is transferable by the registered Holder hereof
on the Security Register of the Company, upon surrender of this Security for
registration of transfer at the office or agency of the Trustee in the City and
State of New York accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any paying agent and the Security Registrar
may deem and treat the registered holder hereof as the absolute owner hereof
(whether or not this Security shall be overdue and notwithstanding any notice of
ownership or writing hereon made by anyone other than the Security Registrar)
for the purpose of receiving payment of or on account of the principal hereof
and premium, if any, and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Security, or for any claim based hereon, or otherwise in
respect hereof, or based on or in
19
<PAGE> 30
respect of the Indenture, against any incorporator, stockholder, officer or
director, past, present or future, as such, of the Company or of any predecessor
or successor corporation, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issuance hereof, expressly waived and released.
[The Securities of this series are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof.]
[This Global Security is exchangeable for Securities in definitive form only
under certain limited circumstances set forth in the Indenture. Securities of
this series so issued are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof.] As provided in the
Indenture and subject to certain limitations [herein and] therein set forth,
Securities of this series [so issued] are exchangeable for a like aggregate
principal amount of Securities of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 2.4. Form of Trustee's Certificate of Authentication.
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series of Securities described
in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By:__________________________
Authorized Signatory
ARTICLE III
THE SECURITIES
SECTION 3.1. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
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The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all Securities of any other
series);
(2) the date or dates on which the principal of the Securities of
the series is payable, and, if applicable to the series, the terms of any
sinking fund obligations with respect to such series;
(3) the rate or rates at which the Securities of the series shall
bear interest or the Floating or Adjustable Rate Provision pursuant to
which such rates shall be determined, the date or dates from which any
such interest shall accrue, the Interest Payment Dates on which any such
interest shall be payable and the Regular Record Date for the interest
payable on any Interest Payment Date (if such Interest Payment Dates or
Regular Record Dates differ from those provided herein);
(4) the place or places where the principal of (and any premium, if
any) and interest on Securities of the series shall be payable;
(5) in addition to the redemption rights provided herein, the period
or periods within which (including the Redemption Option Date for the
series) and the price or prices at which any Securities of the series may
be redeemed, in whole or in part, at the option of the Company;
(6) if other than denominations of $25 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(7) any other event or events of default applicable with respect to
the Securities of the series in addition to those provided in Section
5.1(1) through (7);
(8) any other covenant or warranty included for the benefit of
Securities of the series in addition to (and not inconsistent with) those
included in this Indenture for the benefit of Securities of all series, or
any other covenant or warranty included for the benefit of Securities of
the series in lieu of any covenant or warranty included in this Indenture
for the benefit of Securities of all series, or any provision that any
covenant or warranty included in this Indenture for the benefit of
Securities of all series shall not be for the benefit of Securities of the
series, or any combination of such covenants, warranties or provisions;
(9) the subordination terms of the Securities of the series;
(10) the provisions of this Indenture, if any, that shall not apply
to the series; and
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(11) any other terms of the series (which additional terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to
such Board Resolution and set forth, or determined in the manner provided, in
the Officers' Certificate referred to above or in any such indenture
supplemental hereto.
If any of the terms of the Securities of a series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the Securities of such series.
SECTION 3.2. Denominations.
The Securities of each series shall be issuable in registered form without
coupons and in such denominations as shall be specified as contemplated by
Section 3.1. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $25 and any integral multiple thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
or a Vice Chairman of the Board, its President, a Vice President, the Chief
Financial Officer or the Chief Accounting Officer, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive at the time of the initial delivery by the Company of
Securities of such series to the Trustee for authentication, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel
stating,
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(a) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 2.1, that such form
has been established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such terms
have been established in conformity with the provisions of this Indenture;
and
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, reorganization, and other
laws of general applicability relating to or affecting the enforcement or
creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon receipt of a Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the directors or officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for Securities of that
series, without
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charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like aggregate principal
amount of definitive Securities of the same series and of like tenor of
authorized denominations. Until so exchanged, the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.
SECTION 3.5. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities, or of Securities of a particular series, and of
transfers of Securities or of Securities of such series. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Subject to Section 3.11, upon surrender for registration of transfer of
any Security of any series at the office or agency of the Company in a Place of
Payment for Securities of that series, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Securities of like tenor of the same series, of
any authorized denominations and of a like aggregate principal amount.
Subject to Section 3.11, at the option of the Holder, Securities of any
series may be exchanged for other Securities of like tenor of the same series,
of any authorized denominations and of a like aggregate principal amount, upon
surrender of the Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or
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exchange of Securities, other than exchanges pursuant to Section 3.4, 9.6 or
11.7 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of
or exchange any Security of any series during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities of such series selected for redemption under Section 11.3 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of
Securities of such series at his address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange, if,
after written notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee in its sole discretion.
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Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
For the purposes of determining the Holders who are entitled to
participate in any distribution on the Securities in respect of which a Regular
Record Date or a Special Record Date is not otherwise provided for in this
Indenture, or for the purpose of any other action (unless provided for pursuant
to Section 3.1), the Company may from time to time fix a date, not more than 90
days prior to the date of the payment of distribution or other action, as the
case may be, as a record date for the determination of the identity of the
Holders of record for such purposes.
SECTION 3.8. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 3.7) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. Unless otherwise directed by a Company Order, delivery of
which must be delivered in a timely manner to prevent such destruction, all
cancelled Securities held by the Trustee shall be destroyed by it, and the
Trustee shall deliver a certificate of such destruction to the Company.
SECTION 3.10. Interest.
(a) Each Security will bear interest at the rate established for the
series of Securities of which such Security is a part pursuant to Section 3.1
(the "Coupon Rate") from and including the original date of issuance of such
Security until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article Four)
quarterly in arrears
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on March 31, June 30, September 30 and December 31 of each year (or in such
other periodic installments on such other dates established as payment dates for
the series of Securities of which such Security is a part pursuant to Section
3.1) (each, an "Interest Payment Date") commencing on the date established for
the series of Securities of which such Security is a part pursuant to Section
3.1, to the Person in whose name such Security or any Predecessor Security is
registered, at the close of business on the Regular Record Date for such
interest installment, which, in respect of any Securities of which the
Institutional Trustee of any SSBH Trust is the Holder or a Global Security,
shall be the close of business on the Business Day next preceding that Interest
Payment Date. Notwithstanding the foregoing sentence, if the Preferred
Securities of a SSBH Trust are no longer in book-entry only form or, except if
the Securities originally issued to such SSBH Trust are held by the
Institutional Trustee of such SSBH Trust, the Securities of any series are not
represented by a Global Security, the Company may select a Regular Record Date
for such interest installment on such series of Securities which shall be any
date more than 14 days but less than 60 days before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months and will include the
first day but exclude the last day of such period. Except as provided in the
following sentence, 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 in each 30-day month. In the event
that any date on which interest is payable on the Securities of any series is
not a Business Day, then payment of 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, 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.
(c) If, at any time while the Institutional Trustee of a SSBH Trust
is the Holder of Securities of any series, such SSBH Trust or such Institutional
Trustee is 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 case, the Company will pay
as additional interest ("Additional Interest") on the Securities of such series,
such additional amounts as shall be required so that the net amounts received
and retained by such SSBH Trust and/or such Institutional Trustee, as the case
may be, after paying such taxes, duties, assessments or other governmental
charges will be equal to the amounts such SSBH Trust and/or such Institutional
Trustee, as the case may be, would have received had no such taxes, duties,
assessments or other government charges been imposed.
SECTION 3.11. Form and Payment.
Except as provided in Section 3.12, the Securities of each series
shall be issued in fully registered certificated form without interest coupons.
Principal and interest on the Securities issued in certificated form will be
payable, the transfer of such Securities will be registrable, and such
Securities will be exchangeable, for Securities of the same series bearing
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identical terms and provisions at the office or agency of the Trustee; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the Holders of such Securities at such address as shall appear
in the Security Register. Notwithstanding the foregoing, so long as the Holder
of all Securities of any series is the Institutional Trustee of any SSBH Trust,
the payment of the principal of and interest (including Compounded Interest and
Additional Interest, if any) on Securities of such series will be made at such
place and to such account as may be designated by the Institutional Trustee.
SECTION 3.12. Global Securities.
(a) In connection with a Dissolution Event with respect to any SSBH
Trust,
(i) the Securities in non book-entry certificated form held by such
SSBH Trust, or its Institutional Trustee, will be presented to the Trustee
by the Institutional Trustee of such SSBH Trust in exchange for a Global
Security in an aggregate principal amount equal to the aggregate principal
amount of all outstanding Securities of the series issued to such SSBH
Trust, to be registered in the name of the Depositary, or its nominee, and
delivered by the Trustee to the Depositary for crediting to the accounts
of its participants pursuant to the instructions of the Regular Trustees
of the relevant SSBH Trust. The Company upon any such presentation shall
execute a Global Security in such aggregate principal amount and deliver
the same to the Trustee for authentication and delivery in accordance with
this Indenture. Payments on any Securities issued as a Global Security
will be made to the Depositary; and
(ii) if any Preferred Securities of a SSBH Trust are held in non
book-entry certificated form, the Securities in non book-entry
certificated form held by such SSBH Trust, or its Institutional Trustee,
may be presented to the Trustee by the Institutional Trustee of such SSBH
Trust and any Preferred Security Certificate which represents Preferred
Securities of such SSBH Trust other than Preferred Securities held by the
Depositary or its nominee ("Non Book-Entry Preferred Securities") will be
deemed to represent Securities presented to the Trustee by such
Institutional Trustee having an aggregate principal amount equal to the
aggregate liquidation amount of the Non Book-Entry Preferred Securities
until such Preferred Security Certificates are presented to the Security
Registrar for transfer or reissuance at which time such Preferred Security
Certificates will be cancelled and a Security, registered in the name of
the holder of the Preferred Security Certificate or the transferee of the
holder of such Preferred Security Certificate, as the case may be, with an
aggregate principal amount equal to the aggregate liquidation amount of
the Preferred Security Certificate cancelled, will be executed by the
Company and delivered to the Trustee for authentication and delivery in
accordance with this Indenture. On issue of such Securities, Securities
with an equivalent aggregate principal amount that were presented by the
Institutional Trustee to the Trustee will be deemed to have been
cancelled.
(b) A Global Security may be transferred, in whole but not in part,
only to another nominee of the Depositary, or to a successor Depositary selected
or approved by the Company or to a nominee of such successor Depositary.
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(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for any series of Securities or if
at any time the Depositary for such series shall no longer be registered or in
good standing under the Exchange Act, or other applicable statute or regulation,
and a successor Depositary for such series is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
condition, as the case may be, the Company will execute, and, subject to this
Article III, the Trustee, upon written notice from the Company, will
authenticate and deliver the Securities of such series in definitive registered
form without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Security in exchange for such
Global Security. In addition, the Company may at any time determine that the
Securities of any series shall no longer be represented by a Global Security. In
such event the Company will execute, and subject to Section 3.5, the Trustee,
upon receipt of an Officers Certificate evidencing such determination by the
Company, will authenticate and deliver the Securities of such series in
definitive registered form without coupons, in authorized denominations, and in
an aggregate principal amount equal to the principal amount of the Global
Security for such series in exchange for such Global Security. Upon the exchange
of the Global Security for such Securities in definitive registered form without
coupons, in authorized denominations, the Global Security shall be cancelled by
the Trustee. Such Securities in definitive registered form issued in exchange
for the Global Security shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to the Depositary, for delivery to the Persons in
whose names such Securities are so registered.
ARTICLE IV
SATISFACTION AND DISCHARGE; DEFEASANCE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.6 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 10.3) have
been delivered to the Trustee for cancellation; or
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(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose an amount sufficient to pay and discharge
the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if any)
and interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the Company's
obligation to pay the expenses of any SSBH Trust under Section 10.6 (except upon
the application of subclauses 1(A) or 1(B)(i) above), the obligations of the
Trustee to any Authenticating Agent under Section 6.14, and, if money shall have
been deposited with the Trustee pursuant to subclause (B) of clause (1) of this
Section, the obligations of the Trustee under Section 4.2 and the last paragraph
of Section 10.3 shall survive.
SECTION 4.2. Defeasance and Discharge.
The following provisions shall apply to the Securities of each series
unless specifically otherwise provided in a Board Resolution, Officers'
Certificate or indenture supplemental hereto provided pursuant to Section 3.1.
In addition to discharge of this Indenture pursuant to Sections 4.1 and 4.3, in
the case of any series of Securities with respect to which an amount sufficient
to pay and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium, if any)
and interest, as certified pursuant to subparagraph (a) of Section 4.4 can be
determined at the time of making the deposit referred to in such subparagraph
(a), the Company shall be deemed to have paid and
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discharged the entire indebtedness on all the Securities of such a series as
provided in this Section on and after the date the conditions set forth in
Section 4.4 are satisfied, and the provisions of this Indenture with respect to
the Securities of such series shall no longer be in effect (except as to (i)
rights of registration of transfer and exchange of Securities of such series,
(ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities of
such series, (iii) rights of Holders of Securities of such series to receive,
solely from the trust fund described in subparagraph (a) of Section 4.4,
payments of principal thereof and interest, if any, thereon upon the original
stated due dates therefor (but not upon acceleration), and remaining rights of
the Holders of Securities of such series to receive mandatory sinking fund
payments, if any, (iv) the rights, obligations, duties and immunities of the
Trustee hereunder, (v) this Section 4.2, (vi) the rights of the Holders of
Securities of such series as beneficiaries hereof with respect to the property
so deposited with the Trustee payable to all or any of them) and (vii) the
Company's obligation to pay the expenses of any SSBH Trust under Section 10.6)
(hereinafter called "Defeasance"), and the Trustee at the cost and expense of
the Company, shall execute proper instruments acknowledging the same.
SECTION 4.3. Covenant Defeasance.
In the case of any series of Securities with respect to which an amount
sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal (and
premium, if any) and interest, as certified pursuant to subparagraph (a) of
Section 4.4 can be determined at the time of making the deposit referred to in
such subparagraph (a), (i) the Company shall be released from its obligations
under any covenants specified in or pursuant to this Indenture (except as to (A)
rights of registration of transfer and exchange of Securities of such series,
(B) substitution of mutilated, defaced, destroyed, lost or stolen Securities of
such series, (C) rights of Holders of Securities of such series to receive, from
the Company pursuant to Section 10.1, payments of principal thereof and
interest, if any, thereon upon the original stated due dates therefor (but not
upon acceleration), the Holders of Securities of such series to receive
mandatory sinking fund payments, if any, (D) the rights, obligations, duties and
immunities of the Trustee hereunder, (E) the rights of the Holders of Securities
of such series as beneficiaries hereof with respect to the property so deposited
with the Trustee payable to all or any of them and (F) the Company's obligation
to pay the expenses of any SSBH Trust under Section 10.6), and (ii) the
occurrence of any event specified in Sections 5.1(4) (with respect to any of the
covenants specified in or pursuant to this Indenture) and 5.1(8) shall be deemed
not to be or result in an Event of Default, in each case with respect to the
Outstanding Securities of such series as provided in this Section on and after
the date the conditions set forth in Section 4.4 are satisfied (hereinafter
called "Covenant Defeasance"), and the Trustee, at the cost and expense of the
Company, shall execute proper instruments acknowledging the same. For this
purpose, such Covenant Defeasance means that the Company may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant (to the extent so specified in the case of Section
5.1(4)), whether directly or indirectly by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision
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herein or in any other document, but the remainder of this Indenture and the
Securities of such series shall be unaffected thereby.
SECTION 4.4. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 4.2
or 4.3 to the Outstanding Securities:
(a) with reference to Section 4.2 or 4.3, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of Securities of such
series (i) cash in an amount, or (ii) direct obligations of the United
States of America, backed by its full faith and credit ("U.S. Government
Obligations"), maturing as to principal and interest, if any, at such
times and in such amounts as will insure the availability of cash, or
(iii) a combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and
discharge (A) the principal of and interest, if any, on all Securities of
such series on each date that such principal or interest, if any, is due
and payable, and (B) any mandatory sinking fund payments on the dates on
which such payments are due and payable in accordance with the terms of
this Indenture and the Securities of such series;
(b) in the case of Defeasance under Section 4.2, the Company has
delivered to the Trustee an Opinion of Counsel based on the fact that (x)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (y), since the date hereof, there has
been a change in the applicable United States federal income tax law, in
either case to the effect that, and such opinion shall confirm that, the
Holders of the Securities of such series will not recognize income, gain
or loss for United States federal income tax purposes as a result of such
deposit, Defeasance and discharge and will be subject to United States
federal income tax on the same amount and in the same manner and at the
same times, as would have been the case if such deposit, Defeasance and
discharge had not occurred;
(c) in the case of Covenant Defeasance under Section 4.3, the
Company has delivered to the Trustee an Opinion of Counsel to the effect
that, and such opinion shall confirm that, the Holders of the Securities
of such series will not recognize income, gain or loss for United States
federal income tax purposes as a result of such deposit and Covenant
Defeasance and will be subject to United States federal income tax on the
same amount and in the same manner and at the same times, as would have
been the case if such deposit and Covenant Defeasance had not occurred;
(d) such Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any agreement or
instrument to which the Company is a party or by which it is bound; and
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(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent contemplated by this provision have been complied with.
SECTION 4.5. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money
and U.S. Government Obligations deposited with the Trustee pursuant to Section
4.4 shall be held in trust, and such money and all money from such U.S.
Government Obligations shall be applied by it, in accordance with the provisions
of the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for whose payment such money and U.S. Government
Obligations has been deposited with the Trustee.
SECTION 4.6. Indemnity for U.S. Government Obligations.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 4.4 or the principal or interest received in
respect of such obligations other than any such tax, fee or other charge that by
law is for the account of the Holders of Outstanding Securities.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default," wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of interest upon any Security of that
series when it becomes due and payable, and continuance of such default
for a period of 30 days; it being understood that the occurrence of an
Extended Interest Payment Period in accordance with the terms of such
Security will not constitute such a default; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
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(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of Securities of any series other
than that series), and continuance of such default or breach for a period
of 90 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities
of that series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable Federal
or State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in effect
for a period of 90 consecutive days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company in furtherance of any such action; or
(7) in the event Securities of a series are issued and sold to a
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
Securities
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to holders of Trust Securities in liquidation or redemption of their
interests in such SSBH Trust upon a Special Event with respect to such
SSBH Trust, (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; or
(8) any other Event of Default provided with respect to Securities
of that series.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee,
if the Trustee has actual knowledge thereof, or the Holders of not less than 25%
in principal amount of the Outstanding Securities of that series may, but shall
not be obligated to, declare the principal amount of all of the Securities of
that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) shall become immediately due and
payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of Securities representing a majority in principal
amount of the Outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities
of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or
rates prescribed therefor in such Securities,
(C) all overdue sinking fund payments with respect to
Securities of that series and interest thereon at the rate or rates
prescribed therefor in such Securities;
(D) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(E) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel (including reasonable legal fees and
expenses);
and
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(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof, or
(3) default is made in the deposit of any sinking fund payment, when
and as due by the terms of a Security of any series;
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and for any sinking
fund payment and, to the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal (and premium, if any), on any
overdue interest and on any overdue sinking fund payment, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due unpaid, may, in its
discretion, prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
and collect the monies adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If an Event of Default, of which a Responsible Officer of the Trustee has
actual knowledge, with respect to Securities of any series occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
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SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of any of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or interest or any sinking
fund payment) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any), and interest and sinking fund payments owing and unpaid
in respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of an Holder in any such proceeding.
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
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SECTION 5.6. Application of Money Collected.
Subject to Article Fourteen, any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (or premium, if any), interest or sinking fund payments, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.7; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any), and interest on, and sinking fund
payments with respect to, the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Securities for principal (and premium, it any), and
interest and sinking fund payments, respectively.
SECTION 5.7. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity,
reasonably satisfactory to the Trustee, against the costs, expenses
(including reasonable legal fees and expenses) and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of all Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain
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priority or preference over any other of such Holders or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 3.7)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
3.6, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
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SECTION 5.12. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to the
Securities of such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any), or
interest on, any Security of such series, or in the payment of any sinking
fund installment with respect to the Securities, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected;
provided, however, that if the Securities of such series are held by a SSBH
Trust or a trustee of such trust, such waiver or modification to such waiver
shall not be effective until the holders of Trust Securities representing 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
Securities 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.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
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SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities of any series, or to any suit instituted by
any Holder for the enforcement of the payment of the principal of (or premium,
if any) or interest on any Security on or after the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on or
after the Redemption Date).
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default;
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture; but
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to any series of Securities,
of which a Responsible Officer of the Trustee has actual knowledge, has occurred
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
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(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities of any series determined as provided in Section
5.12, relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture with respect to the
Securities of such series; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or indemnity, reasonably satisfactory to it,
against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with respect
to Securities of any series, the Trustee shall transmit by mail to all Holders
of Securities of such series, as their names and addresses appear in the
Security Register, notice of such default hereunder actually known to a
Responsible Officer of the Trustee, unless such default shall have been cured or
waived; provided that, except in the case of a default in the payment of the
principal of (or premium, if any) or interest on any Security of such series or
in the payment of any sinking fund installment with respect to Securities of
such series, the Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders of Securities of
such series; and provided, further, that in the case of any default of the
character specified in Section 5.1(4) with respect to Securities of such series,
no such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to Securities of such series.
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SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order, and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, conclusively rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity,
reasonably satisfactory to it, against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
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SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 6.7. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such reasonable
compensation for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents, nominees, custodians and counsel), except
any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
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As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of Holders of particular Securities. The obligations of
the Company under this Section shall survive the satisfaction and discharge of
this Indenture.
SECTION 6.8. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section, with respect to the Securities of any series, it shall,
within 90 days after a Responsible Officer of the Trustee ascertains that it has
such conflicting interest, either eliminate such conflicting interest or resign
with respect to the Securities of that series in the manner and with the effect
hereinafter specified in this Article.
(b) In the event that the Trustee shall fail to comply with the provisions
of subsection (a) of this Section with respect to the Securities of any series,
the Trustee shall, within 10 days after the expiration of such 90-day period,
transmit by mail to all Holders of Securities of that series, as their names and
addresses appear in the Security Register, notice of such failure.
(c) For the purposes of this Section, the Trustee shall be deemed to have
a conflicting interest with respect to the Securities of any series if:
(1) the Trustee is trustee under this Indenture with respect to the
Outstanding Securities of any series other than that series or is trustee
under another indenture under which any other securities, or certificates
of interest or participation in any other securities, of the Company are
outstanding, unless such other indenture is a collateral trust indenture
under which the only collateral consists of Securities issued under this
Indenture, provided that there shall be excluded from the operation of
this paragraph this Indenture with respect to the Securities of any series
other than that series or any indenture or indentures under which other
securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or indentures are
wholly unsecured and such other indenture or indentures are
hereafter qualified under the Trust Indenture Act, unless the
Commission shall have found and declared by order pursuant to
Section 305(b) or Section 307(c) of the Trust Indenture Act that
differences exist between the provisions of this Indenture with
respect to Securities of that series and one or more other series or
the provisions of such other indenture or indentures which are so
likely to involve a material conflict of interest as to make it
necessary in the public interest or for the protection of investors
to disqualify the Trustee from acting as such under this Indenture
with respect to the Securities of that series and such other series
or under such other indenture or indentures, or
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(ii) the Company shall have sustained the burden of proving,
on application to the Commission and after opportunity for hearing
thereon, that trusteeship under this Indenture with respect to the
Securities of that series and such other series or such other
indenture or indentures is not so likely to involve a material
conflict of interest as to make it necessary in the public interest
or for the protection of investors to disqualify the Trustee from
acting as such under this Indenture with respect to the Securities
of that series and such other series or under such other indenture
or indentures;
(2) the Trustee or any of its directors or executive officers is an
obligor upon the Securities or an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control
with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (i) one individual may be a director or an executive officer, or
both, of the Trustee and a director or an executive officer, or both, of
the Company but may not be at the same time an executive officer of both
the Trustee and the Company; (ii) if and so long as the number of
directors of the Trustee in office is more than nine, one additional
individual may be a director or an executive officer, or both, of the
Trustee and a director of the Company; and (iii) the Trustee may be
designated by the Company or by any underwriter for the Company to act in
the capacity of transfer agent, registrar, custodian, paying agent, fiscal
agent, escrow agent or depositary, or in any other similar capacity, or,
subject to the provisions of paragraph (1) of this subsection, to act as
trustee, whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner or
executive officer thereof, or is beneficially owned, collectively, by any
two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
subsection defined), (i) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company not including the
Securities issued under this Indenture and securities issued under any
other indenture under which the Trustee is also trustee, or (ii) 10% or
more of any class of security of an underwriter for the Company;
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(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
subsection defined), 5% or more of the voting securities of any person
who, to the actual knowledge of a Responsible Officer of the Trustee, owns
10% or more of the voting securities of, or controls directly or
indirectly or is under direct or indirect common control with, the
Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
subsection defined), 10% or more of any class of security of any person
who, to the actual knowledge of a Responsible Officer of the Trustee, owns
50% or more of the voting securities of the Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos trustee,
guardian, committee or conservator, or in any other similar capacity, an
aggregate of 25% or more of the voting securities, or of any class of
security, of any person, the beneficial ownership of a specified
percentage of which would have constituted a conflicting interest under
paragraph (6), (7) or (8) of this subsection. As to any such securities of
which the Trustee acquired ownership through becoming executor,
administrator or testamentary trustee of an estate which included them,
the provisions of the preceding sentence shall not apply, for a period of
two years from the date of such acquisition, to the extent that such
securities included in such estate do not exceed 25% of such voting
securities or 25% of any such class of security. Promptly after May 15 in
each calendar year, the Trustee shall make a check of its holdings of such
securities in any of the above-mentioned capacities as of such May 15. If
the Company fails to make payment in full of the principal of (or premium,
if any) or interest on any of the Securities when and as the same becomes
due and payable, and such failure continues for 30 days thereafter, the
Trustee shall make a prompt check of its holdings of such securities in
any of the above-mentioned capacities as of the date of the expiration of
such 30-day period, and after such date, notwithstanding the foregoing
provisions of this paragraph, all such securities so held by the Trustee,
with sole or joint control over such securities vested in it, shall, but
only so long as such failure shall continue, be considered as though
beneficially owned by the Trustee for the purposes of paragraphs (6), (7)
and (8) of this subsection.
The specification of percentages in paragraphs (5) to (9), inclusive, of
this subsection shall not be construed as indicating that the ownership of such
percentages of the securities of a person is or is not necessary or sufficient
to constitute direct or indirect control for the purposes of paragraph (3) or
(7) of this subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay monies lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (ii) an obligation shall be deemed to be "in default"
when a default in payment of principal shall
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have continued for 30 days or more and shall not have been cured; and (iii) the
Trustee shall not be deemed to be the owner or holder of (A) any security which
it holds as collateral security, as trustee or otherwise, for an obligation
which is not in default as defined in clause (ii) above, or (B) any security
which it holds as collateral security under this Indenture, irrespective of any
default hereunder, or (C) any security which it holds as agent for collection,
or as custodian, escrow agent or depositary, or in any similar representative
capacity.
(d) For the purposes of this Section:
(1) The term "underwriter," when used with reference to the Company,
means every person who, within three years prior to the time as of which
the determination is made, has purchased from the Company with a view to,
or has offered or sold for the Company in connection with, the
distribution of any security of the Company outstanding at such time, or
has participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct
or indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or any
individual performing similar functions with respect to any organization,
whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership. an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security are
presently entitled to vote in the direction or management of the affairs
of a person.
(5) The term "Company" means any obligor upon the Securities.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
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(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person
means such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount," when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the obligation
evidenced by such other class of securities is not in default as to
principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security for
an obligation of the issuer not in default as to principal or
interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the
issuer thereof;
provided that any voting securities of an issuer shall be deemed outstanding if
any person other than the issuer is entitled to exercise the voting rights
thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided that, in the case
of secured evidences of indebtedness, all of which are issued under a
single indenture, differences in the interest rates or maturity dates of
various series thereof shall not be deemed sufficient to constitute such
series different classes and provided further that, in the case of
unsecured evidences of indebtedness, differences in the interest rates or
maturity dates thereof shall not be deemed sufficient to constitute them
securities of different classes, whether or not they are issued under a
single indenture.
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SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
State authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervision or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 6.11 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8(a) after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
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then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee with respect to all Securities, or (ii) subject to Section 5.14, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 6.11. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.11, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 6.11, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of
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the retiring Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to the Securities of all
series for which it is the Trustee hereunder, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
(e) The Trustee shall not be liable for the acts or omissions to act of
any successor Trustee.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to
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which the Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 6.13. Preferential Collection of Claims Against Company.
(a) Subject to subsection (b) of this Section, if the Trustee shall be or
shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within four months prior to a default, as defined in subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the
Securities and the holders of other indenture securities, as defined in
subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such four months' period and valid as
against the Company and its other creditors, except any such reduction
resulting from the receipt or disposition of any property described in
paragraph (2) of this subsection, or from the exercise of any right of
set-off which the Trustee could have exercised if a petition in bankruptcy
had been filed by or against the Company upon the date of such default;
and
(2) all property received by the Trustee in respect of any claims as
such creditor, either as security therefor, or in satisfaction or
composition thereof. or otherwise, after the beginning of such four
months' period, or an amount equal to the proceeds of any such property,
if disposed of, subject, however, to the rights, if any, of the Company
and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of
any such claim by any Person (other than the Company) who is liable
thereon, (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Federal Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four months' period;
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(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such four
months' period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
subsection (c) of this Section, would occur within four months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim
as provided in paragraph (B) or (C), as the case may be, to the extent of
the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such four months' period for property held as security at
the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property held
in such special account and the proceeds thereof shall be apportioned among the
Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders and the holders of other indenture securities dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, whether such distribution is made in cash, securities or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceedings for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee, the Holders and the holders of
other indenture securities, in accordance with the provisions of this paragraph,
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to
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the Trustee and the Holders and the holders of other indenture securities with
respect to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the beginning of such
four months' period shall be subject to the provisions of this subsection as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such four months' period, it shall be
subject to the provisions of this subsection if and only if the following
conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such four months' period; and
(ii) such receipt of property or reduction of claim occurred within
four months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of this
Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Holders at the time and in the manner
provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in subsection (c) of
this Section;
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(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of the
Company; and
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within
the classification of self-liquidating paper, as defined in subsection (c)
of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in full of
the principal of or interest on any of the Securities or upon the other
indenture securities when and as such principal or interest becomes due
and payable;
(2) the term "other indenture securities" means securities upon
which the Company is an obligor outstanding under any other indenture (i)
under which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii) under
which a default exists at the time of the apportionment of the funds and
property held in such special account;
(3) the term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation;
(5) the term "Company" means any obligor upon the Securities; and
(6) the term "Federal Bankruptcy Act" means the Bankruptcy Act or
Title 11 of the United States Code.
SECTION 6.14. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be
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authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 3.6, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment by first-class mail, postage prepaid, to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve, as
their names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
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The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 6.7.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon an
alternative certificate of authentication in the following form:
"This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
As Trustee
By ............................
As Authenticating Agent
By ............................
Authorized Officer"
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ARTICLE VII
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually not more than 15 days after each Regular Record
Date a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities of such series as of the
preceding March 1 or September 1, or as of such Regular Record Date, as
the case may be, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior
to the time such list is furnished;
provided that if and so long as the Trustee shall be the Security Registrar for
such series, such list shall not be required to be furnished.
SECTION 7.2. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) If three or more Holders of Securities of the same series (herein
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a Security of such
series for a period of at least six months preceding the date of such
application, and such application states that the applicants' desire to
communicate with other Holders of such series with respect to their rights under
this Indenture or under the Securities of such series and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall, within five business days after the receipt
of such application, at its election, either
(i) afford such applicants access to the information with respect to
the Holders of such series preserved at the time by the Trustee in
accordance with Section 7.2(a), or
(ii) inform such applicants as to the approximate number of Holders
of such series whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section 7.2(a),
and as to the approximate cost of mailing to such Holders the form of
proxy or other communication, if any, specified in such application.
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If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of such series whose name and address appear in the
information preserved at the time by the Trustee in accordance with Section
7.2(a) a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interest of the Holders of such series or would be in violation of applicable
law. Such written statement shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing upon the objections specified in the
written statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity for hearing,
that all the objections so sustained have been met and shall enter an order so
declaring, the Trustee shall mail copies of such material to all such Holders
with reasonable promptness after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of any obligation or duty to
such applicants respecting their application.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 7.2(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 7.2(b).
SECTION 7.3. Reports by Trustee.
(a) Within 60 days after April 15 of each year commencing with the year
1997, the Trustee shall transmit by mail to all Holders of Securities for which
it is Trustee hereunder, as their names and addresses appear in the Security
Register, a brief report dated as of such April 15 with respect to:
(1) its eligibility under Section 6.9 and its qualifications under
Section 6.8, or in lieu thereof, if to the best of its knowledge it has
continued to be eligible and qualified under said Sections, a written
statement to such effect;
(2) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the date of such report,
and for the reimbursement of which it claims or may claim a lien or
charge, prior to that of such Securities, on any property or funds held or
collected by it as Trustee, except that the Trustee shall not be required
(but may elect) to report such advances if such advances so remaining
unpaid aggregate not more than 1/2 of 1% of the principal amount of such
Securities Outstanding on the date of such report;
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(3) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the
Securities) to the Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as collateral
security therefor, except an indebtedness based upon a creditor
relationship arising in any manner described in Section 6.13(b)(2), (3),
(4) or (6);
(4) the property and funds, if any, physically in the possession of
the Trustee as such on the date of such report;
(5) any additional issue of Securities for which it is Trustee
hereunder which the Trustee has not previously reported; and
(6) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects such Securities, except action in respect of a default,
notice of which has been or is to be withheld by the Trustee in accordance
with Section 6.2.
(b) The Trustee shall transmit by mail to all Holders of Securities for
which it is Trustee hereunder, as their names and addresses appear in the
Security Register, a brief report with respect to the character and amount of
any advances (and if the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as such) since the date of
the last report transmitted pursuant to subsection (a) of this Section (or if no
such report has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim a lien or
charge, prior to that of such Securities, on property or funds held or collected
by it as Trustee and which it has not previously reported pursuant to this
subsection, except that the Trustee shall not be required (but may elect) to
report such advances if such advances remaining unpaid at any time aggregate 10%
or less of the principal amount of such Securities Outstanding at such time,
such report to be transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such transmission to
such Holders, be filed by the Trustee with each securities exchange upon which
any such Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when any such Securities are listed on any
securities exchange.
SECTION 7.4. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
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Securities Exchange Act of 1934; or, if the Company is not required to
file information, documents or reports pursuant to either of said
Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934 in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in
such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Company with the conditions and covenants of this Indenture as may
be required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, unless:
(1) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as
an entirety shall be a corporation organized and existing under the laws
of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if
any) and interest on all the Securities and the performance of every
covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction, 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; and
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(3) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
SECTION 8.2. Successor Corporation Substituted.
Upon any consolidation of the Company with, or merger of the Company into,
any other corporation or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
8.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter, except in the
case of a lease, the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
contained herein and in the Securities, pursuant to Article VIII; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of one
or more specified series) or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security
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Outstanding of any series created prior to the execution of such
supplemental indenture which is entitled to the benefit of such provision;
or
(5) to secure the Securities; or
(6) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 3.1; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 6.11(b); or
(8) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided such action shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon (including any
change in the Floating or Adjustable Rate Provision pursuant to which such
rate is determined that would reduce that rate for any period) or any
premium payable upon the redemption thereof, or change any Place of
Payment where, or the coin or currency in which, any Security or any
premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or modify the provisions of this Indenture with respect
to the subordination of the Securities in a manner adverse to the Holders,
or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture,
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or the consent of whose Holders is required for any waiver (of compliance
with certain provisions of this Indenture or certain defaults hereunder
and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section 5.13,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby;
provided that this clause shall not be deemed to require the consent of
any Holder with respect to changes in the references to "the Trustee" and
concomitant changes in this Section or the deletion of this proviso, in
accordance with the requirements of Sections 6.11(b) and 9.1(8), or
(4) remove or impair the rights of any Holder of Securities to bring
a Direct Action in certain circumstances, as provided in Section 15.1;
provided, further, that if the Securities of such series are held by a 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 Securities 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.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby to the extent provided therein.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities of such series and this Indenture, and will duly comply
with all other terms, agreements and conditions contained in, or made in the
Indenture for the benefit of, the Securities of such series.
SECTION 10.2. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with
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the address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency in
each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 10.3. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will, prior to each due date of the principal of (and premium,
if any) or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Securities of that series in trust
for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal (and premium, if any) or interest on the Securities
of that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
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The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for three
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York, New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 10.4. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of Sections 10.1 to 10.3, inclusive, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 10.5. Covenants as to SSBH Trusts.
For so long as any Trust Securities of a SSBH Trust remain outstanding,
the Company will (i) maintain 100% direct or indirect ownership of the Common
Securities of such SSBH Trust; provided, however, that any permitted successor
of the Company hereunder may succeed to the Company's ownership of such Common
Securities, (ii) not voluntarily dissolve, wind up or terminate such SSBH Trust,
except in connection with a distribution of Securities upon a Special Event, and
in connection with certain mergers, consolidations or amalgamations permitted by
the Declaration of the applicable SSBH Trust, (iii) timely perform its duties as
Sponsor of the applicable SSBH Trust, (iv) use its reasonable efforts to cause
such SSBH Trust to (a) remain a business trust, except in connection with a
distribution of Securities to the holders of Trust Securities as provided in the
Declaration of such SSBH Trust, the redemption of all of the Trust
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Securities and in connection with certain mergers, consolidations or
amalgamations permitted by the Declaration of such SSBH Trust, and (b) otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes and (v) not knowingly take any action that would cause such SSBH
Trust to not be classified as a grantor trust for United States federal income
tax purposes.
SECTION 10.6. Payment of Expenses.
(a) In connection with the offering, sale and issuance of each series of
Securities to the Institutional Trustee of a SSBH Trust and in connection with
the sale of Trust Securities by such SSBH Trust, the Company, in its capacity as
borrower with respect to such Securities, shall:
(i) pay all costs and expenses relating to the offering, sale and
issuance of such Securities, including commissions to the underwriters
payable pursuant to the applicable Underwriting Agreement and compensation
of the Trustee under this Indenture in accordance with the provisions of
Section 6.7;
(ii) pay all costs and expenses of such SSBH Trust (including, but
not limited to, costs and expenses relating to the organization of the
trust, the offering, sale and issuance of the Trust Securities of such
SSBH Trust (including commissions to the underwriters in connection
therewith), the fees and expenses of the Institutional Trustee, the
Regular Trustees and the Delaware Trustee of such SSBH Trust, the costs
and expenses relating to the operation, maintenance and dissolution of
such SSBH Trust and the enforcement by such Institutional Trustee of the
rights of the holders of the Preferred Securities of such SSBH Trust,
including without limitation, costs and expenses of accountants,
attorneys, statistical or bookkeeping services, expenses for printing and
engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and
other telecommunications expenses and costs and expenses incurred in
connection with the acquisition, financing, and disposition of assets of
such SSBH Trust);
(iii) be primarily liable for any indemnification obligations
arising with respect to the Declaration of such SSBH Trust;
(iv) pay any and all taxes (other than United States withholding
taxes in respect of amounts paid on the Securities held by such SSBH
Trust) and all liabilities, costs and expenses with respect to such taxes
of such SSBH Trust.
(b) Upon termination of this Indenture or any series of Securities or the
removal or resignation of the Trustee pursuant to Section 6.10, the Company
shall pay to the Trustee all amounts accrued and owing to the Trustee to the
date of such termination, removal or resignation. Upon termination of the
Declaration of any SSBH Trust or the removal or resignation of the Delaware
Trustee or the Institutional Trustee, as the case may be, pursuant to Section
5.6 of the Declaration of such SSBH Trust, the Company shall pay to such
Delaware Trustee or such Institutional Trustee, as the case may be, all amounts
accrued and owing to such
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Delaware Trustee or such Institutional Trustee, as the case may be, to the date
of such termination, removal or resignation.
SECTION 10.7. Listing on an Exchange.
If Securities of any series are to be issued as a Global Security in
connection with the distribution of such Securities to the holders of the
Preferred Securities of a SSBH Trust upon a Dissolution Event with respect to
such SSBH Trust, the Company will use its best efforts to list such series of
Securities on the New York Stock Exchange, Inc. or on such other securities
exchange as the Preferred Securities of such SSBH Trust are then listed.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of Article.
Securities of each series are redeemable before their respective Stated
Maturities in accordance with their respective terms and (except as otherwise
specified as contemplated by Section 3.1 for Securities of any series) in
accordance with this Article.
SECTION 11.2. Election to Redeem; Notice to Trustee.
(a) Subject to the provisions of Section 11.2(b) and to the other
provisions of this Article XI, except as otherwise may be specified in this
Indenture or, with respect to any series of Securities, as otherwise specified
as contemplated by Section 3.1 for the Securities of such series, the Company
shall have the right to redeem any series of Securities, in whole or in part,
from time to time, on or after the Redemption Option Date for such series at the
Redemption Price. The election of the Company to redeem any Securities
redeemable at the election of the Company shall be evidenced by a Board
Resolution. In case of any redemption at the election of the Company of less
than all the Securities of any series, the Company shall, at least 30 days, but
not more than 60 days, prior to the Redemption Date fixed by the Company, notify
the Trustee of such Redemption Date and of the principal amount of Securities of
such series to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction.
(b) If a partial redemption of any series of Securities would result in
the delisting of the Preferred Securities of the SSBH Trust that purchased such
Securities from any national securities exchange or other organization on which
the Preferred Securities of such SSBH Trust are then listed, the Company shall
not be permitted to effect such partial redemption and may only redeem such
series of Securities in whole.
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SECTION 11.3. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series; provided, that if at the
time of redemption such Securities are registered as a Global Security, the
Depositary shall determine, in accordance with its procedures, the principal
amount of such Securities held by each Security Beneficial Owner to be redeemed.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities of such series to be
redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
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(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.
SECTION 11.6. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
The Redemption Price shall be paid prior to 12:00 noon, New York City
time, on the date of such redemption or such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an amount
sufficient to pay the Redemption Price by 10:00 a.m., New York City time, on the
date such Redemption Price is to be paid.
SECTION 11.7. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment for Securities of that series (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series, of like tenor
and of any
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authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
SECTION 11.8. Tax Event Redemption.
If a Tax Event with respect to any SSBH Trust has occurred and is
continuing and:
(a) the Company has received a Redemption Tax Opinion with respect
to such SSBH Trust; or
(b) after receiving a Tax Event Opinion, the Regular Trustees of
such SSBH Trust shall have been informed by tax counsel rendering the Tax
Event Opinion that a No Recognition Opinion cannot be delivered to such
SSBH Trust,
then, notwithstanding Section 11.2(a) but subject to Section 11.2(b), the
Company shall have the right upon not less than 30 days nor more than 60 days
notice to the Holders of Securities of the series issued to such SSBH Trust, or
to its Institutional Trustee, to redeem such Securities, in whole or in part,
for cash within 90 days following the occurrence of such Tax Event at the
Redemption Price, provided that if at the time there is available to the Company
or such SSBH Trust the opportunity to eliminate, within such 90 day period, the
Tax Event by taking some ministerial action ("Ministerial Action"), such as
filing a form or making an election, or pursuing some other similar reasonable
measure which has no adverse effect on the Company, the Trust or the holders of
the Trust Securities of such SSBH Trust, the Company or such SSBH Trust shall
pursue such Ministerial Action in lieu of redemption, and, provided further that
the Company shall have no right to redeem such Securities while the Company or
such SSBH Trust is pursuing any Ministerial Action pursuant to its obligations
under the Declaration of such SSBH Trust.
ARTICLE XII
SINKING FUNDS
SECTION 12.1. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.1 for the Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as
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provided in Section 12.2. Each sinking fund payment shall be applied to the
redemption of Securities as provided for by the terms of Securities of such
series.
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities.
Unless the form or terms of any series of Securities shall provide
otherwise, the Company (1) may deliver to the Trustee Outstanding Securities of
a series (other than any previously called for redemption) and (2) may apply as
a credit Securities of a series which have been redeemed either at the election
of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms of
such Securities, in each case in satisfaction of all or any part of any sinking
fund payment with respect to any Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
Securities; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
SECTION 12.3. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 12.2 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 45 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 11.3 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 11.4. The Company shall deposit the
amount of cash, if any, required for such sinking fund payment with the Trustee
in the manner provided in Section 11.5. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 11.6 and 11.7.
ARTICLE XIII
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 13.1. Extension of Interest Payment Period.
The Company shall have the right, at any time and from time to time during
the term of the Securities of any series, to defer payments of interest by
extending the interest payment period of all Securities of such series for a
period not exceeding 20 consecutive quarters (the "Extended
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Interest Payment Period"), during which Extended Interest Payment Period no
interest shall be due and payable on Securities of such series; provided that no
Extended Interest Payment Period may extend beyond the Maturity of such
Securities. To the extent permitted by applicable law, interest, the payment of
which has been deferred because of the extension of the interest payment period
pursuant to this Section 13.1, will bear interest thereon at the Coupon Rate
compounded quarterly for each quarter of the Extended Interest Payment Period
("Compounded Interest"). At the end of any Extended Interest Payment Period with
respect to any series of Securities, the Company shall pay all interest accrued
and unpaid on such Securities, including any Additional Interest and Compounded
Interest (together, "Deferred Interest") that shall be payable to the Holders of
Securities of such Series in whose names such Securities are registered in the
Security Register on the first record date after the end of such Extended
Interest Payment Period. Before the termination of any Extended Interest Payment
Period, the Company may further extend such period; provided that such period,
together with all such further extensions thereof, shall not exceed 20
consecutive quarters; and provided further that no prepayment of interest during
an Extended Interest Payment Period shall allow the Company to extend such
Extended Interest Payment Period beyond 20 consecutive quarters. Upon the
termination of any Extended Interest Payment Period with respect to any series
of Securities and upon the payment of all Deferred Interest then due, the
Company may commence a new Extended Interest Payment Period with respect to such
series of Securities, subject to the foregoing requirements. No interest on a
series of Securities shall be due and payable during an Extended Interest
Payment Period with respect thereto, except at the end thereof, provided the
Company may prepay at any time all or any portion of the interest accrued during
any Extended Interest Payment Period.
SECTION 13.2. Notice of Extension.
(a) If the Institutional Trustee of a SSBH Trust is the only Holder of
Securities of a series at the time the Company selects an Extended Interest
Payment Period with respect thereto, the Company shall give written notice to
the Regular Trustees and the Institutional Trustee of such SSBH Trust and to the
Trustee of its selection of such Extended Interest Payment Period one Business
Day before the earlier of (i) the next succeeding date on which Distributions on
the Trust Securities issued by such SSBH Trust would be payable, if not for such
Extended Interest Payment Period, or (ii) the date such SSBH Trust is required
to give notice of the record date, or the date such Distributions are payable,
to the New York Stock Exchange or other applicable self-regulatory organization
or to holders of the Preferred Securities issued by such SSBH Trust, but in any
event at least one Business Day before such record date.
(b) If the Institutional Trustee of a SSBH Trust is not the only Holder of
Securities of a series at the time the Company selects an Extended Interest
Payment Period with respect thereto, the Company shall give written notice to
the Holders of Securities of such series and the Trustee of its selection of
such Extended Interest Payment Period 10 Business Days before the earlier of (i)
the next succeeding Interest Payment Date, or (ii) the date the Company is
required to give notice of the record or payment date of such interest payment
to the New York Stock Exchange or other applicable self-regulatory organization
or to Holders of Securities of such series.
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(c) The quarter in which any notice is given pursuant to paragraphs (a) or
(b) of this Section 13.2 shall be counted as one of the 20 quarters permitted in
the maximum Extended Interest Payment Period with respect to any series of
Securities permitted under Section 1.3.
SECTION 13.3. Limitation of Transactions.
If with respect to any series of Securities (i) the Company shall exercise
its right to defer payments of interest thereon as provided in Section 13.1 or
(ii) there shall have occurred any Event of Default, 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, 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 Securities of such series
(including the Securities of any other series); provided, however, the Company
may declare and pay a stock dividend where the dividend stock is the same stock
as that on which the dividend is being paid.
ARTICLE XIV
SUBORDINATION OF SECURITIES
SECTION 14.1. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Securities issued
hereunder by such Holder's acceptance thereof likewise covenants and agrees,
that all Securities shall be issued subject to the provisions of this Article
Fourteen; and each Holder of a Security, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions.
The payment by the Company of the principal of, premium, if any, and
interest on all Securities issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred.
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No provision of this Article Fourteen shall prevent the occurrence of any
default or Event of Default hereunder.
SECTION 14.2. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company in
the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company, as the case may be, or in the event that the
maturity of any Senior Indebtedness of the Company, as the case may be, has been
accelerated because of a default, then, in either case, no payment shall be made
by the Company with respect to the principal (including redemption payments) of,
or premium, if any, or interest on, the Securities or to acquire any of the
Securities (except sinking fund payments made in Securities acquired by the
Company prior to such default).
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee, by any Holder or by any Paying Agent (or, if the
Company is acting as its own Paying Agent, money for any such payment is
segregated and held in trust) when such payment is prohibited by the preceding
paragraph of this Section 14.2, before all Senior Indebtedness of the Company is
paid in full, or provision is made for such payment in money in accordance with
its terms, such payment shall be held in trust for the benefit of, and shall be
paid over or delivered to, the holders of Senior Indebtedness of the Company or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, ratably according to the
aggregate amount remaining unpaid on account of the principal, premium, interest
or any other payment due on the Senior Indebtedness held or represented by each,
for application to the payment of all Senior Indebtedness of the Company, as the
case may be, remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the benefit of the holders
of such Senior Indebtedness, but only to the extent that the holders of the
Senior Indebtedness (or their representative or representatives or a trustee)
notify the Trustee in writing within 90 days of such payment of the amounts then
due and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.
SECTION 14.3. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal (and premium, if any) or interest on the Securities;
and upon any such dissolution or winding-up or liquidation or reorganization,
any payment by the Company, or
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distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities or the Trustee
would be entitled to receive, except for the provisions of this Article
Fourteen, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Securities or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Holders of Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee, by any Holder or by any Paying Agent (or, if the Company is acting as
its own Paying Agent, money for any such payment is segregated and held in
trust) before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, ratably according to the
aggregate amount remaining unpaid on account of the principal, premium, interest
or any other payment due on the Senior Indebtedness held or represented by each,
as calculated by the Company, for application to the payment of all Senior
Indebtedness of the Company, as the case may be, remaining unpaid to the extent
necessary to pay such Senior Indebtedness in full in money in accordance with
its terms, after giving effect to any concurrent payment or distribution to or
for the benefit of the holders of such Senior Indebtedness.
For purposes of this Article Fourteen, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Fourteen with
respect to the Securities to the payment of all Senior Indebtedness of the
Company, as the case may be, that may at the time be outstanding, provided that
(i) such Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and (ii) the rights of
the holders of such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions
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provided for in Article VIII shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 14.3 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article VIII. Nothing in Section
14.2 or in this Section 14.3 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 14.4. Subrogation.
Subject to the payment in full of all Senior Indebtedness of the Company,
the rights of the Holders of the Securities shall be subrogated to the rights of
the holders of such indebtedness to receive payments or distributions of cash,
property or securities of the Company, as the case may be, applicable to such
Senior Indebtedness until the principal of (and premium, if any) and interest on
the Securities shall be paid in full; and, for the purposes of such subrogation,
no payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article Fourteen,
and no payment over pursuant to the provisions of this Article Fourteen to or
for the benefit of the holders of such Senior Indebtedness by Holders of the
Securities or the Trustee, shall, as between the Company, its creditors other
than Holders of Senior Indebtedness of the Company, and the holders of the
Securities, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article
Fourteen are and are intended solely for the purposes of defining the relative
rights of the Holders of the Securities, on the one hand, and the holders of
such Senior Indebtedness on the other hand.
Nothing contained in this Article Fourteen or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness of the Company, and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest on the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Securities and creditors
of the Company, as the case may be, other than the holders of Senior
Indebtedness of the Company, as the case may be, nor shall anything herein or
therein prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under the Indenture,
subject to the rights, if any, under this Article Fourteen of the holders of
such Senior Indebtedness in respect of cash, property or securities of the
Company, as the case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article Fourteen, the Trustee, subject to the provisions of Section 6.1,
and the Holders of the Securities shall be entitled to conclusively rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the
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Securities, for the purposes of ascertaining the Persons entitled to participate
in such distribution, the holders of Senior Indebtedness and other indebtedness
of the Company, as the case may be, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Fourteen.
SECTION 14.5. Trustee to Effectuate Subordination.
Each Holder of Securities by such Holder's acceptance thereof authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Fourteen and appoints the Trustee such Holder's attorney-in-fact for any
and all such purposes.
SECTION 14.6. Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Securities pursuant
to the provisions of this Article Fourteen. Notwithstanding the provisions of
this Article Fourteen or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts that would
prohibit the making of any payment of monies to or by the Trustee in respect of
the Securities pursuant to the provisions of this Article Fourteen, unless and
until a Responsible Officer of the Trustee shall have received written notice
thereof from the Company or a holder or holders of Senior Indebtedness or their
representative or representatives or from any trustee therefor; and before the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 6.1, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the notice
provided for in this Section 14.6 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 6.1, shall be entitled
to conclusively rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness of the Company, as
the case may be (or a trustee on behalf of such holder), to establish that such
notice has been given by a holder of such Senior Indebtedness or a trustee on
behalf of any such holder or holders. In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article Fourteen, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of such Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article Fourteen,
and, if such evidence is not
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furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 14.7. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article Fourteen in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Fourteen, and no
implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of such Senior
Indebtedness and, subject to the provisions of Section 6.1, the Trustee shall
not be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Holders of Securities, the Company or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article Fourteen or otherwise.
SECTION 14.8. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company, as the case may be, or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Company, as the case may be,
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Company may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Fourteen or the obligations hereunder of the Holders of the Securities to the
holders of such Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in
any manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company, as the case may be, and
any other Person.
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ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities held by a
SSBH Trust or a trustee of such Trust, if the Institutional Trustee of such SSBH
Trust fails to enforce its rights under this Indenture as the Holder of the
series of Securities held as the assets of such SSBH Trust, any holder of
Preferred Securities of such SSBH Trust may institute legal proceedings directly
against the Company to enforce such Institutional Trustee's rights under this
Indenture without first instituting any legal proceedings against such
Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if an 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 applicable series of Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), the Company acknowledges that a holder of Trust Securities
issued by the SSBH Trust which is, or the Institutional Trustee of which is, the
Holder of such Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the applicable series
of Securities having a principal amount equal to the aggregate liquidation
amount of the Trust Securities of such holder (a "Direct Action") on or after
the respective due date specified of such holder on or after the respective due
date specified in the applicable series of Securities. Notwithstanding any
payments made to such holder of Trust Securities by the Company in connection
with a Direct Action, the Company shall remain obligated to pay the principal of
or interest on the series of Securities held by a SSBH Trust or the
Institutional Trustee of a SSBH Trust, and the Company shall be subrogated to
the rights of the holder of such Trust Securities to the extent of any payments
made by the Company to such holder in any Direct Action.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
SALOMON SMITH BARNEY HOLDINGS INC.
By________________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
As Trustee
By_________________________________
Name:
Title:
Attest:
___________________________
Name:
Title:
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss:
On the ___ day of __________, 199 , before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is a _____________ of SALOMON SMITH BARNEY HOLDINGS INC., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
__________________________
Notary
STATE OF NEW YORK )
COUNTY OF NEW YORK ) ss:
On the ____ day of __________, 199 , before me personally came __________,
to me known, who, being by me duly sworn, did depose and say that he is a
_______________ of THE CHASE MANHATTAN BANK, one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
__________________________
<PAGE> 1
EXHIBIT 4(ff)
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
SSBH Capital I
Dated as of __________ __, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation....................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application..................... 4
SECTION 2.2 Lists of Holders of Securities....................... 5
SECTION 2.3 Reports by the Preferred Guarantee Trustee........... 5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee...... 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent..... 5
SECTION 2.6 Events of Default; Waiver............................ 6
SECTION 2.7 Event of Default; Notice............................. 6
SECTION 2.8 Conflicting Interests................................ 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee. 6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee........ 8
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee 10
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility............. 10
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees................................... 11
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee............................................ 12
SECTION 5.2 Waiver of Notice and Demand.......................... 12
SECTION 5.3 Obligations Not Affected............................. 12
SECTION 5.4 Rights of Holders.................................... 13
SECTION 5.5 Guarantee of Payment................................. 13
<PAGE> 3
Page
----
SECTION 5.6 Subrogation.......................................... 14
SECTION 5.7 Independent Obligations.............................. 14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions........................... 14
SECTION 6.2 Ranking.............................................. 15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.......................................... 15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.......................................... 15
SECTION 8.2 Indemnification...................................... 16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns............................... 16
SECTION 9.2 Amendments........................................... 16
SECTION 9.3 Notices.............................................. 16
SECTION 9.4 Benefit.............................................. 17
SECTION 9.5 Governing Law........................................ 17
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as of ________, __, 1997, is executed and delivered by Salomon Smith
Barney Holdings Inc., a Delaware corporation (the "Guarantor"), and The Chase
Manhattan Bank, as trustee (the "Preferred Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of SSBH Capital I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of ________, __, 1997, among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof __,000,000 preferred securities, having an
aggregate liquidation amount of $ ,000,000, designated the % Trust Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
<PAGE> 5
(c) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred
Securities Guarantee as modified, supplemented or amended from
time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the series of junior subordinated debt securities
of the Guarantor designated the % Junior Subordinated Deferrable Interest
Debentures due , 20 held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer:
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<PAGE> 6
(i) any accrued and unpaid Distributions (as defined in Annex I to the
Declaration) that are required to be paid on the Preferred Securities, to the
extent the Issuer has funds available therefor, (ii) the redemption price of $25
per Preferred Security, plus all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Preferred Securities
as provided in the Declaration or the redemption of all of the Preferred
Securities upon the maturity or redemption of all of the Debentures as provided
in the Declaration) the lesser of (a) the aggregate of the liquidation amount of
$25 per Preferred Security and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment, or (b) the amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of ________, __, 1997,
among the Guarantor and The Chase Manhattan Bank, as trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued to the
Institutional Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s), voting separately as a
class, holding Preferred Securities representing more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
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<PAGE> 7
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Chase Manhattan Bank, until
a Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
4
<PAGE> 8
(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee with
a list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and addresses of the Holders ("List of Holders") as of such date,
(i) within one Business Day after January 1 and June 30 of each year, and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Preferred Guarantee Trustee provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after April 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
5
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SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders, and the Preferred
Guarantee Trustee shall not transfer its right, title and interest in this
Preferred Securities Guarantee to any Person except a Holder exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing
6
<PAGE> 10
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Preferred Guarantee Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or obligations shall
be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
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(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred
Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other evidence
is herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
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(v) The Preferred Guarantee Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Preferred Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and
the signature of the Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Preferred Securities Guarantee, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's or its
agent's taking such action.
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(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount
of the Preferred Securities, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed
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to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall
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pay to the Preferred Guarantee Trustee all amounts accrued and owing to such
Preferred Guarantee Trustee to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) 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 Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce its rights
under this Preferred Securities Guarantee, any Holder may directly institute a
legal proceeding against the Guarantor to enforce the Preferred Guarantee
Trustee's rights under this Preferred Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other Person or entity.
(c) A Holder of Preferred Securities may also directly institute a
legal proceeding against the Guarantor to enforce such Holder's right to receive
payment under this Preferred Securities Guarantee without first (i) directing
the Preferred Guarantee Trustee to enforce the terms of this Preferred
Securities Guarantee or (ii) instituting a legal proceeding directly against the
Issuer or any other Person or entity.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.
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SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if there
shall have occurred any event that would constitute an Event of Default or an
event of default under the Declaration, then (a) the Guarantor 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
Guarantor 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 Guarantor's capital stock for any other class or series of the
Guarantor's capital stock, or (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged)
and (b) the Guarantor 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 Guarantor which rank pari passu with or junior to the Debentures;
provided, however, the Guarantor may declare and pay a stock dividend where the
dividend stock is the same stock as that on which the dividend is being paid.
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SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) the
distribution of the Debentures to the Holders of all of the Preferred Securities
or (iii) full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Issuer. Notwithstanding the foregoing, this Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
under the Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any
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other facts pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may be amended only with the prior approval of
the Holders of not less than a Majority in aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders):
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The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Ron Halleran
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders):
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: A. George Saks, General Counsel
(c) If given to any Holder, at the address set forth on the books
and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD FOR
THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
SALOMON SMITH BARNEY HOLDINGS INC.
as Guarantor
By:__________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Preferred Guarantee Trustee
By:__________________________________________
Name:
Title:
18
<PAGE> 1
EXHIBIT 4(gg)
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
SSBH Capital II
Dated as of __________ __, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation.................................. 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................ 4
SECTION 2.2 Lists of Holders of Securities.................................. 5
SECTION 2.3 Reports by the Preferred Guarantee Trustee...................... 5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee................. 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent................ 5
SECTION 2.6 Events of Default; Waiver....................................... 6
SECTION 2.7 Event of Default; Notice........................................ 6
SECTION 2.8 Conflicting Interests........................................... 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee............ 6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee................... 8
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee........... 10
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility........................ 10
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees.............................................. 11
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee....................................................... 12
SECTION 5.2 Waiver of Notice and Demand..................................... 12
SECTION 5.3 Obligations Not Affected........................................ 12
SECTION 5.4 Rights of Holders............................................... 13
SECTION 5.5 Guarantee of Payment............................................ 13
<PAGE> 3
Page
---
SECTION 5.6 Subrogation..................................................... 14
SECTION 5.7 Independent Obligations......................................... 14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions...................................... 14
SECTION 6.2 Ranking......................................................... 15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination..................................................... 15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation..................................................... 15
SECTION 8.2 Indemnification................................................. 16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.......................................... 16
SECTION 9.2 Amendments...................................................... 16
SECTION 9.3 Notices......................................................... 16
SECTION 9.4 Benefit......................................................... 17
SECTION 9.5 Governing Law................................................... 17
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as of ________, __, 1997, is executed and delivered by Salomon Smith
Barney Holdings Inc., a Delaware corporation (the "Guarantor"), and The Chase
Manhattan Bank, as trustee (the "Preferred Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of SSBH Capital II, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of ________, __, 1997, among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof __,000,000 preferred securities, having an
aggregate liquidation amount of $ ,000,000, designated the % Trust Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
<PAGE> 5
(c) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred
Securities Guarantee as modified, supplemented or amended from
time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the series of junior subordinated debt securities
of the Guarantor designated the % Junior Subordinated Deferrable Interest
Debentures due , 20 held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer:
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(i) any accrued and unpaid Distributions (as defined in Annex I to the
Declaration) that are required to be paid on the Preferred Securities, to the
extent the Issuer has funds available therefor, (ii) the redemption price of $25
per Preferred Security, plus all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Preferred Securities
as provided in the Declaration or the redemption of all of the Preferred
Securities upon the maturity or redemption of all of the Debentures as provided
in the Declaration) the lesser of (a) the aggregate of the liquidation amount of
$25 per Preferred Security and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment, or (b) the amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of ________, __, 1997,
among the Guarantor and The Chase Manhattan Bank, as trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued to the
Institutional Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s), voting separately as a
class, holding Preferred Securities representing more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
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(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Chase Manhattan Bank, until
a Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
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(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee with
a list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and addresses of the Holders ("List of Holders") as of such date,
(i) within one Business Day after January 1 and June 30 of each year, and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Preferred Guarantee Trustee provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after April 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
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SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders, and the Preferred
Guarantee Trustee shall not transfer its right, title and interest in this
Preferred Securities Guarantee to any Person except a Holder exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing
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documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Preferred Guarantee Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or obligations shall
be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
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(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred
Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other evidence
is herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
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(v) The Preferred Guarantee Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Preferred Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and
the signature of the Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Preferred Securities Guarantee, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's or its
agent's taking such action.
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(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount
of the Preferred Securities, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed
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to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall
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pay to the Preferred Guarantee Trustee all amounts accrued and owing to such
Preferred Guarantee Trustee to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) 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 Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce its rights
under this Preferred Securities Guarantee, any Holder may directly institute a
legal proceeding against the Guarantor to enforce the Preferred Guarantee
Trustee's rights under this Preferred Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other Person or entity.
(c) A Holder of Preferred Securities may also directly institute a
legal proceeding against the Guarantor to enforce such Holder's right to receive
payment under this Preferred Securities Guarantee without first (i) directing
the Preferred Guarantee Trustee to enforce the terms of this Preferred
Securities Guarantee or (ii) instituting a legal proceeding directly against the
Issuer or any other Person or entity.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.
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SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if there
shall have occurred any event that would constitute an Event of Default or an
event of default under the Declaration, then (a) the Guarantor 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
Guarantor 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 Guarantor's capital stock for any other class or series of the
Guarantor's capital stock, or (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged)
and (b) the Guarantor 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 Guarantor which rank pari passu with or junior to the Debentures;
provided, however, the Guarantor may declare and pay a stock dividend where the
dividend stock is the same stock as that on which the dividend is being paid.
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SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) the
distribution of the Debentures to the Holders of all of the Preferred Securities
or (iii) full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Issuer. Notwithstanding the foregoing, this Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
under the Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any
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other facts pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may be amended only with the prior approval of
the Holders of not less than a Majority in aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders):
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The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Ron Halleran
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders):
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: A. George Saks, General Counsel
(c) If given to any Holder, at the address set forth on the books
and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD FOR
THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
SALOMON SMITH BARNEY HOLDINGS INC.
as Guarantor
By: _____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Preferred Guarantee Trustee
By: _____________________________________
Name:
Title:
18
<PAGE> 1
EXHIBIT 4(hh)
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
SSBH Capital III
Dated as of __________ __, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation....................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application..................... 4
SECTION 2.2 Lists of Holders of Securities....................... 5
SECTION 2.3 Reports by the Preferred Guarantee Trustee........... 5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee...... 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent..... 5
SECTION 2.6 Events of Default; Waiver............................ 6
SECTION 2.7 Event of Default; Notice............................. 6
SECTION 2.8 Conflicting Interests................................ 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee. 6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee........ 8
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee 10
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility............. 10
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees................................... 11
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee............................................ 12
SECTION 5.2 Waiver of Notice and Demand.......................... 12
SECTION 5.3 Obligations Not Affected............................. 12
SECTION 5.4 Rights of Holders.................................... 13
SECTION 5.5 Guarantee of Payment................................. 13
<PAGE> 3
Page
----
SECTION 5.6 Subrogation.......................................... 14
SECTION 5.7 Independent Obligations.............................. 14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions........................... 14
SECTION 6.2 Ranking.............................................. 15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.......................................... 15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.......................................... 15
SECTION 8.2 Indemnification...................................... 16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns............................... 16
SECTION 9.2 Amendments........................................... 16
SECTION 9.3 Notices.............................................. 16
SECTION 9.4 Benefit.............................................. 17
SECTION 9.5 Governing Law........................................ 17
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as of ________, __, 1997, is executed and delivered by Salomon Smith
Barney Holdings Inc., a Delaware corporation (the "Guarantor"), and The Chase
Manhattan Bank, as trustee (the "Preferred Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of SSBH Capital III, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of ________, __, 1997, among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof __,000,000 preferred securities, having an
aggregate liquidation amount of $ ,000,000, designated the % Trust Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
<PAGE> 5
(c) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred
Securities Guarantee as modified, supplemented or amended from
time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the series of junior subordinated debt securities
of the Guarantor designated the % Junior Subordinated Deferrable Interest
Debentures due , 20 held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer:
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<PAGE> 6
(i) any accrued and unpaid Distributions (as defined in Annex I to the
Declaration) that are required to be paid on the Preferred Securities, to the
extent the Issuer has funds available therefor, (ii) the redemption price of $25
per Preferred Security, plus all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Preferred Securities
as provided in the Declaration or the redemption of all of the Preferred
Securities upon the maturity or redemption of all of the Debentures as provided
in the Declaration) the lesser of (a) the aggregate of the liquidation amount of
$25 per Preferred Security and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment, or (b) the amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of ________, __, 1997,
among the Guarantor and The Chase Manhattan Bank, as trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued to the
Institutional Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s), voting separately as a
class, holding Preferred Securities representing more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
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<PAGE> 7
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Chase Manhattan Bank, until
a Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
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<PAGE> 8
(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee with
a list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and addresses of the Holders ("List of Holders") as of such date,
(i) within one Business Day after January 1 and June 30 of each year, and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Preferred Guarantee Trustee provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after April 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
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SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders, and the Preferred
Guarantee Trustee shall not transfer its right, title and interest in this
Preferred Securities Guarantee to any Person except a Holder exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing
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<PAGE> 10
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Preferred Guarantee Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or obligations shall
be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
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<PAGE> 11
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred
Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other evidence
is herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
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(v) The Preferred Guarantee Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Preferred Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and
the signature of the Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Preferred Securities Guarantee, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's or its
agent's taking such action.
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(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount
of the Preferred Securities, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed
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to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall
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pay to the Preferred Guarantee Trustee all amounts accrued and owing to such
Preferred Guarantee Trustee to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) 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 Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce its rights
under this Preferred Securities Guarantee, any Holder may directly institute a
legal proceeding against the Guarantor to enforce the Preferred Guarantee
Trustee's rights under this Preferred Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other Person or entity.
(c) A Holder of Preferred Securities may also directly institute a
legal proceeding against the Guarantor to enforce such Holder's right to receive
payment under this Preferred Securities Guarantee without first (i) directing
the Preferred Guarantee Trustee to enforce the terms of this Preferred
Securities Guarantee or (ii) instituting a legal proceeding directly against the
Issuer or any other Person or entity.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.
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SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if there
shall have occurred any event that would constitute an Event of Default or an
event of default under the Declaration, then (a) the Guarantor 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
Guarantor 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 Guarantor's capital stock for any other class or series of the
Guarantor's capital stock, or (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged)
and (b) the Guarantor 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 Guarantor which rank pari passu with or junior to the Debentures;
provided, however, the Guarantor may declare and pay a stock dividend where the
dividend stock is the same stock as that on which the dividend is being paid.
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SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) the
distribution of the Debentures to the Holders of all of the Preferred Securities
or (iii) full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Issuer. Notwithstanding the foregoing, this Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
under the Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any
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other facts pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may be amended only with the prior approval of
the Holders of not less than a Majority in aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders):
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The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Ron Halleran
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders):
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: A. George Saks, General Counsel
(c) If given to any Holder, at the address set forth on the books
and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD FOR
THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
SALOMON SMITH BARNEY HOLDINGS INC.
as Guarantor
By:________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Preferred Guarantee Trustee
By:________________________________________
Name:
Title:
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<PAGE> 1
EXHIBIT 4(ii)
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
SSBH Capital IV
Dated as of __________ __, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation....................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application..................... 4
SECTION 2.2 Lists of Holders of Securities....................... 5
SECTION 2.3 Reports by the Preferred Guarantee Trustee........... 5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee...... 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent..... 5
SECTION 2.6 Events of Default; Waiver............................ 6
SECTION 2.7 Event of Default; Notice............................. 6
SECTION 2.8 Conflicting Interests................................ 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee. 6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee........ 8
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee 10
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility............. 10
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees................................... 11
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee............................................ 12
SECTION 5.2 Waiver of Notice and Demand.......................... 12
SECTION 5.3 Obligations Not Affected............................. 12
SECTION 5.4 Rights of Holders.................................... 13
SECTION 5.5 Guarantee of Payment................................. 13
<PAGE> 3
Page
----
SECTION 5.6 Subrogation.......................................... 14
SECTION 5.7 Independent Obligations.............................. 14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions........................... 14
SECTION 6.2 Ranking.............................................. 15
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.......................................... 15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.......................................... 15
SECTION 8.2 Indemnification...................................... 16
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns............................... 16
SECTION 9.2 Amendments........................................... 16
SECTION 9.3 Notices.............................................. 16
SECTION 9.4 Benefit.............................................. 17
SECTION 9.5 Governing Law........................................ 17
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"),
dated as of ________, __, 1997, is executed and delivered by Salomon Smith
Barney Holdings Inc., a Delaware corporation (the "Guarantor"), and The Chase
Manhattan Bank, as trustee (the "Preferred Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of SSBH Capital IV, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of ________, __, 1997, among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof __,000,000 preferred securities, having an
aggregate liquidation amount of $ ,000,000, designated the % Trust Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
<PAGE> 5
(c) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred
Securities Guarantee as modified, supplemented or amended from
time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the series of junior subordinated debt securities
of the Guarantor designated the % Junior Subordinated Deferrable Interest
Debentures due , 20 held by the Institutional Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer:
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<PAGE> 6
(i) any accrued and unpaid Distributions (as defined in Annex I to the
Declaration) that are required to be paid on the Preferred Securities, to the
extent the Issuer has funds available therefor, (ii) the redemption price of $25
per Preferred Security, plus all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Preferred Securities called for
redemption by the Issuer and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Preferred Securities
as provided in the Declaration or the redemption of all of the Preferred
Securities upon the maturity or redemption of all of the Debentures as provided
in the Declaration) the lesser of (a) the aggregate of the liquidation amount of
$25 per Preferred Security and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment, or (b) the amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of ________, __, 1997,
among the Guarantor and The Chase Manhattan Bank, as trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued to the
Institutional Trustee of the Issuer.
"Majority in liquidation amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by Holder(s), voting separately as a
class, holding Preferred Securities representing more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
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<PAGE> 7
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Chase Manhattan Bank, until
a Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
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(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee with
a list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and addresses of the Holders ("List of Holders") as of such date,
(i) within one Business Day after January 1 and June 30 of each year, and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Preferred Guarantee Trustee provided, that the
Guarantor shall not be obligated to provide such List of Holders at any time the
List of Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after April 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
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SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders, and the Preferred
Guarantee Trustee shall not transfer its right, title and interest in this
Preferred Securities Guarantee to any Person except a Holder exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing
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documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guarantee, and the Preferred Guarantee Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or obligations shall
be read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
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(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee, or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred
Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other evidence
is herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
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(v) The Preferred Guarantee Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be counsel to
the Guarantor or any of its Affiliates and may include any of its
employees. The Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Preferred Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Guarantee Trustee; provided
that, nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Preferred Guarantee Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and
the signature of the Preferred Guarantee Trustee or its agents alone shall
be sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any of the terms
and provisions of this Preferred Securities Guarantee, both of which shall
be conclusively evidenced by the Preferred Guarantee Trustee's or its
agent's taking such action.
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(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount
of the Preferred Securities, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed
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to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall
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pay to the Preferred Guarantee Trustee all amounts accrued and owing to such
Preferred Guarantee Trustee to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) 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 Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce its rights
under this Preferred Securities Guarantee, any Holder may directly institute a
legal proceeding against the Guarantor to enforce the Preferred Guarantee
Trustee's rights under this Preferred Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other Person or entity.
(c) A Holder of Preferred Securities may also directly institute a
legal proceeding against the Guarantor to enforce such Holder's right to receive
payment under this Preferred Securities Guarantee without first (i) directing
the Preferred Guarantee Trustee to enforce the terms of this Preferred
Securities Guarantee or (ii) instituting a legal proceeding directly against the
Issuer or any other Person or entity.
SECTION 5.5 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.
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SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if there
shall have occurred any event that would constitute an Event of Default or an
event of default under the Declaration, then (a) the Guarantor 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
Guarantor 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 Guarantor's capital stock for any other class or series of the
Guarantor's capital stock, or (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged)
and (b) the Guarantor 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 Guarantor which rank pari passu with or junior to the Debentures;
provided, however, the Guarantor may declare and pay a stock dividend where the
dividend stock is the same stock as that on which the dividend is being paid.
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SECTION 6.2 Ranking
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) the
distribution of the Debentures to the Holders of all of the Preferred Securities
or (iii) full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Issuer. Notwithstanding the foregoing, this Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
under the Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any
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other facts pertinent to the existence and amount of assets from which
Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may be amended only with the prior approval of
the Holders of not less than a Majority in aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders):
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The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Ron Halleran
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders):
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Attention: A. George Saks, General Counsel
(c) If given to any Holder, at the address set forth on the books
and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD FOR
THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
SALOMON SMITH BARNEY HOLDINGS INC.
as Guarantor
By:________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as
Preferred Guarantee Trustee
By:________________________________________
Name:
Title:
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EXHIBIT 23(a)
ARTHUR ANDERSEN
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in Amendment No. 1 to Form S-3 (Registration No. 333-38931) of
Salomon Inc, SSBH Capital I, SSBH Capital II, SSBH Capital III and SSBH
Capital IV of our report dated March 13, 1997, related to the consolidated
statement of financial condition of Salomon Inc and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1996, which report is incorporated by reference
or included in the annual report on Form 10-K of Salomon Inc for the year ended
December 31, 1996.
/s/ Arthur Andersen LLP
New York, New York
November 17, 1997
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Amendment No. 1 to the
Registration Statement of Salomon Inc, SSBH Capital I, SSBH Capital II,
SSBH Capital III and SSBH Capital IV filed with the Securities and Exchange
Commission on or about November 14, 1997, of our report dated
January 15, 1997 on our audits of the consolidated financial statements
and financial statement schedules of Smith Barney Holdings Inc. and
Subsidiaries (the "Company") as of December 31,1996 and 1995 and for the
three years in the period ended December 31, 1996, which report is included
in the Annual Report on Form 10-K of the Company for the fiscal year ended
December 31, 1996 and which appears in the Form 8-K of Salomon Inc dated
September 29, 1997. We also consent to the reference to our firm under
the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
New York, New York
November 14, 1997
<PAGE> 1
Exhibit 23(c)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Travelers Group Inc.:
We consent to the incorporation by reference in Amendment No. 1 to the
registration statement on Form S-3 of Salomon Inc, SSBH Capital I, SSBH Capital
II, SSBH Capital III and SSBH Capital IV of our reports dated January 17, 1997,
with respect to the consolidated financial statements and related financial
statement schedules incorporated by reference or included in the December 31,
1996 annual report on Form 10-K, as amended by Form 10-K/A-2, of Travelers
Group Inc., which reports appear in the Form 8-K of Salomon Inc dated October
28, 1997, and to the reference to our firm under the heading "Experts" in the
registration statement.
/s/ KPMG Peat Marwick LLP
New York, New York
November 14, 1997
<PAGE> 1
Exhibit 25(b)
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
SALOMON INC
(Exact name of obligor as specified in its charter)
DELAWARE 22-1660266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
SEVEN WORLD TRADE
NEW YORK, NEW YORK 10048
(Address of principal executive offices) (Zip Code)
SENIOR DEBT SECURITIES
(Title of the indenture securities)
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 13TH day of NOVEMBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ ANDREW M. DECK
----------------------------------
ANDREW M. DECK
VICE PRESIDENT
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin...................................... $ 13,892
Interest-bearing balances................................ 4,282
Securities:................................................
Held to maturity securities................................ 2,857
Available for sale securities.............................. 34,091
Federal funds sold and securities purchased under
agreements to resell..................................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income........ $124,827
Less: Allowance for loan and lease losses....... 2,753
Less: Allocated transfer risk reserve........... 13
--------
Loans and leases, net of unearned income,
allowance, and reserve................................. 122,061
Trading Assets............................................. 56,042
Premises and fixed assets (including capitalized
leases).................................................. 2,904
Other real estate owned.................................... 306
Investments in unconsolidated subsidiaries and
associated companies..................................... 232
Customers' liability to this bank on acceptances
outstanding.............................................. 2,092
Intangible assets.......................................... 1,532
Other assets............................................... 10,448
--------
TOTAL ASSETS............................................... $280,709
========
</TABLE>
-4-
<PAGE> 5
<TABLE>
<S> <C>
LIABILITIES
Deposits
In domestic offices.................................. $ 91,249
Noninterest-bearing...........................$38,157
Interest-bearing...............................53,092
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's............................................ 70,192
Noninterest-bearing............................$3,712
Interest-bearing...............................66,480
Federal funds purchased and securities sold under agree-
ments to repurchase....................................... 35,185
Demand notes issued to the U.S. Treasury.................. 1,000
Trading liabilities....................................... 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less........ 4,593
With a remaining maturity of more than one year
through three years............................. 260
With a remaining maturity of more than three years... 146
Bank's liability on acceptances executed and outstanding.. 2,092
Subordinated notes and debentures......................... 5,715
Other liabilities......................................... 11,373
TOTAL LIABILITIES......................................... 264,112
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus............. 0
Common stock.............................................. 1,211
Surplus (exclude all surplus related to preferred stock).. 10,283
Undivided profits and capital reserves.................... 5,280
Net unrealized holding gains (losses)
on available-for-sale securities.......................... (193)
Cumulative foreign currency translation adjustments....... 16
TOTAL EQUITY CAPITAL...................................... 16,597
------
TOTAL LIABILITIES AND EQUITY CAPITAL...................... $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that his Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
- 5 -
<PAGE> 1
Exhibit 25(e)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
SALOMON SMITH BARNEY HOLDINGS INC.
(Exact name of obligor as specified in its charter)
DELAWARE 22-166-0266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
--------------------------------------------
JUNIOR SUBORDINATED DEBT SECURITIES OF SALOMON SMITH BARNEY HOLDINGS INC.
(Title of the indenture securities)
---------------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agreements to repurchase .......... 35,185
Demand notes issued to the U.S. Treasury ............................................ 1,000
Trading liabilities ................................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................................. 4,593
With a remaining maturity of more than one year ................................
through three years ..................................................... 260
With a remaining maturity of more than three years ............................ 146
Bank's liability on acceptances executed and outstanding ............................ 2,092
Subordinated notes and debentures ................................................... 5,715
Other liabilities ................................................................... 11,373
TOTAL LIABILITIES ................................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................................... 0
Common stock ........................................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........................... 10,283
Undivided profits and capital reserves .............................................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................................... (193)
Cumulative foreign currency translation adjustments ................................. 16
TOTAL EQUITY CAPITAL ................................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
Exhibit 25(f)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
SSBH CAPITAL I
(Exact name of obligor as specified in its charter)
DELAWARE 06-6452992
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
--------------------------------------------
TRUST PREFERRED SECURITIES OF SSBH CAPITAL I
(Title of the indenture securities)
-------------------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ................................................. 35,185
Demand notes issued to the U.S. Treasury ............................ 1,000
Trading liabilities ................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................. 4,593
With a remaining maturity of more than one year ................
through three years ..................................... 260
With a remaining maturity of more than three years ............ 146
Bank's liability on acceptances executed and outstanding ............ 2,092
Subordinated notes and debentures ................................... 5,715
Other liabilities ................................................... 11,373
TOTAL LIABILITIES ................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................... 0
Common stock ........................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........... 10,283
Undivided profits and capital reserves .............................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................... (193)
Cumulative foreign currency translation adjustments ................. 16
TOTAL EQUITY CAPITAL ................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
Exhibit 25(g)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
SSBH CAPITAL II
(Exact name of obligor as specified in its charter)
DELAWARE 06-6452994
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
--------------------------------------------
TRUST PREFERRED SECURITIES OF SSBH CAPITAL II
(Title of the indenture securities)
---------------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ................................................. 35,185
Demand notes issued to the U.S. Treasury ............................ 1,000
Trading liabilities ................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................. 4,593
With a remaining maturity of more than one year ................
through three years ..................................... 260
With a remaining maturity of more than three years ............ 146
Bank's liability on acceptances executed and outstanding ............ 2,092
Subordinated notes and debentures ................................... 5,715
Other liabilities ................................................... 11,373
TOTAL LIABILITIES ................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................... 0
Common stock ........................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........... 10,283
Undivided profits and capital reserves .............................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................... (193)
Cumulative foreign currency translation adjustments ................. 16
TOTAL EQUITY CAPITAL ................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
Exhibit 25(h)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
SSBH CAPITAL III
(Exact name of obligor as specified in its charter)
DELAWARE 06-6452995
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
--------------------------------------------
TRUST PREFERRED SECURITIES OF SSBH CAPITAL III
(Title of the indenture securities)
---------------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ................................................. 35,185
Demand notes issued to the U.S. Treasury ............................ 1,000
Trading liabilities ................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................. 4,593
With a remaining maturity of more than one year ................
through three years ..................................... 260
With a remaining maturity of more than three years ............ 146
Bank's liability on acceptances executed and outstanding ............ 2,092
Subordinated notes and debentures ................................... 5,715
Other liabilities ................................................... 11,373
TOTAL LIABILITIES ................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................... 0
Common stock ........................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........... 10,283
Undivided profits and capital reserves .............................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................... (193)
Cumulative foreign currency translation adjustments ................. 16
TOTAL EQUITY CAPITAL ................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
Exhibit 25(i)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
SSBH CAPITAL IV
(Exact name of obligor as specified in its charter)
DELAWARE 06-6452996
(State or other jurisdiction of incorporation (I.R.S. employer
or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
-------------------------------------------
TRUST PREFERRED SECURITIES OF SSBH CAPITAL IV
(Title of the indenture securities)
----------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ................................................. 35,185
Demand notes issued to the U.S. Treasury ............................ 1,000
Trading liabilities ................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................. 4,593
With a remaining maturity of more than one year ................
through three years ..................................... 260
With a remaining maturity of more than three years ............ 146
Bank's liability on acceptances executed and outstanding ............ 2,092
Subordinated notes and debentures ................................... 5,715
Other liabilities ................................................... 11,373
TOTAL LIABILITIES ................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................... 0
Common stock ........................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........... 10,283
Undivided profits and capital reserves .............................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................... (193)
Cumulative foreign currency translation adjustments ................. 16
TOTAL EQUITY CAPITAL ................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
Exhibit 25(j)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
SSBH CAPITAL I
(Exact name of obligor as specified in its charter)
DELAWARE 06-6452992
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
--------------------------------------------
SALOMON SMITH BARNEY HOLDINGS INC. GUARANTEE WITH RESPECT TO
TRUST PREFERRED SECURITIES OF SSBH CAPITAL I
(Title of the indenture securities)
-----------------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ................................................. 35,185
Demand notes issued to the U.S. Treasury ............................ 1,000
Trading liabilities ................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................. 4,593
With a remaining maturity of more than one year ................
through three years ..................................... 260
With a remaining maturity of more than three years ............ 146
Bank's liability on acceptances executed and outstanding ............ 2,092
Subordinated notes and debentures ................................... 5,715
Other liabilities ................................................... 11,373
TOTAL LIABILITIES ................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................... 0
Common stock ........................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........... 10,283
Undivided profits and capital reserves .............................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................... (193)
Cumulative foreign currency translation adjustments ................. 16
TOTAL EQUITY CAPITAL ................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
Exhibit 25(k)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
SSBH CAPITAL II
(Exact name of obligor as specified in its charter)
DELAWARE 06-6452994
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
--------------------------------------------
SALOMON SMITH BARNEY HOLDINGS INC. GUARANTEE WITH RESPECT TO
TRUST PREFERRED SECURITIES OF SSBH CAPITAL II
(Title of the indenture securities)
-----------------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ................................................. 35,185
Demand notes issued to the U.S. Treasury ............................ 1,000
Trading liabilities ................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................. 4,593
With a remaining maturity of more than one year ................
through three years ..................................... 260
With a remaining maturity of more than three years ............ 146
Bank's liability on acceptances executed and outstanding ............ 2,092
Subordinated notes and debentures ................................... 5,715
Other liabilities ................................................... 11,373
TOTAL LIABILITIES ................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................... 0
Common stock ........................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........... 10,283
Undivided profits and capital reserves .............................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................... (193)
Cumulative foreign currency translation adjustments ................. 16
TOTAL EQUITY CAPITAL ................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
Exhibit 25(l)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
SSBH CAPITAL III
(Exact name of obligor as specified in its charter)
DELAWARE 06-6452995
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
--------------------------------------------
SALOMON SMITH BARNEY HOLDINGS INC. GUARANTEE WITH RESPECT TO
TRUST PREFERRED SECURITIES OF SSBH CAPITAL III
(Title of the indenture securities)
-----------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ................................................. 35,185
Demand notes issued to the U.S. Treasury ............................ 1,000
Trading liabilities ................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................. 4,593
With a remaining maturity of more than one year ................
through three years ..................................... 260
With a remaining maturity of more than three years ............ 146
Bank's liability on acceptances executed and outstanding ............ 2,092
Subordinated notes and debentures ................................... 5,715
Other liabilities ................................................... 11,373
TOTAL LIABILITIES ................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................... 0
Common stock ........................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........... 10,283
Undivided profits and capital reserves .............................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................... (193)
Cumulative foreign currency translation adjustments ................. 16
TOTAL EQUITY CAPITAL ................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
Exhibit 25(m)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)__________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
SSBH CAPITAL IV
(Exact name of obligor as specified in its charter)
DELAWARE 06-6452996
(State or other jurisdiction of incorporation (I.R.S. employer
or organization) identification No.)
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(Address of principal executive offices) (Zip Code)
-------------------------------------------
SALOMON SMITH BARNEY HOLDINGS INC. GUARANTEE WITH RESPECT TO
TRUST PREFERRED SECURITIES OF SSBH CAPITAL IV
(Title of the indenture securities)
-----------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New
York 12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.,
20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ Sheik Wiltshire
---------------------------
Sheik Wiltshire
Second Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 13,892
Interest-bearing balances .................... 4,282
Securities:
Held to maturity securities ....................... 2,857
Available for sale securities ..................... 34,091
Federal funds sold and securities purchased under
agreements to resell ......................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $124,827
Less: Allowance for loan and lease losses .... 2,753
Less: Allocated transfer risk reserve ........ 13
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 122,061
Trading Assets .................................... 56,042
Premises and fixed assets (including capitalized
leases) ...................................... 2,904
Other real estate owned ........................... 306
Investments in unconsolidated subsidiaries and
associated companies ......................... 232
Customers' liability to this bank on acceptances
outstanding .................................. 2,092
Intangible assets ................................. 1,532
Other assets ...................................... 10,448
--------
TOTAL ASSETS ...................................... $280,709
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices ............................................ $ 91,249
Noninterest-bearing ............................................ $ 38,157
Interest-bearing ............................................... 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ...................................................... 70,192
Noninterest-bearing ............................................ $ 3,712
Interest-bearing ............................................... 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ................................................. 35,185
Demand notes issued to the U.S. Treasury ............................ 1,000
Trading liabilities ................................................. 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less .................. 4,593
With a remaining maturity of more than one year ................
through three years ..................................... 260
With a remaining maturity of more than three years ............ 146
Bank's liability on acceptances executed and outstanding ............ 2,092
Subordinated notes and debentures ................................... 5,715
Other liabilities ................................................... 11,373
TOTAL LIABILITIES ................................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ....................... 0
Common stock ........................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ........... 10,283
Undivided profits and capital reserves .............................. 5,280
Net unrealized holding gains (losses)
on available-for-sale securities .................................... (193)
Cumulative foreign currency translation adjustments ................. 16
TOTAL EQUITY CAPITAL ................................................ 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ................................ $280,709
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
