<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1997
REGISTRATION NO. 333-38931
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
SALOMON SMITH BARNEY HOLDINGS 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>
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(212) 816-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROBERT H. MUNDHEIM, ESQ., GENERAL COUNSEL
SALOMON SMITH BARNEY HOLDINGS INC.
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(212) 816-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
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>
------------------------
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 Smith Barney Holdings 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
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 the
Registrant'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.
================================================================================
<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)(3) PRICE(1)(2)(3) FEE(4)(5)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities of Salomon Smith
Barney Holdings Inc.(6).........
- ----------------------------------------------------------------------------------------------------------
Index Warrants of Salomon Smith
Barney Holdings Inc.(7).........
- ----------------------------------------------------------------------------------------------------------
Trust Preferred Securities of the
Trusts(8).......................
- ----------------------------------------------------------------------------------------------------------
Junior Subordinated Debt
Securities of Salomon Smith
Barney Holdings Inc.(8).........
- ----------------------------------------------------------------------------------------------------------
Guarantees of Trust Preferred
Securities of the Trusts and
certain back-up
obligations(9)..................
- ----------------------------------------------------------------------------------------------------------
Preferred Stock of Salomon Smith
Barney Holdings Inc.(10)........
- ----------------------------------------------------------------------------------------------------------
Depositary Shares of Salomon Smith
Barney Holdings Inc.(11)........
==========================================================================================================
Total............................. $11,710,346,786 100% $11,710,346,786 $3,620,177.03
==========================================================================================================
</TABLE>
(1) The proposed maximum offering price per unit will be determined from time
to time by the relevant Registrant in connection with the issuance by such
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, as amended. The aggregate public offering price
of the Debt Securities, Index Warrants, Junior Subordinated Debt
Securities, Preferred Stock and Depositary Shares of Salomon Smith Barney
Holdings Inc. and the Trust Preferred Securities of the Trusts registered
hereby will not exceed $11,710,346,786 or the equivalent thereof in one or
more foreign currencies, foreign currency units or composite currencies.
(3) Exclusive of accrued interest and distributions, if any.
(4) A filing fee aggregating $3,628,698.03 was previously paid in connection
with registration statements filed earlier as well as with the initial
filing of and first amendment to this registration statement relating to
the registration of in the aggregate $11,735,346,786 of securities.
(5) The securities covered by the market making prospectus contained in this
registration statement have previously been registered under the Securities
Act of 1933, under the registration statements on Form S-3 of Smith Barney
Holdings Inc. (which has been merged into Salomon Smith Barney Holdings
Inc.) (File Nos. 333-30175, 333-17831, 33-92706, 33-78010, 33-70340 and
33-72856). In accordance with Rule 457(a), registration fees previously
have been paid with respect thereto and the minimum registration fee of
$100 has been paid in connection with the first amendment to this
registration statement.
(6) 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
$11,710,346,786.
(7) 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 or number of securities 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.
(8) Subject to note (12) below, there is being registered hereunder an
indeterminate number of Trust 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 Smith Barney Holdings Inc. as may from time to time be issued at
indeterminate prices. Includes Trust 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 Trust Preferred Securities upon a dissolution of such Trust
and the distribution of the assets thereof.
(9) Includes the rights of holders of the Trust Preferred Securities under any
Guarantees and certain back-up undertakings, comprised of the obligations
of Salomon Smith Barney Holdings 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 Trust
Preferred Securities) and such obligations of Salomon Smith Barney Holdings
Inc. as set forth in the Amended and Restated Declaration of Trust of each
Trust and the related Indenture, in each case as further described in the
Registration Statement. The Guarantees, when taken together with Salomon
Smith Barney Holdings Inc.'s obligations under the Junior Subordinated Debt
Securities, the related Indenture and the Amended and Restated Declaration
of Trust, will provide a full and unconditional guarantee on a subordinated
basis by Salomon Smith Barney Holdings Inc. of payments due on the Trust
Preferred Securities. No separate consideration will be received for any
Guarantees or such back-up obligations.
(10) Subject to note (12) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock of Salomon Smith Barney
Holdings 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.
(11) 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 Smith Barney Holdings 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.
(12) In no event will the aggregate offering price of all securities issued from
time to time pursuant to this Registration Statement exceed $11,710,346,786
or the equivalent thereof in one or more foreign currencies, foreign
currency units or composite currencies.
<PAGE> 3
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating to
Debt Securities and Index Warrants of Salomon Smith Barney Holdings Inc. (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 of Salomon Smith Barney
Holdings Inc. (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 previously-issued 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 DECEMBER 1, 1997
PROSPECTUS
SALOMON SMITH BARNEY HOLDINGS INC.
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 ACCOMPANYING PROSPECTUS SUPPLEMENT OR PRICING SUPPLEMENT, IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
SALOMON SMITH BARNEY
December , 1997
<PAGE> 5
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 4 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 $11,710,346,786 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 incorporated by
reference in our registration statement No. 333-38931), 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 November 28, 1997.
Directions on how you can receive copies of these documents are provided on page
4.
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
2
<PAGE> 6
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 incorporated by reference in
our registration statement No. 333-38931. We provide directions on how you can
get copies of these documents on page 4.
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 or number of securities 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 or number of securities, 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
3
<PAGE> 7
obligations or your rights concerning those Index Warrants. However, every
holder of a particular Index 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 (including their successors) 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.
4
<PAGE> 8
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed:
(a) Annual Report on Form 10-K for the year ended December 31, 1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997, June
30, 1997 and September 30, 1997;
(c) Current Reports on Form 8-K dated January 21, 1997, March 17, 1997, April
15, 1997, July 17, 1997, September 24, 1997, September 29, 1997 (as amended
by the Current Report on Form 8-K/A dated October 28, 1997 and the Current
Report on Form 8-K/A2 dated December 1, 1997), October 21, 1997, October 28,
1997 (as amended by the Current Report on Form 8-K/A dated December 1,
1997), November 21, 1997 (as amended by the Current Report on Form 8-K/A
dated December 1, 1997) and November 28, 1997.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Treasurer
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
212-816-6000
You should rely only on the information incorporated by reference or
provided in this Prospectus or the Prospectus Supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this Prospectus or the Prospectus Supplement is
accurate as of any date other than the date on the front of the document.
5
<PAGE> 9
THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research; and other related
activities.
SALOMON
Together with Salomon Brothers Holding Company Inc and its subsidiaries
(which subsidiaries include Salomon Brothers), Salomon Brothers engages in
global investment banking and global securities trading activities; provides
capital raising, advisory, trading and risk management services to its
customers; and executes proprietary trading strategies on its own behalf.
Certain of the Company's commodities trading activities are conducted by the
Company's wholly owned subsidiary, Phibro Inc., and its subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED -----------------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges.......................... 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amount by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to fixed charges has been computed by dividing earnings
before income taxes and fixed charges by the fixed charges. For the purpose of
this ratio, fixed charges consist of interest expense and that portion of
rentals deemed representative of the appropriate interest factor.
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 or number of securities 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
$11,710,346,786, 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
6
<PAGE> 10
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.
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 or supplemented 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 or supplemented 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 Securities and Exchange Commission (the "Commission") and are
incorporated by reference as part of the registration statement on Form S-3
under the Securities Act of 1933, as amended (the "Securities Act") that the
Company has filed with the Commission relating to the Offered Securities (such
registration statement, together with all exhibits and amendments, 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
or supplemented 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 or supplemented from time
to time.
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").
7
<PAGE> 11
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 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, under which 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 (any such index,
or index referred to in clause (xvi) being referred to herein as an "Index"),
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
8
<PAGE> 12
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; (xxi) the terms, if any, upon which such Debt Securities may or
shall be exchangeable or exercisable for or payable in, among other things,
securities of any kind, instruments, contracts, currencies, commodities, or
other forms of property, rights or interests, or any combination of the
foregoing, and the terms and conditions upon which such exchange, exercise or
payment shall be effected, including, but not limited to, the initial, exchange
or exercise price, rate or ratio, and the relevant exchange or exercise period;
and (xxii) 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.
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 United States 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,
the United States 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, United States 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. United States 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
9
<PAGE> 13
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
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
10
<PAGE> 14
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 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
11
<PAGE> 15
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 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, Smith Barney 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
12
<PAGE> 16
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 or Indexed Notes (as defined
herein), an amount equal to such portion of the principal amount thereof as will
be specified in the related Prospectus Supplement or Pricing 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 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
13
<PAGE> 17
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 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
14
<PAGE> 18
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 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.
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
15
<PAGE> 19
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 or a number of securities that will be determined by reference to
an Index calculated by reference to prices, yields, levels or other specified
objective measures in respect of specified securities or securities indexes or
specified foreign currencies or currency indexes, or a combination thereof, or
changes in such measure or differences between two or more such measures. 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 distribution or the
determination of the payment or distribution on the Index Warrants may be
postponed and the period for which such payment or distribution 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.
Unless otherwise specified 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 or distribution of any securities
due on the Index Warrants, from or to Warrant Holders pursuant to the Index
Warrants.
Unless otherwise specified in the applicable 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 or number of securities due, if any, on such exercise of the Index
Warrants.
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 measure or
measures by reference to which payment or distribution on such Index Warrants
will be determined; (iv) certain information regarding the underlying
securities, foreign currencies or indexes; (v) the amount of cash or number of
securities due, or the means by which the amount of cash or number of securities
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 or the securities that may be distributed in respect of
the Index Warrants; (xii) the method of making any foreign currency translation
applicable to payments or distributions 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
16
<PAGE> 20
amounts will be payable or distributable 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 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 such tax considerations. The summary of United States
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 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.
17
<PAGE> 21
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 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.
18
<PAGE> 22
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 securities, foreign currencies
or indexes, risks relating to the relevant Index or Indexes by which payments or
distributions on the Index Warrants are calculated, general risks applicable to
the securities or currency markets on which the underlying securities, foreign
currencies or indexes 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 relevant
Index or Indexes and the underlying securities, foreign currencies or indexes
(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 relevant Index
or Indexes and the underlying securities, foreign currencies or indexes set
forth in the Prospectus Supplement.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES AND BEARER WARRANTS
In compliance with United States 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 United States 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 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 United
States 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, Societe Anonyme
("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
19
<PAGE> 23
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 or by which amounts due on the Offered Securities may be calculated 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 or the
calculation of amounts due thereon 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, or to calculate amounts due thereon, in either the
current national currency of such Relevant Jurisdiction or Euro, the Company
will make such payments or calculations 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 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.
20
<PAGE> 24
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. The Company or an affiliate may enter into a swap agreement with one of
the Company's affiliates in connection with the sale of the Offered Securities
and may earn additional income as a result of payments pursuant to such swap or
related hedge transactions.
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 Index
Warrants or 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 assets by reference to which the relevant Index or
Indexes are determined or calculated ("Underlying Assets"), 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, exercise, cancel 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.
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. The Company reserves the right to
withdraw, cancel or modify the offer of any Offered Securities at any time
without notice.
21
<PAGE> 25
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
Securities Exchange Act of 1934, as amended (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.
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.
22
<PAGE> 26
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 or reimbursement of certain legal and other expenses. 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 affiliate of the Company in the offer and sale of
Offered Securities will comply with the requirements of Rule 2720 of the Conduct
Rules of the National Association of Securities Dealers, Inc. regarding the
underwriting by an affiliate of securities of its parent. Each of the Company's
broker-dealer affiliates may act as an underwriter in an "at the market" equity
offering pursuant to Rule 415(a)(4) under the Securities Act.
Certain of the Company's affiliates expect to offer and sell previously
issued Offered Securities in the course of each of their respective business in
market-making transactions at negotiated prices related to prevailing market
prices at the time of sale, and may act as principal or agent in such
transactions, but no such entity is obligated to do so, and any such entity may
discontinue any market-making at any time without notice, at its sole
discretion. This Prospectus and the related Prospectus Supplements and Pricing
Supplements may be used by the Company or any of its affiliates in connection
with such transactions.
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 any accompanying Prospectus Supplement and Pricing
Supplement) and the accompanying 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 (including any accompanying Prospectus
Supplement and 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 any accompanying Prospectus Supplement and Pricing
Supplement). This Prospectus (including any accompanying Prospectus Supplement
and 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.
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
23
<PAGE> 27
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
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 Salomon Inc as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in Salomon Inc's Annual Report on Form 10-K
for the year ended December 31, 1996 (the "Salomon Financials"), are
incorporated by reference herein, in reliance upon the report (also incorporated
by reference herein) of Arthur Andersen LLP, independent public accountants, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Smith Barney Holdings
Inc. and its subsidiaries for the fiscal years ended December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996, included
in the Company's Current Report on Form 8-K dated September 29, 1997, have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report 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.
The supplemental consolidated financial statements of the Company and its
subsidiaries for the fiscal years ended December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996, included in the
Company's Current Report on Form 8-K dated November 28, 1997, have been audited
by Coopers & Lybrand L.L.P., independent certified public accountants, as set
forth in their report thereon, included therein and incorporated herein by
reference, which report states that Coopers & Lybrand L.L.P. did not audit the
Salomon Financials and that their opinion with respect to any amounts contained
in the Salomon Financials is based on the report of Arthur Andersen LLP. Such
financial statements referred to above are incorporated by reference herein in
reliance upon such reports given upon the authority of said firm as experts in
accounting and auditing.
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. 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.
24
<PAGE> 28
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with 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 the Registration Statement under the Securities Act
relating to the Offered Securities with the Commission. 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, (ii) the Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997 and (iii) the Current Reports on Form
8-K dated January 21, 1997, March 17, 1997, April 15, 1997, July 17, 1997,
September 24, 1997, September 29, 1997 (as amended by the Current Report on Form
8-K/A dated October 28, 1997 and the Current Report on Form 8-K/A2 dated
December 1, 1997), October 21, 1997, October 28, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997), November 21, 1997 (as amended by
the Current Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the 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.
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.
25
<PAGE> 29
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 DECEMBER 1, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER , 1997)
$11,710,346,786
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 that we will deliver to
prospective buyers of any note. The maximum amount that we expect to receive
from the sale of the notes is between $11,622,519,185 and $11,695,708,853 after
paying the agents commissions of between $14,637,933 and $87,827,601.
<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, - May be redeemable or repurchasable by us
or Zero Coupon
BASE FLOATING LIBOR - May be renewable at your option or extendible at
RATES: Commercial Paper Rate our option
Treasury Rate
CD Rate - Interest rate may be reset at our option from
Prime Rate time to time and be redeemable by you at the time
J.J. Kenny Rate of any reset
Eleventh District Cost of
Funds Rate - May be issued with Original Issue Discount for
Federal Funds Rate tax purposes
- Portion of principal may be payable prior to
maturity
INDEXED NOTES: Payments of interest or
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
Indexed Notes may be paid currency 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>
------------------------
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.
------------------------
SALOMON SMITH BARNEY
December , 1997
<PAGE> 30
THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research; and other related
activities.
SALOMON
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. 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.
S-2
<PAGE> 31
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
$11,710,346,786 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 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
consolidated 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 $30.9
billion, consisting of the following: $19.7 billion of term debt, $5.4 billion
in commercial paper and $5.8 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 to this Prospectus Supplement (a "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.
S-3
<PAGE> 32
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 OID 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 OID 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 OID 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 United States 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.
"OID Note" is defined under "Certain United States Federal Income Tax
Considerations -- United States Holders -- Original Issue Discount."
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
S-4
<PAGE> 33
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 more of which may be an Agent (as defined
herein) 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 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 OID Note (other than an Indexed Note (as defined herein) is
declared to be due and payable immediately as a result of the acceleration of
Stated Maturity, 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
S-5
<PAGE> 34
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 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") or, in the case of an incomplete month, the
number of days elapsed.
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
S-6
<PAGE> 35
"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.
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.
S-7
<PAGE> 36
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 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
S-8
<PAGE> 37
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 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 Registered 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
S-9
<PAGE> 38
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>
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.
S-10
<PAGE> 39
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
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.
S-11
<PAGE> 40
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 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 or more of
which may be an Agent (as defined herein)), 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
S-12
<PAGE> 41
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 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).
S-13
<PAGE> 42
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 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 no 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 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
S-14
<PAGE> 43
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 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 Registered 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, Spread
Multiplier, or method of calculation (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, Spread Multiplier, or method of calculation, 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, Spread Multiplier or method of calculation (in the case of
a Floating Rate Note) and, if so, (i) such new interest rate or such new Spread,
Spread Multiplier, or method of calculation, 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, Spread Multiplier, and/or method of calculation 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
S-15
<PAGE> 44
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.
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 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 application of a formula or by such other
objective price, economic or other measures as are described in the applicable
Pricing Supplement (any such measure or measures, an "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
S-16
<PAGE> 45
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.
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 security, currency, commodity or other good or article
to which the Note is indexed 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.
DUAL CURRENCY NOTES
The Company may from time to time offer Registered 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.
S-17
<PAGE> 46
For United States 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 United States 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 Registered 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 Renewable 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 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.
S-18
<PAGE> 47
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, Spread Multiplier or method of calculation
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 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
S-19
<PAGE> 48
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 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.
S-20
<PAGE> 49
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 OID 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.
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 Registered Note, its
Interest Payment Dates or any other matter relating thereto may be modified by
the terms as specified 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 Registered 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
S-21
<PAGE> 50
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 "-- Payment Currency" and "Description of Registered
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.
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.
S-22
<PAGE> 51
In the event of an official redenomination of the Specified Currency of a
Registered 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. Registered 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 Registered 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 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
S-23
<PAGE> 52
BE SUBSTANTIAL. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND
LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN INDEXED NOTES.
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 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 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 can be changed only with 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.
S-24
<PAGE> 53
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 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 can be changed only with 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 long
term capital gains recognized by individuals in respect of capital 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 United States 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
S-25
<PAGE> 54
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.
Foreign Currency Notes. 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) 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 the OID Note's 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 OID Note's adjusted issue price, and the
denominator of which is the excess of remaining redemption amount over the OID
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.
S-26
<PAGE> 55
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 Registered Notes having market discount generally will be
treated as ordinary income to the extent of the market discount that accrued on
the Registered 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 Registered 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 Registered 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 will be accrued by a United
States holder in the Specified Currency. The amount includible in income by a
United States holder in respect of such accrued market discount will be the U.S.
dollar value of the amount accrued, generally calculated at the spot rate of
exchange on the date that the Note is disposed of by the United States holder.
Any accrued 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 from the date of issuance
("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 is 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
S-27
<PAGE> 56
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 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 be revoked only with 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 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 a Registered Note purchased for an
amount less than or equal to the remaining redemption amount but in excess of
the Note's 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 HOLDERS
Under current United States federal income tax law: (a) payment on a
Registered Note to a holder who is not a United States holder (a "non-United
States holder") 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 statement signed under penalties of perjury that
includes its name and address and certifies that it is a non-United States
holder in compliance with applicable requirements (or, with respect to payments
made after December 31, 1998, satisfies certain documentary evidence
requirements for establishing that it is a non-United States holder); (b) a
non-United States holder will not be subject to United States federal income tax
on gain realized on the disposition of the Registered Note. Notwithstanding the
above, a Non-United States holder that is subject to United States federal
income taxation on a net income basis generally will be subject to the same
rules to which a United States holder is subject with respect to interest
payments on a Registered Note and with respect to gain or loss realized or
recognized on the disposition of a Registered Note. Special rules might also
apply to a Non-United States holder that is a qualified resident of a country
with which the United States has an income tax treaty.
S-28
<PAGE> 57
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, with respect to
payments made after December 31, 1998, satisfies certain documentary evidence
requirements for establishing that it is a non-United States holder)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, (ii) is not a
controlled foreign corporation for United States federal income tax purposes and
(iii) with respect to payments made after December 31, 1998, is not a foreign
partnership that, at any time during its taxable year is 50% or more (by income
or capital interest) owned by United States holders or is engaged in the conduct
of a U.S. trade or business. 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.
With respect to payments made after December 31, 1998, for purposes of
applying the rules set forth in the three preceding paragraphs to an entity that
is treated as fiscally transparent (e.g., a partnership or certain trusts) for
United States federal income tax purposes, the beneficial owner means each of
the ultimate beneficial owners of the entity.
PLAN OF DISTRIBUTION
The Registered Notes are being offered on a continuous basis by the Company
through Salomon Brothers and Smith Barney (together with any successor or
successors thereto, 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.
S-29
<PAGE> 58
No Registered Note will have an established trading market when issued.
Unless otherwise specified in the applicable Pricing Supplement, the Registered
Notes will not be listed on any securities exchange. The Agents may make a
market in the Registered Notes, but no Agent is obligated to do so and any Agent
may discontinue any market-making at any time without notice, at its sole
discretion. There can be no assurance of the existence or liquidity of a
secondary market for any Registered Notes, or that the maximum amount of
Registered Notes will be sold.
Each of the Agents, whether acting as agent or principal, 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 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 Registered
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 Registered 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 Registered 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
participation of each Agent in the offering of the Registered Notes will comply
with the requirements of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. regarding the underwriting by an
affiliate of the securities of its parent.
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.
S-30
<PAGE> 59
======================================================
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND
PRICING 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 SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND PRICING SUPPLEMENT IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................... S-2
Description of Registered Notes....... S-2
Currency Risks........................ S-21
Risks of Indexed Notes................ S-23
Certain United States Federal Income
Tax Considerations.................. S-24
Plan of Distribution.................. S-29
PROSPECTUS
Prospectus Summary.................... 2
The Company........................... 6
Ratio of Earnings to Fixed Charges.... 6
The Offered Securities................ 6
Description of Debt Securities........ 7
Description of Index Warrants......... 15
Limitations on Issuance of Bearer
Securities and Bearer Warrants...... 19
European Monetary Union............... 20
Use of Proceeds and Hedging........... 21
Plan of Distribution.................. 21
ERISA Matters......................... 23
Experts............................... 24
Legal Matters......................... 24
Available Information................. 25
Incorporation of Certain Documents by
Reference........................... 25
</TABLE>
======================================================
======================================================
$11,710,346,786
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 December , 1997
SALOMON SMITH BARNEY
======================================================
<PAGE> 60
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 DECEMBER 1, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER , 1997)
$11,710,346,786
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 that we will deliver to
prospective buyers of any note. The maximum amount that we expect to receive
from the sale of the notes is between $11,622,519,185 and $11,695,708,8543 after
paying the agents commissions of between $14,637,933 and $87,827,601.
<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
J.J. Kenny time 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
Federal Funds Rate 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 - Notes may pay additional interest in the event they
securities, currencies, become subject to certain U.S. withholding taxes
commodities or other goods Notes will be issued in bearer form. Bearer Notes will
PAYMENT Generally semi-annually for not be offered, sold or delivered to any U.S. person,
DATES: Fixed Rate Notes except as permitted under U.S. Treasury regulations
Interest on Floating Rate Notes will be sold through our broker-dealer
or Indexed Notes may be subsidiaries, as Agents
paid monthly, quarterly, Notes may be subject to certain indexation and currency
semi- annually or annually risks
CURRENCIES: U.S. Dollars and other Series H Notes are part of our Senior Indebtedness;
currencies Series I Notes are part of our Subordinated Indebtedness
DENOMINATION: Minimum of $10,000, minimum
purchase of $25,000
</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.
------------------------
SALOMON SMITH BARNEY INTERNATIONAL
December , 1997
<PAGE> 61
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company......................................................................... S-3
Description of Bearer Notes......................................................... S-3
Governing Law....................................................................... S-26
Currency Risks...................................................................... S-26
Risks of Indexed Notes.............................................................. S-27
Certain United States Federal Income Tax Considerations............................. S-28
Plan of Distribution................................................................ S-29
Incorporation of Certain Documents by Reference..................................... S-31
General Information................................................................. S-32
</TABLE>
S-2
<PAGE> 62
THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research, and other related
activities.
SALOMON
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.
$11,710,346,786 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
S-3
<PAGE> 63
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
consolidated 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 $30.9
billion, consisting of the following: $19.7 billion of term debt, $5.4 billion
in commercial paper and $5.8 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 to this
Prospectus Supplement (a "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
S-4
<PAGE> 64
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 United States 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; (xvii) whether such
Note is to be listed on the Luxembourg Stock Exchange and (xviii) 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 a Bearer Note, 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 the Note has
certain interest payment characteristics (e.g., interest holidays, interest
payable in additional securities or stepped interest).
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.
S-5
<PAGE> 65
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, Societe Anonyme ("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.
S-6
<PAGE> 66
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) and 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 (other than an Indexed Note) (as defined herein)
is declared to be due and payable immediately as a result of the acceleration of
Stated Maturity, 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
S-7
<PAGE> 67
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
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") or, in the case of an incomplete month, the
number of days elapsed.
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
S-8
<PAGE> 68
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
S-9
<PAGE> 69
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 with respect to any such Floating Rate Note that is listed on the
Luxembourg Stock Exchange 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.
S-10
<PAGE> 70
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 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 Bearer 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
S-11
<PAGE> 71
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 - (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.
S-12
<PAGE> 72
"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
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
S-13
<PAGE> 73
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 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 or more of
which may be an Agent (as defined herein)), 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
S-14
<PAGE> 74
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 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.
S-15
<PAGE> 75
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 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 no 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.
S-16
<PAGE> 76
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 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 Bearer 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, Spread Multiplier or
method of calculation (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, Spread Multiplier, or method of calculation, as the case may be, may be
reset (each an "Optional Reset Date").
The Company shall notify the Trustee 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 Trustee for such
Bearer Note shall provide notice of such election (the "Reset Notice") to the
Holder of such Bearer Note, in accordance with "Notices" below. The Reset Notice
shall indicate whether the Company has elected to reset the interest rate (in
the case of a Fixed Rate Note) or the Spread, Spread Multiplier or method of
calculation (in the case of a Floating Rate Note) and, if so, (i) such new
interest rate or such new Spread, Spread Multiplier or method of calculation, 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
provision by the Trustee of a Reset Notice to the Holder of a Note, such new
interest rate or such new Spread, Spread Multiplier and/or method of
calculation, 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 Trustee for such Bearer
Note to provide notice of such higher interest rate or higher Spread or Spread
Multiplier, as the case may be, to the Holder of such Bearer Note in accordance
with "Notices" below. 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
S-17
<PAGE> 77
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 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 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 application of a formula or by such other
objective price, economic or other measures as are described in the applicable
Pricing Supplement (any such measure or measures, an "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.
S-18
<PAGE> 78
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.
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 security, currency, commodity or other good or article
to which the Note is indexed 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.
DUAL CURRENCY NOTES
The Company may from time to time offer Bearer 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 United States 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 United States federal income
tax consequences of the purchase, ownership and disposition of Dual Currency
Notes will be set forth in the applicable Pricing Supplement.
S-19
<PAGE> 79
RENEWABLE NOTES
The Company may from time to time offer Bearer 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 Renewable 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 Trustee for such Bearer Note shall provide notice of such
election (the "Extension Notice") to the Holder of such Bearer Note, in
accordance with "Notices" below. The Extension Notice will set forth
S-20
<PAGE> 80
(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, Spread Multiplier or method of calculation 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 provision by such Trustee 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 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 Trustee for such Bearer Note to provide notice of such
higher interest rate or higher Spread or Spread Multiplier, as the case may be,
to the Holder of such Bearer Note in accordance with "Notices" below. 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 Trustee or 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.
S-21
<PAGE> 81
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.
In order for a Bearer Note to be repaid, the Principal 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 United
States 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).
S-22
<PAGE> 82
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 Bearer Note, its
Interest Payment Dates or any other matter relating thereto may be modified by
the terms as specified 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 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 United
States 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 United States 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
S-23
<PAGE> 83
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 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
S-24
<PAGE> 84
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 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, with respect to any series of Bearer Notes that 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, with respect to any
series of Bearer Notes that may be listed on the Luxembourg Stock Exchange, if
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.
S-25
<PAGE> 85
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.
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 any 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 " -- Payment Currency" and
"Description of Bearer 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
S-26
<PAGE> 86
LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN BEARER NOTES
DENOMINATED IN A CURRENCY OTHER THAN THE PURCHASER'S HOME CURRENCY.
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 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
Bearer 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. Bearer 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 Bearer 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.
S-27
<PAGE> 87
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 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.
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 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 United States federal income tax
considerations discussed below, as well as the application of state, local,
foreign or other tax law.
Under current United States 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, (iii) is not a controlled foreign corporation as to the
United States and (iv) with respect to payments made after December 31, 1998, is
not a
S-28
<PAGE> 88
foreign partnership that, at any time during its taxable year is 50% or more (by
income or capital interest) owned by U.S. persons or is engaged in the conduct
of a U.S. trade or business (a person described in (i), (ii), (iii) and (iv)
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 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 the Company's broker-dealer subsidiaries, Salomon Brothers, Smith
Barney, Salomon Brothers International Limited, Salomon Brothers AG and Salomon
Brothers Hong Kong Limited (together with any successor or successors thereto,
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 United States 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 United States
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
S-29
<PAGE> 89
United States 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.
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 1996) 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.
No Bearer Note will have an established trading market when issued. Unless
otherwise specified in the applicable Pricing Supplement, the Bearer Notes will
not be listed on any securities exchange. The Agents may make a market in the
Bearer Notes, but no Agent is obligated to do so and any Agent may discontinue
any market-making at any time without notice, at its sole discretion. There can
be no assurance of the existence or liquidity of a secondary market for any
Bearer Notes, or that the maximum amount of Bearer Notes will be sold.
Each of the Agents, whether acting as agent or principal, 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 Bearer
Notes.
Concurrently with the offering of Bearer Notes through the Agents as
described herein, the Company may issue other Securities pursuant to the
Indenture referred to in the Prospectus.
S-30
<PAGE> 90
Each of the Agents is a wholly owned subsidiary of the Company. The
participation of each Agent in the offering of the Bearer Notes will comply with
the requirements of Rule 2720 of the Conduct Rules of the National Association
of Securities Dealers, Inc. regarding the underwriting by an affiliate of the
securities of its parent.
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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Securities and
Exchange Commission pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (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; (ii) the Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997 and (iii) the Current Reports on Form
8-K dated January 21, 1997, March 17, 1997, April 15, 1997, July 17, 1997,
September 24, 1997, September 29, 1997 (as amended by the Current Report on Form
8-K/A dated October 28, 1997 and the Current Report on Form 8-K/A2 dated
December 1, 1997), October 21, 1997, October 28, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997) November 21, 1997 (as amended by
the Current Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of 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.$11,710,346,786 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
S-31
<PAGE> 91
accompanying Prospectus relate. Pursuant to the Global Selling Agency Agreement
(the "Selling Agency Agreement") among the Agents and the Company, 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 will give an
undertaking in the event of the listing of any series of the Bearer Notes on the
Luxembourg Stock Exchange to the effect that, so long as any such series of
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 such Bearer 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 such Bearer Notes.
GENERAL INFORMATION
Application may be made to list certain series of the Bearer Notes on the
Luxembourg Stock Exchange. In connection with any such listing, the Amended and
Restated Certificate of Incorporation and By-Laws of the Company and a legal
notice relating to the issuance of any such Bearer Notes will be deposited with
the Chief Registrar of the District Court of Luxembourg, where copies may be
obtained upon request.
The issuance of the Bearer Notes was authorized by action of the Board of
Directors of the Company on November 28, 1997.
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, Amended and Restated 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 such series of 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 Bearer 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
S-32
<PAGE> 92
(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)
(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) OID Note: [ ] Yes [ ] No
Total Amount of OID Yield to Maturity
(xxx) Renewable Note [ ] Yes [ ] No
Extension of Maturity [ ] Yes [ ] No
(xxxi) Listed on Luxembourg Stock Exchange: [ ] Yes [ ] No
------------------------------------
You should rely only on the information incorporated by reference or
provided in this Prospectus Supplement or the accompanying Prospectus and
Pricing 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 Supplement or the accompanying Prospectus and Pricing Supplement is
accurate as of any date other than the date on the front of the document.
S-33
<PAGE> 93
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 14 Boulevard F.D. Roosevelt
Charlotte
P.O. Box 807 L-2450 Luxembourg
L-1330 Luxembourg
</TABLE>
LEGAL ADVISORS 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. Luxembourgeoise
43 Boulevard Royal Luxembourg
Luxembourg City 2955
<PAGE> 94
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 DECEMBER 1, 1997
PROSPECTUS
$1,000,000,000
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 that we
will deliver to prospective buyers of any note. We expect to receive between
$972,500,000 and $995,000,000 from the sale of the notes, after paying the
underwriters commissions of between $5,000,000 and $27,500,000.
<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
Federal Funds Rate
- 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 ACCOMPANYING PRICING SUPPLEMENT, IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
SALOMON SMITH BARNEY
December , 1997
<PAGE> 95
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 Pricing
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 4 for information on our Company and our
financial statements. The Pricing 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 Pricing 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 $1,000,000,000 of Notes. A
Pricing 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 between the Company and
Citibank N.A., as 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 incorporated by
reference in our registration statement No. 333-38931), 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, including the Report on Form 8-K dated November 28, 1997.
Directions on how you can receive copies of these documents are provided on page
4.
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
2
<PAGE> 96
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
3
<PAGE> 97
public reference rooms. Our SEC filings are also available to the public from
the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed:
(a) Annual Report on Form 10-K for the year ended December 31, 1996.
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997.
(c) Current Reports on Form 8-K dated January 21, 1997, March 17,
1997, April 15, 1997, July 17, 1997, September 24, 1997, September 29, 1997
(as amended by the Current Report on Form 8-K/A dated October 28, 1997 and
the Current Report on Form 8-K/A2 dated December 1, 1997), October 21,
1997, October 28, 1997 (as amended by the Current Report on Form 8-K/A
dated December 1, 1997), November 21, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Treasurer
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
212-816-6000
You should rely only on the information incorporated by reference or
provided in this Prospectus or the 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.
4
<PAGE> 98
THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research, and other related
activities.
SALOMON
Together with Salomon Brothers Holding Company Inc and its subsidiaries
(which subsidiaries include Salomon Brothers), Salomon Brothers engages in
global investment banking and global securities trading activities; provides
capital raising, advisory, trading and risk management services to its
customers; and executes proprietary trading strategies on its own behalf.
Certain of the Company's commodities trading activities are conducted by the
Company's wholly owned subsidiary, Phibro Inc., and its subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED -----------------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges.......................... 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amount by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to fixed charges has been computed by dividing earnings
before income taxes and fixed charges by the fixed charges. For the purpose of
this ratio, fixed charges consist of interest expense and that portion of
rentals deemed representative of the appropriate interest factor.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each Registered Note (as defined below)
in the currency designated by the Company (the "Specified Currency") for such
Note. If requested by a prospective purchaser of a Registered Note having a
Specified Currency other than U.S. dollars, each of the Agents may at its
discretion arrange for the exchange of U.S. dollars into such Specified Currency
to enable the purchaser to pay for such Note. Each such exchange will be made by
an Agent on such terms and subject to such conditions, limitations and charges
as an Agent may from time to time establish in accordance with its regular
foreign exchange practice. All costs of exchange will be borne by the purchaser.
References herein to "U.S. dollars" or "$" are to the lawful currency of
the United States.
5
<PAGE> 99
DESCRIPTION OF THE NOTES
The Company's Notes, Series J (the "Notes") will be issued as a series
under an indenture dated as of December 1, 1988 (as amended or supplemented from
time to time, the "Indenture") between the Company and Citibank N.A., a national
banking association, as trustee (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 Securities and Exchange
Commission (the "Commission") and is incorporated by reference as part of the
registration statement on Form S-3 (together with all amendments and exhibits,
the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). 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 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 $1,000,000,000 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 and the authorized denominations of Notes having a
Specified Currency other than U.S. dollars will be the approximate equivalents
thereof in the Specified Currency. 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 to this
Prospectus (a "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
6
<PAGE> 100
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 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
United States 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
7
<PAGE> 101
the following limitations. The Company may, in its sole discretion, limit to
$2,500,000 (or the approximate equivalent thereof in other currencies) 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 (or
the approximate equivalent thereof) 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 (or the
approximate equivalent thereof), 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. 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 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.
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 (or the approximate equivalent thereof)
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 (or the approximate equivalent thereof) 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,
8
<PAGE> 102
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 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 other than an Indexed Note (as
defined herein) is declared to be due and payable immediately as a result of the
acceleration of Stated Maturity, 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.
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.
9
<PAGE> 103
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 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") or, in the case of an incomplete month, the
number of days elapsed.
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
10
<PAGE> 104
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.
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.
11
<PAGE> 105
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 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
12
<PAGE> 106
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 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
13
<PAGE> 107
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>
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.
14
<PAGE> 108
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
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.
15
<PAGE> 109
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 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 or more of
which may be an Underwriter (as defined herein)), 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
16
<PAGE> 110
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 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).
17
<PAGE> 111
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 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 no 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
18
<PAGE> 112
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 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 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 Note or the Spread, Spread Multiplier or method of
calculation (in the case of a Floating Rate Note) with respect to such Note and,
if so, the date or dates on which such interest rate or such Spread, Spread
Multiplier or method of calculation, 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 Note at least 45 but not more than
60 days prior to an Optional Reset Date for such Note. Not later than 40 days
prior to such Optional Reset Date, the Trustee for such Note will mail to the
Holder of such 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, Spread Multiplier or method of
calculation (in the case of a Floating Rate Note) and, if so, (i) such new
interest rate or such new Spread, Spread Multiplier or method of calculation, 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, Spread Multiplier and/or method
of calculation, 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.
19
<PAGE> 113
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a 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 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 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 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 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
Note or notification to the Trustee for such 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 Note for repayment pursuant to a Reset Notice may, by written
notice to the Trustee for such 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 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 application of a formula or by such other
objective price, economic or other measures as are described in the applicable
Pricing Supplement (any such measure or measures, an "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
20
<PAGE> 114
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.
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 security, currency, commodity or other good or article
to which the Note is indexed 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.
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
21
<PAGE> 115
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 United States 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 Renewable 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.
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 renew. 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
22
<PAGE> 116
such Note to notify the Depositary of its desire to exercise a right to renew.
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 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.
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 Note at least 45 but not more than 60 days prior to the old
Stated Maturity of such Note. Not later than 40 days prior to the old Stated
Maturity of such Note, the Trustee for such Note will mail to the Holder of such
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 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, Spread Multiplier or method of
calculation 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 Note, the Stated Maturity of
such Note shall be extended automatically, and, except as modified by the
Extension Notice and as described in the next paragraph, such 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 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 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 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 Note. Such notice shall be irrevocable. All 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 Note, the Holder of such
Note will have the option to elect repayment of such 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 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 Note or notification to the Trustee for such 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 Note for repayment pursuant to an
Extension Notice may, by written notice to the Trustee for such 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."
23
<PAGE> 117
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 (other
than Amortizing 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 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.
24
<PAGE> 118
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.
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 in the applicable Pricing Supplement.
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 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"
25
<PAGE> 119
(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,
Smith Barney 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 (or, in the case of Discount Notes or Indexed Notes (as defined herein),
an amount equal to such portion of the principal amount thereof as will be
specified in the related Pricing Supplement). 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
26
<PAGE> 120
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 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; (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; (iii) change the currency or composite
currency of denomination or payment of the principal of (and premium, if any,
on) or any interest payable on any Debt Security; (iv) impair the right to
institute suit for the enforcement of any payment on or with respect to any Debt
Security; or (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 Indenture with respect to
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).
27
<PAGE> 121
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, 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.
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
28
<PAGE> 122
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 " -- Payment Currency."
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.
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 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
29
<PAGE> 123
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 or by which
amounts due on the Notes may be calculated 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 or the calculation of amounts due thereon 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, or to calculate amounts due thereon, in either the current national
currency of such Relevant Jurisdiction or Euro, the Company will make such
payments or calculations 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.
30
<PAGE> 124
USE OF PROCEEDS AND HEDGING
General. The proceeds to be received by the Company from the sale of the
Notes 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.
The Company or an affiliate may enter into a swap agreement with one of the
Company's affiliates in connection with the sale of the Notes and may earn
additional income as a result of payments pursuant to such swap or related hedge
transactions.
Use of Proceeds Relating to Indexed Notes. All or a portion of the
proceeds to be received by the Company from the sale of 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 assets by reference to which the relevant Index
or Indexes are determined or calculated (the "Underlying Assets"), 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 Indexed Notes. From time to time after the initial offering and prior to
the maturity of the 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 Notes, 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 Indexed Notes from time to time
and may, in their sole discretion, hold, resell, cancel or retire such Notes.
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 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 Indexed Notes will be used by the
Company or its subsidiaries for general corporate purposes, as described above.
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.
31
<PAGE> 125
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.
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 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 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
32
<PAGE> 126
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 can only be changed
with 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," "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
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 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 can only be changed with 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 long term capital
gains recognized by individuals in respect of capital 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.
33
<PAGE> 127
Original Issue Discount
In General. Notes with a term greater than one year may be issued with OID
for United States 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 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.
Foreign Currency Notes. 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
34
<PAGE> 128
qualified stated interest (the "remaining redemption amount") but in excess of
the OID Note's 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 OID
Note's adjusted issue price, and the denominator of which is the excess of the
remaining redemption amount over the OID 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 Notes 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 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 will be accrued by a United
States holder in the Specified Currency. The amount includible in income by a
United States holder in respect of such accrued market discount will be the U.S.
dollar value of the amount accrued, generally calculated at the spot rate of
exchange on the date that the Note is disposed of by the United States holder.
Any accrued 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 from the date of issuance ("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 is 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
35
<PAGE> 129
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 be revoked only with 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 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 a Note purchased for an amount less than or equal to the remaining
redemption amount but in excess of the Note's 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 HOLDERS
Under current United States federal income tax law: (a) payment on a Note
to a holder who is not a United States holder (a "non-United States holder")
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 holder in compliance with applicable
requirements (or, with respect to payments made after December 31, 1998,
satisfies certain documentary evidence requirements for establishing that it is
a non-United States holder); (b) a non-United States holder will not be subject
to United States federal income tax on gain realized on the disposition of the
Note. Notwithstanding the above, a Non-United States holder that is subject to
United
36
<PAGE> 130
States federal income taxation on a net income basis generally will be subject
to the same rules to which a United States holder is subject with respect to
interest payments on a Note and with respect to gain or loss realized or
recognized on the disposition of a Note. Special rules might also apply to a
Non-United States holder that is a qualified resident of a country with which
the United States has an income tax treaty.
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, with respect to payments made
after December 31, 1998, satisfies certain documentary evidence requirements for
establishing that it is a non-United States holder) 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, (ii) is not a controlled foreign corporation for
United States federal income tax purposes and (iii) with respect to payments
made after December 31, 1998, is not a foreign partnership that, at any time
during its taxable year is 50% or more (by income or capital interest) owned by
United States holders or is engaged in the conduct of a U.S. trade or business.
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.
With respect to payments made after December 31, 1998, for purposes of
applying the rules set forth in the three preceding paragraphs to an entity that
is treated as fiscally transparent (e.g., a partnership or certain trusts) for
United States federal income tax purposes, the beneficial owner means each of
the ultimate beneficial owners of the entity.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") entered into by the Company and Salomon Brothers
and Smith Barney (together with any successor or successors thereto, the
"Underwriters"), the Company has agreed to 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.
37
<PAGE> 131
After any initial public fixed price offering of Notes, the price to the 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.
No Note will have an established trading market when issued. Unless
otherwise specified in the applicable Pricing Supplement, the Notes will not be
listed on any securities exchange. The Underwriters or Dealers may make a market
in the Notes, but no Underwriter or Dealer is obligated to do so and any
Underwriter or Dealer may discontinue any market-making at any time without
notice, at its sole discretion. There can be no assurance of the existence or
liquidity of a secondary market for any Notes, or that the maximum amount of
Notes will be sold. Moreover, the Company reserves the right to withdraw, cancel
or modify the offer made hereby at any time without notice.
An Underwriter, 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 Underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that such Underwriters may be required to make in respect thereof and will
reimburse each of the Underwriters for certain legal and other expenses incurred
by it in connection with the offer and sale 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.
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 Securities Exchange Act of
1934, as amended (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 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.
38
<PAGE> 132
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.
Each of the Underwriters is a wholly-owned subsidiary of the Company. The
participation of each Underwriter in the offer and sale of Notes will comply
with the requirements of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. regarding the underwriting by an
affiliate of the securities of its parent.
This Prospectus and the related Pricing Supplement may be used by the
Company, the Underwriters, any Dealer that is an affiliate of the Company or
other affiliates of the Company in connection with offers and sales of the Notes
offered hereby in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Any such entity may act as
principal or agent in such transactions.
No 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) 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.
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> 133
EXPERTS
The consolidated financial statements and schedule of Salomon Inc as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in Salomon Inc's Annual Report on Form 10-K
for the year ended December 31, 1996 (the "Salomon Financials"), are
incorporated by reference herein, in reliance upon the report (also incorporated
by reference herein) of Arthur Andersen LLP, independent public accountants, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Smith Barney Holdings
Inc. and its subsidiaries for the fiscal years ended December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996, included
in the Company's Current Report on Form 8-K dated September 29, 1997, have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements referred to above are incorporated by
reference herein in reliance upon such report given upon the authority of said
firm as experts in accounting and auditing.
The supplemental consolidated financial statements of the Company and its
subsidiaries for the fiscal years ended December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996, included in the
Company's Current Report on Form 8-K dated November 28, 1997, have been audited
by Coopers & Lybrand L.L.P., independent certified public accountants, as set
forth in their report thereon, included therein and incorporated herein by
reference, which report states that Coopers & Lybrand L.L.P. did not audit the
Salomon Financials and that their opinion with respect to any amounts contained
in the Salomon Financials is based on the report of Arthur Andersen LLP. Such
financial statements referred to above are incorporated by reference herein in
reliance upon such reports given upon the authority of said firm as experts in
accounting and auditing.
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. Kenneth J. Bialkin, a
partner of Skadden, Arps, Slate, Meagher & Flom LLP, is a director of Travelers
Group, the parent of the Company, and he and other attorneys in such firm
beneficially own an aggregate of less than one percent of the common stock of
Travelers Group. Each of Cleary, Gottlieb, Steen & Hamilton and Skadden, Arps,
Slate, Meagher & Flom LLP has from time to time acted as counsel for Travelers
Group and certain of its subsidiaries and may do so in the future.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with 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
40
<PAGE> 134
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 the Registration Statement
relating to the Notes. 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, (ii) the Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997 and (iii) the Current Reports on Form
8-K dated January 21, 1997, March 17, 1997, April 15, 1997, July 17, 1997,
September 24, 1997, September 29, 1997 (as amended by the Current Report on Form
8-K/A dated October 28, 1997 and the Current Report on Form 8-K/A2 dated
December 1, 1997), October 21, 1997, October 28, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997), November 21, 1997 (as amended by
the Current Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the 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 of Notes, 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.
41
<PAGE> 135
======================================================
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR THE ACCOMPANYING PRICING SUPPLEMENT. WE HAVE
AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING
AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR THE ACCOMPANYING
PRICING SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT
OF THE DOCUMENT.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
Prospectus Summary..................... 2
The Company............................ 5
Ratio of Earnings to Fixed Charges..... 5
Important Currency Information......... 5
Description of the Notes............... 6
Currency Risks......................... 28
European Monetary Union................ 30
Use of Proceeds and Hedging............ 31
Risks of Indexed Notes................. 31
Certain United States Federal Income
Tax Considerations................... 32
Plan of Distribution................... 37
ERISA Matters.......................... 39
Experts................................ 40
Legal Matters.......................... 40
Available Information.................. 40
Incorporation of Certain Documents by
Reference............................ 41
</TABLE>
======================================================
======================================================
$1,000,000,000
SALOMON SMITH BARNEY HOLDINGS INC.
NOTES, SERIES J
DUE MORE THAN NINE MONTHS
FROM DATE OF ISSUE
PROSPECTUS
Dated December , 1997
SALOMON SMITH BARNEY
======================================================
<PAGE> 136
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 DECEMBER 1, 1997
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
$ 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 $ .
- --------------------------------------------------------------------------------
THE TRUST PREFERRED SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION, NOR HAS ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
SALOMON SMITH BARNEY
<PAGE> 137
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.
S-1
<PAGE> 138
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> 139
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 S-6
to S-9.
RANKING OF JUNIOR SUBORDINATED DEBT SECURITIES
Salomon Smith Barney's obligations under the Junior Subordinated Debt
Securities are subordinate and junior in right of payment to all of Salomon
Smith Barney's present and future senior indebtedness. This
S-3
<PAGE> 140
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.
S-4
<PAGE> 141
THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research; and other related
activities.
SALOMON
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.
S-5
<PAGE> 142
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
S-6
<PAGE> 143
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
S-7
<PAGE> 144
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
S-8
<PAGE> 145
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."
S-9
<PAGE> 146
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 FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED -----------------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges.......................... 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amount by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to 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.
S-10
<PAGE> 147
CAPITALIZATION
The following table sets forth the combined capitalization of the Company
at , 199 , 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 , 199 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 , 199 .
<TABLE>
<CAPTION>
AT , 199
---------------------------
(UNAUDITED)
---------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings................................................ $
Notes payable........................................................
Long-term debt.......................................................
--------
Total debt................................................. $
--------
Redeemable Preferred Stock, Series A(1)..............................
SSBH-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts holding solely Junior
Subordinated Debt Securities of SSBH(2)............................
Stockholder's equity
Preferred Stock, Series D and E(1).................................
Common stock ($.01 par value;
authorized -- 1,000 shares; issued and outstanding -- 1,000
shares)........................................................
Additional paid-in capital...........................................
Retained earnings....................................................
Cumulative translation adjustment....................................
Treasury Stock
--------
Total stockholder's equity.................................
--------
Total capitalization................................................. $
--------
</TABLE>
- ---------------
(1) On November 28, 1997, in connection with the merger of the Company into a
wholly owned subsidiary of Travelers Group Inc., each share of Series A
Cumulative Convertible Preferred Stock, 8.08% Cumulative Preferred Stock,
Series D and 8.40% Cumulative Preferred Stock, Series E of the Company was
exchanged, respectively, for one share of Series I Cumulative Preferred
Stock, 8.08% Cumulative Preferred Stock, Series J and 8.40% Cumulative
Preferred Stock, Series K, of Travelers Group Inc.
(2) 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
S-11
<PAGE> 148
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 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
S-12
<PAGE> 149
Subordinated Debt Securities) during any such extended interest payment period.
In the event that the Company exercises its right to extend the interest payment
period, then (a) the Company shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payment with respect thereto (other than (i) repurchases, redemptions
or other acquisitions of shares of capital stock of the Company in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of employees, officers, directors or consultants, (ii) as a
result of an exchange or conversion of any class or series of the Company's
capital stock for any other class or series of the Company's capital stock, or
(iii) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged), and (b) the Company shall not make
any payment of interest on or principal of (or premium, if any, on), or repay,
repurchase or redeem, any debt securities issued by the Company which rank pari
passu with or junior to the Junior Subordinated Debt Securities. The foregoing,
however, will not apply to any stock dividends paid by the Company where the
dividend stock is the same stock as that on which the dividend is being paid.
Prior to the termination of any Extension Period, the Company may further extend
such Extension Period; provided, that such Extension Period, together with all
such previous and further extensions thereof, may not exceed 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.
S-13
<PAGE> 150
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 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
S-14
<PAGE> 151
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of such dissolution and distribution of Junior
Subordinated Debt Securities and, provided further, that, if at the time there
is available to the Company or SSBH Capital the opportunity to eliminate, within
such 90 day period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure, that will have no adverse effect on SSBH Capital, the Company or the
holders of the Trust Securities, the Company or SSBH Capital will pursue such
measure in lieu of dissolution. Furthermore, if in the case of the occurrence of
a Tax Event, (i) the Company has received an opinion (a "Redemption Tax
Opinion") of a nationally recognized independent tax counsel experienced in such
matters that, as a result of such Tax Event, there is more than an insubstantial
risk that the Company would be precluded from deducting the interest on the
Junior Subordinated Debt Securities for United States federal income tax
purposes, even after the Junior Subordinated Debt Securities were distributed to
the holders of Trust Securities in liquidation of such holders' interests in
SSBH Capital as described above, or (ii) the Regular Trustees shall have been
informed by such tax counsel that it cannot deliver a No Recognition Opinion to
the Regular Trustees, the Company shall have the right, upon not less than 30
nor more than 60 days' notice, to redeem the Junior Subordinated Debt
Securities, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event, and, following such redemption, Trust Securities
with an aggregate liquidation amount equal to the aggregate principal amount of
the Junior Subordinated Debt Securities so redeemed shall be redeemed by SSBH
Capital at the Redemption Price on a pro rata basis; provided, however, that if
at the time there is available to the Company or SSBH Capital the opportunity to
eliminate, within such 90-day period, the Tax Event by taking some ministerial
action, such as filing a form or making an election or pursuing some other
similar reasonable measure that will have no adverse effect on SSBH Capital, the
Company or the holders of the Trust Securities, the Company or SSBH Capital will
pursue such measure in lieu of redemption.
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, the Company will use its best efforts to cause the
Junior Subordinated Debt Securities to be listed on the New York Stock Exchange
or on such other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debt Securities
upon dissolution of SSBH Capital, (i) the Preferred Securities will no longer be
deemed to be outstanding, (ii) the securities depositary or its nominee, as the
record holder of the Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debt Securities
to be delivered upon such distribution, and (iii) any certificates representing
Preferred Securities not held by the Depositary or its nominee will be deemed to
represent Junior Subordinated Debt Securities having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and with accrued and unpaid interest
equal to accrued and unpaid distributions on, such Preferred Securities until
such certificates are presented to the Company or its agent for transfer or
reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of SSBH
Capital were to occur. Accordingly, the Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Junior Subordinated Debt Securities that an investor may receive
if a dissolution and liquidation of SSBH Capital were to occur, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
REDEMPTION PROCEDURES
SSBH Capital may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all 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
S-15
<PAGE> 152
Depositary (as defined in the accompanying Prospectus) funds sufficient to pay
the applicable Redemption Price and will give the Depositary irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Preferred Securities. See "-- Book-Entry Only Issuance -- The Depository Trust
Company." If notice of redemption shall have been given and funds deposited as
required, then, immediately prior to the close of business on the date of such
deposit, distributions will cease to accrue and all rights of holders of
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price but
without interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by SSBH Capital, or by the
Company pursuant to the Guarantee, distributions on such Preferred Securities
will continue to accrue at the then applicable rate from the original redemption
date to the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed in accordance with
the Depositary's standard procedures. See " -- Book-Entry Only Issuance -- The
Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its affiliates or
subsidiaries, including, without limitation, Smith Barney and/or Salomon
Brothers (and any successor or successors thereto), may at any time, and from
time to time, purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of SSBH Capital (each a "Liquidation"), the holders of
the Preferred Securities will be entitled to receive out of the assets of SSBH
Capital, after satisfaction of liabilities to creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $ 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.
S-16
<PAGE> 153
Under the terms of the Indenture, the Company has covenanted that, for so
long as the Preferred Securities remain outstanding, it will not voluntarily
dissolve, wind-up or terminate SSBH Capital, except in connection with a
distribution of Junior Subordinated Debt Securities upon a Special Event or in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that, pursuant to the
Declaration the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration and therefore the
Indenture. In the event that any Declaration Event of Default with respect to
the Preferred Securities is waived by the holders of the Preferred Securities as
provided in the Declaration, the holders of Common Securities pursuant to the
Declaration have agreed that such waiver also constitutes a waiver of such
Declaration Event of Default with respect to the Common Securities for all
purposes under the Declaration without any further act, vote or consent of the
holders of Common Securities. See "-- Voting Rights."
If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debt Securities, any holder of Preferred Securities may directly
institute a legal proceeding against the Company to enforce the Institutional
Trustee's rights under the Junior Subordinated Debt Securities without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. If a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
the redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debt Securities without first (i) directing the
Institutional Trustee to enforce the terms of the Junior Subordinated Debt
Securities or (ii) instituting a legal proceeding against the Company to enforce
the Institutional Trustee's rights under the Junior Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from SSBH Capital. The holders
of Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debt Securities.
Upon the occurrence of an Indenture Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debt Securities will have
the right under the Indenture to declare the principal of and interest on the
Junior Subordinated Debt Securities to be immediately due and payable. The
Company and SSBH Capital are each required to file annually with the
Institutional Trustee an officers' certificate as to its compliance with all
conditions and covenants under the Declaration.
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.
S-17
<PAGE> 154
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debt Securities, to (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee, or exercising any trust or power conferred on the
Indenture Trustee with respect to the Junior Subordinated Debt Securities, (ii)
waive any past Indenture Event of Default that is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debt Securities shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debt Securities where such consent shall be
required; provided, however, that, where a consent or action under the Indenture
would require the consent or act of holders of more than a majority in principal
amount of the Junior Subordinated Debt Securities (a "Super Majority") affected
thereby, only the holders of at least such Super Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
record holder of Preferred Securities may directly institute a legal proceeding
against the Company to enforce the Institutional Trustee's rights under the
Junior Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity. The
Institutional Trustee shall notify all holders of the Preferred Securities of
any notice of default received from the Indenture Trustee with respect to the
Junior Subordinated Debt Securities. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy available to the Institutional Trustee, the Institutional Trustee, as
holder of the Junior Subordinated Debentures, shall not take any of the actions
described in clauses (i), (ii), (iii) or (iv) above unless the Institutional
Trustee has obtained an opinion of a nationally recognized independent tax
counsel experienced in such matters to the effect that, as a result of such
action, SSBH Capital will not fail to be classified as a grantor trust for
United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debt Securities, is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Institutional Trustee shall request the written direction of the holders of the
Trust Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a majority in liquidation amount of the Trust Securities voting
together as a single class; provided, however, that where any amendment,
modification or termination under the Indenture would require the consent of a
Super Majority, the Institutional Trustee may only give such consent at the
direction of the holders of at least the proportion in aggregate liquidation
amount of the Trust Securities which the relevant Super Majority represents of
the aggregate principal amount of the Junior Subordinated Debt Securities
outstanding. The Institutional Trustee shall be under no obligation to take any
such action in accordance with the directions of the holders of the Trust
Securities unless the Institutional Trustee has obtained an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that for United States federal income tax purposes SSBH Capital will not
be classified as other than a grantor trust.
A waiver of an Indenture Event of Default by the Institutional Trustee at
the direction of the holders of the Preferred Securities will constitute a
waiver of the corresponding Declaration Event of Default.
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
S-18
<PAGE> 155
such holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents. No
vote or consent of the holders of Preferred Securities will be required for SSBH
Capital to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debt Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
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
S-19
<PAGE> 156
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity), (vi) such successor entity has a purpose identical to that of SSBH
Capital, (vii) prior to such merger, consolidation, amalgamation or replacement,
SSBH Capital has received an opinion of a nationally recognized independent
counsel to SSBH Capital experienced in such matters to the effect that, (A) such
merger, consolidation, amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), and (B)
following such merger, consolidation, amalgamation or replacement, neither SSBH
Capital nor such successor entity will be required to register as an "investment
company" under the 1940 Act; and (viii) the Company guarantees the obligations
of such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, SSBH Capital shall
not, except with the consent of holders of 100% in liquidation amount of the
Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by
any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it, if in the opinion of a nationally recognized
independent tax counsel experienced in such matters, such consolidation,
amalgamation, merger or replacement would cause SSBH Capital or the Successor
Entity to be classified as other than a grantor trust for United States federal
income tax purposes. In addition, so long as any Preferred Securities are
outstanding and are not held entirely by the Company, SSBH Capital may not
voluntarily liquidate, dissolve, wind-up or terminate except as described above
under "-- Special Event Redemption Distribution."
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates,
representing the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. (the
"NASD"). Access to the DTC system is also available to others, such as
securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with 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
S-20
<PAGE> 157
which the Beneficial Owners purchased Preferred Securities. Transfers of
ownership interests in the Preferred Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in the Preferred Securities, except in the event that use of the
book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Preferred Securities in accordance
with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to SSBH Capital as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co. consenting or voting
rights to those Direct Participants to whose accounts the Preferred Securities
are credited on the record date (identified in a listing attached to the Omnibus
Proxy). The Company and SSBH Capital believe that the arrangements among DTC,
Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights that
can be directly exercised by a holder of a beneficial interest in SSBH Capital.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of DTC,
SSBH Capital or the Company, subject to any statutory or regulatory requirements
to the contrary that may be in effect from time to time. Payment of
distributions to DTC is the responsibility of SSBH Capital, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
SSBH Capital. Under such circumstances, in the event 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.
S-21
<PAGE> 158
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such a default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. Notwithstanding the foregoing, the holders of
Preferred Securities will not be required to offer such indemnity in the event
such holders, by exercising their voting rights, direct the Institutional
Trustee to take any action following a Declaration Event of Default.
The Institutional Trustee has extended substantial credit facilities (the
borrowings under which constitute Senior Indebtedness (as defined herein)) to
the Company. The Company and certain of its subsidiaries also maintain bank
accounts, borrow money and have other customary commercial banking or investment
banking relationships with the Institutional Trustee in the ordinary course of
business.
PAYING AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions will apply:
The Institutional Trustee will act as paying agent and may designate
an additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of SSBH Capital, but upon payment (with the
giving of such indemnity as SSBH Capital or the Company may require) in
respect of any tax or other government charges that may be imposed in
relation to it.
SSBH Capital will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate SSBH Capital in
such a way so that SSBH Capital will not be required to register as an
"investment company" under the 1940 Act or be characterized as other than a
grantor trust for United States federal income tax purposes. The Company is
authorized and directed to conduct its affairs so that the Junior Subordinated
Debt Securities will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Company and the Regular
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust of SSBH Capital or the certificate of
incorporation of the Company, that each of the Company and the Regular Trustees
determines in its discretion to be necessary or desirable to achieve such end,
as long as such action does not adversely affect the interests of the holders of
the Preferred Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
S-22
<PAGE> 159
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.
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.
S-23
<PAGE> 160
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 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.
S-24
<PAGE> 161
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 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
S-25
<PAGE> 162
distribution would be payable, if not for such Extension Period, but in any
event one Business Day prior to such record date. The Regular Trustees shall
give notice of the Company's selection of such Extension Period to the holders
of the Preferred Securities. If the Institutional Trustee shall not be the sole
holder of the Junior Subordinated Debt Securities, the Company shall give the
holders of the Junior Subordinated Debt Securities notice of its selection of
such Extension Period ten Business Days prior to the earlier of (i) the next
succeeding Interest Payment Date or (ii) the date upon which the Company is
required to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Junior Subordinated Debt
Securities of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time SSBH Capital shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Junior Subordinated Debt Securities such additional amounts as shall be
required so that the net amounts received and retained by SSBH Capital after
paying any such taxes, duties, assessments or other governmental charges will be
not less than the amounts SSBH Capital would have received had no such taxes,
duties, assessments or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debt Securities,
will have the right to declare the principal of and the interest on the Junior
Subordinated Debt Securities (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debt Securities. See "Description of Junior
Subordinated Debt Securities -- Events of Default" in the accompanying
Prospectus for a description of the Indenture Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. The holders of
Preferred Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debt Securities. See "Description of the Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Junior Subordinated Debt Securities
on the date such interest or principal is otherwise payable, the Company
acknowledges that, in such event, a holder of Preferred Securities may institute
a Direct Action for payment on or after the respective due date specified in the
Junior Subordinated Debt Securities. The Company may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of all of the holders of Preferred Securities of SSBH Capital.
Notwithstanding any payment made to such holder of Preferred Securities by the
Company in connection with a Direct Action, the Company shall remain obligated
to pay the principal of or interest on the Junior Subordinated Debt Securities
held by SSBH Capital or the Institutional Trustee of SSBH Capital, and the
Company shall be subrogated to the rights of the holder of such Preferred
Securities with respect to payments on the Preferred Securities to the extent of
any payments made by the Company to such holder in any Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debt Securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of SSBH Capital
as a result of the occurrence of a Special Event, the Junior Subordinated Debt
Securities will be issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the depositary or its nominee.
Except under the limited circumstances described below, Junior Subordinated Debt
Securities represented by a Global Security will not be exchangeable for, and
will not otherwise be issuable as, Junior Subordinated Debt Securities in
definitive form. The Global Securities described above may not be transferred
except by the depositary to a nominee of
S-26
<PAGE> 163
the depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debt Securities in definitive form and will not be considered the
Holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debt
Securities shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the depositary or its
nominee or to a successor depositary or its nominee. Accordingly, each
Beneficial Owner must rely on the procedures of the depositary or if such person
is not a Participant, on the procedures of the Participant through which such
person owns its interest to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in SSBH Capital,
DTC will act as securities depositary for the Junior Subordinated Debt
Securities. For a description of DTC and the specific terms of the depositary
arrangements, see "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. The
Company may appoint a successor to DTC or any successor depositary in the event
DTC or such successor depositary is unable or unwilling to continue as a
depositary for the Global Securities.
None of the Company, SSBH Capital, the Indenture Trustee, any paying agent
and any other agent of the Company or the Indenture Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Junior Subordinated Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than the depositary or its
nominee only if (i) the depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Junior Subordinated Debt Securities. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Junior
Subordinated Debt Securities registered in such names as the depositary shall
direct. It is expected that such instructions will be based upon directions
received by the depositary from its Participants with respect to ownership of
beneficial interests in such Global Security.
MISCELLANEOUS
The Indenture will provide that the Company will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Junior Subordinated
Debt Securities, (ii) the organization, maintenance and dissolution of SSBH
Capital, (iii) the retention of the SSBH Trustees and (iv) the enforcement by
the Institutional Trustee of the rights of the holders of the Preferred
Securities.
S-27
<PAGE> 164
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
S-28
<PAGE> 165
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
S-29
<PAGE> 166
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.
S-30
<PAGE> 167
If the Company fails to make interest or other payments on the Junior
Subordinated Debt Securities when due (taking account of any Extension Period),
the Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities -- Book Entry Only Issuance -- The Depository Trust Company" and
"-- Voting Rights," may direct the Institutional Trustee to enforce its rights
under the Junior Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
holder of Preferred Securities may directly institute a legal proceeding against
the Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Junior Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities may also institute a Direct Action for payment on
or after the respective due date specified in the Junior Subordinated Debt
Securities without first (i) directing the Institutional Trustee to enforce the
terms of the Junior Subordinated Debt Securities or (ii) instituting a legal
proceeding against the Company to enforce the Institutional Trustee's rights
under the Junior Subordinated Debt Securities. In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by the
Company to such holder of Preferred Securities in such Direct Action.
Consequently, the Company will be entitled to payment of amounts that a holder
of Preferred Securities receives in respect of an unpaid distribution that
resulted in the bringing of a Direct Action to the extent that such holder
receives or has already received full payment with respect to such unpaid
distribution from SSBH Capital. The Company, under the Guarantee, acknowledges
that the Guarantee Trustee shall enforce the Guarantee on behalf of the holders
of the Preferred Securities. If the Company fails to make payments under the
Guarantee, the Guarantee provides a mechanism whereby the holders of the
Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against SSBH Capital, the Guarantee
Trustee, or any other person or entity. A holder of Preferred Securities may
also directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under the Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against SSBH Capital or any other person or
entity.
The Company and SSBH Capital believe that the above mechanisms and
obligations, taken together, are equivalent to a full and unconditional
guarantee by the Company of payments due on the Preferred Securities. See
"Description of Guarantee -- General."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Preferred Securities.
Unless otherwise stated, this summary deals only with Preferred Securities held
as capital assets 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, common
trust funds, insurance companies, dealers in securities or currencies,
tax-exempt investors, persons that have a functional currency other than the
U.S. Dollar or persons that will hold the Preferred Securities as a position in
a "straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities. This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly
with retroactive effect.
S-31
<PAGE> 168
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
S-32
<PAGE> 169
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
S-33
<PAGE> 170
corporation that is related to the Company through stock ownership, and (c)
either (A) the beneficial owner of the Preferred Security certifies to SSBH
Capital or its agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Preferred Security in such capacity, certifies to
SSBH Capital or its agent, under penalties of perjury, that such statement has
been received from the beneficial owner by it or by a Financial Institution
holding such security for the beneficial owner and furnishes SSBH Capital or its
agent with a copy thereof; and (ii) a United States Alien Holder of a Preferred
Security will not be subject to United States federal withholding tax on any
gain realized upon the sale or other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Preferred Securities will be reported to holders
on Forms 1099, which forms should be mailed to holders of Preferred Securities
by January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income tax, provided the
required information is provided to the IRS on a timely basis.
On October 7, 1997, the United States Treasury Department issued final
Treasury regulations governing information reporting and the certification
procedures regarding withholding and backup withholding on certain amounts paid
to United States Alien Holders after December 31, 1998. Such regulations, among
other things, may change the certification procedures relating to the receipt by
intermediaries of payments on behalf of a beneficial owner of a Preferred
Security. Prospective investors should consult their tax advisors regarding the
effect, if any, of such new Treasury regulations on an investment in the
Preferred Securities.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
S-34
<PAGE> 171
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, or to contribute to payments that such
Underwriters may be required to make in respect thereof and to reimburse each of
the Underwriters for certain legal and other expenses.
SSBH Capital and the Company have agreed, during the period beginning on
the date of the Underwriting Agreement and continuing to and including the date
that is 60 days after the closing date for the purchase of the Preferred
Securities, not to offer, sell, contract to sell or otherwise dispose of any
preferred securities, 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.
S-35
<PAGE> 172
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 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 SSBH Capital, and in such case may purchase Preferred Securities
in the open market following completion of this offering to cover all or a
portion of such short position. The Underwriters may also cover all or a portion
of such short position, up to a specified aggregate principal amount or number
of Preferred Securities, by exercising any Underwriters' over-allotment option
that may be applicable with respect to the particular underwritten offering. In
addition, the managing Underwriter for the particular offering, on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements between
the Underwriters whereby it may reclaim from an Underwriter (or dealer
participating in this offering) for the account of the Underwriters, the selling
concession with respect to Preferred Securities that are distributed in the
relevant offering but subsequently purchased for the account of the Underwriters
in the open market. Any of the transactions described in this paragraph may
result in the maintenance of the price of the Preferred Securities at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if any are
undertaken, they may be discontinued at any time.
The 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 affiliate of the Company in the offer and sale of
Preferred Securities will comply with the requirements of Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. regarding
the underwriting by an affiliate of securities of its parent.
This Prospectus Supplement and the Prospectus may be used by the Company or
any Underwriter that is an affiliate or other affiliates of the Company in
connection with offers and sales of the Preferred Securities in market-making
transactions at negotiated prices related to prevailing market prices at the
time of sale. Any such entity may act as principal or agent in such
transactions. No such entity is obligated to make a market in the Preferred
Securities and any such entity may discontinue any market-making at any time
without notice, at its sole discretion. There can be no assurance of the
liquidity or existence of a secondary market for any Preferred Securities.
S-36
<PAGE> 173
LEGAL MATTERS
The validity of the Junior Subordinated Debt Securities, the Guarantee and
certain matters relating thereto will be passed upon for the Company and SSBH
Capital by Robert H. Mundheim, Esq., General Counsel of the Company. Mr. 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 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-37
<PAGE> 174
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 DECEMBER 1, 1997
PROSPECTUS
SALOMON SMITH BARNEY HOLDINGS INC.
may offer --
PREFERRED STOCK
DEPOSITARY SHARES
and
SSBH CAPITAL I
SSBH CAPITAL II
SSBH CAPITAL III
SSBH CAPITAL IV, which are subsidiaries of Salomon Smith Barney Holdings Inc.
may offer --
TRUST PREFERRED SECURITIES
that Salomon Smith Barney Holdings
Inc. has guaranteed to the extent
explained in this prospectus.
At the time of offering of these Trust
Preferred Securities, Salomon Smith
Barney Holdings Inc. will also by this
prospectus offer its related Junior
Subordinated Debt Securities.
We will provide the specific terms
of these securities in supplements
to this prospectus. You should read
this prospectus and the supplements
carefully before you invest.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAS ANY OF THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS,
OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT, IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
SALOMON SMITH BARNEY
December , 1997.
<PAGE> 175
PROSPECTUS SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the terms
of our securities, you should carefully read this document and the Prospectus
Supplement that explains the specific terms of the securities we are offering.
You should also read the documents we have referred you to in Where You Can Find
More Information on page 5 for information on our Company and our financial
statements. The Prospectus Supplement may also add, update or change information
contained in this Prospectus. It is important for you to consider the
information in the Prospectus and any Prospectus Supplement in making your
investment decision.
OUR COMPANY
Salomon Smith Barney Holdings Inc. is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. and Salomon Brothers Inc.
THE TRUSTS
SSBH Capital I, SSBH Capital II, SSBH Capital III and SSBH Capital IV (the
"Trusts") are recently formed Delaware business trusts. All of the common
undivided interests (the "Common Securities") in each of the Trusts will be held
by the Company or its subsidiaries.
Each Trust will not engage in any activities other than (i) offering trust
preferred securities representing undivided beneficial interests in the assets
of the respective Trust ("Preferred Securities" and, together with the Common
Securities, the "Trust Securities"), (ii) investing the proceeds of the offering
solely in the Company's Junior Subordinated Debt Securities (as described below)
and activities incidental to the foregoing. Each Trust will not issue any
securities other than the Common Securities and the Preferred Securities.
Each Trust will be managed by trustees appointed by the Company or its
subsidiaries, as holders of the Common Securities. The holders of the Preferred
Securities have no right to elect or remove trustees. The Company will pay all
costs, expenses, debts and liabilities of each of the Trusts, including fees and
expenses related to the offering of the Preferred Securities, but not including
payments under the Common Securities or the Preferred Securities.
A Prospectus Supplement will describe the specific types, amounts, price
and detailed terms of any Preferred Securities that any of the Trusts may offer.
THE SECURITIES OUR COMPANY MAY OFFER
We may use this Prospectus to offer Junior Subordinated Debt Securities in
connection with an offering by one or more of the Trusts of Preferred Securities
and Preferred Stock. The Preferred Stock may or may not be in the form of
Depositary Shares. A Prospectus Supplement will describe the specific types,
amounts, prices, and detailed terms of any securities we offer.
JUNIOR SUBORDINATED DEBT SECURITIES
These securities are unsecured general obligations of our Company. Our
obligations under the Junior Subordinated Debt Securities are subordinated and
junior in right of payment to all of our present and future senior indebtedness.
The Junior Subordinated Debt Securities will be issued under an indenture
between the Company and the Chase Manhattan Bank, as trustee; we have certain
banking relationships with the Chase Manhattan Bank. We have summarized below
the general features of the Junior Subordinated Debt Securities from the
indenture. We encourage you to read the indenture, which is an exhibit to our
registration statement No. 333-38931, our recent annual report on Form 10-K, our
recent quarterly reports on Form 10-Q and our
2
<PAGE> 176
recent reports on Form 8-K, including the Report on Form 8-K dated November 28,
1997. Directions on how you can receive copies of these documents are provided
on page 5.
GENERAL INDENTURE PROVISIONS THAT APPLY TO JUNIOR SUBORDINATED DEBT SECURITIES
- - The indenture gives the Company the right to postpone interest payments on the
Junior Subordinated Debt Securities for a number of periods of such duration
as will be specified in a Prospectus Supplement. These extension periods need
not be consecutive.
- - The indenture does not limit the amount of Junior Subordinated Debt Securities
that we may issue or provides holders any protection should there be a highly
leveraged transaction involving our Company.
- - Each indenture allows for Junior Subordinated Debt Securities to be issued in
series and provides for the issuance of securities in book-entry,
certificated, and, in limited circumstances, bearer form.
- - The indenture allows us to merge or to consolidate with another company, or
sell all or substantially all of our assets to another company. If these
events occur, the other company will be required to assume our
responsibilities under the Junior Subordinated Debt Securities, and, assuming
that the transaction has not resulted in an event of default, we will be
released from all liabilities and obligations.
- - The indenture provides that holders of a majority of the total principal
amount of the Junior Subordinated Debt Securities outstanding in any series
may vote to change certain of our obligations or your rights concerning those
securities. If the Junior Subordinated Debt Securities are held by one of the
Trusts or its trustee, any such change also requires the approval of holders
of a majority of liquidation preference of the Trust Securities of the
relevant Trust. However, every holder of a particular security must consent to
certain important changes in that security, including changes in the payment
of principal or interest on or currency of any security, and, if the Junior
Subordinated Debt Securities are held by one of the Trusts or its trustee,
each of the holders of Trust Securities of the relevant Trust must also
approve any such change.
- - We may discharge certain of the Junior Subordinated Debt Securities or be
released from our obligation to comply with the limitations discussed above or
certain events of default at any time by depositing sufficient amounts of cash
or United States government securities with the trustee to pay our obligations
under the particular securities when due. If we chose to discharge certain
securities, all amounts due to you on those securities would be paid by the
trustee from the deposited funds.
- - The indenture governs the actions of the trustee with regard to the Junior
Subordinated Debt Securities, including the circumstances under which the
trustee is required to give notices to holders of the securities and the
procedures by which lost or stolen debt securities may be replaced.
EVENTS OF DEFAULT
The events of default specified in the indenture include:
- Principal not paid when due
- Sinking fund payment not made when due
- Failure to pay interest for 30 days
- Covenants not performed for 90 days following notice
- Certain events of insolvency or bankruptcy, whether voluntary or not
- If Junior Subordinated Debt Securities are held by one of the Trusts or
its trustee in connection with a Trust's issuance of Trust Securities,
the voluntary or involuntary dissolution or termination of such Trust,
subject to certain limited exceptions
3
<PAGE> 177
REMEDIES
If we default in performing any of these obligations, the Trustee or
holders of 25% of the principal amount of Junior Subordinated Debt Securities
outstanding in a series may declare the principal immediately payable. However,
holders of a majority in principal amount of the securities may rescind this
action as regards payment defaults, but only with the approval of each holder of
Trust Securities if Junior Subordinated Debt Securities are held by one of the
Trusts or its trustee.
OTHER PROVISIONS APPLICABLE TO JUNIOR SUBORDINATED DEBT SECURITIES HELD BY THE
TRUSTS
If Junior Subordinated Debt Securities are held by one of the Trusts or its
trustee in connection with a Trust's issuance of Trust Securities:
- The Junior Subordinated Debt Securities may be distributed pro rata to
the holders of the relevant Trust Securities in certain circumstances, as
specified in the Prospectus Supplement.
- If the Company is in default under any such security or the related
Guarantee (as described below) or has postponed payments on such
security, then during the period of such default or postponement, the
Company will not (with limited exceptions) be able to:
- pay a dividend or make any other payment or distribution on its stock,
- redeem, purchase or acquire any of its stock, or
- make an interest or principal payment, or repurchase or redeem, any of
its debt securities that rank equally with or junior to the Junior
Subordinated Debt Securities.
- The Company will generally be required to maintain ownership of 100% of
the common securities of the relevant Trust, will not be allowed to
dissolve or wind up the Trust, and will be required to use its reasonable
efforts to cause the Trust to maintain its trust and tax status.
PREFERRED STOCK AND DEPOSITARY SHARES
The Company does not currently have any shares of Preferred Stock
outstanding. We may issue Preferred Stock from time to time in series, in which
case the Prospectus Supplement for the offering will explain the terms and
conditions of the particular series of Preferred Stock, including:
- the ranking of the Preferred Stock in relation to our Common Stock or
other series of Preferred Stock
- whether any dividends are payable on the Preferred Stock and at what rate
and on which dates dividends are payable
- whether the Company will have the right to redeem some or all of the
Preferred Stock
- details of the rights of holders of the Preferred Stock to distributions
of the Company's assets in the event of liquidation or dissolution,
including any liquidation preference
- any voting rights that holders of the Preferred Stock may have, although
the Company expects that all series of Preferred Stock will be non-voting
- whether the Company will offer receipts for Depositary Shares, each
representing a specified fraction of a share of Preferred Stock, which
Preferred Stock will be deposited with a Preferred Stock Depositary that
will serve as an intermediary for holders of Depositary Shares in
connection with the distribution of dividends, redemption, voting and
other matters relating to such Preferred Stock.
USE OF PROCEEDS
The Company will use the net proceeds we receive from any offering of
Junior Subordinated Debt Securities or Preferred Stock for general corporate
purposes, primarily to fund our operating units and subsidiaries. We may use
some of the proceeds to refinance or extend the maturity of some of the
Company's existing debt obligations.
4
<PAGE> 178
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, June 30, 1997 and September 30, 1997;
(c) Current Reports on Form 8-K dated January 21, 1997, March 17,
1997, April 15, 1997, July 17, 1997, September 24, 1997, September 29, 1997
(as amended by the Current Report on Form 8-K/A dated October 28, 1997 and
the Current Report on Form 8-K/A2 dated December 1, 1997), October 21,
1997, October 28, 1997 (as amended by the Current Report on Form 8-K/A
dated December 1, 1997), November 21, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Treasurer
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
212-816-6000
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
5
<PAGE> 179
THE COMPANY
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage for domestic and international institutional
and individual clients; underwriting and distribution of securities; arranging
for the private placement of securities; assisting in mergers and acquisitions
and providing financial advisory services; market making and trading in
corporate debt and equity, United States government and agency, mortgage-related
and municipal securities and foreign exchange, futures and forward contracts;
consumer financing activities; securities lending activities; investment
management and advisory services; securities research; and other related
activities.
SALOMON
Together with Salomon Brothers Holding Company Inc and its subsidiaries
(which subsidiaries include Salomon Brothers), Salomon Brothers engages in
global investment banking and global securities trading activities; provides
capital raising, advisory, trading and risk management services to its
customers; and executes proprietary trading strategies on its own behalf.
Certain of the Company's commodities trading activities are conducted by the
Company's wholly owned subsidiary, Phibro Inc., and its subsidiaries.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED --------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges................ 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amount by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to fixed charges has been computed by dividing earnings
before income taxes and fixed charges by the fixed charges. For the purpose of
this ratio, fixed charges consist of interest expense and that portion of
rentals deemed representative of the appropriate interest factor.
SSBH TRUSTS
Each of the SSBH Trusts is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust executed by the Company, as sponsor
for such trust (the "Sponsor"), and the trustees of such trust dated as of
December 19, 1996 with respect to SSBH Capital I, SSBH Capital II and SSBH
Capital III and October 24, 1997 with respect to SSBH Capital IV and (ii) the
filing of a certificate of trust with the Secretary of State of the State of
Delaware on December 19, 1996 with respect to SSBH Capital I, SSBH Capital II
and SSBH Capital III and October 24, 1997 with respect to SSBH Capital IV. Each
such declaration will be amended and restated in its entirety (as so amended and
restated, each a "Declaration"),
6
<PAGE> 180
and is substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Each of the SSBH Trusts exists
for the exclusive purposes of (i) issuing the Preferred Securities and common
securities representing undivided beneficial interests in the assets of the
Trust (the "Common Securities" and, together with the Preferred Securities, the
"Trust Securities"), (ii) investing the gross proceeds from the sale of the
Trust Securities in the Junior Subordinated Debt Securities and (iii) engaging
in only those other activities necessary or incidental thereto. All of the
Common Securities will be directly or indirectly owned by the Company. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities, except that, upon an event of default under
the Declaration, the rights of the holders of the Common Securities to payment
in respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. The Company will directly or indirectly acquire Common Securities in
an aggregate liquidation amount equal to 3% or more of the total capital of each
SSBH Trust.
Each SSBH Trust has a term of approximately 55 years but may terminate
earlier, as provided in each Declaration. Each SSBH Trust's business and affairs
will be conducted by the trustees of each applicable Trust (the "SSBH Trustees")
appointed by the Company as the direct or indirect holder of all the Common
Securities. The holder of the Common Securities will be entitled to appoint,
remove or replace any of, or increase or reduce the number of, the SSBH Trustees
of the SSBH Trusts. The duties and obligations of the SSBH Trustees shall be
governed by the Declaration of such SSBH Trust. Each SSBH Trust will have two
SSBH Trustees (the "Regular Trustees") who are employees or officers of or who
are affiliated with the Company. One SSBH Trustee of each SSBH Trust will be a
financial institution that is not affiliated with the Company and that has a
specified minimum amount of aggregate capital, surplus, and undivided profits of
not less than $50,000,000, which shall act as property trustee and as indenture
trustee for the purposes of compliance with the provisions of Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the terms set
forth in a Prospectus Supplement (the "Institutional Trustee"). In addition,
unless the Institutional Trustee maintains a principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law, one
SSBH Trustee of each SSBH Trust will have a principal place of business or
reside in the State of Delaware (the "Delaware Trustee"). The Company will pay
all fees and expenses related to the SSBH Trusts and the offering of the Trust
Securities.
The office of the Delaware Trustee for each of the SSBH Trusts is Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. The
address for each SSBH Trust is c/o the Company, the Sponsor of the SSBH Trusts,
at the Company's corporate headquarters located at 388 Greenwich Street, New
York, New York 10013.
USE OF PROCEEDS
All of the net proceeds from the sale of any Preferred Securities offered
hereby will be invested by the SSBH Trust in Junior Subordinated Debt
Securities. The Company will use the proceeds from the sale of the Junior
Subordinated Debt Securities to the SSBH Trusts to fund its financial services
business and for general corporate purposes, which may include the reduction or
refinancing of other borrowings, or the making of investments in or capital
contributions to subsidiaries of the Company. Also, in order to fund its
financial services business the Company expects to incur additional indebtedness
in the future.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The following description sets forth certain general terms and provisions
of 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.
7
<PAGE> 181
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 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
8
<PAGE> 182
the Company under the Indenture and thereafter, except in the case of a lease,
the predecessor corporation shall be relieved of all obligations and covenants
under the Indenture and the Junior Subordinated Debt Securities. (Article Eight)
Events of Default. The Indenture provides that the following are Events of
Default thereunder with respect to any series of the Junior Subordinated Debt
Securities: (a) default in the payment of the principal of (or premium, if any,
on) any Junior Subordinated Debt Security of such series at its maturity; (b)
default in making a sinking fund payment, if any, when and as the same shall be
due and payable by the terms of the Junior Subordinated Debt Securities of such
series; (c) default for 30 days in the payment of any installment of interest on
any Junior Subordinated Debt Security of such series; (d) default for 90 days
after written notice in the performance of any other covenant in respect of the
Junior Subordinated Debt Securities of such series contained in the Indenture;
(e) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of the Company; (f) any other
Event of Default provided in the applicable resolution of the Board of Directors
or supplemental indenture under which the Junior Subordinated Debt Securities
are issued; and (g) in the event Junior Subordinated Debt Securities of a series
are issued and sold to an SSBH Trust or a trustee of such trust in connection
with the issuance of Trust Securities by such SSBH Trust, such SSBH Trust shall
have voluntarily or involuntarily dissolved, wound-up its business or otherwise
terminated its existence, except in connection with (i) the distribution of
Junior Subordinated Debt Securities to holders of Trust Securities in
liquidation or redemption of their interests in such SSBH Trust upon a Special
Event, (ii) the redemption of all of the outstanding Trust Securities of such
SSBH Trust or (iii) certain mergers, consolidations or amalgamations, each as
permitted by the Declaration of such SSBH Trust. (Section 5.1) The Indenture
Trustee may withhold notice to the Holders of the Junior Subordinated Debt
Securities of any default with respect thereto (except in the payment of
principal, premium or interest) if it considers such withholding to be in the
interests of such Holders. (Section 6.2)
If an Event of Default with respect to the Junior Subordinated Debt
Securities shall have occurred and be continuing, the Indenture Trustee or the
Holders of 25% in aggregate principal amount of the Junior Subordinated Debt
Securities may declare the principal of all the Junior Subordinated Debt
Securities to be due and payable immediately. (Section 5.2)
The Indenture contains a provision entitling the Indenture Trustee to be
indemnified by the Holders before proceeding to exercise any right or power
under the Indenture at the request of any of the Holders. (Section 6.3). The
Indenture provides that the Holders of a majority in principal amount of the
outstanding Junior Subordinated Debt Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture Trustee,
with respect to the Junior Subordinated Debt Securities. (Section 5.12) The
right of a Holder to institute a proceeding with respect to the Indenture is
subject to certain conditions precedent including notice and indemnity to the
Indenture Trustee, but the Holder has an absolute right to receipt of principal,
premium, if any, and interest on the Junior Subordinated Debt Securities at the
Stated Maturity (or, in the case of redemption, on the Redemption Date) or to
institute suit for the enforcement thereof. (Sections 5.7 and 5.8)
The Holders of not less than a majority in principal amount of the
Outstanding Junior Subordinated Debt Securities may on behalf of the Holders of
all the Junior Subordinated Debt Securities waive any past defaults except (a) a
default in payment of the principal of (or premium, if any) or interest on any
Junior Subordinated Debt Security and (b) a default in respect of a covenant or
provision of the Indenture which cannot be amended or modified without the
consent of the Holder of each affected Junior Subordinated Debt Security;
provided, however, that if the Junior Subordinated Debt Securities are held by
an SSBH Trust or a trustee of such trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the applicable SSBH Trust shall have consented
to such waiver or modification to such waiver; provided further, that if the
consent of the Holder of each outstanding Junior Subordinated Debt Security is
required, such waiver shall not be effective until each holder of the Trust
Securities of the applicable SSBH Trust shall have consented to such waiver.
(Section 5.13)
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)
9
<PAGE> 183
Modifications and Amendments. Modifications and amendments to the
Indenture may be made by the Company and the Indenture Trustee with the consent
of the Holders of a majority in principal amount of the Junior Subordinated Debt
Securities at the time outstanding of each series which is affected thereby,
provided, that no such modification or amendment may, without the consent of the
Holder of each Junior Subordinated Debt Security affected thereby: (i) modify
the terms of payment of principal, premium, if any, or interest; or (ii) reduce
the percentage of Holders of Junior Subordinated Debt Securities necessary to
modify or amend the Indenture or waive compliance by the Company with any
covenant or past default; provided, further, that if the Junior Subordinated
Debt Securities of such series are held by an SSBH Trust or a trustee of such
trust, such supplemental indenture shall not be effective until the holders of a
majority in liquidation preference of Trust Securities of the applicable SSBH
Trust shall have consented to such supplemental indenture; provided further,
that if the consent of the Holder of each outstanding Junior Subordinated Debt
Security is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities of the applicable SSBH Trust shall have
consented to such supplemental indenture. (Section 9.2)
Discharge and Defeasance. The Company may discharge all of its obligations
(except those set forth below) to holders of any series of Junior Subordinated
Debt Securities issued under the Indenture, which Junior Subordinated Debt
Securities have not already been delivered to the Indenture Trustee for
cancellation and which either have become due and payable or are by their terms
due and payable within one year (or are to be called for redemption within one
year) by depositing with the Indenture Trustee an amount certified to be
sufficient to pay when due the principal of and premium, if any, and interest on
all outstanding Junior Subordinated Debt Securities of such series and to make
any mandatory sinking fund payments thereon when due. (Section 4.1)
Unless otherwise specified in the applicable Prospectus Supplement with
respect to the Junior Subordinated Debt Securities of a series, the Company, at
its option, (i) will be discharged from any and all obligations in respect of
the Junior Subordinated Debt Securities of such series (except for certain
obligations to pay all expenses of the applicable SSBH Trust, to register the
transfer or exchange of Junior Subordinated Debt Securities of such series, to
replace mutilated, defaced, destroyed, lost or stolen Junior Subordinated Debt
Securities of such series, and to maintain Paying Agents and hold monies for
payment in trust), or (ii) need not comply with certain covenants specified in
the applicable Prospectus Supplement with respect to the Junior Subordinated
Debt Securities of that series, and the occurrence of an event described in
clause (d) under "Events of Default" above with respect to any defeased covenant
and clause (f) of the "Events of Default" above shall no longer be an Event of
Default if, in either case, the Company deposits with the Indenture Trustee, in
trust, money or U.S. Government Obligations that through the payment of interest
thereon and principal thereof in accordance with their terms will provide money
in an amount sufficient to pay all the principal of (and premium, if any) and
any interest on the Junior Subordinated Debt Securities of such series on the
dates such payments are due (which may include one or more redemption dates
designated by the Company) in accordance with the terms of such Junior
Subordinated Debt Securities. Such a trust may only be established, if, among
other things, the Company shall have delivered an Opinion of Counsel, which, in
the case of a discharge pursuant to clause (i), must be based upon a ruling or
administrative pronouncement of the Internal Revenue Service, to the effect that
the Holders of the Junior Subordinated Debt Securities will not recognize gain
or loss for federal income tax purposes as a result of such deposit or
defeasance and will be subject to federal income tax in the same manner as if
such defeasance had not occurred. (Sections 4.2, 4.3 and 4.4) In the event the
Company omits to comply with its remaining obligations under the Indenture after
a defeasance of the Indenture with respect to the Junior Subordinated Debt
Securities of any series as described under clause (ii) above and the Junior
Subordinated Debt Securities of such series are declared due and payable because
of the occurrence of any undefeased Event of Default, the amount of money and
United States Government Obligations on deposit with the Indenture Trustee may
be insufficient to pay amounts due on the Junior Subordinated Debt Securities of
such series at the time of the acceleration resulting from such Event of
Default. However, the Company will remain liable in respect of such payments.
10
<PAGE> 184
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 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.
11
<PAGE> 185
Principal, premium, if any, and interest payments on Junior Subordinated
Debt Securities represented by a Registered Global Security registered in the
name of a Depositary or its nominee will be made to such Depositary or its
nominee, as the case may be, as the registered owner of such Registered Global
Security. None of the Company, the Indenture Trustee or any other agent of the
Company or agent of the Indenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Registered Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary for any Junior Subordinated Debt
Securities represented by a Registered Global Security, upon receipt of any
payment of principal, premium or interest in respect of such Registered Global
Security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such
Registered Global Security as shown on the records of such Depositary. The
Company also expects that payments by participants to owners of beneficial
interests in such Registered Global Security held through such participants will
be governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
participants.
If the Depositary for any Junior Subordinated Debt Securities represented
by a Registered Global Security is at any time unwilling or unable to continue
as Depositary or ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and a successor
Depositary registered as a clearing agency under the Exchange Act is not
appointed by the Company within 90 days, the Company will issue such Junior
Subordinated Debt Securities in definitive form in exchange for such Registered
Global Security. In addition, the Company may at any time and in its sole
discretion determine not to have any of the Junior Subordinated Debt Securities
of a series represented by one or more Registered Global Securities and, in such
event, will issue Junior Subordinated Debt Securities of such series in
definitive form in exchange for all of the Registered Global Security or
Securities representing such Junior Subordinated Debt Securities. Any Junior
Subordinated Debt Securities issued in definitive form in exchange for a
Registered Global Security will be registered in such name or names as the
Depositary shall instruct the relevant Trustee. It is expected that such
instructions will be based upon directions received by the Depositary from
participants with respect to ownership of beneficial interests in such
Registered Global Security.
The Junior Subordinated Debt Securities of a series may also be issued in
the form of one or more bearer global Securities (a "Bearer Global Security")
that will be deposited with a common depositary for Euro-clear and Cedel Bank,
Societe Anonyme, or with a nominee for such depositary identified in the
Prospectus Supplement relating to such series. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any portion of a series of Junior Subordinated Debt Securities to be
represented by a Bearer Global Security will be described in the Prospectus
Supplement relating to such series.
Ranking of Junior Subordinated Debt Securities. The Junior Subordinated
Debt Securities will be subordinated and junior in right of payment to certain
indebtedness of the Company to the extent set forth in the Prospectus Supplement
that will accompany this Prospectus.
Certain Provisions Applicable to SSBH Trusts. In the event Junior
Subordinated Debt Securities of a series are issued and sold to an SSBH Trust or
a trustee of such trust in connection with the issuance of Trust Securities by
such SSBH Trust, such Junior Subordinated Debt Securities subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of such SSBH Trust upon the occurrence of certain events
described in the Prospectus Supplement relating to such Trust Securities. Only
one series of Junior Subordinated Debt Securities will be issued to an SSBH
Trust, or a trustee of such trust, in connection with the issuance of Trust
Securities by such SSBH Trust. If Junior Subordinated Debt Securities are issued
to an SSBH Trust or a trustee of such trust in connection with the issuance of
Trust Securities by such SSBH Trust and (i) there shall have occurred and be
continuing an Event of Default, (ii) the Company shall be in default with
respect to its payment of any obligations under the related Guarantee, or (iii)
the Company shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debt Securities by extending the interest
payment period as provided in the Indenture
12
<PAGE> 186
and such period, or any extension thereof, shall be continuing, then (a) the
Company shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged), and (b) the Company shall not make any payment of
interest on or principal of (or premium, if any, on), or repay, repurchase or
redeem any debt securities issued by the Company which rank pari passu with or
junior to such Junior Subordinated Debt Securities. The foregoing, however, will
not apply to any stock dividends paid by the Company where the dividend stock is
the same stock as that on which the dividend is being paid.
In the event Junior Subordinated Debt Securities are issued to an SSBH
Trust or a trustee of such trust in connection with the issuance of Trust
Securities of such SSBH Trust, for so long as such Trust Securities remain
outstanding, the Company will covenant (i) to directly or indirectly maintain
100% ownership of the Common Securities of such SSBH Trust; provided, however,
that any permitted successor of the Company under the Indenture may succeed to
the Company's ownership of such Common Securities, (ii) to not voluntarily
dissolve, wind-up or terminate such SSBH Trust, except in connection with a
distribution of Junior Subordinated Debt Securities upon a Special Event and in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration of the applicable SSBH Trust, (iii) to timely perform its duties
as Sponsor of the applicable SSBH Trust and (iv) to use its reasonable efforts
to cause such SSBH Trust (a) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Trust Securities in liquidation of such SSBH Trust, the redemption of
all of the Trust Securities of such SSBH Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
SSBH Trust, and (b) to otherwise continue to be classified as a grantor trust
for United States federal income tax purposes. (Section 10.5)
DESCRIPTION OF PREFERRED SECURITIES
The following description sets forth certain general terms and provisions
of the Preferred Securities to which any Prospectus Supplement may relate. The
particular terms of the Preferred Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Preferred Securities so offered will be described in the Prospectus
Supplement relating to such Preferred Securities. The description does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the forms of Declarations, which
are filed as exhibits to the Registration Statement of which this Prospectus
forms a part.
Each SSBH Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each SSBH Trust authorizes the Regular Trustees of such SSBH
Trust to issue on behalf of such SSBH Trust one series of Preferred Securities.
Each Declaration will be qualified as an indenture under the Trust Indenture
Act. The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred or
other special rights or such restrictions as shall be set forth in the
Declaration of the SSBH Trust issuing such Preferred Securities or made part of
such Declaration by the Trust Indenture Act. Reference is made to any Prospectus
Supplement relating to the Preferred Securities of an SSBH Trust for specific
terms, including (i) the distinctive designation of such Preferred Securities,
(ii) the number of Preferred Securities issued by such SSBH Trust, (iii) the
annual distribution rate (or method of determining such rate) for Preferred
Securities issued by such SSBH Trust and the date or dates upon which such
distributions shall be payable, (iv) whether distributions on Preferred
Securities issued by such SSBH Trust shall be cumulative, and, in the case of
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities issued by such SSBH Trust shall be cumulative, (v) the
amount or amounts which shall be paid out of the
13
<PAGE> 187
assets of such SSBH Trust to the Holders of Preferred Securities of such SSBH
Trust upon voluntary or involuntary dissolution, winding-up or termination of
such SSBH Trust, (vi) the obligation, if any, of such SSBH Trust to purchase or
redeem Preferred Securities issued by such SSBH Trust and the price or prices at
which, the period or periods within which and the terms and conditions upon
which Preferred Securities issued by such SSBH Trust shall be purchased or
redeemed, in whole or in part, pursuant to such obligation, (vii) the voting
rights, if any, of Preferred Securities issued by such SSBH Trust in addition to
those required by law, including the number of votes per Preferred Security and
any requirement for the approval by the holders of Preferred Securities, or of
Preferred Securities issued by one or more SSBH Trusts, or of both, as a
condition to specified action or amendments to the Declaration of such SSBH
Trust, and (viii) any other relevant rights, preferences, privileges,
limitations or restrictions of Preferred Securities issued by such SSBH Trust
consistent with the Declaration of such SSBH Trust or with applicable law. All
Preferred Securities offered hereby will be guaranteed by the Company to the
extent set forth below under "Description of Guarantees." Certain United States
federal income tax considerations applicable to any offering of Preferred
Securities will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each SSBH Trust
will issue one series of Common Securities. The Declaration of each SSBH Trust
authorizes the Regular Trustees of such trust to issue on behalf of such SSBH
Trust one series of Common Securities having such terms including distributions,
redemption, voting, liquidation rights or such restrictions as shall be set
forth therein. The terms of the Common Securities issued by such SSBH Trust will
be substantially identical to the terms of the Preferred Securities issued by
such SSBH Trust and the Common Securities will rank pari passu, and payments
will be made thereon pro rata with such Preferred Securities except that, upon
an Event of Default under the Declaration of such SSBH Trust, the rights of the
holders of such Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of such Preferred Securities. Except in certain limited
circumstances, the Common Securities of an SSBH Trust will also carry the right
to vote and to appoint, remove or replace any of the SSBH Trustees of such SSBH
Trust. All of the Common Securities of an SSBH Trust will be directly or
indirectly owned by the Company.
If an Event of Default with respect to a Declaration of any SSBH Trust
occurs and is continuing, then the holders of Preferred Securities of such SSBH
Trust would rely on the enforcement by the Institutional Trustee of its rights
as a holder of the Junior Subordinated Debt Securities against the Company. In
addition, the holders of a majority in liquidation amount of such Preferred
Securities will have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee under such Declaration, including the right to direct the Institutional
Trustee to exercise the remedies available to it as a holder of the Junior
Subordinated Debt Securities. If the Institutional Trustee fails to enforce its
rights under the Junior Subordinated Debt Securities, any holder of such
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If an Event of
Default with respect to the Declaration of any SSBH Trust has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Preferred Securities of such SSBH
Trust may also directly institute a proceeding for enforcement of payment to
such holder of the principal of or interest on the Junior Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of such Preferred Securities of such holder (a "Direct Action") on or after the
respective due date specified in the Junior Subordinated Debt Securities without
first (i) directing the Institutional Trustee to enforce the terms of the Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's Rights under the Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of such Preferred Securities
under such Declaration to the extent of any payment made by the Company to such
holder of such Preferred Securities in such Direct Action. Consequently, the
Company will be entitled to payment of amounts that a holder of Preferred
Securities receives in respect of an unpaid distribution that resulted in the
bringing of a
14
<PAGE> 188
Direct Action to the extent that such holder receives or has already received
full payment with respect to such unpaid distribution from an SSBH Trust. The
holders of Preferred Securities of an SSBH Trust will not be able to exercise
directly any other remedy available to the holders of the Junior Subordinated
Debt Securities.
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the guarantees by
the Company on a subordinated basis of the payment of periodic cash
distributions ("distributions") and payments on liquidation, redemption or
otherwise on the Preferred Securities (the "Guarantees") that will be executed
and delivered by the Company for the benefit of the holders, from time to time,
of Preferred Securities. Each Guarantee will be qualified as an indenture under
the Trust Indenture Act. The Chase Manhattan Bank will act as indenture trustee
under each Guarantee (the "Guarantee Trustee"). The terms of each Guarantee will
be those set forth in such Guarantee and those made part of such Guarantee by
the Trust Indenture Act. The summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the form of Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act. Each Guarantee will be held by the Guarantee Trustee for the
benefit of the holders of the Preferred Securities of an SSBH Trust.
GENERAL
Pursuant to and to the extent set forth in each Guarantee and except as
otherwise set forth in the applicable Prospectus Supplement, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities issued by an SSBH Trust (except to the extent paid by such
SSBH Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such SSBH Trust may have or assert, the following payments
(the "Guarantee Payments"), without duplication: (i) any accrued and unpaid
distributions that are required to be paid on such Preferred Securities, to the
extent such SSBH Trust has funds available therefor, and (ii) the redemption
price per Preferred Security set forth in the applicable Prospectus Supplement,
which will not be lower than the stated liquidity amount, plus all accrued and
unpaid distributions (the "Redemption Price"), to the extent such SSBH Trust has
funds available therefor, with respect to any Preferred Securities called for
redemption by such SSBH Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such SSBH Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Preferred Securities or the redemption of all of the Preferred
Securities) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Preferred Securities to the date of
payment or (b) the amount of assets of such SSBH Trust remaining for
distribution to holders of such Preferred Securities in liquidation of such SSBH
Trust. The Company's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of
Preferred Securities or by causing such SSBH Trust to pay such amounts to such
holders.
Each Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities issued by an SSBH Trust from the time of issuance of
such Preferred Securities but will not apply to any payment of distributions or
Redemption Price, or to payments upon the dissolution, winding-up or termination
of such SSBH Trust, except to the extent such SSBH Trust shall have funds
available therefor. If the Company does not make interest payments on the Junior
Subordinated Debt Securities purchased by an SSBH Trust, such SSBH Trust will
not pay distributions on the Preferred Securities issued by such SSBH Trust and
will not have funds available therefor. See "Description of Junior Subordinated
Debt Securities." The Guarantee, when taken together with the Company's
obligations under the Junior Subordinated Debt Securities, the Indenture and the
Declaration of any SSBH Trust, including its obligations to pay costs, expenses,
debts and liabilities of such SSBH Trust (other than with respect to Trust
Securities) will provide a full and unconditional guarantee on a subordinated
basis by the Company of payments due on the Preferred Securities issued by such
SSBH Trust.
15
<PAGE> 189
CERTAIN COVENANTS OF THE COMPANY
In each Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by an SSBH Trust remain outstanding, if there shall have
occurred any event that would constitute an Event of Default under such
Guarantee or the Declaration of such SSBH Trust, then (a) the Company shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or make any guarantee payment with respect thereto (other than
(i) repurchases, redemptions or other acquisitions of shares of capital stock of
the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged) and (b) the
Company shall not make any payment of interest on, or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank pari passu with or junior to such Junior Subordinated Debt
Securities. Each Guarantee, however, will except from the foregoing any stock
dividends paid by the Company where the dividend stock is the same stock as that
on which the dividend is being paid.
MODIFICATION OF THE GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities to which a Guarantee relates (in which case
no vote will be required), each Guarantee may be amended only with the prior
approval of the holders of not less than a majority in aggregate liquidation
amount of the outstanding related Preferred Securities issued by an SSBH Trust.
The manner of obtaining any such approval of holders of such Preferred
Securities will be set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in a Guarantee shall bind the successors,
assignees, receivers, trustees and representatives of the Company and shall
inure to the benefit of the holders of the related Preferred Securities of an
SSBH Trust then outstanding.
EVENTS OF DEFAULT
An Event of Default under a Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities to which a Guarantee relates have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee. If the
Guarantee Trustee fails to enforce the Guarantee Trustee's rights under a
Guarantee, any holder of related Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Guarantee Trustee's rights
under such Guarantee without first instituting a legal proceeding against the
SSBH Trust that issued such Preferred Securities, the Guarantee Trustee or any
other person or entity. A holder of Preferred Securities may also directly
institute a legal proceeding against the Company to enforce such holder's right
to receive payment under such Guarantee without first (i) directing the
Guarantee Trustee to enforce the terms of the Guarantee or (ii) instituting a
legal proceeding against the SSBH Trust that issued such Preferred Securities or
any other person or entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each of the Guarantees and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
a Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to a Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of
16
<PAGE> 190
the powers vested in it by a Guarantee at the request of any holder of Preferred
Securities to which such Guarantee relates unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate as to the Preferred Securities issued by an
SSBH Trust upon full payment of the Redemption Price of all Preferred Securities
of such SSBH Trust, upon distribution of the Junior Subordinated Debt Securities
held by such SSBH Trust to the holders of the Preferred Securities of such SSBH
Trust or upon full payment of the amounts payable in accordance with the
Declaration of such SSBH Trust upon liquidation of such SSBH Trust. Each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of related Preferred Securities issued by an SSBH
Trust must restore payment of any sums paid under such Preferred Securities or
such Guarantee.
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any affiliate of the Company and (iii) senior to the
Company's common stock. The terms of the Preferred Securities provide that each
holder of Preferred Securities issued by a SSBH Trust by acceptance thereof
agrees to the subordination provisions and other terms of the applicable
Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under a Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantees will be governed by, and construed in accordance with, the
internal laws of the State of New York.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the Company's authorized capital stock
consists of 1,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"), and 10,000,000 shares of preferred stock, par value $1.00 per share
(the "Preferred Stock"). All of the outstanding shares of Common Stock are held
by Travelers Group. Under the Company's Amended and Restated Certificate of
Incorporation (as amended, the "Certificate of Incorporation"), the Board of
Directors of the Company is authorized to issue shares of the Preferred Stock in
one or more series, and to establish from time to time the number of shares to
be included in each such series and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the Board of Directors of
the Company and as are not stated and expressed in the Certificate of
Incorporation. Prior to the issuance of each series of Preferred Stock, the
Board of Directors of the Company will adopt resolutions creating and
designating such series as a series of Preferred Stock and such resolutions will
be filed in a Certificate of Designation as an amendment to the Certificate of
Incorporation. As used herein, the term "Board of Directors of the Company"
means the Board of Directors of the Company and includes any duly authorized
committee thereof.
The rights of holders of the Preferred Stock offered hereby will be subject
to, and may be adversely affected by, the rights of holders of any shares of
preferred stock that may be issued in the future. The Board of Directors may
cause shares of preferred stock to be issued in public or private transactions
for any proper corporate purposes, which may include issuance to obtain
additional financing in connection with acquisitions
17
<PAGE> 191
or otherwise, and issuance to officers, directors and employees of the Company
and its subsidiaries pursuant to benefit plans or otherwise.
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of certain general terms of
the Company's Preferred Stock to which any Prospectus Supplement may relate.
Certain terms of any series of Preferred Stock offered by any Prospectus
Supplement will be described in the Prospectus Supplement relating thereto. If
so indicated in the Prospectus Supplement, the terms of any series may differ
from the terms set forth below. The description of certain provisions of the
Company's Preferred Stock does not purport to be complete and is subject to and
qualified in its entirety by reference to the provisions of the Company's
Certificate of Incorporation, and the Certificate of Designation (the
"Certificate of Designation") relating to each particular series of Preferred
Stock which will be filed or incorporated by reference, as the case may be, as
an exhibit to the Registration Statement of which this Prospectus forms a part
at or prior to the time of the issuance of such Preferred Stock.
GENERAL
As of the date of this Prospectus there were no shares of Preferred Stock
outstanding. The Preferred Stock may be issued in one or more series, with such
designations of titles; dividend rates; any redemption provisions; special or
relative rights in the event of liquidation, dissolution, distribution or
winding up of the Company; any sinking fund provisions; any conversion
provisions; any voting rights thereof; and any other preferences, privileges,
powers, rights, qualifications, limitations and restrictions, as shall be set
forth as and when established by the Board of Directors of the Company. The
shares of any series of Preferred Stock will be, when issued, fully paid and
non-assessable and holders thereof will have no preemptive rights in connection
therewith.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of Preferred Stock will be specified in the
Prospectus Supplement relating thereto.
RANK
Unless otherwise specified in the Prospectus Supplement relating to the
shares of any series of Preferred Stock, such shares will rank on a parity with
each other series of Preferred Stock and prior to the Common Stock as to
dividends and distributions of assets.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Company out of funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of Preferred
Stock. Such rates may be fixed or variable or both. Dividends will be payable to
holders of record of Preferred Stock as they appear on the books of the Company
(or, if applicable, the records of the Depositary referred to below under
"Description of Depositary Shares") on such record dates as shall be fixed by
the Board of Directors. Dividends on any series of Preferred Stock may be
cumulative or noncumulative.
No full dividends may be declared or paid on funds set apart for the
payment of dividends on any series of Preferred Stock unless dividends shall
have been paid or set apart for such payment on equity securities ranking on a
parity with respect to dividends with such series of Preferred Stock. If full
dividends are not so paid, such series of Preferred Stock shall share dividends
pro rata with such other equity securities.
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Company or the holder thereof and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
18
<PAGE> 192
In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Company, or by any other method determined to be equitable by the Board of
Directors.
On and after a redemption date, unless the Company defaults in the payment
of the redemption price, dividends will cease to accrue on shares of Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of each series of Preferred Stock will be entitled to
receive out of assets of the Company available for distribution to shareholders,
before any distribution is made on any securities ranking junior with respect to
liquidation, including Common Stock, distributions upon liquidation in the
amount set forth in the Prospectus Supplement relating to such series of
Preferred Stock, plus an amount equal to any accrued and unpaid dividends. If,
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock of any series
and any other securities ranking on a parity with respect to liquidation rights
are not paid in full, the holders of the Preferred Stock of such series and such
other securities will share ratably in any such distribution of assets of the
Company in proportion to the full liquidation preferences to which each is
entitled. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of such series of Preferred Stock will not
be entitled to any further participation in any distribution of assets of the
Company.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular series of Preferred Stock or except as expressly required by
applicable law, the holders of Preferred Stock will have no voting rights.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain material provisions of the
Deposit Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts (as defined below) is subject to and qualified in its entirety by
reference to the forms of Deposit Agreement and Depositary Receipt relating to
the Preferred Stock, which will be filed or incorporated by reference, as the
case may be, as exhibits to the Registration Statement of which this Prospectus
forms a part. The particular terms of any Depositary Shares, any Depositary
Receipts and any Deposit Agreement relating to a particular series of Preferred
Stock which vary from the terms set forth below will be set forth in the
applicable Prospectus Supplement.
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In such event, the
Company will issue receipts for Depositary Shares, each of which will represent
a fraction (to be set forth in the Prospectus Supplement relating to a
particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below.
The shares of series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 (the "Preferred Stock Depositary"). Subject to the terms
of the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, conversion
and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing
19
<PAGE> 193
the fractional shares of Preferred Stock in accordance with the terms of the
applicable Prospectus Supplement.
Pending the preparation of definitive Depositary Receipts, the Preferred
Stock Depositary may, upon the written order of the Company or any holder of
deposited Preferred Stock, execute and deliver temporary Depositary Receipts
which are substantially identical to, and entitle the holders thereof to all the
rights pertaining to, the definitive Depositary Receipts. Depositary Receipts
will be prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited Preferred Stock to the
record holders of Depositary Shares relating to such Preferred Stock in
proportion to the numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto. If the Preferred Stock Depositary determines
that it is not feasible to make such distribution, it may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
REDEMPTION OF PREFERRED STOCK
If a series of Preferred Stock represented by Depositary Shares is to be
redeemed, the Depositary Shares will be redeemed from the proceeds received by
the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of such series of Preferred Stock held by the Preferred Stock Depositary.
The Depositary Shares will be redeemed by the Preferred Stock Depositary at a
price per Depositary Share equal to the applicable fraction of the redemption
price per share payable in respect of the shares of Preferred Stock so redeemed.
Whenever the Company redeems shares of Preferred Stock held by the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem as of the same date
the number of Depositary Shares representing shares of Preferred Stock so
redeemed. If fewer than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by the Preferred Stock
Depositary by lot or pro rata or by any other equitable method as may be
determined by the Preferred Stock Depositary.
WITHDRAWAL OF PREFERRED STOCK
Any holder of Depositary Shares may, upon surrender of the Depositary
Receipts at the corporate trust office of the Preferred Stock Depositary (unless
the related Depositary Shares have previously been called for redemption),
receive the number of whole shares of the related series of Preferred Stock and
any money or other property represented by such Depositary Receipts. Holders of
Depositary Shares making such withdrawals will be entitled to receive whole
shares of Preferred Stock on the basis set forth in the related Prospectus
Supplement for such series of Preferred Stock, but holders of such whole shares
of Preferred Stock will not thereafter be entitled to deposit such Preferred
Stock under the Deposit Agreement or to receive Depositary Receipts therefor. If
the Depositary Shares surrendered by the holder in connection with such
withdrawal exceed the number of Depositary Shares that represent the number of
whole shares of Preferred Stock to be withdrawn, the Preferred Stock Depositary
will deliver to such holder at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited Preferred Stock are entitled to vote, the Preferred Stock Depositary
will mail the information contained in such notice of meeting to the record
holders of the Depositary Shares relating to such series of Preferred Stock.
Each record holder of such Depositary Shares on the record date (which will be
the same date as the record date for the relevant series of Preferred Stock)
will be entitled to instruct the Preferred Stock Depositary as to the exercise
of the voting rights pertaining to the amount of the Preferred Stock represented
by such holder's Depositary Shares.
20
<PAGE> 194
The Preferred Stock Depositary will endeavor, insofar as practicable, to vote
the amount of such series of Preferred Stock represented by such Depositary
Shares in accordance with such instructions, and the Company will agree to take
all reasonable actions that may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will vote all shares of any series of Preferred Stock
held by it proportionately with instructions received, to the extent it does not
receive specific instructions from the holder of Depositary Shares representing
such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock Depositary. However, any amendment
that imposes additional charges or materially and adversely alters any
substantial existing right of the holders of the Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the affected Depositary Shares then outstanding. Every holder of an
outstanding Depositary Receipt at the time any such amendment becomes effective,
or any transferee of such holder, shall be deemed, by continuing to hold such
Depositary Receipt, or by reason of the acquisition thereof, to consent and
agree to such amendment and to be bound by the Deposit Agreement as amended
thereby. The Deposit Agreement automatically terminates if (i) all outstanding
Depositary Shares have been redeemed; or (ii) each share of Preferred Stock has
been converted into other Preferred Stock or has been exchanged for Debt
Securities; or (iii) there has been a final distribution in respect of the
Preferred Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution has been distributed to the holders of
Depositary Shares. The Deposit Agreement may be terminated by the Company at any
time and the Preferred Stock Depositary will provide notice of such termination
to the record holders of all outstanding Depositary Receipts not less than 30
days prior to the termination date, in which event the Preferred Stock
Depositary will deliver or make available for delivery to holders of Depositary
Shares, upon surrender of such Depositary Shares, the number of whole or
fractional shares of the related series of Preferred Stock as are represented by
such Depositary Shares.
CHARGES OF DEPOSITARY; TAXES AND OTHER ENVIRONMENTAL CHARGES
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay all charges of the Preferred Stock Depositary in connection with the
initial deposit of the relevant series of Preferred Stock and any redemption of
such Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges or expenses as are
expressly provided in the Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its intent to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock Depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward all reports and communications
from the Company which are delivered to the Preferred Stock Depositary and which
the Company is required to furnish to the holders of the deposited Preferred
Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. The
21
<PAGE> 195
obligations of the Company and the Preferred Stock Depositary under the Deposit
Agreement will be limited to performance in good faith of their duties
thereunder and they will not be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares, Depositary Receipts or shares of
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or upon information provided by
holders of Depositary Receipts or other persons believed to be competent and on
documents believed to be genuine.
DESCRIPTION OF COMMON STOCK
Each holder of Common Stock is entitled to one vote per share for the
election of directors and for all other matters to be voted on by the Company's
stockholders. Except as otherwise provided by law, the holders of shares of
Common Stock vote as one class. Holders of Common Stock may not cumulate their
votes in the election of directors, and are entitled to share equally in such
dividends as may be declared by the Board of Directors out of funds legally
available therefor, but only after payment of dividends required to be paid on
outstanding shares of preferred stock.
Upon voluntary or involuntary liquidation, dissolution or winding up of the
Company, the holders of the Common Stock share pro rata in the assets remaining
after payments to creditors and provision for the preference of any preferred
stock. There are no preemptive or other subscription rights, conversion rights
or redemption or sinking fund provisions with respect to shares of Common Stock.
All of the outstanding shares of Common Stock are fully paid and nonassessable.
PLAN OF DISTRIBUTION
The Company may sell any series of Preferred Stock or Depositary Shares and
any SSBH Trust may sell Preferred Securities in one or more of the following
ways from time to time: (i) to or through underwriters or dealers, (ii) directly
to purchasers, or (iii) through agents. Any such underwriters, dealers or agents
may include one or more affiliates of the Company. The Prospectus Supplement
with respect to any securities offered hereby (the "Offered Securities") will
set forth (i) the terms of the offering of the Offered Securities, including the
name or names of any underwriters, dealers or agents, (ii) the purchase price of
the Offered Securities and the proceeds to the Company or an SSBH Trust as the
case may be, from such sale, (iii) any underwriting discounts and commissions or
agency fees and other items constituting underwriters' or agents' compensation,
(iv) any initial public offering prices, (v) any discounts or concessions
allowed or reallowed or paid to dealers and (vi) any securities exchange on
which such Offered Securities may be listed. Any initial public offering price,
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
In connection with underwritten offerings of Offered Securities, certain
underwriters and selling group members and their respective affiliates may
engage in transactions that stabilize, maintain or otherwise affect the market
price of the Offered Securities. Such transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M under the
Exchange Act, pursuant to which such persons may bid for or purchase Offered
Securities for the purposes of stabilizing their market price. The underwriters
also may
22
<PAGE> 196
create a short position for their respective accounts by selling more Offered
Securities in connection with this offering than they are committed to purchase
from the Company, and in such case may purchase Offered Securities in the open
market following completion of this offering to cover all or a portion of such
short position. The Underwriters may also cover all or a portion of such short
position, up to a specified aggregate principal amount or number of Offered
Securities, by exercising any underwriters' over-allotment option that may be
applicable with respect to the particular underwritten offering. In addition,
the managing underwriter for the particular offering, on behalf of the
underwriters, may impose "penalty bids" under contractual arrangements between
the underwriters whereby it may reclaim from an underwriter (or dealer
participating in this offering) for the account of the underwriters, the selling
concession with respect to Offered Securities that are distributed in the
relevant offering but subsequently purchased for the account of the underwriters
in the open market. Any of the transactions described in this paragraph may
result in the maintenance of the price of the Offered Securities at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if any are
undertaken, they may be discontinued at any time. Such transactions may be
effected in the over-the-counter market or otherwise. Underwriters are not
required to engage in any of these activities. Any such activities, if
commenced, may be discontinued at any time.
If dealers are utilized in the sale of Offered Securities, the Company or
the applicable SSBH Trust will sell such Offered Securities to the dealers as
principals. The dealers may then resell such Offered Securities to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offered Securities may be sold directly by the Company and/or, if
applicable, any SSBH Trust to one or more institutional purchasers, or through
agents designated by the Company and/or, if applicable, any SSBH Trust from time
to time, at a fixed price, or prices, which may be charged, or at varying prices
determined at time of sale. Any agent involved in the offer or sale of the
Offered Securities in respect to which this Prospectus is delivered will be
named, and any commissions payable by the Company or the applicable SSBH Trust
to such agent will be set forth in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
The Preferred Securities may be sold directly by an SSBH Trust to
institutional investors or others who may be deemed to be underwriters within
the meaning of the Securities Act with respect to any resale thereof. The terms
of any such sales will be described in the Prospectus Supplement relating
thereto.
If so indicated in the Prospectus Supplement, the Company or the applicable
SSBH Trust will authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase Offered Securities from the Company or
such SSBH Trust at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts (the "Contracts") providing
for payment and delivery on a specified date or dates in the future. Such
Contracts will not be subject to any conditions except (a) the purchase by an
institution of the Offered Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject and (b) if the Offered Securities
are being sold to underwriters, the Company shall have sold to such underwriters
the total principal amount of the Offered Securities less the principal amount
thereof covered by the Contracts. The Prospectus Supplement will set forth the
commission payable for solicitation of such Contracts.
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus or any accompanying Prospectus
Supplement and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or any of the SSBH
Trusts, or any underwriter, agent or dealer. Neither the delivery of this
Prospectus and any Prospectus Supplement nor any sale made thereunder shall,
under any circumstance, create an implication that there has been no change in
the affairs of the Company or any of the SSBH Trusts since the date hereof or
thereof. This Prospectus and any related Prospectus Supplement do not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered
23
<PAGE> 197
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
The participation of any affiliate of the Company in the offer and sale of
Offered Securities will comply with the requirements of Rule 2720 of the Conduct
Rules of the National Association of Securities Dealers, Inc. regarding the
underwriting by an affiliate of securities of its parent.
This Prospectus Supplement and the related Prospectus may be used by the
Company or any of its affiliates in connection with offers and sales of the
Offered Securities in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Any such entity may act as
principal or agent in such transactions. No such entity is obligated to make a
market in the Offered Securities, and any such entity may discontinue any
market-making at any time without notice, at its sole discretion. Each series of
Offered Securities will be a new issue of securities and will have no
established trading market. The Offered Securities may or may not be listed on a
national securities exchange. There can be no assurance of the existence or
liquidity of a secondary market for any Offered Securities, or that the maximum
number of Offered Securities will be sold.
Agents, dealers and underwriters may be entitled, under agreements with the
Company or an SSBH Trust, to indemnification by the Company or the applicable
SSBH Trust against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Act"), or to contribution with respect
to payments that such agents, dealers or underwriters may be required to make in
respect thereof and to reimbursement of certain legal and other expenses
incurred by such agents, dealers or underwriters. Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for the Company or an SSBH Trust in the ordinary course of business.
EXPERTS
The consolidated financial statements and schedules of Salomon Inc as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, included in Salomon Inc's Annual Report on Form 10-K
for the year ended December 31, 1996 (the "Salomon Financials"), are
incorporated by reference herein, in reliance upon the report (also incorporated
by reference herein) of Arthur Andersen LLP, independent public accountants and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Smith Barney Holdings
Inc. and its subsidiaries for the fiscal years ended December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996, included
in the Company's Current Report on Form 8-K dated September 29, 1997, have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements referred to above are incorporated by
reference herein in reliance upon such report given upon the authority of said
firm as experts in accounting and auditing.
The supplemental consolidated financial statements of the Company and its
subsidiaries for the fiscal years ended December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996, included in the
Company's Current Report on Form 8-K dated November 28, 1997 have been audited
by Coopers & Lybrand L.L.P., independent certified public accountants, as set
forth in their report thereon, included therein and incorporated herein by
reference, which report states that Coopers & Lybrand L.L.P. did not audit the
Salomon Financials and that their opinion with respect to any amounts contained
in the Salomon Financials is based on the report of Arthur Andersen L.L.P. Such
financial statements referred to above are incorporated by reference herein in
reliance upon such reports given upon the authority of said firm as experts in
accounting and auditing.
24
<PAGE> 198
LEGAL MATTERS
The validity of the Junior Subordinated Debt Securities, the Preferred
Stock, Depositary Shares, Guarantees and certain matters relating thereto will
be passed upon for the Company and SSBH Capital by Robert H. Mundheim, Esq.,
General Counsel of the Company. Mr. 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
Preferred Securities and certain matters relating thereto and certain United
States federal income tax matters will be passed upon for the Company and SSBH
Capital by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. Certain
legal matters will be passed upon for the Underwriters by Cleary, Gottlieb,
Steen & Hamilton, New York, New York or Skadden, Arps, Slate, Meagher & Flom
LLP, as set forth in the applicable Prospectus Supplement. Kenneth J. Bialkin, a
partner of Skadden, Arps, Slate, Meagher & Flom LLP, is a director of Travelers
Group, the parent of the Company, and he and other attorneys in such firm
beneficially own an aggregate of less than one percent of the common stock of
Travelers Group. Each of Cleary, Gottlieb, Steen & Hamilton and Skadden, Arps,
Slate, Meagher & Flom LLP has from time to time acted as counsel for Travelers
Group and certain of its subsidiaries and may do so in the future.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Such reports and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at: Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and Seven World Trade Center, New York, New York 10048.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a site on the World Wide Web,
the address of which is http://www.sec.gov, that contains reports, proxy and
information statements and other information regarding issuers, such as the
Company, that file electronically with the Commission. Such reports and other
information can also be inspected at the offices of the New York Stock Exchange,
Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005.
The Company and the SSBH Trusts have filed with the Commission a
Registration Statement on Form S-3 (the "Registration Statement," which term
shall include all amendments, exhibits, annexes and schedules thereto) pursuant
to the Act, with respect to the Offered Securities. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company, the SSBH Trusts
and the Offered Securities, reference is made to the Registration Statement and
exhibits thereto. Statements contained in this Prospectus as to the contents of
any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or document filed as an
exhibit to the Company's Registration Statement, each such statement being
qualified in all respects by such reference.
No separate financial statements of the SSBH Trusts have been included or
incorporated by reference herein. The Company does not consider that such
financial statements would be material to holders of the Preferred Securities
because (i) all of the voting securities of the SSBH Trusts will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) the SSBH Trusts have no independent operations but exist for the sole
purpose of issuing securities representing undivided beneficial interests in
their respective assets and investing the proceeds thereof in Junior
Subordinated Debt Securities issued by the Company, and (iii) the obligations of
the SSBH Trusts under the Preferred Securities are fully and unconditionally
guaranteed by the Company to the extent that the respective SSBH Trust has funds
available to meet such obligations. See "Description of Junior Subordinated Debt
Securities" and "Description of Guarantees."
25
<PAGE> 199
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents heretofore
filed by the Company with the Commission pursuant to the Exchange Act: (i) the
Annual Report on Form 10-K for the year ended December 31, 1996, (ii) the
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997, June 30,
1997 and September 30, 1997, and (iii) the Current Reports on Form 8-K dated
January 21, 1997, March 17, 1997, April 15, 1997, July 17, 1997, September 24,
1997, September 29, 1997 (as amended by the Current Report on Form 8-K/A dated
October 28, 1997 and the Current Report on Form 8-K/A2 dated December 1, 1997),
October 21, 1997, October 28, 1997 (as amended by the Current Report on Form
8-K/A dated December 1, 1997), November 21, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the later of (i) the termination of the Offered Securities and (ii) the date on
which all broker-dealer subsidiaries of the Company cease offering and selling
Offered Securities pursuant to this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part of
this Prospectus except as so modified or superseded.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference in the
Registration Statement of which this Prospectus forms a part other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into such documents. Requests should be directed to Salomon Smith
Barney Holdings Inc., 388 Greenwich Street, New York, New York 10013; Attention:
Treasurer; telephone (212) 816-6000.
26
<PAGE> 200
======================================================
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT. WE HAVE
AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING
AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU
SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THE DOCUMENT.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary..................................... S-1
The Company................................. S-5
SSBH Capital................................ S-5
Risk Factors................................ S-6
Use of Proceeds............................. S-10
Accounting Treatment........................ S-10
Ratio of Earnings to Fixed Charges.......... S-10
Capitalization.............................. S-11
Description of the Preferred Securities..... S-11
Description of the Junior Subordinated Debt
Securities................................ S-23
Description of Guarantee.................... S-28
Effect of Obligations Under the Junior
Subordinated Debt Securities and the
Guarantee................................. S-30
Certain United States Federal Income Tax
Considerations............................ S-31
Underwriting................................ S-35
Legal Matters............................... S-37
PROSPECTUS
Prospectus Summary.......................... 2
The Company................................. 6
Ratio of Earnings to Fixed Charges.......... 6
SSBH Trusts................................. 6
Use of Proceeds............................. 7
Description of Junior Subordinated Debt
Securities................................ 7
Description of Preferred Securities......... 13
Description of Guarantees................... 15
Description of Capital Stock................ 17
Description of Preferred Stock.............. 18
Description of Depositary Shares............ 19
Description of Common Stock................. 22
Plan of Distribution........................ 22
Experts..................................... 24
Legal Matters............................... 25
Available Information....................... 25
Incorporation of Certain Documents by
Reference................................. 26
</TABLE>
======================================================
======================================================
Shares
SSBH Capital I
% Trust Preferred Securities
------------------
PROSPECTUS SUPPLEMENT
DATED , 199
(INCLUDING PROSPECTUS)
DATED , 199
------------------
SALOMON SMITH BARNEY
======================================================
<PAGE> 201
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 DECEMBER 1, 1997
PROSPECTUS
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 outstanding $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 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 affiliates 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.
------------------------
SALOMON SMITH BARNEY
December , 1997
<PAGE> 202
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, (ii) the Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997 and (iii) the Current Reports on Form
8-K dated January 21, 1997, March 17, 1997, April 15, 1997, July 17, 1997,
September 24, 1997, September 29, 1997 (as amended by the Current Report on Form
8-K/A dated October 28, 1997 and the Current Report on Form 8-K/A2 dated
December 1, 1997), October 21, 1997, October 28, 1997 (as amended by the Current
Report on Form 8-K/A dated December 1, 1997), November 21, 1997 (as amended by
the Current Report on Form 8-K/A dated December 1, 1997) and November 28, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the 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
2
<PAGE> 203
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
Pursuant to an agreement and plan of merger dated as of September 24, 1997,
a newly-formed wholly owned subsidiary of Travelers Group Inc. ("Travelers
Group") merged with and into Salomon Inc ("Salomon") on November 28, 1997;
Salomon then became a wholly owned subsidiary of Travelers Group and was renamed
Salomon Smith Barney Holdings Inc. (the "Company"). Immediately thereafter,
Smith Barney Holdings Inc., another wholly owned subsidiary of Travelers Group,
was merged into the Company. The Company is a holding company primarily engaged
in investment banking, proprietary trading, retail brokerage and asset
management activities through its two broker-dealer subsidiaries, Smith Barney
Inc. ("Smith Barney") and Salomon Brothers Inc ("Salomon Brothers").
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 (telephone number: (212) 816-6000).
SMITH BARNEY
Smith Barney provides investment banking, asset management, brokerage and
other financial services for United States and foreign corporations, governments
and institutional and individual investors. These activities include securities,
options and commodities brokerage of 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>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges..... 1.29 1.37 1.20 0.98* 1.32 1.27
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amounts by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to fixed charges has been computed by dividing earnings
before income taxes and fixed charges by the fixed charges. For the purpose of
this ratio, fixed charges consist of interest expense and that portion of
rentals deemed representative of the appropriate interest factor.
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 26,
3
<PAGE> 204
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, 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
4
<PAGE> 205
delivery of such securities in certificated form. Such limits and such law may
impair the ability to transfer beneficial interests in Book-Entry Notes.
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
5
<PAGE> 206
person entitled thereto as such address shall appear in the register of holders
of Outstanding Securities. 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
6
<PAGE> 207
Company and one or more other Subsidiaries. The term "Voting Stock" means
capital stock the holders of 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).
7
<PAGE> 208
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 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
8
<PAGE> 209
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 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
9
<PAGE> 210
Index Value. All capitalized terms have the meanings given them in the
Prospectus Supplement relating to the Notes.
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.
10
<PAGE> 211
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
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.
Smith Barney Inc. and Salomon Brothers Inc are, and each of the SSBH
Subsidiaries may be, a member of the National Association of Securities Dealers,
Inc. (the "NASD") and may participate in distributions of the Outstanding
Securities. Accordingly, the participation of any such entity in the offerings
of Outstanding Securities will conform with the requirements of Rule 2720 of the
Conduct Rules of the NASD regarding the underwriting by an affiliate of the
securities of its parent.
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
11
<PAGE> 212
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 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, (the "Salomon Financials") are
incorporated by reference herein, in reliance upon the report (also incorporated
by reference herein) of Arthur Andersen LLP, independent public accountants, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements and schedule of Smith Barney Holdings
Inc. and its subsidiaries for the fiscal years ended December 31, 1996 and 1995,
and for each of the three years in the period ended December 31, 1996, included
in the Company's Current Report on Form 8-K dated September 29, 1997, have been
audited by Coopers & Lybrand L.L.P., independent certified public accountants,
as set forth in their report 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.
The supplemental consolidated financial statements of the Company and its
subsidiaries for the fiscal years ended December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1996, included in the
Company's Current Report on Form 8-K dated November 28, 1997, have been audited
by Coopers & Lybrand L.L.P., independent certified public accountants, as set
forth in their report thereon, included therein and incorporated herein by
reference, which report states that Coopers & Lybrand L.L.P. did not audit the
Salomon Financials and that their opinion with respect to any amounts contained
in the Salomon Financials is based on the report of Arthur Andersen LLP. Such
financial statements referred to above are incorporated by reference herein in
reliance upon such reports given upon the authority of said firm as experts in
accounting and auditing.
12
<PAGE> 213
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................................................ 250,000.00
Trustees' Fees and Expenses.................................... 180,000.00
Blue Sky Fees and Expenses..................................... 10,000.00
Printing and Engraving Fees.................................... 1,000,000.00
Rating Agency Fees............................................. 750,000.00
NASD Fee....................................................... 30,500.00
Legal Fees and Expenses........................................ 400,000.00
Miscellaneous.................................................. 801.97
-------------
Total................................................ $6,250,000.00
=============
</TABLE>
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 corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out
II-1
<PAGE> 214
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 Eighth of
Salomon Smith Barney Holdings Inc.'s By-Laws provides for indemnification of
directors and officers of Salomon Smith Barney Holdings Inc. against certain
liabilities incurred as a result of their duties as such and Article Fifth of
Salomon Smith Barney Holdings Inc.'s Amended and Restated Certificate of
Incorporation provides that no directors of Salomon Smith Barney Holdings Inc.
shall be liable for monetary damages for breach of fiduciary duty as a director.
Salomon Smith Barney Holdings Inc.'s Amended and Restated Certificate of
Incorporation, as amended, and its By-Laws, as amended, are filed as Exhibits
4(a) and 4(b), respectively, to this Registration Statement.
Salomon Smith Barney Holdings Inc. maintains insurance policies covering
liabilities of directors and officers to the extent not covered by
indemnification from Salomon Smith Barney Holdings 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, 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
II-2
<PAGE> 215
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(f) 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 relating to the Medium-Term Notes, Series
H and Series I, will be filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
1(c) -- Form of Continuous Underwriting Agreement relating to the Notes, Series J, will
be filed as an Exhibit to a Current Report on Form 8-K and incorporated herein by
reference.
1(d) -- Form of Underwriting Agreement for Index Warrants will be filed as an Exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
1(e) -- 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.
1(f) -- Form of Underwriting Agreement for Trust Preferred Securities will be filed as an
exhibit to a Current Report on Form 8-K and incorporated herein by reference.
4(a) -- Amended and Restated Certificate of Incorporation of the Company.*
4(b) -- By-Laws of the Company.*
4(c) -- Senior Debt Indenture, dated as of December 1, 1988, between the Company 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 the Company 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 the Company and Citibank, N.A. (incorporated
by reference to Exhibit 4(c) to Registration Statement No. 33-41209).
</TABLE>
II-3
<PAGE> 216
<TABLE>
<S> <C> <C>
4(e) -- Third Supplemental Indenture, dated as of July 1, 1992, to Senior Debt Indenture,
dated as of December 1, 1988 between the Company 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 the Company
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 the Company
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 the Company
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 the Company
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 the Company 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 the Company
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) -- Form of Tenth Supplemental Indenture, dated as of November 28, 1997, between the
Company and Citibank N.A.*
4(m) -- Subordinated Debt Indenture, dated as of December 1, 1988, between the Company
and Bankers Trust Company, as Trustee (incorporated by reference to Exhibit 7 to
the Company's Current Report on Form 8-K dated August 2, 1989).
4(n) -- First Supplemental Indenture, dated as of September 7, 1990, to Subordinated Debt
Indenture dated as of December 1, 1988 between the Company and Bankers Trust
Company (incorporated by reference to Exhibit 4(b) to Registration Statement No.
33-39502).
4(o) -- Second Supplemental Indenture, dated as of December 14, 1993, between the Company
and Bankers Trust Company. (incorporated by reference to Exhibit 4(n) to
Registration Statement No. 333-01807).
4(p) -- Form of Third Supplemental Indenture, dated as of November 28, 1997, between the
Company and Bankers Trust Company.*
4(q) -- Senior Debt Indenture, dated as of October 27, 1993, between the Company 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(r) -- Form of First Supplemental Indenture, dated as of November 28, 1997, between the
Company and The Bank of New York.*
4(s) -- Senior Debt Indenture, dated as of January 18, 1994, between the Company and The
Chase Manhattan Bank, as Trustee (incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K dated January 18, 1994).
4(t) -- Form of First Supplemental Indenture, dated as of November 28, 1997, between the
Company and The Chase Manhattan Bank.*
4(u) -- Forms of Medium-Term Registered Notes, Series H and Series I.*
4(v) -- Forms of Medium-Term Bearer Notes, Series H and Series I.*
4(w) -- Forms of Medium-Term Temporary Global Notes, Series H and Series I.*
4(x) -- Forms of Medium-Term Permanent Global Notes, Series H and Series I.*
4(y) -- Forms of Notes, Series J.*
4(z) -- Form of proposed Index Warrant Agreement for Index Warrants, with form of
proposed Index Warrant Certificate attached as an exhibit thereto, for Index
Warrants in registered form will be filed as an Exhibit to a Current Report on
Form 8-K and incorporated herein by reference.
4(aa) -- Certificate of Trust of SSBH Capital I, as amended.+
</TABLE>
II-4
<PAGE> 217
<TABLE>
<S> <C> <C>
4(bb) -- Certificate of Trust of SSBH Capital II, as amended.+
4(cc) -- Certificate of Trust of SSBH Capital III, as amended.+
4(dd) -- Certificate of Trust of SSBH Capital IV.+
4(ee) -- Form of Amended and Restated Declaration of Trust for SSBH Capital I.+
4(ff) -- Form of Amended and Restated Declaration of Trust for SSBH Capital II.+
4(gg) -- Form of Amended and Restated Declaration of Trust for SSBH Capital III.+
4(hh) -- Form of Amended and Restated Declaration of Trust for SSBH Capital IV.+
4(ii) -- Form of Indenture between the Company and The Chase Manhattan Bank, as Trustee.+
4(jj) -- Form of Trust Preferred Security (included in Exhibit 4(cc)).
4(kk) -- Form of Common Security (included in Exhibit 4(cc)).
4(ll) -- Form of Guarantee with respect to the Trust Preferred Securities of SSBH Capital
I.+
4(mm) -- Form of Guarantee with respect to the Trust Preferred Securities of SSBH Capital
II.+
4(nn) -- Form of Guarantee with respect to the Trust Preferred Securities of SSBH Capital
III.+
4(oo) -- Form of Guarantee with respect to the Trust Preferred Securities of SSBH Capital
IV.+
4(pp) -- Form of Junior Subordinated Debt Securities (included in Exhibit 4(cc).
4(qq) -- 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(rr) -- Form of Deposit Agreement will be filed as an exhibit to a Current Report on Form
8-K and incorporated herein by reference.
4(ss) -- 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. (incorporated by reference to
Exhibits 12.01 and 12.07 to the Company's Current Report on Form 8-K dated
November 28, 1997).
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 Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibits 5(b)
and 8(a)).
23(d) -- Consent of Robert H. Mundheim, Esq. (included in Exhibit 5(a)).
24 -- 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.+
</TABLE>
II-5
<PAGE> 218
<TABLE>
<S> <C> <C>
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.+
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.
* Filed herewith.
** 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 Smith Barney Holdings 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 Smith Barney Holdings 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.
II-6
<PAGE> 219
(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 Smith Barney
Holdings 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 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> 220
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALOMON SMITH
BARNEY HOLDINGS 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 1ST DAY OF DECEMBER, 1997.
SALOMON SMITH BARNEY HOLDINGS INC.
By: /s/ CHARLES W. SCHARF
------------------------------------
Charles W. Scharf
Chief Financial Officer
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 SMITH BARNEY HOLDINGS INC. ON
THE 1ST DAY OF DECEMBER, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------ -------------------------------------------------
<C> <S>
* Co-Chairman, Co-Chief Executive Officer, Director
- ------------------------------------------ and Principal Executive Officer
(James Dimon)
* Co-Chairman, Co-Chief Executive Officer, Director
- ------------------------------------------ and Principal Executive Officer
(Deryck C. Maughan)
/s/ CHARLES W. SCHARF Chief Financial Officer and Principal Financial
- ------------------------------------------ Officer
(Charles W. Scharf)
* Controller and Principal Accounting Officer
- ------------------------------------------
(Michael J. Day)
* Director
- ------------------------------------------
(Steven D. Black)
* Director
- ------------------------------------------
(James Boshart III)
* Director
- ------------------------------------------
(Thomas G. Maheras)
</TABLE>
II-8
<PAGE> 221
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------ -------------------------------------------------
<C> <S>
* Director
- ------------------------------------------
(Jay Mandelbaum)
* Director
- ------------------------------------------
(Eduardo G. Mestre)
* Director
- ------------------------------------------
(Shigeru Myojin)
* Director
- ------------------------------------------
(Michael B. Panitch)
</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 Smith Barney Holdings Inc.
pursuant to powers of attorney executed on behalf of each such director and
officer.
By: /s/ CHARLES W. SCHARF
----------------------------------
Charles W. Scharf
Attorney-in-Fact
II-9
<PAGE> 222
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, EACH OF SSBH
CAPITAL I, SSBH CAPITAL II, SSBH CAPITAL III AND SSBH 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 1ST DAY OF DECEMBER, 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> 223
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 relating to the Medium-Term
Notes, Series H and Series I, will be filed as an Exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
1(c) -- Form of Continuous Underwriting Agreement relating to the Notes, Series
J, will be filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
1(d) -- Form of Underwriting Agreement for Index Warrants will be filed as an
Exhibit to a Current Report on Form 8-K and incorporated herein by
reference.
1(e) -- 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.
1(f) -- Form of Underwriting Agreement for Trust Preferred Securities will be
filed as an exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4(a) -- Amended and Restated Certificate of Incorporation of the Company.*
4(b) -- By-Laws of the Company.*
4(c) -- Senior Debt Indenture, dated as of December 1, 1988, between the
Company 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 the Company 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 the Company 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 the Company 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
the Company 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
the Company 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
the Company 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
the Company 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 the
Company 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> 224
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ----------------------------------------------------------------------- ------------
<S> <C> <C> <C>
4(k) -- Ninth Supplemental Indenture, dated as of November 22, 1996, between
the Company 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) -- Form of Tenth Supplemental Indenture, dated as of November 28, 1997,
between the Company and Citibank N.A.*
4(m) -- Subordinated Debt Indenture, dated as of December 1, 1988, between the
Company and Bankers Trust Company, as Trustee (incorporated by
reference to Exhibit 7 to the Company's Current Report on Form 8-K
dated August 2, 1989).
4(n) -- First Supplemental Indenture, dated as of September 7, 1990, to
Subordinated Debt Indenture dated as of December 1, 1988 between the
Company and Bankers Trust Company (incorporated by reference to Exhibit
4(b) to Registration Statement No. 33-39502).
4(o) -- Second Supplemental Indenture, dated as of December 14, 1993, between
the Company and Bankers Trust Company. (incorporated by reference to
Exhibit 4(n) to Registration Statement No. 333-01807).
4(p) -- Form of Third Supplemental Indenture, dated as of November 28, 1997,
between the Company and Bankers Trust Company.*
4(q) -- Senior Debt Indenture, dated as of October 27, 1993, between the
Company 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(r) -- Form of First Supplemental Indenture, dated as of November 28, 1997,
between the Company and The Bank of New York.*
4(s) -- Senior Debt Indenture, dated as of January 18, 1994, between the
Company and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit 4 to the Company's Current Report on Form 8-K
dated January 18, 1994).
4(t) -- Form of First Supplemental Indenture, dated as of November 28, 1997,
between the Company and The Chase Manhattan Bank.*
4(u) -- Forms of Medium-Term Registered Notes, Series H and Series I.*
4(v) -- Forms of Medium-Term Bearer Notes, Series H and Series I.*
4(w) -- Forms of Medium-Term Temporary Global Notes, Series H and Series I.*
4(x) -- Forms of Medium-Term Permanent Global Notes, Series H and Series I.*
4(y) -- Forms of Notes, Series J.*
4(z) -- Form of proposed Index Warrant Agreement for Index Warrants, with form
of proposed Index Warrant Certificate attached as an exhibit thereto,
for Index Warrants in registered form will be filed as an Exhibit to a
Current Report on Form 8-K and incorporated herein by reference.
4(aa) -- Certificate of Trust of SSBH Capital I, as amended.+
4(bb) -- Certificate of Trust of SSBH Capital II, as amended.+
4(cc) -- Certificate of Trust of SSBH Capital III, as amended.+
4(dd) -- Certificate of Trust of SSBH Capital IV.+
4(ee) -- Form of Amended and Restated Declaration of Trust for SSBH Capital I.+
4(ff) -- Form of Amended and Restated Declaration of Trust for SSBH Capital II.+
4(gg) -- Form of Amended and Restated Declaration of Trust for SSBH Capital
III.+
4(hh) -- Form of Amended and Restated Declaration of Trust for SSBH Capital IV.+
4(ii) -- Form of Indenture between the Company and The Chase Manhattan Bank, as
Trustee.+
4(jj) -- Form of Trust Preferred Security (included in Exhibit 4(cc)).
4(kk) -- Form of Common Security (included in Exhibit 4(cc)).
</TABLE>
<PAGE> 225
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ----------------------------------------------------------------------- ------------
<S> <C> <C> <C>
4(ll) -- Form of Guarantee with respect to the Trust Preferred Securities of
SSBH Capital I.+
4(mm) -- Form of Guarantee with respect to the Trust Preferred Securities of
SSBH Capital II.+
4(nn) -- Form of Guarantee with respect to the Trust Preferred Securities of
SSBH Capital III.+
4(oo) -- Form of Guarantee with respect to the Trust Preferred Securities of
SSBH Capital IV.+
4(pp) -- Form of Junior Subordinated Debt Securities (included in Exhibit 4(cc).
4(qq) -- 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(rr) -- Form of Deposit Agreement will be filed as an exhibit to a Current
Report on Form 8-K and incorporated herein by reference.
4(ss) -- 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.
(incorporated by reference to Exhibits 12.01 and 12.07 to the Company's
Current Report on Form 8-K dated November 28, 1997).
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 Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibits 5(b) and 8(a)).
23(d) -- Consent of Robert H. Mundheim, Esq. (included in Exhibit 5(a)).
24 -- 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.+
</TABLE>
<PAGE> 226
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ ----------------------------------------------------------------------- ------------
<S> <C> <C> <C>
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.+
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.
* Filed herewith.
** 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 1(a)
FORM OF
SALOMON SMITH BARNEY HOLDINGS INC.
DEBT SECURITIES
UNDERWRITING AGREEMENT BASIC PROVISIONS
December 1, 1997
To the Representative or Representatives named in the Terms Agreement referred
to below:
Salomon Smith Barney Holdings Inc., a Delaware corporation (the
"Company"), may issue and sell from time to time series of its debt securities
registered under the registration statement referred to in Section 2(a) hereof.
Such debt securities may have varying designations, denominations, currencies,
interest rates and payment dates, maturities, redemption provisions and selling
prices. The basic provisions set forth herein are intended to be incorporated by
reference in a terms agreement of the type referred to in Section l hereof
relating to the specific series of debt securities to be issued and sold by the
Company pursuant thereto (the "Securities") to the several underwriters named
therein (the "Underwriters"). Unless otherwise specified in the applicable terms
agreement, the Securities will be issued under (i) in the case of senior debt
securities, an indenture dated as of December 1, 1988, between the Company and
Citibank, N.A., as trustee (such trustee or such other replacement or successor
trustee as may be named for such senior debt securities being hereinafter
referred to as the "Senior Debt Trustee") (such indenture, as amended and
supplemented, and as it may from time to time be further amended or supplemented
by one or more indentures supplemental thereto, the "Senior Debt Indenture") or
(ii) in the case of subordinated debt securities, an indenture dated as of
December 1, 1988, between the Company and Bankers Trust Company, as trustee
(such trustee or such other replacement or successor trustee as may be named for
such senior debt securities being hereinafter referred to as the "Subordinated
Debt Trustee", and together with the Senior Debt Trustee, the "Trustee") (such
indenture, as amended and supplemented, and as it may from time to time be
further amended or supplemented by one or more indentures supplemental thereto,
the "Subordinated Debt Indenture", and together with the Senior Debt Indenture,
the "Indenture"). The Terms Agreement relating to the Securities (the "Terms
Agreement"), together with the provisions hereof incorporated therein by
reference, is herein referred to as this "Agreement." If the Underwriters
consist only of the firm or firms referred to in the Terms Agreement as
Representative or Representatives, then the terms "Underwriters" and
"Representatives," as used herein, shall each be deemed to refer to such firm or
firms.
1. TERMS AGREEMENT. The obligation of the Underwriters to
purchase, and the Company to sell, the Securities is evidenced by the Terms
Agreement delivered at the time the Company determines to sell the Securities.
The Terms Agreement specifies the Indenture under which the Securities are to be
issued, the Trustee, the firm or firms which will be Underwriters, the principal
amount of the Securities to be purchased by each Underwriter, the purchase price
to be paid by the Underwriters for the Securities, the public offering price, if
any, of the Securities, whether the Underwriters are authorized to solicit
institutional investors to purchase Securities pursuant to Delayed Delivery
Contracts, certain terms thereof and the Underwriters' compensation therefor,
and any terms of the Securities not otherwise specified in the Indenture
(including,
1
<PAGE> 2
but not limited to, designations, denominations, currencies, interest rates and
payment dates, maturity, redemption provisions and sinking fund requirements).
The Terms Agreement specifies any details of the terms of the offering that
should be reflected in a post-effective amendment to the Registration Statement
or the Prospectus Supplement (each as hereinafter defined).
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each Underwriter that:
(a) A registration statement on Form S-3 (File No.
333-38931), including a prospectus, relating to the Securities has been
prepared by the Company in conformity in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Act"), the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and
has been filed with the Commission and has become effective. Such
registration statement and prospectus may have been amended or
supplemented from time to time prior to the date of this Agreement; any
such amendment to the Registration Statement was so prepared and filed
and any such amendment has become effective. A prospectus supplement
(the "Prospectus Supplement"), including a prospectus, relating to the
Securities has been so prepared and will be filed pursuant to Rule 424
under the Act. Copies of such registration statement and prospectus,
any such amendment or supplement, the Prospectus Supplement and all
documents incorporated by reference therein which were filed with the
Commission on or prior to the date of the Terms Agreement have been
delivered to you. Such registration statement and prospectuses, as
amended or supplemented to the date of the Terms Agreement and as
supplemented by the Prospectus Supplement, are herein collectively
referred to as the "Registration Statement" and the "Prospectus",
respectively. Any references herein to the Registration Statement or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein which were filed with the Commission
on or prior to the date of the Terms Agreement, and any reference to
the terms "amend", "amendment" or supplement" with respect to the
Registration Statement or the Prospectus shall be deemed to refer to
and include the filing of any document with the Commission deemed to be
incorporated by reference therein after the date of the Terms
Agreement.
(b) The Registration Statement, at the time it became
effective, any post-effective amendment thereto, at the time it became
effective, the Registration Statement and the Prospectus, as of the
date of the Terms Agreement and at the Closing Date (as hereinafter
defined), and any amendment or supplement thereto, conformed or will
conform in all material respects to the requirements of the Act, the
Trust Indenture Act and the Rules and Regulations; and no such document
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
except that the foregoing shall not apply to (i) statements in or
omissions from any such document in reliance upon, and in con-
2
<PAGE> 3
formity with, written information furnished to the Company by or on
behalf of any Underwriter through you, specifically for use in the
preparation thereof or (ii) that part of the Registration Statement
which shall constitute the Statement of Eligibility (Form T-1) under
the Trust Indenture Act of the Trustee.
(c) The documents incorporated by reference in the
Registration Statement or the Prospectus, when they became effective or
were filed with the Commission, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
conformed, and any documents so filed and incorporated by reference
after the date of the Terms Agreement will, when they are filed with
the Commission, conform, in all material respects to the requirements
of the Act and the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES. If so authorized in
the Terms Agreement, the Underwriters may solicit offers from investors of the
types set forth in the Prospectus to purchase Securities from the Company
pursuant to delayed delivery contracts ("Delayed Delivery Contracts"). Such
contracts shall be substantially in the form of Exhibit I hereto but with such
changes therein as the Company may approve. Securities to be purchased pursuant
to Delayed Delivery Contracts are herein called "Contract Securities." When
Delayed Delivery Contracts are authorized in the Terms Agreement, the Company
will enter into a Delayed Delivery Contract in each case where a sale of
Contract Securities arranged through you has been approved by the Company but,
except as the Company may otherwise agree, such Delayed Delivery Contracts must
be for at least the minimum amount of Contract Securities set forth in the Terms
Agreement, and the aggregate amount of Contract Securities may not exceed the
amount set forth in the Terms Agreement. The Company will advise you not later
than 10:00 A.M., New York City time, on the third full business day preceding
the Closing Date (or at such later time as you may otherwise agree) of the sales
of the Contract Securities which have been so approved. You and the other
Underwriters will not have any responsibility in respect of the validity or
performance of Delayed Delivery Contracts.
The amount of Securities to be purchased by each Underwriter
as set forth in the Terms Agreement shall be reduced by an amount which shall
bear the same proportion to the total amount of Contract Securities as the
amount of Securities set forth opposite the name of such Underwriter bears to
the total amount of Securities set forth in the Terms Agreement, except to the
extent that you determine that such reduction shall be otherwise than in such
proportion and so advise the Company; provided, however, that the total amount
of Securities to be purchased by all Underwriters shall be the total amount of
Securities set forth in the Terms Agreement less the aggregate amount of
Contract Securities.
The Securities to be purchased by the Underwriters will be
delivered by the Company to you for the accounts of the several Underwriters at
the office specified in the Terms Agreement against payment of the purchase
price therefor by certified or official bank check or checks in New York
Clearing House (next day) funds (or as otherwise specified in the Terms
Agreement) payable to the order of the Company on the date and at the time
specified in the Terms Agreement, or at such other time not later than eight
full business days thereafter as you
3
<PAGE> 4
and the Company determine, such time being herein referred to as the "Closing
Date." The obligations of the Underwriters to purchase the Securities will be
several and not joint. It is understood that the Underwriters propose to offer
the Securities for sale as set forth in the Prospectus. The Securities will be
prepared in definitive form and in such authorized denominations and registered
in such names as you may request upon at least two business days' prior notice
to the Company and will be made available for checking and packaging at the
office at which they are to be delivered on the Closing Date (or such other
office as may be specified for that purpose in the Terms Agreement) at least one
business day prior to the Closing Date.
It is understood that you, acting individually and not in a
representative capacity, may (but shall not be obligated to) make payment to the
Company on behalf of any other Underwriter for Securities to be purchased by
such Underwriter. Any such payment by you shall not relieve any such Underwriter
of any of its obligations hereunder.
The Company will pay to you on the Closing Date for the
accounts of the underwriters any fee, commission or other compensation specified
in the Terms Agreement. Such payment will be made by certified or official bank
check in New York Clearing House (next day) funds.
4. COVENANTS. The Company covenants and agrees with each
Underwriter that:
(a) The Company will cause the Prospectus Supplement to
be filed pursuant to Rule 424 under the Act and will notify you
promptly of such filing. During the period in which a prospectus
relating to the Securities is required to be delivered under the Act,
the Company will notify you promptly of the time when any amendment to
the Registration Statement has become effective or any subsequent
supplement to the Prospectus has been filed and of any request by the
Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information; it will
prepare and file with the Commission, promptly upon your request, any
amendments or supplements to the Registration Statement or Prospectus,
which, in your opinion, may be necessary or advisable in connection
with the distribution of the Securities by the Underwriters; it will
file no amendment or supplement to the Registration Statement or the
Prospectus (other than any prospectus supplement relating to the
offering of securities other than the Securities registered under the
Registration Statement or any document required to be filed under the
Exchange Act which upon filing is deemed to be incorporated by
reference therein) to which you shall reasonably object by notice to
the Company after having been furnished a copy a reasonable time prior
to the filing; and it will furnish to you at or prior to the filing
thereof a copy of any such prospectus supplement or any document which
upon filing is deemed to be incorporated by reference in the
Registration Statement or Prospectus.
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of
4
<PAGE> 5
the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for
any such purpose; and it will promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such a
stop order should be issued.
(c) Within the time during which a prospectus relating to
the Securities is required to be delivered under the Act, the Company
will comply with all requirements imposed upon it by the Act, as now
and hereafter amended, and by the Rules and Regulations, as from time
to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Securities as contemplated by the
provisions hereof and the Prospectus. If during such period any event
occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances then existing, not misleading, or if
during such period it is necessary to amend or supplement the
Registration Statement or the Prospectus to comply with the Act, the
Company will promptly notify you and you will amend or supplement the
Registration Statement or the Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such
compliance.
(d) The Company will use its best efforts to qualify the
Securities for sale under the securities laws of such jurisdictions as
you reasonably designate, to maintain such qualifications in effect so
long as required for the distribution of the Securities and, if
requested by the Underwriters, to arrange for the determination of the
legality of the Securities for purchase by institutional investors,
except that the Company shall not be required in connection therewith
to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general or
unlimited service of process in any jurisdiction where it is not now so
subject.
(e) The Company will furnish to the Underwriters copies
of the Registration Statement and the Prospectus (including all
documents incorporated by reference therein), and all amendments and
supplements to the Registration Statement or the Prospectus which are
filed with the Commission during the period in which a prospectus
relating to the Securities is required to be delivered under the Act
(including all documents filed with the Commission during such period
which are deemed to be incorporated by reference therein), in each case
in such quantities as you may from time to time reasonably request.
(f) So long as any of the Securities are outstanding, the
Company agrees to furnish to you, upon your request (i) as soon as
available, copies of all reports to the Company's security holders
generally and (ii) all reports and financial statements filed by or on
behalf of the Company with the Commission or any national securities
exchange.
5
<PAGE> 6
(g) The Company will make generally available to its
security holders and to you as soon as practicable, but in any event
not later than 15 months after the end of the Company's current fiscal
quarter, an earnings statement (which need not be audited) covering a
12-month period beginning after the date upon which the Prospectus
Supplement is filed pursuant to Rule 424 under the Act, which shall
satisfy the provisions of Section ll(a) of the Act.
(h) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated,
will pay all expenses incident to the performance of its obligations
hereunder, including, without limiting the generality of the foregoing,
all costs, taxes and expenses incident to the issue and delivery of the
Securities, all fees and expenses of the Company's counsel and
accountants, and all costs and expenses incident to the preparing,
printing, filing and distributing of all documents relating to the
offering, and will reimburse the Underwriters for any expenses
(including fees and disbursements of counsel not exceeding the amount,
if any, specified in the Terms Agreement) incurred by them in
connection with the matters referred to in Section 4(d) hereof and the
preparation of memoranda relating thereto, for any filing fee of the
National Association of Securities Dealers, Inc. relating to the
Securities, and for any fees charged by investment rating agencies for
rating the Securities. If the sale of Securities provided for in this
Agreement is not consummated by reason of any failure, refusal or
inability on the part of the Company to perform any agreement on its
part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the
Company is not fulfilled, the Company will reimburse the Underwriters
for all reasonable out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in connection
with the proposed purchase and sale of the Securities.
(i) If so stated in the Terms Agreement, the Company will
use its best efforts to cause an application for the listing of the
Securities on the New York Stock Exchange or such other securities
exchange specified in the Terms Agreement and for the registration of
the Securities under the Exchange Act to become effective.
(j) The Company will not, without your consent, offer or
sell, or publicly announce its intention to offer or sell, any debt
securities denominated in the currency in which the Securities are
denominated having a maturity of more than one year (except under prior
contractual commitments or pursuant to bank credit agreements) during
the period beginning the date of the Terms Agreement and ending the
business day following the Closing Date.
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations
of the Underwriters to purchase and pay for the Securities as provided therein
shall be subject to the accuracy, as of the date of the Terms Agreement and the
Closing Date (as if made at the Closing Date), of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder, and to the following additional conditions:
6
<PAGE> 7
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for
that purpose shall have been instituted or, to the knowledge of the
Company or any Underwriter, threatened by the Commission, and any
request of the Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) shall have
been complied with to your satisfaction.
(b) From and after the execution of the Terms Agreement
and until the Closing Date, there shall not have occurred (i) any
change, or any development involving a prospective change, in or
affecting particularly the business or properties of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters, including any Representatives, materially impairs the
investment quality of the Securities; (ii) any downgrading in the
rating of the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule
436(g) under the Act); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by
Federal or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority
in interest of the Underwriters, including any Representatives, the
effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Securities.
(c) The Company shall have furnished to you the opinion,
dated the Closing Date, of the General Counsel of the Company or
counsel specified in the Terms Agreement to the effect that:
(i) The Company has been duly incorporated and
is an existing corporation in good standing under the laws of
the State of Delaware with corporate power and authority to
own its properties and conduct its business as described in
the Prospectus;
(ii) The Indenture has been duly authorized,
executed and delivered by the Company, has been duly qualified
under the Trust Indenture Act and constitutes a legal, valid
and binding instrument enforceable against the Company in
accordance with its terms (subject, as to enforcement, to
applicable bankruptcy, reorganization, insolvency, moratorium
and other similar laws affecting creditors' rights generally
and to general principles of equity regardless of whether such
enforceability is considered in a proceeding in equity or at
law);
7
<PAGE> 8
(iii) The Securities have been validly authorized
and, when duly executed by the proper officers of the Company,
duly authenticated by the Trustee and delivered as
contemplated hereby and by the Indenture (and, in the case of
any Contract Securities, as contemplated by the Delayed
Delivery Contracts with respect thereto), will be validly
issued and outstanding obligations of the Company enforceable
in accordance with their terms and entitled to the benefits of
the Indenture (subject, as to enforcement, to applicable
bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally and to
general principles of equity regardless of whether such
enforceability is considered in a proceeding in equity or at
law) and conform in all material respects to the description
thereof in the Prospectus;
(iv) The Indenture conforms in all material
respects to the description thereof in the Prospectus;
(v) The Registration Statement has become
effective under the Act and, to the best of the knowledge of
such counsel, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that purpose
have been initiated or are pending or threatened under the
Act, and the Registration Statement, as of its effective date,
the Prospectus as of the date of the Terms Agreement and the
Closing Date and any amendment or supplement thereto, as of
its date, comply as to form in all material respects with the
requirements of the Act, the Exchange Act and the Trust
Indenture Act and the applicable rules and regulations
thereunder (except that such counsel need express no opinion
as to the financial statements or other data of a financial or
statistical nature or the Statement of Eligibility (Form T-1)
under the Trust Indenture Act of the Trustee); such counsel
has no reason to believe that either such registration
statement as of its effective date or the Prospectus, as of
the date of the Terms Agreement or the Closing Date, or any
such amendment or supplement as of its date and the Closing
Date contained any untrue statement of a material fact or
omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading
(except as aforesaid); the descriptions in the Registration
Statement and Prospectus of statutes, legal and governmental
proceedings and contracts and other documents are accurate and
fairly present the information required to be shown; and such
counsel does not know of any legal or governmental proceedings
required to be described in the Prospectus which are not
described as required or of any contracts or documents of a
character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as
required; it being understood that such counsel need express
no opinion as to the financial statements or other data of a
financial or statistical nature contained in the Registration
Statement or the Prospectus;
8
<PAGE> 9
(vi) The Terms Agreement (including the
provisions of this Agreement) and any Delayed Delivery
Contracts have been duly authorized, executed and delivered by
the Company;
(vii) No consent, approval, authorization or order
of any court or governmental agency, authority or body is
required for the consummation by the Company of the
transactions contemplated herein, in any Delayed Delivery
Contract or in the Indenture, except such as have been
obtained under the Act and the Trust Indenture Act and such as
may be required under the securities or blue sky laws of any
jurisdiction in connection with the sale of the Securities;
and
(viii) The execution, delivery and performance of
the Indenture, the Terms Agreement (including the provisions
of this Agreement) and any Delayed Delivery Contracts and the
issuance and sale of the Securities and compliance with the
terms and provisions thereof will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default under any statute, any rule, regulation or order of
any governmental agency or body or any court having
jurisdiction over the Company or any material subsidiary of
the Company or any of their properties or any agreement or
instrument known to such counsel to which the Company is a
party or by which the Company is bound or to which any of the
properties of the Company is subject, or the charter or
by-laws of the Company.
(d) The Company shall have furnished you an opinion,
dated the Closing Date, of the General Counsel of the Company, to the
effect as stated in subparagraph (c)(v) above and to the further effect
that:
(i) The Company is duly qualified to do business
as a foreign corporation in good standing in all other
jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification and the failure so to qualify would have a
material adverse effect on the Company;
(ii) The execution, delivery and performance of
the Indenture, the Terms Agreement (including the provisions
of this Agreement) and any Delayed Delivery Contracts and the
issuance and sale of the Securities and compliance with the
terms and provisions thereof will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, any statute, any agreement or instrument
known to such counsel to which the Company or any subsidiary
of the Company is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject, or the charter or
by-laws of the Company or any such subsidiary; and
9
<PAGE> 10
(iii) There are no contracts, agreements or
understandings known to such counsel between the Company and
any person granting such person the right to require the
Company to include such securities in the securities
registered pursuant to the Registration Statement.
(e) You shall have received from your counsel, as
specified in the Terms Agreement, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Securities,
the Registration Statement, the Prospectus and other related matters as
you may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(f) The Company shall have furnished to you a
certificate, dated the Closing Date, of the Chairman of the Board, any
Vice Chairman, the President or any Vice President and of the principal
financial or accounting officer of the Company to the effect that the
signers of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct on and as of
the Closing Date with the same effect as if made on the
Closing Date, and the Company has complied in all material
respects with all the agreements and satisfied all the
conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness
of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or, to their
knowledge, threatened;
(iii) the Registration Statement, including any
supplements or amendments thereto, does not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading; the Prospectus, including
any supplements or amendments thereto, does not contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; and since the
effective date of the Registration Statement there has not
occurred any event concerning which information is required to
be contained in an amended or supplemented Prospectus
concerning which such information is not contained therein;
and
(iv) there have been no material adverse changes
in the general affairs of the Company and its subsidiaries
taken as a whole or in the financial position as shown by
information contained in the Registration
10
<PAGE> 11
Statement and the Prospectus, other than changes disclosed in
or contemplated by the Registration Statement and the
Prospectus.
(g) You shall have received on the Closing Date a letter
from Coopers & Lybrand, dated the Closing Date, to the effect set forth
in Exhibit II hereto, with respect to the Registration Statement and
the Prospectus at the time of the Terms Agreement.
(h) Prior to the Closing Date, the Company shall have
furnished to you such further information, certificates and documents
as you may reasonably request.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact
contained in such registration statement when it became effective, or
in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus supplement,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading and will
reimburse each Underwriter for any legal or other expenses reasonably
incurred by it in connection with investigating or defending against
such loss, claim damage, liability or action; provided, however, that
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
through you, specifically for use in the preparation thereof.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the
Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any part of such registration
statement when it became effective, or in the Registration Statement,
the Prospectus or any amendment or supplement thereto, or any related
preliminary prospectus supplement, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any
11
<PAGE> 12
Underwriter, through you, specifically for use in the preparation
thereof, and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending against any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party, and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent that it shall wish, jointly with any
other indemnifying party, similarly notified to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to
the indemnified party), and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 6
is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above, (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other from the offering of the
Securities, or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Securities (before
deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus
Supplement. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent
12
<PAGE> 13
such untrue statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant
to this subsection (d) were to be determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in the first sentence of this
subsection (d). The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim (which
shall be limited as provided in subsection (c) above if the
indemnifying party has assumed the defense of any such action in
accordance with the provisions thereof) which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of
the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute shall be several in
proportion to their respective underwriting obligations and not joint.
Promptly after receipt by an indemnified party under this subsection
(d) of the notice of the commencement of any action against such party
in respect of which a claim for contribution may be made against an
indemnifying party under this subsection (d), such indemnified party
shall notify the indemnifying party in writing of the commencement
thereof if the notice specified in subsection (c) above has not been
given with respect to such action; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may
have to any indemnified party otherwise than under this subsection (d).
(e) The obligations of the Company under this Section 6
shall be in addition to any liability which the Company may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the
Act or the Exchange Act; and the obligations of the Underwriters under
this Section 6 shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each director of the Company (including
any person who, with his consent, is named in the Registration
Statement as about to become a director of the Company), to each
officer of the Company who has signed the Registration Statement and to
each person, if any, who controls the Company within the meaning of the
Act or the Exchange Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters contained in Section 6 hereof,
13
<PAGE> 14
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling
persons, or the Company or any of its officers, directors or any controlling
persons, and shall survive delivery of and payment for the Securities.
8. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter or Underwriters shall fail to take
up and pay for the principal amount of Securities agreed by such
Underwriter or Underwriters to be purchased hereunder, upon tender of
such Securities in accordance with the terms hereof, and the principal
amount of Securities not purchased does not aggregate more than 10% of
the total principal amount of the Securities set forth in the Terms
Agreement, the remaining Underwriters shall be obligated to take up and
pay for (in proportion to the respective underwriting obligations
hereunder as set forth in the Terms Agreement, except as may otherwise
be determined by you) the Securities which the withdrawing or
defaulting Underwriters agreed but failed to purchase.
(b) If any Underwriter or Underwriters shall fail to take
up and pay for the principal amount of Securities agreed by such
Underwriter or Underwriters to be purchased hereunder, upon tender of
such Securities in accordance with the terms hereof, and the principal
amount of Securities not purchased aggregates more than 10% of the
total principal amount of Securities set forth in the Terms Agreement
hereto, and arrangements satisfactory to you and the Company for the
purchase of such Securities by other persons are not made within 36
hours thereafter, this Agreement shall terminate. In the event of a
default by any Underwriter as set forth in this Section 8, the Closing
Date shall be postponed for such period, not to exceed seven full
business days, as you shall determine in order that the required
changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. In the event of any
such termination, the Company shall not be under any liability to any
Underwriter (except to the extent provided in Section 4(h) and Section
6 hereof) nor shall any Underwriter (other than an Underwriter who
shall have failed, otherwise than for some reason permitted under this
Agreement, to purchase the principal amount of Securities agreed by
such Underwriter to be purchased under this Agreement) be under any
liability to the Company (except to the extent provided in Section 6
hereof). Nothing contained in this Agreement shall relieve any
defaulting Underwriter of its liability, if any, to the Company and any
non-defaulting Underwriter for damages occasioned by its default
hereunder.
9. TERMINATION. You shall have the right to terminate this
Agreement by giving notice as hereinafter specified at any time at or prior to
the Closing Date if (i) the Company shall have failed, refused or been unable,
at or prior to the Closing Date, to perform, in any material respect, any
agreement on its part to be performed hereunder, or (ii) any other condition of
the Underwriters' obligations is not fulfilled in all material respects. Any
such termination shall be without liability of any party to any other party
except that the provisions of Section 4(h) and Section 6 shall at all times be
effective. If you elect to terminate this Agreement as provided in
14
<PAGE> 15
this Section, the Company shall be notified promptly by you by telephone or
telegram, confirmed by letter.
10. NOTICES. All notices or communications hereunder shall be in
writing and, if sent to you, shall be mailed, delivered or telegraphed and
confirmed to you at your address set forth for that purpose in the Terms
Agreement, or, if sent to the Company shall be mailed, delivered or telegraphed
and confirmed to the Company, Salomon Smith Barney Holdings Inc., at 388
Greenwich Street, New York, New York 10013, Attention: Treasurer. Notices to any
Underwriter pursuant to Section 6 hereof shall be mailed, delivered or
telegraphed and confirmed to such Underwriters address furnished to the Company
in writing for the purpose of communications hereunder. Any party to this
Agreement may change such address for notices by sending to the parties to this
Agreement written notice of a new address for such purpose.
11. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Company and the Underwriters and their respective successors
and the controlling persons, officers and directors referred to in Section 6
hereof, and no other person shall have any right or obligation hereunder.
In all dealings with the Company under this Agreement, you shall act on behalf
of each of the several Underwriters, and any action under this Agreement taken
by you or by any one of you designated in the Terms Agreement will be binding
upon all the Underwriters.
12. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13. COUNTERPARTS. The Terms Agreement may be executed by one or
more of you and the Company in one or more counterparts, each of which shall
constitute an original and all of which taken together shall constitute one and
the same Agreement.
15
<PAGE> 16
SALOMON SMITH BARNEY HOLDINGS INC.
[Insert specific title of securities]
DELAYED DELIVERY CONTRACT
[Insert date of initial public offering]*
SALOMON SMITH BARNEY HOLDINGS INC.
c/o*
Gentlemen:
The undersigned hereby agrees to purchase from Salomon Smith Barney
Holdings Inc. (hereinafter called the "Company"), and the Company agrees to
sell to the undersigned, [if one delayed closing, insert: as of the date
hereof, for delivery on 19_ ("Delivery Date")]
[$]_________________________
principal amount of the Company's [title of Securities] (the "Securities"),
offered by the Company's Prospectus relating thereto, receipt of a copy of which
is hereby acknowledged, at a purchase price of ___% of the principal amount
thereof plus accrued interest, if any, and on the further terms and conditions
set forth in this contract.
[If two or more delayed closings, insert the following:
The undersigned will purchase from the Company, as of the date hereof, for
delivery on the dates set forth below, Securities in the principal amounts set
forth below:
Delivery Date Principal Amount
_____________ ________________
_____________ ________________
Each of such delivery dates is hereinafter referred to as a [Delivery Date.]
Payment for the securities which the undersigned has agreed to purchase for
delivery on [the] [each] Delivery Date shall be made to the Company or its order
by certified or official bank check in New York Clearing House (next day) funds
(or as otherwise specified in the Terms Agreement) at the office of __________
at [A.][P.]M.,__________ time, on such Delivery Date upon delivery to the
undersigned of the Securities to be purchased by the undersigned for delivery on
such Delivery Date in definitive form and in such denominations and registered
in such names as the undersigned may designate by written or telegraphic
communications addressed to the Company not less than five full business days
prior to such Delivery Date. If no designation is received, the Securities will
be registered in the name of the undersigned and issued in the de-
* To be completed when the Terms Agreement is executed by the parties thereto.
16
<PAGE> 17
nomination equal to the aggregate principal amount of Securities to be
purchased by the undersigned on such Delivery Date.
The obligation of the undersigned to take delivery of, and make payment for,
Securities on [the] [each] Delivery Date shall be subject only to the conditions
that (i) investment in the Securities shall not at such Delivery Date be
prohibited under the laws of any jurisdiction in the United States to which the
undersigned is subject, which investment the undersigned represents is not
prohibited on the date hereof, and (ii) the Company shall have delivered to the
Underwriters the principal amount of the Securities to be purchased by the
Underwriters the principal amount of the Securities to be purchased by them
pursuant to the Underwriting Agreement referred to in the Prospectus mentioned
above and received payment therefor.
Promptly after completion of the sale to the Underwriters, the Company will mail
or deliver to the undersigned at its address set forth below notice to such
effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
This contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
It is understood that the acceptance of this contract and any other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first-come, first-served basis. If this contract is
acceptable to the Company, it is requested that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned when such counterpart is mailed or
delivered.
THIS CONTRACT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
Very truly yours,
-------------------------
(Name of Purchaser)
By:
-------------------------
(Title of Signatory)
-------------------------
-------------------------
(Address of Purchaser)
Accepted as of the above date.
SALOMON SMITH BARNEY HOLDINGS INC.
By:
-------------------------------
Name:
Title:
17
<PAGE> 18
EXHIBIT II
COMFORT LETTER PROVISIONS
1. They are independent auditors with respect to the Company
within the meaning of the Act and the applicable published rules and
regulations thereunder.
2. In their opinion, the consolidated financial statements and
financial statement schedules audited by them and incorporated by
reference in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Securities Exchange Act of 1934 and the related published
rules and regulations.
3. They have read the minutes of the meetings of the board of
directors of the Company and its subsidiaries as set forth in the
minute books of all such meetings through the date as set forth
therein.
a. With respect to the unaudited financial statements,
if any, included or incorporated by reference in the
Registration Statement, they have
(i) Performed the procedures specified by the
American Institute of Certified Public Accountants for a
review of interim financial statement information as described
in SAS No. 71, Interim Financial Information, on the unaudited
condensed consolidated financial statements for these periods,
described in 3.
(ii) Inquired of certain officials of the Company
who have responsibility for financial statement and accounting
matters whether the unaudited condensed consolidated financial
statements referred to in a(i) comply as to form in all
material respects with the applicable accounting requirements
of the Securities Exchange Act of 1934 as it applies to Form
10-Q and the related published rules and regulations.
4. Nothing came to their attention as a result of the foregoing
procedures, however, that caused them to believe that--
a. (i) Any material modifications should be made to
the unaudited condensed consolidated financial statements
described in 3, incorporated by reference in the Registration
Statement, for them to be in conformity with generally
accepted accounting principles.
(ii) The unaudited condensed consolidated
financial statements described in 3 do not comply as to form
in all material respects with the applicable accounting
requirements of the Securities Exchange Act of 1934 as it
applies to Form 10-Q and the related published rules and
regulations.
18
<PAGE> 19
b. (i) At the date of the most recent interim period
financial statement, there was any change in the capital
stock, increase in long-term debt, or any decreases in the
consolidated net current assets or stockholders' equity of the
consolidated companies as compared with amounts shown in the
most recent quarter end unaudited condensed financial balance
sheet incorporated by reference in the Registration Statement
or (ii) for the period from the most recent quarter end to a
subsequent specified date not more than five business days
prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year,
in consolidated revenues, or income before extraordinary
items, except in all instances for changes, increases, or
decreases that the Registration Statement discloses have
occurred or may occur.
5. In addition to the procedures performed above, they have
carried out certain other specified procedures, not constituting an
audit, with respect to certain dollar amounts, percentages and ratios
which are included in the Prospectus and which are specified by the
Underwriters and have found such dollar amounts, percentages and ratios
to be in agreement, except as noted in such letter, with the relevant
accounting, financial and other records of the Company and its
subsidiaries identified in such letter.
II-2
19
<PAGE> 1
Exhibit 4a
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SALOMON SMITH BARNEY HOLDINGS INC.
The undersigned, Robert H. Mundheim, certifies that he is the
General Counsel and Secretary of Salomon Smith Barney Holdings Inc, a
corporation organized and existing under the laws of the State of Delaware (the
"Corporation"), and does hereby further certify as follows:
(1) The name of the Corporation is Salomon Smith Barney
Holdings Inc.
(2) The name under which the Corporation was originally
incorporated was Engelhard Industries, Inc. and the original Certificate of
Incorporation of the Corporation was filed with the Secretary of State of the
State of Delaware on March 14, 1960.
(3) This Amended and Restated Certificate of Incorporation was
duly adopted by and in accordance with the provisions of Sections 242 and 245 of
the General Corporation Law of the State of Delaware.
(4) The text of the Certificate of Incorporation of the
Corporation is amended and restated to read in its entirety, as follows:
FIRST: The name of the corporation is Salomon Smith Barney
Holdings Inc. (the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code (the "GCL").
FOURTH: A. (i) The total number of shares of Common Stock
which the Corporation shall have authority to issue is One Thousand (1,000)
shares of Common Stock having a par value of one cent ($.01) per share. The
total number of shares of Preferred Stock which the Corporation shall have the
authority to issue is Ten Million (10,000,000) shares having a par value of one
dollar ($1.00) per share.
(ii) No stockholder shall have any rights to
cumulate his votes in the election of directors. No stockholder shall be
entitled to any preemptive rights in respect of any securities of the
Corporation.
B. The Board of Directors is authorized, subject to
limitations prescribed by law and the provisions of this Article FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series,
<PAGE> 2
and to fix the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof. The
authority of the Board of Directors with respect to each series shall include,
but not be limited to, determination of the following:
(i) The number of shares constituting that series and the
distinctive designation of that series.
(ii) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of that
series:
(iii) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of the
voting rights;
(iv) Whether that series shall have conversion or exchange
privileges, and, if so, the terms and conditions of such conversion or exchange,
including provision for adjustment of the conversion or exchange rate in such
events as the Board of Directors shall determine:
(v) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the manner of selecting shares for redemption if less than all shares are to be
redeemed, the date or dates upon or after which they shall be redeemable, and
the amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(vii) The right of the shares of that series to the benefit of
conditions and restrictions upon the creation of indebtedness of the Corporation
or any subsidiary, upon the issue of any additional stock (including additional
shares of such series or any other series) and upon the payment of dividends or
the making of other distributions on, and the purchase, redemption or other
acquisition by the Corporation or any subsidiary of any outstanding stock of the
Corporation;
(viii) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
(ix) Any other relative, participating, optional or other
special rights, qualifications, limitations or restrictions of that series.
C. Dividends on outstanding shares of Preferred Stock shall be
paid, or declared and set apart for payment, before any dividends shall be paid
or declared and set apart for payment on outstanding shares of Common Stock. If
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the assets available for distribution to holders of shares of
Preferred Stock of all series shall be insufficient to pay such holders the full
preferential amount to which they are entitled, then such assets shall be
distributed ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential amounts (including unpaid cumulative
dividends, if any) payable with respect thereto.
D. Shares of any series of Preferred Stock which have been
redeemed
2
<PAGE> 3
(whether through the operation of a sinking fund or otherwise) or which, if
convertible or exchangeable, have been converted into or exchanged for shares of
stock of any other class or classes shall have the status of authorized and
unissued shares of Preferred Stock of the same series and may be reissued as a
part of the series of which they were originally a part or may be reclassified
and reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of any other
series of Preferred Stock, all subject to the conditions and the restrictions on
issuance set forth in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of Preferred Stock.
E. Subject to the provisions of any applicable law or except
as otherwise provided by the resolution or resolutions providing for the issue
of any series of Preferred Stock, the holders of outstanding shares of Common
Stock shall exclusively possess voting power for the election of directors and
for all other purposes, each holder of record of shares of Common Stock being
entitled to one vote for each share of Common Stock standing in his name on the
books of the Corporation.
F. Except as otherwise provided by the resolution or
resolutions providing for the issue of any series of Preferred Stock, after
payment shall have been made to the holders of Preferred Stock of the full
amount of dividends to which they shall be entitled pursuant to the resolution
or resolutions providing for the issue of any series of Preferred Stock, the
holders of Common Stock shall be entitled, to the exclusion of the holders of
Preferred Stock of any and all series, to receive such dividends as from time to
time may be declared by the Board of Directors.
G. Except as otherwise provided by the resolution or
resolutions providing for the issue of any series of Preferred Stock, in the
event of any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, after payment shall have been made to the holders of
Preferred Stock of the full amount to which they shall be entitled pursuant to
the resolution or resolutions providing for the issue of any series of Preferred
Stock, the holders of Common Stock shall be entitled, to the exclusion of the
holders of Preferred Stock of any and all series, to share ratably according to
the number of shares of Common Stock held by them, in all remaining assets of
the Corporation available for distribution.
FIFTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(1) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless the
By-Laws so provide.
(4) No director shall be personally liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (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) pursuant to Section 174 of the GCL or (iv) for any transaction from
which
3
<PAGE> 4
the director derived an improper personal benefit. Any repeal or modification of
this Article FIFTH by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification with respect to acts or omissions occurring
prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the GCL,
this Restated Certificate of Incorporation, and any By-Laws adopted by the
stockholders; provided, however, that no By-Laws hereafter adopted by the
stockholders shall invalidate any prior act of the directors which would have
been valid if such By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without
the State of Delaware, as the By-Laws may provide. The books of the Corporation
may be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed by a duly authorized officer this ____
day of December, 1997.
SALOMON SMITH BARNEY
HOLDINGS INC.
By_________________________
Name: Robert H. Mundheim
Title: General Counsel and Secretary
4
<PAGE> 1
Exhibit 4b
BY-LAWS
OF
SALOMON SMITH BARNEY HOLDINGS INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
Section 2. Annual Meetings. The Annual Meetings of
Stockholders for the election of directors shall be held on such date and at
such time as shall be designated from time to time by the Board of Directors.
Any other proper business may be transacted at the Annual Meeting of
Stockholders.
Section 3. Special Meetings. Unless otherwise required by law
or by the certificate of incorporation of the Corporation, as amended and
restated from time to time (the
<PAGE> 2
"Certificate of Incorporation"), Special Meetings of Stockholders, for any
purpose or purposes, may be called by the Chairman of the Board. A special
meeting shall be called at the request in writing of a majority of the Board of
Directors or of the Executive Committee, or by the vote of the Board of
Directors or of the Executive Committee. If the entire Board of Directors
becomes vacant, any Stockholder may call a special meeting in the same manner
that the Chairman of the Board may call such meeting, and directors for the
unexpired term may be elected at said special meeting in the manner provided for
their election at annual meetings.
Section 4. Notice. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise permitted by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
Section 5. Adjournments. Any meeting of the stockholders may
be adjourned from time to time, not exceeding sixty days in all, to reconvene at
the same or some other place, and notice need not be given of any such adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Corporation may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Section 6. Quorum. Unless otherwise required by law or the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to
2
<PAGE> 3
vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business. A
quorum, once established, shall not be broken by the withdrawal of enough votes
to leave less than a quorum. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, in the manner provided in Section 5,
until a quorum shall be present or represented.
Section 7. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these By-laws, any question brought before any
meeting of stockholders, other than the election of directors, shall be decided
by the vote of the holders of a majority of the total number of votes of the
capital stock represented and entitled to vote thereat, voting as a single
class. Unless otherwise provided in the Certificate of Incorporation, each
stockholder represented at a meeting of stockholders shall be entitled to cast
one vote for each share of the capital stock entitled to vote thereat held by
such stockholder. Such votes may be cast in person or by proxy but no proxy
shall be voted on or after three years from its date, unless such proxy provides
for a longer period. The Board of Directors, in its discretion, or the officer
of the Corporation presiding at a meeting of stockholders, in such officer's
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
Section 8. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
3
<PAGE> 4
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the Corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. Every written consent shall bear the date of signature of
each stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days of
the earliest dated consent delivered in the manner required by this Section 8 to
the Corporation, written consents signed by a sufficient number of holders to
take action are delivered to the Corporation by delivery to its registered
office in the state of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing and who, if the
action had been taken at a meeting, would have been entitled to notice of the
meeting if the record date for such meeting had been the date that written
consents signed by a sufficient number of holders to take the action were
delivered to the Corporation as provided above in this section.
Section 9. List of Stockholders Entitled to Vote. The officer
of the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the
4
<PAGE> 5
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is present.
Section 10. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 9 of this Article II or the books
of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 11. Conduct of Meetings. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to do all
such acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) the determination of when the polls
shall open and close for any given matter to be voted on at the meeting; (iii)
rules and procedures for maintaining order at the meeting and the safety of
those present; (iv) limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
5
<PAGE> 6
determine; (v) restrictions on entry to the meeting after the time fixed for the
commencement thereof; and (vi) limitations on the time allotted to questions or
comments by participants.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of
Directors shall consist of not less than two nor more than twenty members, the
exact number of which shall initially be fixed by the Incorporator and
thereafter from time to time by affirmative vote of the entire Board of
Directors or by the stockholders of the Corporation. Except as provided in
Section 2 of this Article III, directors shall be elected by a plurality of the
votes cast at the Annual Meetings of Stockholders and each director so elected
shall hold office until the next Annual Meeting of Stockholders and until such
director's successor is duly elected and qualified, or until such director's
earlier death, resignation or removal. Any director may resign at any time upon
written notice to the Corporation. Directors need not be stockholders.
Section 2. Vacancies. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors or otherwise may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and qualified,
or until their earlier death, resignation or removal. Any vacancy on the Board
of Directors that results from an increase in the number of directors may be
filled by a majority of the Board of Directors then in office, provided that a
quorum is present.
Section 3. Duties and Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such
6
<PAGE> 7
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these By-Laws required to
be exercised or done by the stockholders.
Section 4. Meetings. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Regular meetings of the Board of Directors may be held without notice at such
time and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Board, the Executive Committee or the Chairman of the Board. Notice thereof
stating the place, date and hour of the meeting shall be given to each director
personally either orally, by telephone or in writing on twenty-four (24) hours'
notice, or on such shorter notice as the person or persons calling such meeting
may deem necessary or appropriate in the circumstances.
Section 5. Quorum. Except as otherwise required by law or the
Certificate of Incorporation, at all meetings of the Board of Directors,
one-third of the total number of directors shall constitute a quorum for the
transaction of business. Vote of a majority of the directors present at a
meeting at which there is a quorum shall be the act of the Board of Directors.
If a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting of the time and place of the
adjourned meeting, until a quorum shall be present.
Section 6. Actions by Written Consent. Unless otherwise
provided in the Certificate of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
7
<PAGE> 8
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 7 shall constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a designation
by the Board of Directors of an alternate member to replace the absent or
disqualified member, the member or members thereof present at any meeting and
not disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any absent or disqualified member. Any committee,
to the extent permitted by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Each committee shall keep regular minutes and report to the
Board of Directors when required.
8
<PAGE> 9
Section 9. Executive Committee. The Board of Directors may
designate an Executive Committee of not more than ten nor fewer than two persons
from among their own number. One-third of the members of the Executive Committee
shall constitute a quorum except when the Executive Committee consists of two,
then one member shall constitute a quorum. Any vacancy on the Executive
Committee shall be filled by the Board of Directors.
The Executive Committee shall exercise all powers of the Board of
Directors between the meetings of said Board except as otherwise provided in the
General Corporation Law of the State of Delaware. No action of the Executive
Committee shall become operative unless it has the affirmative vote of at least
a majority of the members of the Executive Committee present and voting.
Regular meetings of the Executive Committee shall be held without
notice at such time and place as may be determined from time to time by
resolution of the Executive Committee. Special meetings of the Executive
Committee may be called at any time upon one day's notice, or other reasonable
notice, either personally, orally, by telephone or in writing, by the Chairman
of the Board, the Chairman of the Executive Committee, or by any two members of
the Executive Committee.
In the absence of both the Secretary and an Assistant Secretary, the
Executive Committee shall appoint a secretary who shall keep regular minutes of
the actions of the said Committee and report the same to the Board of Directors,
which thereupon shall take action thereon.
The Board of Directors may designate from the members of the Executive
Committee a Chairman of the Executive Committee. If the Board of Directors
should not make such designation, the Executive Committee may designate a
Chairman of the Executive Committee.
9
<PAGE> 10
Section 10. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director, payable in cash or securities. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
Section 11. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for this
reason, or solely because the director or officer is present at or participates
in the meeting of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because the director's or officer's vote
is counted for such purpose if (i) the material facts as to the director's or
officer's relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the Board
of Directors or committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (ii) the material
facts as to the director's or officer's relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or ratified
by the Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a
10
<PAGE> 11
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall include a Secretary and a Treasurer.
The Board of Directors, in its discretion, also may choose a Chairman of the
Board of Directors, or Co-Chairmen of the Board of Directors, each of whom must
be a director, a President and one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers and other officers. Any number of offices may
be held by the same person, unless otherwise prohibited by law or the
Certificate of Incorporation. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the Chairman or
Co-Chairmen of the Board of Directors, need such officers be directors of the
Corporation.
Section 2. Election. The Board of Directors, at its first
meeting held after each Annual Meeting of Stockholders (or action by written
consent of stockholders in lieu of the Annual Meeting of Stockholders), shall
elect the officers of the Corporation who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors; and all officers of the
Corporation shall hold office until their successors are chosen and qualified,
or until their earlier death, resignation or removal. Any officer elected by the
Board of Directors may be removed at any time by the affirmative vote of the
Board of Directors. Any vacancy occurring in any office of the Corporation shall
be filled by the Board of Directors.
11
<PAGE> 12
Section 3. Voting Securities Owned by the Corporation. Powers
of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do so by the Board of Directors and
any such officer may, in the name of and on behalf of the Corporation, take all
such action as any such officer may deem advisable to vote in person or by proxy
at any meeting of security holders of any corporation in which the Corporation
may own securities and at any such meeting shall possess and may exercise any
and all rights and power incident to the ownership of such securities and which,
as the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board. The Chairman of the Board of
Directors shall preside at all meetings of the stockholders and of the Board of
Directors. The Chairman of the Board shall be the Chief Executive Officer of the
Corporation, unless the Board of Directors designates the President as the Chief
Executive Officer. If the Board of Directors shall appoint Co-Chairmen of the
Board, each such Co-Chairman shall also be Co-Chief Executive Officer of the
Corporation, unless the Board of Directors designates the President as the Chief
Executive Officer, and each Co-Chairman, acting alone, shall have all of the
powers of the Chairman of the Board. Except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, or if there be no
President, the Chairman of the Board of Directors shall exercise all the powers
and discharge all the duties of the President. The Chairman
12
<PAGE> 13
of the Board of Directors shall also perform such other duties and may exercise
such other powers as may from time to time be assigned by these By-Laws or by
the Board of Directors.
Section 5. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, have general supervision of the business of the Corporation
and shall see that all orders and resolutions of the Board of Directors are
carried into effect. The President shall execute all bonds, mortgages, contracts
and other instruments of the Corporation requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be otherwise signed
and executed and except that the other officers of the Corporation may sign and
execute documents when so authorized by these By-Laws, the Board of Directors or
the President. In the absence or disability of the Chairman of the Board of
Directors, or if there be none, the President shall preside at all meetings of
the stockholders and the Board of Directors. If there be no Chairman of the
Board of Directors, unless the Board of Directors shall otherwise designate, the
President shall be the Chief Executive Officer of the Corporation. The President
shall also perform such other duties and may exercise such other powers as may
from time to time be assigned to such officer by these By-Laws or by the Board
of Directors.
Section 6. Vice Presidents. At the request of the President or
in the President's absence or in the event of the President's inability or
refusal to act (and if there be no Chairman of the Board of Directors), the Vice
President, or the Vice Presidents if there are more than one (in the order
designated by the Board of Directors), shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Each Vice President shall perform such
other duties and have such other powers as the Board of Directors from time to
time may prescribe. If there be no Chairman of the Board of Directors and no
Vice President, the Board of
13
<PAGE> 14
Directors shall designate the officer of the Corporation who, in the absence of
the President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.
Section 7. Secretary. If requested by the Board of Directors,
the Secretary shall attend all meetings of the Board of Directors and all
meetings of stockholders and record all the proceedings thereat in a book or
books to be kept for that purpose; the Secretary shall also perform like duties
for committees of the Board of Directors when required. The Secretary shall
give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors, the Chairman of the Board of
Directors or the President. If the Secretary shall be unable or shall refuse to
cause to be given notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors, the Chairman of the Board of Directors or the
President may choose another officer to cause such notice to be given. The
Secretary shall have custody of the seal of the Corporation and the Secretary or
any Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant Secretary.
The Board of Directors may give general authority to any other officer to affix
the seal of the Corporation and to attest to the affixing by such officer's
signature. The Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law to be kept or filed
are properly kept or filed, as the case may be.
14
<PAGE> 15
Section 8. Treasurer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all transactions as Treasurer and of the financial condition of the Corporation.
Section 9. Assistant Secretaries. Assistant Secretaries, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to act, shall
perform the duties of the Secretary, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of the Treasurer's disability or refusal to act, shall
perform the duties of the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Treasurer.
Section 11. Other Officers. Such other officers as the Board
of Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to
15
<PAGE> 16
them by the Board of Directors. Any Vice Chairman, the Chief Administrative
Officer, the General Counsel or the Chief Financial Officer shall have the same
authority to bind the Corporation as the President, unless otherwise specified
by the Board of Directors. The Board of Directors may delegate to any other
officer of the Corporation the power to choose such other officers and to
prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by such stockholder in the Corporation.
Section 2. Signatures. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
Section 3. Lost Certificates. The Board of Directors may
direct a new certificate to be issued in place of any certificate theretofore
issued by the Corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the
16
<PAGE> 17
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or the owner's legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed or the issuance of such new certificate.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws. Transfers of
stock shall be made on the books of the Corporation only by the person named in
the certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled before
a new certificate shall be issued. No transfer of stock shall be valid as
against the Corporation for any purpose until it shall have been entered in the
stock records of the Corporation by an entry showing from and to whom
transferred.
Section 5. Record Date.
(a) In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the
17
<PAGE> 18
meeting; providing, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which record date shall not be more than ten days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in this State,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of Directors
is required by law, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the day on which the Board of Directors adopts the resolutions
taking such prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date,
18
<PAGE> 19
which record date shall not precede the date upon which the resolution fixing
the record date is adopted, and which record date shall be not more than sixty
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
Section 6. Record Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise required by
law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
19
<PAGE> 20
Section 2. Waivers of Notice. Whenever any notice is required
by law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto. Attendance of a
person at a meeting, present in person or represented by proxy, shall constitute
a waiver of notice of such meeting, except where the person attends the meeting
for the express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the requirements of the DGCL and the provisions of the
Certificate of Incorporation, if any, may be declared by the Board of Directors
or the Executive Committee at any regular or special meeting of the Board of
Directors or Executive Committee (or any action by written consent in lieu
thereof in accordance with Section 6 of Article III hereof), and may be paid in
cash, in property, or in shares of the Corporation's capital stock. Before
payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, deems proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for any proper purpose, and the
Board of Directors may modify or abolish any such reserve.
20
<PAGE> 21
Section 2. Disbursements. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall end on December 31.
Section 4. Corporate Seal. The corporate seal shall be such
seal as is designated as such by the Board of Directors of the Corporation. The
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or
Proceedings. Subject to Section 3 of this Article VIII, the Corporation shall
indemnify, to the fullest extent permissible under the General Corporation Law
of the State of Delaware, or the indemnification provisions of any successor
statute, 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 such person is or was a
director or officer of the Corporation, or is or was a director or officer of
the Corporation serving at the request of the Corporation as a director or
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts
21
<PAGE> 22
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding.
Section 2. Good Faith Reliance. Each director and officer and
each member of any committee designated by the Board of Directors shall, in the
performance of his or her duties, be fully protected in relying in good faith on
the records or books of account of the Corporation or another enterprise, or on
information supplied to such person by the officers of the Corporation or
another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 2 shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent.
Section 3. Expenses Payable in Advance. Expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Article VIII.
Section 4. Nonexclusivity of Indemnification and Advancement
of Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation, any By-Law,
22
<PAGE> 23
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity while holding such office, it being the policy of the Corporation that
indemnification of the persons specified in Section 1 of this Article VIII shall
be made to the fullest extent permitted by law. The provisions of this Article
VIII shall not be deemed to preclude the indemnification of any person who is
not specified in Section 1 of this Article VIII but whom the Corporation has the
power or obligation to indemnify under the provisions of the General Corporation
Law of the State of Delaware, or otherwise.
Section 5. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power or
the obligation to indemnify such person against such liability under the
provisions of this Article VIII.
Section 6. Certain Definitions. For purposes of this Article
VIII, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
23
<PAGE> 24
the same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
Section 7. Survival of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 8. Indemnification of Employees and Agents. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of expenses
to employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
24
<PAGE> 25
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended
or repealed, in whole or in part, or new By-Laws may be adopted, by the
stockholders or by the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new By-Laws be contained in
the notice of such meeting of stockholders or Board of Directors as the case may
be. All such amendments must be approved by either the holders of at least
two-thirds of the outstanding capital stock entitled to vote thereon or by an
affirmative vote of at least two-thirds of the entire Board of Directors then in
office.
Section 2. Entire Board of Directors. As used in this Article
IX and in these By-Laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would have if there were no
vacancies.
* * *
25
<PAGE> 1
Exhibit 4(l)
================================================================================
SALOMON SMITH BARNEY HOLDINGS INC.
TO
CITIBANK, N.A.
Trustee
--------------------------------------------
TENTH SUPPLEMENTAL INDENTURE
Dated as of November 28, 1997
Supplemental to Indenture dated as of December 1, 1988
================================================================================
<PAGE> 2
This Tenth Supplemental Indenture (the "Supplemental Indenture") is
made and entered into as of November 28, 1997 between Salomon Smith Barney
Holdings Inc., a Delaware corporation formerly known as Salomon Inc (the
"Company"), and Citibank, N.A., a national banking association (the "Trustee"),
as Trustee under the Indenture dated as of December 1, 1988, as amended by the
First Supplemental Indenture dated September 7, 1990, the Second Supplemental
Indenture thereto dated June 12, 1991, the Third Supplemental Indenture thereto
dated July 1, 1992, the Fourth Supplemental Indenture thereto dated October 29,
1992, the Fifth Supplemental Indenture thereto dated December 14, 1993, the
Sixth Supplemental Indenture thereto dated December 29, 1994, the Seventh
Supplemental Indenture thereto dated February 1, 1996, the Eighth Supplemental
Indenture thereto dated May 8, 1996, and the Ninth Supplemental Indenture
thereto dated November 20, 1996 between the Company and the Trustee (as amended
to the date hereof, the "Indenture").
WHEREAS, the parties hereto have previously entered into the
Indenture to provide for the issuance and sale by the Company from time to time
of its Senior Debt Securities (the "Debt Securities"); and
WHEREAS, Sections 1101 (2) and (11) of the Indenture provide that
the Company, when authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into an indenture supplemental to the
Indenture, in form satisfactory to the Trustee, without the consent of any
holder of Debt Securities, (a) to add to the covenants of the Company, for the
benefit of all or any series of Debt Securities and the Coupons, if any,
pertaining thereto (and, if such covenants are to be for the benefit of less
than all such series, stating that such covenants are expressly being included
solely for the benefit of such series) and (b) to cure any ambiguity, to correct
or supplement any provision therein that may be defective or inconsistent with
any other provision therein, or to make any other provisions with respect to
matters or questions under the Indenture that shall not be inconsistent with any
provision of the Indenture, provided that such other provisions shall not
adversely affect the interests of the Holders of Outstanding Debt Securities or
Coupons, if any, of any series created prior to the execution of such
supplemental indenture in any material respect; and
WHEREAS, the Company has changed its name from "Salomon Inc" to
"Salomon Smith Barney Holdings Inc."; and
WHEREAS, Smith Barney Inc. is a Subsidiary of the Company, and the
Company wishes to amend the definition of "Restricted Subsidiary" to include
Smith Barney Inc.;
WHEREAS, the Company, pursuant to the foregoing authority, proposes
in and by this Supplemental Indenture to amend the Indenture in certain
respects; and
WHEREAS the Company has duly authorized the execution and delivery
of this Supplemental Indenture, and all things necessary have been done to make
this Supplemental Indenture a valid agreement of the Company, in accordance with
its terms:
<PAGE> 3
NOW, THEREFORE the Company and the Trustee hereby agree as follows:
ARTICLE I
The definition of "Restricted Subsidiary" in Section 101 is amended
and restated as follows:
"Restricted Subsidiary" means each of Salomon Brothers Inc, Smith
Barney Inc., and any Subsidiary which owns or may hereafter own, directly or
indirectly, any of the voting stock of, or succeeds to any substantial part of
the business now conducted by, any of such corporations. For the purposes of
this definition and the definition of "Subsidiary", "voting stock" means stock
having voting power for the election of directors, whether at all times or only
for so long as no senior class of stock has such voting power by reason of any
contingency.
ARTICLE II
In the first paragraph of the Indenture, the words "SALOMON INC"
shall be replaced with "SALOMON SMITH BARNEY HOLDINGS INC."
ARTICLE III
Except as amended as set forth above, the Indenture is in all
respects ratified and confirmed and the terms, provisions and conditions thereof
shall remain in full force and effect. This Supplemental Indenture shall take
effect on the date hereof.
ARTICLE IV
This Supplemental Indenture shall be deemed to be a contract made
and to be performed entirely in the State of New York, and for all purposes
shall be governed and construed in accordance with the laws of said State
without regard to the conflicts of laws rules of said State. This Supplemental
Indenture is subject to the terms and conditions in the Indenture including
terms and conditions limiting the liabilities of the Trustee. The Trustee has no
responsibility for the correctness of the statements of fact herein contained
which shall be taken as the statements of the Company and makes no
representations as to the validity or sufficiency of this Supplemental
Indenture.
------------------
This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
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:
CITIBANK, N.A., as Trustee
By:_____________________________
Name:
Title:
Attest:_____________________________
Name:
Title:
<PAGE> 5
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the ___ day of December, 1997, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that she/he is the ____________________ of SALOMON SMITH BARNEY HOLDINGS INC.,
one of the corporations described in and which executed the foregoing
instrument; that she/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 she/he signed
her/his name thereto by like authority.
_____________________________
Notary Public
SEAL
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the ___ day of December, 1997, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he is the _______________________ of CITIBANK, N.A., one of the
corporations described in and which executed the foregoing instrument; that
she/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 she/he signed her/his name
thereto by like authority.
_____________________________
Notary Public
SEAL
R-2
<PAGE> 1
Exhibit 4(p)
================================================================================
SALOMON SMITH BARNEY HOLDINGS INC.
TO
BANKERS TRUST COMPANY
Trustee
--------------------------------------
THIRD SUPPLEMENTAL INDENTURE
Dated as of November 28, 1997
Supplemental to Indenture dated as of December 1, 1988
================================================================================
<PAGE> 2
This Third Supplemental Indenture (the "Supplemental Indenture") is
made and entered into as of November 28, 1997 between Salomon Smith Barney
Holdings Inc., a Delaware corporation formerly known as Salomon Inc (the
"Company"), and Bankers Trust Company (the "Trustee"), as Trustee under the
Indenture dated as of December 1, 1988, as amended by the First Supplemental
Indenture dated September 7, 1990 and the Second Supplemental Indenture thereto
dated December 14, 1993 between the Company and the Trustee (as amended to the
date hereof, the "Indenture").
WHEREAS, the parties hereto have previously entered into the
Indenture to provide for the issuance and sale by the Company from time to time
of its Subordinated Debt Securities (the "Debt Securities"); and
WHEREAS, Sections 1101(2) and (10) of the Indenture provide that the
Company, when authorized by a Board Resolution, and the Trustee, at any time and
from time to time, may enter into an indenture supplemental to the Indenture, in
form satisfactory to the Trustee, without the consent of any holder of Debt
Securities, (a) to add to the covenants of the Company, for the benefit of all
or any series of Debt Securities and the Coupons, if any, pertaining thereto
(and, if such covenants are to be for the benefit of less than all such series,
stating that such covenants are expressly being included solely for the benefit
of such series) and (b) to cure any ambiguity, to correct or supplement any
provision therein that may be defective or inconsistent with any other provision
therein, or to make any other provisions with respect to matters or questions
under the Indenture that shall not be inconsistent with any provision of the
Indenture, provided that such other provisions shall not adversely affect the
interests of the Holders of Outstanding Debt Securities or Coupons, if any, of
any series created prior to the execution of such supplemental indenture in any
material respect; and
WHEREAS, the Company has changed its name from "Salomon Inc" to
"Salomon Smith Barney Holdings Inc."; and
WHEREAS, the Company wishes to amend Section 1001(2);
WHEREAS, the Company, pursuant to the foregoing authority, proposes
in and by this Supplemental Indenture to amend the Indenture in certain
respects; and
WHEREAS the Company has duly authorized the execution and delivery
of this Supplemental Indenture, and all things necessary have been done to make
this Supplemental Indenture a valid agreement of the Company, in accordance with
its terms:
NOW, THEREFORE the Company and the Trustee hereby agree as follows:
<PAGE> 3
ARTICLE I
Section 1001(2) is amended and restated as follows:
"(2) immediately after giving effect to such transaction and
treating any indebtedness that becomes an obligation of the Company as a result
of such transaction as having been incurred by the Company at the time of such
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 happened or be
continuing;"
ARTICLE II
In the first paragraph of the Indenture, the words "SALOMON INC"
shall be replaced with "SALOMON SMITH BARNEY HOLDINGS INC."
ARTICLE III
Except as amended as set forth above, the Indenture is in all
respects ratified and confirmed and the terms, provisions and conditions thereof
shall remain in full force and effect. This Supplemental Indenture shall take
effect on the date hereof.
ARTICLE IV
This Supplemental Indenture shall be deemed to be a contract made
and to be performed entirely in the State of New York, and for all purposes
shall be governed and construed in accordance with the laws of said State
without regard to the conflicts of laws rules of said State. This Supplemental
Indenture is subject to the terms and conditions in the Indenture including
terms and conditions limiting the liabilities of the Trustee. The Trustee has no
responsibility for the correctness of the statements of fact herein contained
which shall be taken as the statements of the Company and makes no
representations as to the validity or sufficiency of this Supplemental
Indenture.
------------------
This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
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:
BANKERS TRUST COMPANY, as Trustee
By:_____________________________
Name:
Title:
Attest:_____________________________
Name:
Title:
<PAGE> 5
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the ___ day of December, 1997, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that she/he is the ____________________ of SALOMON SMITH BARNEY HOLDINGS INC.,
one of the corporations described in and which executed the foregoing
instrument; that she/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 she/he signed
her/his name thereto by like authority.
_____________________________
Notary Public
SEAL
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the ___ day of December, 1997, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he is the _______________________ of BANKERS TRUST COMPANY, one of the
corporations described in and which executed the foregoing instrument; that
she/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 she/he signed her/his name
thereto by like authority.
_____________________________
Notary Public
SEAL
R-2
<PAGE> 1
Exhibit 4(r)
================================================================================
SALOMON SMITH BARNEY HOLDINGS INC.
TO
THE BANK OF NEW YORK
Trustee
---------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of November 28, 1997
Supplemental to Indenture dated as of October 27, 1993
================================================================================
<PAGE> 2
This First Supplemental Indenture (the "Supplemental Indenture") is
made and entered into as of November 28, 1997 between Salomon Smith Barney
Holdings Inc., a Delaware corporation formerly known as Salomon Inc (the
"Company"), and The Bank of New York (the "Trustee"), as Trustee under the
Indenture dated as of October 27, 1993, between the Company and the Trustee (as
amended to the date hereof, the "Indenture").
WHEREAS, the parties hereto have previously entered into the
Indenture to provide for the issuance and sale by the Company from time to time
of its Senior Debt Securities (the "Debt Securities"); and
WHEREAS, Sections 11.01 (2) and (11) of the Indenture provide that
the Company, when authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into an indenture supplemental to the
Indenture, in form satisfactory to the Trustee, without the consent of any
holder of Debt Securities, (a) to add to the covenants of the Company, for the
benefit of all or any series of Debt Securities and the Coupons, if any,
pertaining thereto (and, if such covenants are to be for the benefit of less
than all such series, stating that such covenants are expressly being included
solely for the benefit of such series) and (b) to cure any ambiguity, to correct
or supplement any provision therein that may be defective or inconsistent with
any other provision therein, or to make any other provisions with respect to
matters or questions under the Indenture that shall not be inconsistent with any
provision of the Indenture, provided that such other provisions shall not
adversely affect the interests of the Holders of Outstanding Debt Securities or
Coupons, if any, of any series created prior to the execution of such
supplemental indenture in any material respect; and
WHEREAS, the Company has changed its name from "Salomon Inc" to
"Salomon Smith Barney Holdings Inc."; and
WHEREAS, Smith Barney Inc. is a Subsidiary of the Company, and the
Company wishes to amend the definition of "Restricted Subsidiary" to include
Smith Barney Inc.;
WHEREAS, the Company, pursuant to the foregoing authority, proposes
in and by this Supplemental Indenture to amend the Indenture in certain
respects; and
WHEREAS the Company has duly authorized the execution and delivery
of this Supplemental Indenture, and all things necessary have been done to make
this Supplemental Indenture a valid agreement of the Company, in accordance with
its terms:
NOW, THEREFORE the Company and the Trustee hereby agree as follows:
<PAGE> 3
ARTICLE I
The definition of "Restricted Subsidiary" in Section 1.01 is amended
and restated as follows:
"Restricted Subsidiary" means each of Salomon Brothers Inc., Smith
Barney Inc., and any Subsidiary which owns or may hereafter own, directly or
indirectly, any of the voting stock of, or succeeds to any substantial part of
the business now conducted by, any of such corporations. For the purposes of
this definition and the definition of "Subsidiary", "voting stock" means stock
having voting power for the election of directors, whether at all times or only
for so long as no senior class of stock has such voting power by reason of any
contingency.
ARTICLE II
In the first paragraph of the Indenture, the words "SALOMON INC"
shall be replaced with "SALOMON SMITH BARNEY HOLDINGS INC."
ARTICLE III
Except as amended as set forth above, the Indenture is in all
respects ratified and confirmed and the terms, provisions and conditions thereof
shall remain in full force and effect. This Supplemental Indenture shall take
effect on the date hereof.
ARTICLE IV
This Supplemental Indenture shall be deemed to be a contract made
and to be performed entirely in the State of New York, and for all purposes
shall be governed and construed in accordance with the laws of said State
without regard to the conflicts of laws rules of said State. This Supplemental
Indenture is subject to the terms and conditions in the Indenture including
terms and conditions limiting the liabilities of the Trustee. The Trustee has no
responsibility for the correctness of the statements of fact herein contained
which shall be taken as the statements of the Company and makes no
representations as to the validity or sufficiency of this Supplemental
Indenture.
--------------
This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
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 BANK OF NEW YORK, as Trustee
By:_____________________________
Name:
Title:
Attest:_____________________________
Name:
Title:
<PAGE> 5
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the ___ day of December, 1997, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that she/he is the ____________________ of SALOMON SMITH BARNEY HOLDINGS INC.,
one of the corporations described in and which executed the foregoing
instrument; that she/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 she/he signed
her/his name thereto by like authority.
_____________________________
Notary Public
SEAL
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the ___ day of December, 1997, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he is the _______________________ of THE BANK OF NEW YORK, one of the
corporations described in and which executed the foregoing instrument; that
she/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 she/he signed her/his name
thereto by like authority.
_____________________________
Notary Public
SEAL
R-2
<PAGE> 1
Exhibit 4(t)
================================================================================
SALOMON SMITH BARNEY HOLDINGS INC.
TO
THE CHASE MANHATTAN BANK
Trustee
----------------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of November 28, 1997
Supplemental to Indenture dated as of January 18, 1994
================================================================================
<PAGE> 2
This First Supplemental Indenture (the "Supplemental Indenture") is
made and entered into as of November 28, 1997 between Salomon Smith Barney
Holdings Inc., a Delaware corporation formerly known as Salomon Inc (the
"Company"), and The Chase Manhattan Bank, (the "Trustee"), as Trustee under the
Indenture dated as of January 18, 1994 between the Company and the Trustee (as
amended to the date hereof, the "Indenture").
WHEREAS, the parties hereto have previously entered into the
Indenture to provide for the issuance and sale by the Company from time to time
of its Senior Debt Securities (the "Debt Securities"); and
WHEREAS, Sections 11.01 (2) and (11) of the Indenture provide that
the Company, when authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into an indenture supplemental to the
Indenture, in form satisfactory to the Trustee, without the consent of any
holder of Debt Securities, (a) to add to the covenants of the Company, for the
benefit of all or any series of Debt Securities and the Coupons, if any,
pertaining thereto (and, if such covenants are to be for the benefit of less
than all such series, stating that such covenants are expressly being included
solely for the benefit of such series) and (b) to cure any ambiguity, to correct
or supplement any provision therein that may be defective or inconsistent with
any other provision therein, or to make any other provisions with respect to
matters or questions under the Indenture that shall not be inconsistent with any
provision of the Indenture, provided that such other provisions shall not
adversely affect the interests of the Holders of Outstanding Debt Securities or
Coupons, if any, of any series created prior to the execution of such
supplemental indenture in any material respect; and
WHEREAS, the Company has changed its name from "Salomon Inc" to
"Salomon Smith Barney Holdings Inc."; and
WHEREAS, Smith Barney Inc. is a Subsidiary of the Company, and the
Company wishes to amend the definition of "Restricted Subsidiary" to include
Smith Barney Inc.;
WHEREAS, the Company, pursuant to the foregoing authority, proposes
in and by this Supplemental Indenture to amend the Indenture in certain
respects; and
WHEREAS the Company has duly authorized the execution and delivery
of this Supplemental Indenture, and all things necessary have been done to make
this Supplemental Indenture a valid agreement of the Company, in accordance with
its terms:
NOW, THEREFORE the Company and the Trustee hereby agree as follows:
<PAGE> 3
ARTICLE I
The definition of "Restricted Subsidiary" in Section 1.01 is amended
and restated as follows:
"Restricted Subsidiary" means each of Salomon Brothers Inc, Smith
Barney Inc., and any Subsidiary which owns or may hereafter own,
directly or indirectly, any of the voting stock of, or succeeds to any
substantial part of the business now conducted by, any of such corporations. For
the purposes of this definition and the definition of "Subsidiary", "voting
stock" means stock having voting power for the election of directors, whether at
all times or only for so long as no senior class of stock has such voting power
by reason of any contingency.
ARTICLE II
In the first paragraph of the Indenture, the words "SALOMON INC"
shall be replaced with "SALOMON SMITH BARNEY HOLDINGS INC."
ARTICLE III
Except as amended as set forth above, the Indenture is in all
respects ratified and confirmed and the terms, provisions and conditions thereof
shall remain in full force and effect. This Supplemental Indenture shall take
effect on the date hereof.
ARTICLE IV
This Supplemental Indenture shall be deemed to be a contract made
and to be performed entirely in the State of New York, and for all purposes
shall be governed and construed in accordance with the laws of said State
without regard to the conflicts of laws rules of said State. This Supplemental
Indenture is subject to the terms and conditions in the Indenture including
terms and conditions limiting the liabilities of the Trustee. The Trustee has no
responsibility for the correctness of the statements of fact herein contained
which shall be taken as the statements of the Company and makes no
representations as to the validity or sufficiency of this Supplemental
Indenture.
--------------------
This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
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:
<PAGE> 5
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the ___ day of December, 1997, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that she/he is the ____________________ of SALOMON SMITH BARNEY HOLDINGS INC.,
one of the corporations described in and which executed the foregoing
instrument; that she/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 she/he signed
her/his name thereto by like authority.
-----------------------------
Notary Public
SEAL
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the ___ day of December, 1997, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he is the _______________________ of THE CHASE MANHATTAN BANK, one of the
corporations described in and which executed the foregoing instrument; that
she/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 she/he signed her/his name
thereto by like authority.
-----------------------------
Notary Public
SEAL
R-2
<PAGE> 1
Exhibit 4(u)(i)
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
NO. FL____ SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FLOATING OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: |_| CD Rate |_| Commercial Paper Rate |_| Federal Funds Rate
|_| LIBOR Telerate |_| LIBOR Reuters |_| Treasury Rate
|_| Treasury Rate Constant Maturity |_| Prime Rate
|_| J. J. Kenny Rate |_| Eleventh District Cost of Funds Rate
|_| Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Floating Rate: |_| Indexed Interest Rate: |_| (see attached)
Spread Multiplier: Spread (+/-):
1
<PAGE> 2
Spread Reset |_| The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
|_| The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: |_| Yes (see attached) |_| No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: |_| Yes (see attached) |_| No
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
2
<PAGE> 3
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company") for value received hereby promises to pay CEDE & Co. or registered
assigns, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described above or in the Pricing Supplement attached
hereto or delivered herewith, in the Specified Currency on the Stated Maturity
shown above or earlier if and to the extent so provided herein, and (b) to pay
accrued interest on the Principal Amount then outstanding (or, in the case of an
Indexed Principal Note, the Face Amount then outstanding): (i) if this is a
Floating Rate Note, at the Initial Interest Rate shown above from the Original
Issue Date shown above until the first Interest Reset Date shown above following
the Original Issue Date and thereafter at the Base Rate shown above, adjusted by
the Spread or Spread Multiplier, if any, shown above, determined in accordance
with the provisions hereof, (ii) if this is an Indexed Rate Note, at a rate
determined by reference to an Index as described herein, (iii) if this is an
Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein,
until, in each case, the Principal Amount or the Face Amount is paid or duly
provided for in accordance with the terms hereof. The interest so payable, and
punctually paid or duly provided for, on each Interest Payment Date specified
herein will, as provided in the Indenture referred to below, be paid to the
person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which, in the case of any Interest Payment Date shall be the date
(whether or not a Business Day), fifteen calendar days immediately preceding
such Interest Payment Date and, in the case of interest payable at Stated
Maturity shall be the Stated Maturity of this Note. Notwithstanding the
foregoing, if this Note is issued between a Regular Record Date and the related
Interest Payment Date, the interest so payable for the period from the Original
Issue Date to such Interest Payment Date shall be paid on the next succeeding
Interest Payment Date to the Registered Holder hereof on the related Regular
Record Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Registered Holder hereof on such Regular
Record Date and may be paid to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes not less than ten
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 Registered Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
For purposes of this Note, "Business Day" 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 shown
3
<PAGE> 4
above (as defined below) is other than U.S. dollars, the financial center of the
country issuing the Specified Currency (which, in the case of the Euro, shall be
Brussels, Belgium) and (ii) if the Base Rate specified above is LIBOR, a London
Banking Day. "London Banking Day" means any day on which dealings in deposits in
the Specified Currency are transacted in the London interbank market.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are payable
by the Company in the Specified Currency shown above. If the Specified Currency
shown above is other than U.S. dollars, the Company will arrange to convert all
payments in respect hereof into U.S. dollars in the manner described on the
reverse hereof. The Holder hereof may, if so indicated above, elect to receive
all payments in respect hereof in the Specified Currency by delivery of a
written notice to the Trustee not later than fifteen calendar days prior to the
applicable payment date. Such election will remain in effect until revoked by
written notice to the Trustee received not later than fifteen calendar days
prior to the applicable payment date. If the Company determines that the
Specified Currency is not available for making payments in respect hereof 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 or within
the international banking community, then the Holder hereof may not so elect to
receive payments in the Specified Currency, and any such outstanding election
shall be automatically suspended, and payments shall be in U.S. dollars, until
the Company determines that the Specified Currency is again available for making
such payments.
Payments of interest in U.S. dollars (other than interest payable at
Maturity) will be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register on the applicable
Record Date, provided, that, if the Holder hereof is the Holder of U.S.
$10,000,000 (or the equivalent thereof in a currency other than U.S. dollars
determined as provided on the reverse hereof) or more in aggregate principal
amount of Registered Notes of like tenor and term, such U.S. dollar interest
payments will be made by wire transfer of immediately available funds, but only
if appropriate wire transfer instructions have been received in writing by the
Trustee not less than fifteen calendar days prior to the applicable Interest
Payment Date. Simultaneously with any election by the Holder hereof to receive
payments in respect hereof in the Specified Currency (if other than U.S.
dollars), such Holder shall provide appropriate wire transfer instructions to
the Trustee and all such payments will be made by wire transfer of immediately
available funds to an account maintained by the payee with a bank located
outside the United States. The principal hereof and any premium and interest
hereon payable at Maturity will be paid in immediately available funds upon
surrender of this Note at the corporate trust office or agency of the Trustee
located in the City and State of New York.
4
<PAGE> 5
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within - mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
5
<PAGE> 6
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FLOATING OR INDEXED RATE)
General
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture) to which indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, as exchange rate agent for the Notes (the "Exchange
Rate Agent") 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 currencies on the
applicable issue dates.
Unless otherwise specified above, the authorized denominations of
Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any larger
amount that is an integral multiple of U.S.$1,000. The authorized denominations
of Registered Notes denominated in a currency other than U.S. dollars will be as
set forth on the respective faces thereof.
Each Registered Note will be issued initially as either a Book-Entry
Note or, if so specified above, a Certificated Note. Book-Entry Notes will not
be exchangeable for Certificated Notes and, except as otherwise provided in the
Indenture, will not otherwise be issuable as Certificated Notes.
Floating Rate Notes
Unless otherwise specified on the face hereof, if this Note is a
Floating Rate Note, this Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) at the Initial Interest Rate
set forth on the face hereof. Thereafter, the interest rate hereon for each
Interest Reset Period (as defined below) will be determined by reference to the
Base Rate specified on the face hereof, plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, specified on the face hereof. The
Base Rates that may be specified on the face hereof are LIBOR, the Commercial
Paper Rate, the Treasury Rate, the Federal Funds Rate, the CD Rate, the Prime
Rate, the J.J. Kenny Rate, the Eleventh District Cost of Funds Rate or any other
Base Rate specified on the face hereof. "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.
1
<PAGE> 7
As specified on the face hereof, this 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 specified on the face hereof, the interest rate 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 Company will appoint, and enter into an agreement with, agents
(each, a "Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof. Unless otherwise specified on the face hereof, Citibank, N.A. shall be
the Calculation Agent for this Note. At the request of the Holder hereof, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date.
The interest rate hereon will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" specified on the face hereof, and the first day of each Interest Reset
Period being an "Interest Reset Date"). Unless otherwise specified on the face
hereof, the Interest Reset Dates will be, if this Note resets daily, each
Business Day; if this Note (unless this Note is a Treasury Rate Note) resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets
weekly, Tuesday of each week (except as provided below under "Determination of
Treasury Rate"); if this Note resets 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); if this Note resets
quarterly, the third Wednesday of March, June, September and December of each
year; if this Note resets semiannually, the third Wednesday of the two months of
each year specified on the face hereof; and if this Note resets annually, the
third Wednesday of the month of each year specified on the face hereof. If an
Interest Reset Date 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, if the Base Rate specified on the face hereof is LIBOR and 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 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 on the face hereof, the interest payable
hereon on each Interest Payment Date 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 such Interest Payment Date, provided,
however, that if the interest rate is reset daily or weekly, the interest
payable hereon 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
2
<PAGE> 8
Date immediately preceding such Interest Payment Date, except that, at Maturity,
the interest payable will include interest accrued to, but excluding, the date
of Maturity.
If more than one Interest Reset Date occurs during any period for
which accrued interest is being calculated, accrued interest shall be calculated
by multiplying the principal amount hereof (or if this Note is an Indexed
Principal Note, the Face Amount specified on the face hereof) 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 on the face hereof, by dividing the
interest rate in effect on such day by 360 if the Base Rate specified on the
face hereof is the Commercial Paper Rate, the Federal Funds Rate, the CD Rate,
the J.J. Kenny Rate, the Prime Rate, the Eleventh District Cost of Funds Rate or
LIBOR, or by the actual number of days in the year, if the Base Rate specified
on the face hereof is the Treasury Rate. In all other cases, accrued interest
shall be calculated by multiplying the principal amount hereof (or if this Note
is an Indexed Principal Note, the Face Amount specified on the face hereof) 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 if the Base Rate specified on the face hereof is the
Commercial Paper Rate, the Federal Funds Rate, the CD Rate the J.J. Kenny Rate,
the prime Rate, the Eleventh District cost of Funds Rate or LIBOR, or by the
actual number of days in the year, if the Base Rate specified on the face hereof
is the Treasury Rate. For purposes of making the foregoing calculations, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date.
Unless otherwise specified on the face hereof, all percentages
resulting from any calculation of the rate of interest hereof 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 will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will be
payable, if this Note resets 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 on the face hereof or, in the case of Eleventh District Cost of Funds
Rate Notes, on the first calendar day of each March, June, September and
December; if this Note resets quarterly, on the third Wednesday of March, June,
September and December of each year; if this Note resets semiannually, on the
third Wednesday of the two months of each year specified on the face hereof; and
if this Note resets annually, on the third Wednesday of the month of each year
specified on the face hereof, and in each case at Maturity (each such day being
an "Interest Payment Date"). If an Interest Payment Date would otherwise fall on
a day that is not a Business Day, such Interest Payment Date shall be postponed
to the next succeeding Business Day, except that, if the Base Rate specified on
the face hereof is LIBOR and 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 Note for which
3
<PAGE> 9
"Accrue to Pay" is not specified on the face hereof, if an Interest Payment Date
with respect to such 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 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.
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of interest shall be the rate
determined in accordance with the provisions of the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this
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 on the face hereof. 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 specified on the face hereof
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 specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("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 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 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 on the face
hereof in a denomination of $5,000,000, provided, however, that if the dealers
selected as aforesaid by the 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.
4
<PAGE> 10
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper
Rate, this 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 on the face hereof. The
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent 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 on the face hereof, 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 tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day, (the "Calculation 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 Index Maturity specified on the face hereof 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 commercial
paper of the Index Maturity specified on the face hereof 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 the 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 the yield calculated in accordance
with the following formula:
D x 360
Money Market Yield = --------------- X 100
360 - (D x M)
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 Index Maturity specified on the face hereof.
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.
5
<PAGE> 11
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and Spread or
Spread Multiplier, if any, specified on the face hereof. 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 is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the succeeding
Monday will be reset by the Calculation Agent 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.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, this 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 on the face hereof. "LIBOR" for each Interest Reset Period will be
determined by the Calculation Agent 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 arithmetic mean
of the offered rates for deposits in the Specified Currency for the period
of the Index Maturity specified on the face hereof, 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.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
on the face hereof, the display designated as page "3750" on the Dow Jones
Telerate Service (or
6
<PAGE> 12
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)
or (b) if "LIBOR Reuters" is designated on the face hereof, 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). If
neither LIBOR Reuters nor LIBOR Telerate is specified on the face hereof,
LIBOR will be determined as if LIBOR Telerate had been specified. If at
least two such offered rates appear on the Designated LIBOR Page, "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 fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will request
the principal London offices of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, 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 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 Index Maturity specified on the face hereof,
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 the 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).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate,
this 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 on the face hereof. Unless "Treasury Rate Constant
Maturity" is specified on the face hereof, 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 bills") having the Index Maturity
specified on the face hereof, as published in
7
<PAGE> 13
H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction
average (investment)" or, if not so published by 3:00 p.m., New York City time,
on the tenth calendar day after such Treasury Rate Determination Date (or, if
such day is not a Business Day, the next succeeding Business Day) (the
"Calculation 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 bills having the Index Maturity specified on the face hereof
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 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 the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity specified
on the face hereof, provided, however, that if the dealers selected as aforesaid
by the 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 bills would normally be auctioned.
Treasury bills 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
Note whose Base Rate is the Treasury Rate, then such Interest Reset Date shall
instead be the Business Day immediately following such auction date.
If "Treasury Rate 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 "Constant Maturity -- 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
8
<PAGE> 14
arithmetic mean of bid-side quotations, expressed in terms of yield, reported by
three leading U.S. government securities dealers (one or more 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 "Calculation Date" pertaining to any Treasury Rate Determination
Date or Constant Maturity Treasury Rate Determination Date, as applicable, shall
be the tenth calendar day after such Treasury Rate Determination Date or
Constant Maturity Treasury Rate Determination Date, as applicable, or, if such a
day is not a Business Day, the next succeeding Business Day.
Determination of Prime Rate
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
9
<PAGE> 15
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.
Determination of J.J. Kenny Rate
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 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;
10
<PAGE> 16
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 no 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.
Determination of Eleventh District Cost of Funds Rate
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
If this Note is designated as an Inverse Floating Rate Note on the
face hereof, the Inverse Floating Rate shall be equal to (i) in the case of the
period, if any, commencing on the Original Issue Date (or such other date which
may be specified on the face hereof as the date on which this Note shall begin
to accrue interest), up to the first Interest Reset Date, the Initial Fixed
Interest Rate shown above, and (ii) in the case of each period commencing on an
Interest Reset
11
<PAGE> 17
Date, the Reset Fixed Reference Rate shown above minus the interest rate
determined by reference to the Base Rate shown above, as adjusted by the Spread
or Spread Multiplier, if any, as determined in accordance with the provisions
hereof, 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 the date of Maturity will be the the rate in effect on the tenth day
preceding such date.
Floating Rate / Fixed Rate Notes
If this Note is designated as a Floating Rate / Fixed Rate Note,
this 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 this Note will be determined as provided herein as if it were a Floating Rate
Note and a Fixed Rate Note hereunder for each such respective period, all as
described herein and in the applicable Pricing Supplement.
Subsequent Interest Periods
If so specified on the face hereof, the Spread or Spread Multiplier
on this Note may be reset by the Company on the date or dates specified on the
face hereof (each an "Optional Reset Date"). Not later than 40 days prior to
each Optional Reset Date, the Trustee will mail to the Holder of this Note a
notice (the "Reset Notice"), first class, postage prepaid, indicating whether
the Company has elected to reset the Spread or Spread Multiplier, and if so, (i)
such new Spread or Spread Multiplier 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 this 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 the Subsequent
Interest Period. Notwithstanding the foregoing, not later than 20 days prior to
the Optional Reset Date, the Company may, at its option, revoke the Spread or
Spread Multiplier provided for in the Reset Notice and establish a higher Spread
or Spread Multiplier for the Subsequent Interest Period by causing the Trustee
to mail notice of such higher Spread or Spread Multiplier to the Holder of this
Note. Such notice shall be irrevocable. All Registered Notes with respect to
which the Spread or Spread Multiplier is reset on an Optional Reset Date will
bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by the Company
on each Optional Reset Date at a price equal to the principal amount hereof,
plus interest accrued to such Optional Reset Date. In order to obtain repayment
on an Optional Reset Date, the Holder must follow the procedures set forth below
for optional repayment, except that the period for delivery or notification to
the Trustee shall be at least 25 but not more than 35 days prior to such
Optional Reset Date, and except that if the Holder has tendered this Note for
repayment pursuant to a Reset Notice, the Holder may, by written notice to the
Trustee, revoke such tender for repayment until the close of business on the
tenth day before the Optional Reset Date.
12
<PAGE> 18
Indexed Notes
If this Note is an Indexed Note, then 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 amount designated on the face
hereof as the Face Amount of this Note and by reference to the Index as
described on the face hereof. If this Note is a 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 described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by 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 this Note shall be calculated in the manner described on the face
hereof. Any determination of such third party shall in the absence of manifest
error be binding on all parties.
Specified Currency
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by the
Company or its agent based on the highest firm bid quotation expressed in U.S.
dollars received by the Company or its 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 selected by the Exchange Rate
Agent (one or more of which may be an agent involved in the distribution of the
Notes (an "Agent") and another of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer, for settlement on such payment date, of the
aggregate amount of the 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 Registered Notes by
deductions from such payments. If no such bid quotations are available, then
such payments will be made in the Specified Currency, unless the Specified
Currency is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Company's control, in which case payment will be made
as described in the next paragraph.
Payments in Currencies other than the Specified Currency
13
<PAGE> 19
Except as set forth below, if any payment in respect hereof 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 such payment shall be made in U.S. dollars until such currency
is again available or so used. The amount so payable in such foreign 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 on the face
hereof. Any payment made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
In the event of an official redenomination of the Specified Currency
of this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 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 this Note and the Indenture, and, except as
provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of this Note 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, this Note in either the
current national currency of such Relevant Jurisdiction or Euro, the Company
will make such
14
<PAGE> 20
payments in such national currency or Euro at its sole discretion. To the extent
that the terms and conditions of this Note 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 paragraph and any resultant amendment to the terms and
conditions of this Note will not entitle any Holder hereof (i) to any legal
remedy, including, without limitation, redemption, rescission, notice,
repudiation, adjustment or renegotiation of the terms and conditions of this
Note or the Indenture, 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 this Note or the Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency
Note, the Company may have a one time option, exercisable on one or more dates
(each an "Option Election Date") in whole, but not in part, with respect to all
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 an optional currency (the "Optional Payment 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.
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note,
this Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if
15
<PAGE> 21
a Special Election Interval is specified on the face hereof, the last month in a
period equal to twice the Special Election Interval) after such Renewal Date, if
the Holder of this Note elects to extend the term of this Note or any portion
thereof as described below. If the Holder does not elect to extend the term of
any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so
specified, 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. Such election will be
irrevocable and will be binding upon each subsequent holder of this Note. An
election to renew the term of this Note may be exercised with respect to less
than the entire principal amount of this Note only if so specified on the face
hereof and then only in such principal amount, or any integral multiple in
excess thereof, as is specified on the face hereof. Notwithstanding the
foregoing, the term of this Note may not be extended beyond the Stated Maturity
specified for this Note on the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Spread or Spread
Multiplier applicable to the Extension Period, and (iv) the provisions, if any,
for redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
16
<PAGE> 22
Notwithstanding the foregoing, not later than 20 days prior to the
old Stated Maturity of this Note, the Company may, at its option, revoke the
Spread or Spread Multiplier provided for in the Extension Notice and establish a
higher Spread or Spread Multiplier for the Extension Period by causing the
Trustee to mail notice of such higher Spread or Spread Multiplier, first class,
postage prepaid to the Holder of this Note. Such notice shall be irrevocable.
All Registered Notes with respect to which the Maturity is extended will bear
such higher Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will
have the option to elect repayment of this Note by the Company on the old Stated
Maturity at a price equal to the principal amount hereof, plus interest accrued
to such date. In order to obtain repayment on such old Stated Maturity once the
Company has extended the Maturity hereof, the Holder must follow the procedures
set forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole or in part, on the date or dates (each an Optional
Redemption Date") specified herein, at the price (the "Redemption
Price")(together with accrued interest to such Optional Redemption Date)
specified herein. Unless otherwise stated herein, the Company may exercise such
option with respect to this Note by notifying the Trustee for this 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, the Trustee shall mail to the Holder a
notice of such redemption at least 30 but not more than 60 days prior to the
date of redemption unless otherwise specified on the face hereof In the event of
redemption of this Note in part only, a new Note or Notes for the unredeemed
portion hereof will be issued to the Holder hereof upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable
prior to Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Trustee must receive at least 30 but not more than
45 days prior to an Optional Repayment Date (i) this Note with the form below
entitled "Option to Elect Repayment" duly completed; or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities exchange
or the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States of America setting forth the name of the
Holder of this Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of this Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that this Note with the form below entitled "Option to Elect
Repayment" duly completed will be received by the Trustee not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter. If the procedure described in clause (ii) of the preceding sentence is
17
<PAGE> 23
followed, this Note with form duly completed must be received by the Trustee by
such fifth Business Day. Any tender of this Note 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 this Note for less than the entire
principal amount of the Note provided that the principal amount of this Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be canceled and a new Note or Notes for the
remaining principal amount hereof shall be issued in the name of the Holder of
this Note.
Unless otherwise specified on the face hereof, this Note will not be
subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a Discount
Note, the amount payable in the event of redemption or repayment prior to the
Stated Maturity hereof (other than pursuant to an optional redemption by the
Company at a stated Redemption Price), in lieu of the principal amount due at
the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as
of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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.
Other Terms
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
18
<PAGE> 24
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company,
19
<PAGE> 25
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Note at the times, place and rate, and the coin or
currency, herein prescribed.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
20
<PAGE> 26
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT ENT -as joint tenants with right of
survivorship and not as tenants in
common
UNIF GIFT MIN ACT _______________Custodian_______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_______________________________________
(State)
Additional abbreviations may also be used though not in the above list
--------------------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $__________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date or repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York or, if delivery is by mail, 450 West 33rd Street, Attention: Corporate
Trust Department, New York, New York 10001.
Dated:
----------------------------------------------------------
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the
within Note in every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED,
the undersigned hereby sell(s), assign(s) and transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
_________________________________________
_________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
________________________________________________________________________attorney
to transfer such Note on the books of Salomon Smith Barney Holdings Inc. with
full power of substitution in the premises.
Dated:____________________ __________________________________________________
Signature
__________________________________________________
NOTICE: The signature to this
assignment must correspond with
the name as it appears upon the
face of the Note in every
particular, without alteration
or enlargement or any change
whatsoever
<PAGE> 27
Exhibit 4(u)(ii)
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
No. FX- MEDIUM-TERM NOTE, SERIES H
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH BELOW
WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
<PAGE> 28
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
2
<PAGE> 29
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company"), for value received hereby promises to pay CEDE & Co. or registered
assigns, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
at the Interest Rate shown above from the Original Issue Date shown above or
from the most recent date to which interest has been paid or duly provided for,
semiannually in arrears on the Interest Payment Dates specified on the face of
this Note and at Maturity, until, in either case, the Principal Amount then
outstanding or the Face Amount is paid or duly provided for in accordance with
the terms hereof. Interest on this Note, if any, will be computed on the basis
of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture referred to on
the reverse hereof, be paid to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which, (other than interest payable at
Maturity) shall be the date (whether or not a Business Day) fifteen calendar
days immediately preceding such Interest Payment Date, and, in the case of
interest payable at Stated Maturity, shall be the Stated Maturity of this Note.
Notwithstanding the foregoing, if this Note is issued between a Regular Record
Date and the related Interest Payment Date, the interest so payable for the
period from the Original Issue Date to such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the Registered Holder hereof on
the related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered Holder
hereof on such Regular Record Date, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
less than ten 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 Registered Notes may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. If an Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is
specified on the face hereof, 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
3
<PAGE> 30
Day. Each payment of interest in respect of an Interest Payment Date shall
include interest accrued through the day before such Interest Payment Date.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 shown above (as defined below) 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).
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are payable
by the Company in the Specified Currency shown above. If the Specified Currency
shown above is other than U.S. dollars, the Company will arrange to convert all
payments in respect hereof into U.S. dollars in the manner described on the
reverse hereof. The Holder hereof may, if so indicated above, elect to receive
all payments in respect hereof in the Specified Currency by delivery of a
written notice to the Trustee not later than fifteen calendar days prior to the
applicable payment date. Such election will remain in effect until revoked by
written notice to the Trustee received not later than fifteen calendar days
prior to the applicable payment date. If the Company determines that the
Specified Currency is not available for making payments in respect hereof 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 or within
the international banking community, then the Holder hereof may not so elect to
receive payments in the Specified Currency, and any such outstanding election
shall be automatically suspended, and payments shall be in U.S. dollars, until
the Company determines that the Specified Currency is again available for making
such payments.
Payments of interest in U.S. dollars (other than interest payable at
Maturity) will be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register on the applicable
Record Date, provided, that, if the Holder hereof is the Holder of U.S.
$10,000,000 (or the equivalent thereof in a currency other than U.S. dollars
determined as provided on the reverse hereof) or more in aggregate principal
amount of Registered Notes of like tenor and term, such U.S. dollar interest
payments will be made by wire transfer of immediately available funds, but only
if appropriate wire transfer instructions have been received in writing by the
Trustee not less than fifteen calendar days prior to the applicable Interest
Payment Date. Simultaneously with any election by the Holder hereof to receive
payments in respect hereof in the Specified Currency (if other than U.S.
dollars), such Holder shall provide appropriate wire transfer instructions to
the Trustee and all such payments will be made by wire transfer of immediately
available funds to an account maintained by the payee with a bank located
outside the United States. The principal hereof and any premium and interest
hereon payable at Maturity will be paid in immediately available funds upon
surrender of this
4
<PAGE> 31
Note at the corporate trust office or agency of the Trustee located in the City
and State of New York.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
5
<PAGE> 32
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FIXED RATE)
General
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture) to which indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, as exchange rate agent for the Notes (the "Exchange
Rate Agent") 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 currencies on the
applicable issue dates.
Unless otherwise specified above, the authorized denominations of
Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any larger
amount that is an integral multiple of U.S.$1,000. The authorized denominations
of Registered Notes denominated in a currency other than U.S. dollars will be as
set forth on the respective faces thereof.
Each Registered Note will be issued initially as either a Book-Entry
Note or, if so specified above, a Certificated Note. Book-Entry Notes will not
be exchangeable for Certificated Notes and, except as otherwise provided in the
Indenture, will not otherwise be issuable as Certificated Notes.
Fixed Rate Notes
This 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 Interest Rate stated on the face hereof until the principal amount
hereof is paid or made available for payment, except as otherwise described
below under "Subsequent Interest Periods" and "Extension of Maturity", and
except that if so specified in the attached Pricing Supplement, the rate of
interest payable may be subject to adjustment as specified therein.
Unless otherwise set forth herein, interest on this Note will be
payable semiannually in arrears on the Interest Payment Dates set forth above
and at Stated Maturity. If an Interest Payment Date with respect to any 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
1
<PAGE> 33
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 Note for which
"Accrue to Pay" is specified on the face hereof, 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.
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 herein, interest on this Note will be computed
on the basis of a 360-day year of twelve 30-day months ("30 over "360").
Subsequent Interest Periods
If so specified on the face hereof, the Interest Rate on this Note
may be reset by the Company on the date or dates specified on the face hereof
(each an "Optional Reset Date"). Not later than 40 days prior to each Optional
Reset Date, the Trustee will mail to the Holder of this Note a notice (the
"Reset Notice"), first class, postage prepaid, indicating whether the Company
has elected to reset the Interest Rate, and if so, (i) such new Spread or Spread
Multiplier 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 this 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 the Subsequent Interest Period. Notwithstanding the
foregoing, not later than 20 days prior to the Optional Reset Date, the Company
may, at its option, revoke the Interest Rate provided for in the Reset Notice
and establish a higher Spread or Spread Multiplier for the Subsequent Interest
Period by causing the Trustee to mail notice of such higher Spread or Spread
Multiplier to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Interest Rate is reset on an Optional
Reset Date will bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by
the Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
Indexed Notes
2
<PAGE> 34
If this Note is an Indexed Principal Note, then the principal amount
payable at Stated Maturity or earlier redemption or retirement, is determined by
reference to the amount designated on the face hereof as the Face Amount of this
Note and by reference to the Index as described on the face hereof. If this Note
is an Indexed Principal Note, the principal amount payable at Stated Maturity or
any earlier redemption or repayment of this Note may be different from the Face
Amount. If the determination of the Index is calculated or announced by a third
party, which may be an 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 this Note was issued and permitted changes described on the
face hereof), then such Index shall be calculated for this Note's purposes by
another third party, which may be an affiliate of the Company, selected by 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 principal amount of this Note shall be calculated in the
manner described on the face hereof. Any determination of such third party shall
in the absence of manifest error be binding on all parties.
Specified Currency
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by the
Company or its agent based on the highest firm bid quotation expressed in U.S.
dollars received by the Company or its 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 selected by the Exchange Rate
Agent (one or more of which may be an agent involved in the distribution of the
Notes (an "Agent") and another of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer, for settlement on such payment date, of the
aggregate amount of the 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 Registered Notes by
deductions from such payments. If no such bid quotations are available, then
such payments will be made in the Specified Currency, unless the Specified
Currency is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Company's control, in which case payment will be made
as described in the next paragraph.
Payments in Currencies other than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment shall be made in U.S. dollars until such currency
is again available or so used. The amount so payable in such foreign currency
shall be converted into U.S. dollars on the basis of
3
<PAGE> 35
the most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under the
Indenture.
In the event of an official redenomination of the Specified Currency
of this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 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 this Note and the Indenture, and, except as
provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of this Note 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, this Note 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 this Note 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 paragraph and any resultant
amendment to the terms and conditions of this Note will not entitle any Holder
hereof (i) to any legal remedy, including, without limitation, redemption,
rescission, notice, repudiation, adjustment or renegotiation of the terms and
conditions of this Note or the Indenture, or (ii) to raise any defense
4
<PAGE> 36
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 this Note or the Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency
Note, the Company may have a one time option, exercisable on one or more dates
(each an "Option Election Date") in whole, but not in part, with respect to all
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 an optional currency (the "Optional Payment 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.
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note,
this Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this Note during the
specified period prior to any Renewal Date, such portion will become due and
payable on the Interest
5
<PAGE> 37
Payment Date occurring in the sixth month (or the last month in the Special
Election Interval) after such Renewal Date (the "New Maturity Date").
The Holder may elect to renew the term of this Note, or if so
specified, 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. Such election will be
irrevocable and will be binding upon each subsequent holder of this Note. An
election to renew the term of this Note may be exercised with respect to less
than the entire principal amount of this Note only if so specified on the face
hereof and then only in such principal amount, or any integral multiple in
excess thereof, as is specified on the face hereof. Notwithstanding the
foregoing, the term of this Note may not be extended beyond the Stated Maturity
specified for this Note on the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Interest Rate
applicable to the Extension Period, and (iv) the provisions, if any, for
redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the
old Stated Maturity of this Note, the Company may, at its option, revoke the
Interest Rate provided for in the Extension Notice and establish a higher Spread
or Spread Multiplier for the Extension Period by causing the Trustee to mail
notice of such higher Spread or Spread Multiplier, first class, postage prepaid
to the Holder of this Note. Such notice shall be irrevocable. All Registered
6
<PAGE> 38
Notes with respect to which the Maturity is extended will bear such higher
Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will
have the option to elect repayment of this Note by the Company on the old Stated
Maturity at a price equal to the principal amount hereof, plus interest accrued
to such date. In order to obtain repayment on such old Stated Maturity once the
Company has extended the Maturity hereof, the Holder must follow the procedures
set forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole or in part, on the date or dates (each an Optional
Redemption Date") specified herein, at the price (the "Redemption
Price")(together with accrued interest to such Optional Redemption Date)
specified herein. Unless otherwise stated herein, the Company may exercise such
option with respect to this Note by notifying the Trustee for this 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, the Trustee shall mail to the Holder a
notice of such redemption at least 30 but not more than 60 days prior to the
date of redemption unless otherwise specified on the face hereof In the event of
redemption of this Note in part only, a new Note or Notes for the unredeemed
portion hereof will be issued to the Holder hereof upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable
prior to Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Trustee must receive at least 30 but not more than
45 days prior to an Optional Repayment Date (i) this Note with the form below
entitled "Option to Elect Repayment" duly completed; or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities exchange
or the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States of America setting forth the name of the
Holder of this Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of this Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that this Note with the form below entitled "Option to Elect
Repayment" duly completed will be received by the Trustee not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter. If the procedure described in clause (ii) of the preceding sentence is
followed, this Note with form duly completed must be received by the Trustee by
such fifth Business Day. Any tender of this Note 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 this Note for less than the entire
principal amount of the Note provided that the principal amount of this Note
remaining outstanding after repayment is an authorized denomination. Upon such
7
<PAGE> 39
partial repayment, this Note shall be canceled and a new Note or Notes for the
remaining principal amount hereof shall be issued in the name of the Holder of
this Note.
Unless otherwise specified on the face hereof, this Note will not be
subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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.
Other Terms
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
8
<PAGE> 40
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and the coin or currency, herein
prescribed.
9
<PAGE> 41
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
10
<PAGE> 42
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT ENT -as joint tenants with right of
survivorship and not as tenants in
common
UNIF GIFT MIN ACT _______________Custodian_______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_______________________________________
(State)
Additional abbreviations may also be used though not in the above list
--------------------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $__________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date or repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York or, if delivery is by mail, 450 West 33rd Street, Attention: Corporate
Trust Department, New York, New York 10001.
Dated:
----------------------------------------------------------
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the
within Note in every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
_________________________________________
_________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
________________________________________________________________________attorney
appointing to transfer such Note on the books of Salomon Smith Barney Holdings
Inc. with full power of substitution in the premises.
Dated:____________________ __________________________________________________
Signature
__________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the Note in every particular, without
alteration or enlargement or any change
whatsoever.
11
<PAGE> 43
Exhibit 4(u)(iii)
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
NO. FL SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FLOATING OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO
MATURITY" SET FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING
THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: [ ] Yes (see attached) [ ] No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: [ ] CD Rate [ ] Commercial Paper Rate
[ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters
[ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Prime Rate
[ ] J. J. Kenny Rate
[ ] Eleventh District Cost of Funds Rate
[ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: [ ] Yes [ ] No
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate: [ ] (see attached)
1
<PAGE> 44
Spread Multiplier: Spread (+/-):
Spread Reset [ ] The Spread or Spread Multiplier
may not be changed prior to Stated Maturity.
[ ] The Spread or Spread Multiplier may be
changed prior to Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: [ ] Yes (see attached) [ ] No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: [ ] Yes (see attached) [ ] No
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID: Yield to Maturity:
Renewable Note: [ ] Yes (see attached) [ ] No
Special Election Interval (if applicable):
2
<PAGE> 45
Amount (if less than entire principal amount) as to which election may
be exercised:
3
<PAGE> 46
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly
organized and existing under the laws of the State of Delaware (herein referred
to as the "Company") for value received hereby promises to pay CEDE & Co. or
registered assigns, (a) the Principal Amount or, in the case of an Indexed
Principal Note, the Face Amount adjusted 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 (an "Index") as described above or in the Pricing Supplement
attached hereto or delivered herewith, in the Specified Currency on the Stated
Maturity shown above or earlier if and to the extent so provided herein, and (b)
to pay accrued interest on the Principal Amount then outstanding (or, in the
case of an Indexed Principal Note, the Face Amount then outstanding): (i) if
this is a Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Base Rate shown above,
adjusted by the Spread or Spread Multiplier, if any, shown above, determined in
accordance with the provisions hereof, (ii) if this is an Indexed Rate Note, at
a rate determined by reference to an Index as described herein, (iii) if this is
an Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein,
until, in each case, the Principal Amount or the Face Amount is paid or duly
provided for in accordance with the terms hereof. The interest so payable, and
punctually paid or duly provided for, on each Interest Payment Date specified
herein will, as provided in the Indenture referred to below, be paid to the
person in whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which, in the case of any Interest Payment Date shall be the date
(whether or not a Business Day), fifteen calendar days immediately preceding
such Interest Payment Date and, in the case of interest payable at Stated
Maturity shall be the Stated Maturity of this Note. Notwithstanding the
foregoing, if this Note is issued between a Regular Record Date and the related
Interest Payment Date, the interest so payable for the period from the Original
Issue Date to such Interest Payment Date shall be paid on the next succeeding
Interest Payment Date to the Registered Holder hereof on the related Regular
Record Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Registered Holder hereof on such Regular
Record Date and may be paid to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes not less than ten
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 Registered Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
For purposes of this Note, "Business Day" 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 shown
4
<PAGE> 47
above (as defined below) is other than U.S. dollars, the financial center of the
country issuing the Specified Currency (which, in the case of the Euro, shall be
Brussels, Belgium) and (ii) if the Base Rate specified above is LIBOR, a London
Banking Day. "London Banking Day" means any day on which dealings in deposits in
the Specified Currency are transacted in the London interbank market.
The indebtedness evidenced by this Note is, to the extent set
forth in the Indenture, expressly subordinated and subject in right of payment
to the prior payment in full of Senior Indebtedness as defined in the Indenture,
and this Note is issued subject to such provisions, and each Holder of this
Note, by accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
If this Note is an Amortizing Note as shown on the face
hereof, a portion or all the principal amount of the Note is payable prior to
Stated Maturity in accordance with a schedule, by application of a formula, or
by reference to an index (as described above).
The principal hereof and any premium and interest hereon are
payable by the Company in the Specified Currency shown above. If the Specified
Currency shown above is other than U.S. dollars, the Company will arrange to
convert all payments in respect hereof into U.S. dollars in the manner described
on the reverse hereof. The Holder hereof may, if so indicated above, elect to
receive all payments in respect hereof in the Specified Currency by delivery of
a written notice to the Trustee not later than fifteen calendar days prior to
the applicable payment date. Such election will remain in effect until revoked
by written notice to the Trustee received not later than fifteen calendar days
prior to the applicable payment date. If the Company determines that the
Specified Currency is not available for making payments in respect hereof 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 or within
the international banking community, then the Holder hereof may not so elect to
receive payments in the Specified Currency, and any such outstanding election
shall be automatically suspended, and payments shall be in U.S. dollars, until
the Company determines that the Specified Currency is again available for making
such payments.
Payments of interest in U.S. dollars (other than interest
payable at Maturity) will be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Security Register on the
applicable Record Date, provided, that, if the Holder hereof is the Holder of
U.S. $10,000,000 (or the equivalent thereof in a currency other than U.S.
dollars determined as provided on the reverse hereof) or more in aggregate
principal amount of Registered Notes of like tenor and term, such U.S. dollar
interest payments will be made by wire transfer of immediately available funds,
but only if appropriate wire transfer instructions have been received in writing
by the Trustee not less than fifteen calendar days prior to the applicable
Interest Payment Date. Simultaneously with any election by the Holder hereof to
receive payments in respect hereof in the Specified Currency (if other than U.S.
dollars), such Holder
5
<PAGE> 48
shall provide appropriate wire transfer instructions to the Trustee and all such
payments will be made by wire transfer of immediately available funds to an
account maintained by the payee with a bank located outside the United States.
The principal hereof and any premium and interest hereon payable at Maturity
will be paid in immediately available funds upon surrender of this Note at the
corporate trust office or agency of the Trustee located in the City and State of
New York.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
NOTE SET FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED
HERETO OR DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Bankers Trust Company, or
its successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By_________________________________________
Authorized Officer
[Seal]
Attest_____________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within - mentioned
Indenture.
BANKERS TRUST COMPANY,
as Trustee
By_________________________________________
Authorized Signatory
6
<PAGE> 49
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FLOATING OR INDEXED RATE)
General
This Note is one of a series of duly authorized debt
securities of the Company (the "Debt Securities") issued or to be issued in one
or more series under an indenture, dated as of December 1, 1988, as amended (the
"Indenture") between the Company and Bankers Trust Company, as trustee (the
"Trustee," which term includes any successor Trustee under the Indenture) to
which indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Debt
Securities and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. The U.S. dollar equivalent of the public offering
price or purchase price of Notes denominated in currencies other than U.S.
dollars will be determined by the Company or its agent, as exchange rate agent
for the Notes (the "Exchange Rate Agent") 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 currencies on the applicable issue dates.
Unless otherwise specified above, the authorized denominations
of Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any
larger amount that is an integral multiple of U.S.$1,000. The authorized
denominations of Registered Notes denominated in a currency other than U.S.
dollars will be as set forth on the respective faces thereof.
Each Registered Note will be issued initially as either a
Book-Entry Note or, if so specified above, a Certificated Note. Book-Entry Notes
will not be exchangeable for Certificated Notes and, except as otherwise
provided in the Indenture, will not otherwise be issuable as Certificated Notes.
Floating Rate Notes
Unless otherwise specified on the face hereof, if this Note is
a Floating Rate Note, this Note will bear interest from its Original Issue Date
to the first Interest Reset Date (as defined below) at the Initial Interest Rate
set forth on the face hereof. Thereafter, the interest rate hereon for each
Interest Reset Period (as defined below) will be determined by reference to the
Base Rate specified on the face hereof, plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, specified on the face hereof. The
Base Rates that may be specified on the face hereof are LIBOR, the Commercial
Paper Rate, the Treasury Rate, the Federal Funds Rate, the CD Rate, the Prime
Rate, the J.J. Kenny Rate, the Eleventh District Cost of Funds Rate or any other
Base Rate specified on the face hereof. "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.
1
<PAGE> 50
As specified on the face hereof, this 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 specified on the face hereof, the interest
rate 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 Company will appoint, and enter into an agreement with,
agents (each, a "Calculation Agent") to calculate interest rates on this Note.
All determinations of interest rates by the Calculation Agent shall, in the
absence of manifest error, be conclusive for all purposes and binding on the
Holder hereof. Unless otherwise specified on the face hereof, Bankers Trust
Company shall be the Calculation Agent for this Note. At the request of the
Holder hereof, the Calculation Agent will provide the interest rate then in
effect and, if determined, the interest rate that will become effective on the
next Interest Reset Date.
The interest rate hereon will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" specified on the face hereof, and the first day of each Interest Reset
Period being an "Interest Reset Date"). Unless otherwise specified on the face
hereof, the Interest Reset Dates will be, if this Note resets daily, each
Business Day; if this Note (unless this Note is a Treasury Rate Note) resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets
weekly, Tuesday of each week (except as provided below under "Determination of
Treasury Rate"); if this Note resets 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); if this Note resets
quarterly, the third Wednesday of March, June, September and December of each
year; if this Note resets semiannually, the third Wednesday of the two months of
each year specified on the face hereof; and if this Note resets annually, the
third Wednesday of the month of each year specified on the face hereof. If an
Interest Reset Date 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, if the Base Rate specified on the face hereof is LIBOR and 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 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 on the face hereof, the interest
payable hereon on each Interest Payment Date 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 such Interest Payment Date,
provided, however, that if the interest rate is reset daily or weekly, the
interest payable hereon 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
2
<PAGE> 51
Date immediately preceding such Interest Payment Date, except that, at Maturity,
the interest payable will include interest accrued to, but excluding, the date
of Maturity.
If more than one Interest Reset Date occurs during any period
for which accrued interest is being calculated, accrued interest shall be
calculated by multiplying the principal amount hereof (or if this Note is an
Indexed Principal Note, the Face Amount specified on the face hereof) 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 on the face hereof, by dividing the
interest rate in effect on such day by 360 if the Base Rate specified on the
face hereof is the Commercial Paper Rate, the Federal Funds Rate, the CD Rate,
the J.J. Kenny Rate, the Prime Rate, the Eleventh District Cost of Funds Rate or
LIBOR, or by the actual number of days in the year, if the Base Rate specified
on the face hereof is the Treasury Rate. In all other cases, accrued interest
shall be calculated by multiplying the principal amount hereof (or if this Note
is an Indexed Principal Note, the Face Amount specified on the face hereof) 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 if the Base Rate specified on the face hereof is the
Commercial Paper Rate, the Federal Funds Rate, the CD Rate the J.J. Kenny Rate,
the prime Rate, the Eleventh District cost of Funds Rate or LIBOR, or by the
actual number of days in the year, if the Base Rate specified on the face hereof
is the Treasury Rate. For purposes of making the foregoing calculations, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date.
Unless otherwise specified on the face hereof, all percentages
resulting from any calculation of the rate of interest hereof 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 will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will
be payable, if this Note resets 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 on the face hereof or, in the case of Eleventh District Cost of Funds
Rate Notes, on the first calendar day of each March, June, September and
December; if this Note resets quarterly, on the third Wednesday of March, June,
September and December of each year; if this Note resets semiannually, on the
third Wednesday of the two months of each year specified on the face hereof; and
if this Note resets annually, on the third Wednesday of the month of each year
specified on the face hereof, and in each case at Maturity (each such day being
an "Interest Payment Date"). If an Interest Payment Date would otherwise fall on
a day that is not a Business Day, such Interest Payment Date shall be postponed
to the next succeeding Business Day, except that, if the Base Rate specified on
the face hereof is LIBOR and 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 Note for which
3
<PAGE> 52
"Accrue to Pay" is not specified on the face hereof, if an Interest Payment Date
with respect to such 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 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.
Subject to applicable provisions of law and except as
specified herein, on each Interest Reset Date the rate of interest shall be the
rate determined in accordance with the provisions of the applicable heading
below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate,
this 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 on the face hereof. 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 specified on the face hereof
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 specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("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 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 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 on the face
hereof in a denomination of $5,000,000, provided, however, that if the dealers
selected as aforesaid by the 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.
4
<PAGE> 53
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial
Paper Rate, this 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 on the face hereof. The
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent 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 on the face hereof, 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 tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day, (the "Calculation 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 Index Maturity specified on the face hereof 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 commercial
paper of the Index Maturity specified on the face hereof 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 the 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 the yield calculated in
accordance with the following formula:
D x 360
Money Market Yield = X 100
360 - (D x M)
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 Index Maturity specified on the face hereof.
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.
5
<PAGE> 54
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal
Funds Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and Spread or
Spread Multiplier, if any, specified on the face hereof. 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 is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the succeeding
Monday will be reset by the Calculation Agent 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.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, this
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 on the face hereof. "LIBOR" for each Interest Reset Period will be
determined by the Calculation Agent 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 arithmetic mean of the offered rates for deposits in the
Specified Currency for the period of the Index Maturity specified on
the face hereof, 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. "Designated LIBOR Page" means either
(a) if "LIBOR Telerate" is designated on the face hereof, the display
designated as page "3750" on the Dow Jones Telerate Service (or
6
<PAGE> 55
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) or (b) if "LIBOR Reuters" is designated on the face
hereof, 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). If neither LIBOR Reuters nor LIBOR
Telerate is specified on the face hereof, LIBOR will be determined as
if LIBOR Telerate had been specified. If at least two such offered
rates appear on the Designated LIBOR Page, "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 fewer than two offered rates appear on the
Designated LIBOR Page on such LIBOR Determination Date, the Calculation
Agent will request the principal London offices of each of four major
banks in the London interbank market selected by the Calculation Agent
to provide the Calculation Agent with its offered quotations for
deposits in the Specified Currency for the period of the Index Maturity
specified on the face hereof, 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 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 Index Maturity specified on the
face hereof, 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 the 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).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury
Rate, this 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 on the face hereof. Unless "Treasury Rate
Constant Maturity" is specified on the face hereof, 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 bills") having the Index Maturity
specified on the face hereof, as published in
7
<PAGE> 56
H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction
average (investment)" or, if not so published by 3:00 p.m., New York City time,
on the tenth calendar day after such Treasury Rate Determination Date (or, if
such day is not a Business Day, the next succeeding Business Day) (the
"Calculation 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 bills having the Index Maturity specified on the face hereof
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 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 the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity specified
on the face hereof, provided, however, that if the dealers selected as aforesaid
by the 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 bills would normally be auctioned.
Treasury bills 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
Note whose Base Rate is the Treasury Rate, then such Interest Reset Date shall
instead be the Business Day immediately following such auction date.
If "Treasury Rate 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 "Constant Maturity -- 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
8
<PAGE> 57
arithmetic mean of bid-side quotations, expressed in terms of yield, reported by
three leading U.S. government securities dealers (one or more 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 "Calculation Date" pertaining to any Treasury Rate Determination
Date or Constant Maturity Treasury Rate Determination Date, as applicable, shall
be the tenth calendar day after such Treasury Rate Determination Date or
Constant Maturity Treasury Rate Determination Date, as applicable, or, if such a
day is not a Business Day, the next succeeding Business Day.
Determination of Prime Rate
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
9
<PAGE> 58
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.
Determination of J.J. Kenny Rate
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 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;
10
<PAGE> 59
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 no 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.
Determination of Eleventh District Cost of Funds Rate
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
If this Note is designated as an Inverse Floating Rate Note on the
face hereof, the Inverse Floating Rate shall be equal to (i) in the case of the
period, if any, commencing on the Original Issue Date (or such other date which
may be specified on the face hereof as the date on which this Note shall begin
to accrue interest), up to the first Interest Reset Date, the Initial Fixed
Interest Rate shown above, and (ii) in the case of each period commencing on an
Interest Reset
11
<PAGE> 60
Date, the Reset Fixed Reference Rate shown above minus the interest rate
determined by reference to the Base Rate shown above, as adjusted by the Spread
or Spread Multiplier, if any, as determined in accordance with the provisions
hereof, 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 the date of Maturity will be the the rate in effect on the tenth day
preceding such date.
Floating Rate / Fixed Rate Notes
If this Note is designated as a Floating Rate / Fixed Rate Note,
this 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 this Note will be determined as provided herein as if it were a Floating Rate
Note and a Fixed Rate Note hereunder for each such respective period, all as
described herein and in the applicable Pricing Supplement.
Subsequent Interest Periods
If so specified on the face hereof, the Spread or Spread Multiplier
on this Note may be reset by the Company on the date or dates specified on the
face hereof (each an "Optional Reset Date"). Not later than 40 days prior to
each Optional Reset Date, the Trustee will mail to the Holder of this Note a
notice (the "Reset Notice"), first class, postage prepaid, indicating whether
the Company has elected to reset the Spread or Spread Multiplier, and if so, (i)
such new Spread or Spread Multiplier 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 this 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 the Subsequent
Interest Period. Notwithstanding the foregoing, not later than 20 days prior to
the Optional Reset Date, the Company may, at its option, revoke the Spread or
Spread Multiplier provided for in the Reset Notice and establish a higher Spread
or Spread Multiplier for the Subsequent Interest Period by causing the Trustee
to mail notice of such higher Spread or Spread Multiplier to the Holder of this
Note. Such notice shall be irrevocable. All Registered Notes with respect to
which the Spread or Spread Multiplier is reset on an Optional Reset Date will
bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by the Company
on each Optional Reset Date at a price equal to the principal amount hereof,
plus interest accrued to such Optional Reset Date. In order to obtain repayment
on an Optional Reset Date, the Holder must follow the procedures set forth below
for optional repayment, except that the period for delivery or notification to
the Trustee shall be at least 25 but not more than 35 days prior to such
Optional Reset Date, and except that if the Holder has tendered this Note for
repayment pursuant to a Reset Notice, the Holder may, by written notice to the
Trustee, revoke such tender for repayment until the close of business on the
tenth day before the Optional Reset Date.
12
<PAGE> 61
Indexed Notes
If this Note is an Indexed Note, then 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 amount designated on the face
hereof as the Face Amount of this Note and by reference to the Index as
described on the face hereof. If this Note is a 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 described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by 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 this Note shall be calculated in the manner described on the face
hereof. Any determination of such third party shall in the absence of manifest
error be binding on all parties.
Specified Currency
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by the
Company or its agent based on the highest firm bid quotation expressed in U.S.
dollars received by the Company or its 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 selected by the Exchange Rate
Agent (one or more of which may be an agent involved in the distribution of the
Notes (an "Agent") and another of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer, for settlement on such payment date, of the
aggregate amount of the 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 Registered Notes by
deductions from such payments. If no such bid quotations are available, then
such payments will be made in the Specified Currency, unless the Specified
Currency is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Company's control, in which case payment will be made
as described in the next paragraph.
Payments in Currencies other than the Specified Currency
13
<PAGE> 62
Except as set forth below, if any payment in respect hereof 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 such payment shall be made in U.S. dollars until such currency
is again available or so used. The amount so payable in such foreign 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 on the face
hereof. Any payment made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
In the event of an official redenomination of the Specified Currency
of this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 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 this Note and the Indenture, and, except as
provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of this Note 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, this Note in either the
current national currency of such Relevant Jurisdiction or Euro, the Company
will make such
14
<PAGE> 63
payments in such national currency or Euro at its sole discretion. To the extent
that the terms and conditions of this Note 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 paragraph and any resultant amendment to the terms and
conditions of this Note will not entitle any Holder hereof (i) to any legal
remedy, including, without limitation, redemption, rescission, notice,
repudiation, adjustment or renegotiation of the terms and conditions of this
Note or the Indenture, 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 this Note or the Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency
Note, the Company may have a one time option, exercisable on one or more dates
(each an "Option Election Date") in whole, but not in part, with respect to all
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 an optional currency (the "Optional Payment 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.
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note,
this Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if
15
<PAGE> 64
a Special Election Interval is specified on the face hereof, the last month in a
period equal to twice the Special Election Interval) after such Renewal Date, if
the Holder of this Note elects to extend the term of this Note or any portion
thereof as described below. If the Holder does not elect to extend the term of
any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so
specified, 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. Such election will be
irrevocable and will be binding upon each subsequent holder of this Note. An
election to renew the term of this Note may be exercised with respect to less
than the entire principal amount of this Note only if so specified on the face
hereof and then only in such principal amount, or any integral multiple in
excess thereof, as is specified on the face hereof. Notwithstanding the
foregoing, the term of this Note may not be extended beyond the Stated Maturity
specified for this Note on the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Spread or Spread
Multiplier applicable to the Extension Period, and (iv) the provisions, if any,
for redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
16
<PAGE> 65
Notwithstanding the foregoing, not later than 20 days prior to the
old Stated Maturity of this Note, the Company may, at its option, revoke the
Spread or Spread Multiplier provided for in the Extension Notice and establish a
higher Spread or Spread Multiplier for the Extension Period by causing the
Trustee to mail notice of such higher Spread or Spread Multiplier, first class,
postage prepaid to the Holder of this Note. Such notice shall be irrevocable.
All Registered Notes with respect to which the Maturity is extended will bear
such higher Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will
have the option to elect repayment of this Note by the Company on the old Stated
Maturity at a price equal to the principal amount hereof, plus interest accrued
to such date. In order to obtain repayment on such old Stated Maturity once the
Company has extended the Maturity hereof, the Holder must follow the procedures
set forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole or in part, on the date or dates (each an Optional
Redemption Date") specified herein, at the price (the "Redemption
Price")(together with accrued interest to such Optional Redemption Date)
specified herein. Unless otherwise stated herein, the Company may exercise such
option with respect to this Note by notifying the Trustee for this 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, the Trustee shall mail to the Holder a
notice of such redemption at least 30 but not more than 60 days prior to the
date of redemption unless otherwise specified on the face hereof In the event of
redemption of this Note in part only, a new Note or Notes for the unredeemed
portion hereof will be issued to the Holder hereof upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable
prior to Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Trustee must receive at least 30 but not more than
45 days prior to an Optional Repayment Date (i) this Note with the form below
entitled "Option to Elect Repayment" duly completed; or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities exchange
or the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States of America setting forth the name of the
Holder of this Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of this Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that this Note with the form below entitled "Option to Elect
Repayment" duly completed will be received by the Trustee not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter. If the procedure described in clause (ii) of the preceding sentence is
17
<PAGE> 66
followed, this Note with form duly completed must be received by the Trustee by
such fifth Business Day. Any tender of this Note 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 this Note for less than the entire
principal amount of the Note provided that the principal amount of this Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be canceled and a new Note or Notes for the
remaining principal amount hereof shall be issued in the name of the Holder of
this Note.
Unless otherwise specified on the face hereof, this Note will not be
subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a Discount
Note, the amount payable in the event of redemption or repayment prior to the
Stated Maturity hereof (other than pursuant to an optional redemption by the
Company at a stated Redemption Price), in lieu of the principal amount due at
the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as
of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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.
Other Terms
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
18
<PAGE> 67
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company,
19
<PAGE> 68
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Note at the times, place and rate, and the coin or
currency, herein prescribed.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
20
<PAGE> 69
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT ENT -as joint tenants with right of
survivorship and not as tenants in
common
UNIF GIFT MIN ACT Custodian
--------------- ---------------
(Cust) (Minor)
Under Uniform Gifts to Minors Act
---------------------------------------
(State)
Additional abbreviations may also be used though not in the above list
------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date or repayment, to the undersigned at:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print or Type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York or, if delivery is by mail, 450 West 33rd Street, Attention: Corporate
Trust Department, New York, New York 10001.
Dated:
---------------------------------------------
Note: The signature to this Option to Elect
Repayment must correspond with the name as
written upon the face of the within Note in
every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please Print or Type Name and Address Including Zip Code of Assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- --------------------------------------------------------------------------------
attorney to transfer such Note on the books of Salomon Smith Barney Holdings
Inc. with full power of substitution in the premises.
Dated:
------------------ --------------------------------------------------
Signature
--------------------------------------------------
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the Note in every particular,
without alteration or enlargement
or any change whatsoever
<PAGE> 70
Exhibit 4(u)(iv)
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
No. FX- MEDIUM-TERM NOTE, SERIES I
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH BELOW
WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
<PAGE> 71
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
2
<PAGE> 72
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company"), for value received hereby promises to pay CEDE & Co. or registered
assigns, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
at the Interest Rate shown above from the Original Issue Date shown above or
from the most recent date to which interest has been paid or duly provided for,
semiannually in arrears on the Interest Payment Dates specified on the face of
this Note and at Maturity, until, in either case, the Principal Amount then
outstanding or the Face Amount is paid or duly provided for in accordance with
the terms hereof. Interest on this Note, if any, will be computed on the basis
of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture referred to on
the reverse hereof, be paid to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which, (other than interest payable at
Maturity) shall be the date (whether or not a Business Day) fifteen calendar
days immediately preceding such Interest Payment Date, and, in the case of
interest payable at Stated Maturity, shall be the Stated Maturity of this Note.
Notwithstanding the foregoing, if this Note is issued between a Regular Record
Date and the related Interest Payment Date, the interest so payable for the
period from the Original Issue Date to such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the Registered Holder hereof on
the related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered Holder
hereof on such Regular Record Date, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
less than ten 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 Registered Notes may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. If an Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is
specified on the face hereof, 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
3
<PAGE> 73
Day. Each payment of interest in respect of an Interest Payment Date shall
include interest accrued through the day before such Interest Payment Date.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 shown above (as defined below) 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).
The indebtedness evidenced by this Note is, to the extent set forth
in the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are payable
by the Company in the Specified Currency shown above. If the Specified Currency
shown above is other than U.S. dollars, the Company will arrange to convert all
payments in respect hereof into U.S. dollars in the manner described on the
reverse hereof. The Holder hereof may, if so indicated above, elect to receive
all payments in respect hereof in the Specified Currency by delivery of a
written notice to the Trustee not later than fifteen calendar days prior to the
applicable payment date. Such election will remain in effect until revoked by
written notice to the Trustee received not later than fifteen calendar days
prior to the applicable payment date. If the Company determines that the
Specified Currency is not available for making payments in respect hereof 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 or within
the international banking community, then the Holder hereof may not so elect to
receive payments in the Specified Currency, and any such outstanding election
shall be automatically suspended, and payments shall be in U.S. dollars, until
the Company determines that the Specified Currency is again available for making
such payments.
Payments of interest in U.S. dollars (other than interest payable at
Maturity) will be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register on the applicable
Record Date, provided, that, if the Holder hereof is the Holder of U.S.
$10,000,000 (or the equivalent thereof in a currency other than U.S. dollars
determined as provided on the reverse hereof) or more in aggregate principal
amount of Registered Notes of like tenor and term, such U.S. dollar interest
payments will be made by wire transfer of immediately available funds, but only
if appropriate wire transfer instructions have
4
<PAGE> 74
been received in writing by the Trustee not less than fifteen calendar days
prior to the applicable Interest Payment Date. Simultaneously with any election
by the Holder hereof to receive payments in respect hereof in the Specified
Currency (if other than U.S. dollars), such Holder shall provide appropriate
wire transfer instructions to the Trustee and all such payments will be made by
wire transfer of immediately available funds to an account maintained by the
payee with a bank located outside the United States. The principal hereof and
any premium and interest hereon payable at Maturity will be paid in immediately
available funds upon surrender of this Note at the corporate trust office or
agency of the Trustee located in the City and State of New York.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Bankers Trust Company, or
its successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY,
as Trustee
5
<PAGE> 75
By
--------------------------
Authorized Signatory
6
<PAGE> 76
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FIXED RATE)
General
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee," which
term includes any successor Trustee under the Indenture) to which indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Debt Securities and of the
terms upon which the Debt Securities are, and are to be, authenticated and
delivered. The U.S. dollar equivalent of the public offering price or purchase
price of Notes denominated in currencies other than U.S. dollars will be
determined by the Company or its agent, as exchange rate agent for the Notes
(the "Exchange Rate Agent") 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
currencies on the applicable issue dates.
Unless otherwise specified above, the authorized denominations of
Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any larger
amount that is an integral multiple of U.S.$1,000. The authorized denominations
of Registered Notes denominated in a currency other than U.S. dollars will be as
set forth on the respective faces thereof.
Each Registered Note will be issued initially as either a Book-Entry
Note or, if so specified above, a Certificated Note. Book-Entry Notes will not
be exchangeable for Certificated Notes and, except as otherwise provided in the
Indenture, will not otherwise be issuable as Certificated Notes.
Fixed Rate Notes
This 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 Interest Rate stated on the face hereof until the principal amount
hereof is paid or made available for payment, except as otherwise described
below under "Subsequent Interest Periods" and "Extension of Maturity", and
except that if so specified in the attached Pricing Supplement, the rate of
interest payable may be subject to adjustment as specified therein.
Unless otherwise set forth herein, interest on this Note will be
payable semiannually in arrears on the Interest Payment Dates set forth above
and at Stated Maturity. If an Interest Payment Date with respect to any 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
1
<PAGE> 77
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 Note for which
"Accrue to Pay" is specified on the face hereof, 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.
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 herein, interest on this Note will be computed
on the basis of a 360-day year of twelve 30-day months ("30 over "360").
Subsequent Interest Periods
If so specified on the face hereof, the Interest Rate on this Note
may be reset by the Company on the date or dates specified on the face hereof
(each an "Optional Reset Date"). Not later than 40 days prior to each Optional
Reset Date, the Trustee will mail to the Holder of this Note a notice (the
"Reset Notice"), first class, postage prepaid, indicating whether the Company
has elected to reset the Interest Rate, and if so, (i) such new Spread or Spread
Multiplier 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 this 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 the Subsequent Interest Period. Notwithstanding the
foregoing, not later than 20 days prior to the Optional Reset Date, the Company
may, at its option, revoke the Interest Rate provided for in the Reset Notice
and establish a higher Spread or Spread Multiplier for the Subsequent Interest
Period by causing the Trustee to mail notice of such higher Spread or Spread
Multiplier to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Interest Rate is reset on an Optional
Reset Date will bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by
the Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
Indexed Notes
2
<PAGE> 78
If this Note is an Indexed Principal Note, then the principal amount
payable at Stated Maturity or earlier redemption or retirement, is determined by
reference to the amount designated on the face hereof as the Face Amount of this
Note and by reference to the Index as described on the face hereof. If this Note
is an Indexed Principal Note, the principal amount payable at Stated Maturity or
any earlier redemption or repayment of this Note may be different from the Face
Amount. If the determination of the Index is calculated or announced by a third
party, which may be an 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 this Note was issued and permitted changes described on the
face hereof), then such Index shall be calculated for this Note's purposes by
another third party, which may be an affiliate of the Company, selected by 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 principal amount of this Note shall be calculated in the
manner described on the face hereof. Any determination of such third party shall
in the absence of manifest error be binding on all parties.
Specified Currency
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by the
Company or its agent based on the highest firm bid quotation expressed in U.S.
dollars received by the Company or its 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 selected by the Exchange Rate
Agent (one or more of which may be an agent involved in the distribution of the
Notes (an "Agent") and another of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer, for settlement on such payment date, of the
aggregate amount of the 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 Registered Notes by
deductions from such payments. If no such bid quotations are available, then
such payments will be made in the Specified Currency, unless the Specified
Currency is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Company's control, in which case payment will be made
as described in the next paragraph.
Payments in Currencies other than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment shall be made in U.S. dollars until such currency
is again available or so used. The amount so payable in such foreign currency
shall be converted into U.S. dollars on the basis of
3
<PAGE> 79
the most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under the
Indenture.
In the event of an official redenomination of the Specified Currency
of this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 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 this Note and the Indenture, and, except as
provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of this Note 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, this Note 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 this Note 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 paragraph and any resultant
amendment to the terms and conditions of this Note will not entitle any Holder
hereof (i) to any legal remedy, including, without limitation, redemption,
rescission, notice, repudiation, adjustment or renegotiation of the terms and
conditions of this Note or the Indenture, or (ii) to raise any defense
4
<PAGE> 80
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 this Note or the Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency
Note, the Company may have a one time option, exercisable on one or more dates
(each an "Option Election Date") in whole, but not in part, with respect to all
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 an optional currency (the "Optional Payment 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.
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note,
this Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this Note during the
specified period prior to any Renewal Date, such portion will become due and
payable on the Interest
5
<PAGE> 81
Payment Date occurring in the sixth month (or the last month in the Special
Election Interval) after such Renewal Date (the "New Maturity Date").
The Holder may elect to renew the term of this Note, or if so
specified, 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. Such election will be
irrevocable and will be binding upon each subsequent holder of this Note. An
election to renew the term of this Note may be exercised with respect to less
than the entire principal amount of this Note only if so specified on the face
hereof and then only in such principal amount, or any integral multiple in
excess thereof, as is specified on the face hereof. Notwithstanding the
foregoing, the term of this Note may not be extended beyond the Stated Maturity
specified for this Note on the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Interest Rate
applicable to the Extension Period, and (iv) the provisions, if any, for
redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the
old Stated Maturity of this Note, the Company may, at its option, revoke the
Interest Rate provided for in the Extension Notice and establish a higher Spread
or Spread Multiplier for the Extension Period by causing the Trustee to mail
notice of such higher Spread or Spread Multiplier, first class, postage prepaid
to the Holder of this Note. Such notice shall be irrevocable. All Registered
6
<PAGE> 82
Notes with respect to which the Maturity is extended will bear such higher
Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will
have the option to elect repayment of this Note by the Company on the old Stated
Maturity at a price equal to the principal amount hereof, plus interest accrued
to such date. In order to obtain repayment on such old Stated Maturity once the
Company has extended the Maturity hereof, the Holder must follow the procedures
set forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole or in part, on the date or dates (each an Optional
Redemption Date") specified herein, at the price (the "Redemption
Price")(together with accrued interest to such Optional Redemption Date)
specified herein. Unless otherwise stated herein, the Company may exercise such
option with respect to this Note by notifying the Trustee for this 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, the Trustee shall mail to the Holder a
notice of such redemption at least 30 but not more than 60 days prior to the
date of redemption unless otherwise specified on the face hereof In the event of
redemption of this Note in part only, a new Note or Notes for the unredeemed
portion hereof will be issued to the Holder hereof upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable
prior to Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Trustee must receive at least 30 but not more than
45 days prior to an Optional Repayment Date (i) this Note with the form below
entitled "Option to Elect Repayment" duly completed; or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities exchange
or the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States of America setting forth the name of the
Holder of this Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of this Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that this Note with the form below entitled "Option to Elect
Repayment" duly completed will be received by the Trustee not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter. If the procedure described in clause (ii) of the preceding sentence is
followed, this Note with form duly completed must be received by the Trustee by
such fifth Business Day. Any tender of this Note 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 this Note for less than the entire
principal amount of the Note provided that the principal amount of this Note
remaining outstanding after repayment is an authorized denomination. Upon such
7
<PAGE> 83
partial repayment, this Note shall be canceled and a new Note or Notes for the
remaining principal amount hereof shall be issued in the name of the Holder of
this Note.
Unless otherwise specified on the face hereof, this Note will not be
subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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.
Other Terms
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
8
<PAGE> 84
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and the coin or currency, herein
prescribed.
9
<PAGE> 85
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
10
<PAGE> 86
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT ENT -as joint tenants with right of
survivorship and not as tenants in
common
UNIF GIFT MIN ACT _______________Custodian_______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_______________________________________
(State)
Additional abbreviations may also be used though not in the above list
--------------------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $__________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date or repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York or, if delivery is by mail, 450 West 33rd Street, Attention: Corporate
Trust Department, New York, New York 10001.
Dated:
----------------------------------------------------------
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the
within Note in every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED,
the undersigned hereby sell(s), assign(s) and transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
_________________________________________
_________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
________________________________________________________________________attorney
to transfer such Note on the books of Salomon Inc with full power of
substitution in the premises.
Dated:____________________ __________________________________________________
Signature
__________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the Note in every particular, without
alteration or enlargement or any change
whatsoever.
11
<PAGE> 1
Exhibit 4(v)(i)
FORM OF SERIES H FLOATING RATE OR INDEXED RATE BEARER NOTE
BEARER PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
No. FL- MEDIUM-TERM NOTE, SERIES H
(FLOATING RATE OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: |_| CD Rate |_| Commercial Paper Rate |_| Federal Funds Rate
|_| LIBOR Telerate |_| LIBOR Reuters |_| Treasury Rate
|_| Treasury Rate Constant Maturity |_| Prime Rate
|_| J. J. Kenny Rate |_| Eleventh District Cost of Funds Rate
|_| Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
<PAGE> 2
Indexed Principal Note: |_| Yes (see attached) |_| No
Floating Rate: |_| Indexed Interest Rate: |_| (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset |_| The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
|_| The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: |_| Yes (see attached) |_| No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: |_| Yes (see attached) |_| No
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
2
<PAGE> 3
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 4
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, or earlier if and to the extent so provided herein, (a) the Principal
Amount or, in the case of an Indexed Principal Note, the Face Amount adjusted 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 (an "Index") as described on
the face hereof or in the Pricing Supplement attached hereto or delivered
herewith, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
on the Principal Amount then outstanding (or, in the case of an Indexed
Principal Note, the Face Amount then outstanding): (i) if this is a Floating
Rate Note, at the Initial Interest Rate shown above from the Original Issue Date
shown above until the first Interest Reset Date shown above following the
Original Issue Date and thereafter at the Base Rate shown above, adjusted by the
Spread or Spread Multiplier, if any, shown above, determined in accordance with
the provisions hereof, (ii) if this is an Indexed Rate Note, at a rate
determined by reference to an Index as described herein, (iii) if this is an
Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein, in
arrears to the bearer of the interest coupons attached hereto (the "Coupons")
upon surrender thereof as they shall severally mature at the rates per annum and
on the dates, determined as described on the reverse hereof, until, in either
case, the Principal Amount or the Face Amount is paid or duly provided for in
accordance with the terms hereof.
For purposes of this Note, "Business Day" 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 this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which in the case of the Euro shall be Brussels, Belgium)
and (ii) if the Base Rate specified above is LIBOR, a London Banking Day.
"London Banking Day means any day on which dealings in deposits in the Specified
currency are transacted in the London interbank market.
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in respect
of this Note and any Coupon will be made only against surrender of this Note or
such Coupon, at the offices of the Paying Agents outside the United States
listed on the reverse hereof. At the direction of the Holder
4
<PAGE> 5
of this Note or any 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 U.S. dollar payments) or outside the United States (in the case of
payments in a currency other than U.S. dollars) mailed to an address outside the
United States furnished by the Holder hereof or, at the option of the Holder
hereof, by wire transfer (pursuant to written instructions supplied by the
Holder hereof) to an account maintained by the payee with a bank located outside
the United States. No payment in respect of this Note or any Coupon will be made
upon presentation of this Note or such Coupon at any office or agency of the
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 this Note 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 the Trustee) in the United States at
which such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR DELIVERED
HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Citibank, N.A., or its successor, as
Trustee.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
6
<PAGE> 7
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FLOATING OR INDEXED RATE)
General
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, as exchange rate agent for the Notes (the "Exchange
Rate Agent"), 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 currencies on the
applicable issue dates.
Unless otherwise specified on the face hereof, 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. The authorized
denominations of Bearer Notes having a specified currency other than U.S.
dollars will be, unless otherwise specified herein, the approximate equivalents
thereof in the Specified Currency.
Floating Rate Notes
Unless otherwise specified on the face hereof, if this Note is a Floating
Rate Note, this Note will bear interest from its Original Issue Date to the
first Interest Reset Date (as defined below) at the Initial Interest Rate set
forth on the face hereof. Thereafter, the interest rate hereon for each Interest
Reset Period (as defined below) 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, specified on the face hereof. The face of this
Note will designate one of the following Base Rates as applicable hereto: (i)
the CD Rate, (ii) the Commercial Paper Rate, (iii) the Federal Funds Rate, (iv)
LIBOR, (v) the Treasury Rate, the Prime Rate, the J.J. Kenny Rate, the Eleventh
District Cost of Funds Rate or (vi) such other Base Rate as set forth herein.
"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.
<PAGE> 8
As specified on the face hereof, this 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 specified on the face hereof, the interest rate 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 Company will appoint, and enter into an agreement with, agents (each,
a "Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof. Unless otherwise specified on the face hereof, Citibank, N.A. shall be
the Calculation Agent for this Note. At the request of the Holder hereof, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date. In addition, such information will be communicated to the Luxembourg
Stock Exchange and will be made available at the offices of the Paying Agent in
Luxembourg and at the Luxembourg Stock Exchange.
As specified on the face hereof, the interest rate hereon will be reset
daily, weekly, monthly, quarterly, semiannually or annually (such period being
the "Interest Reset Period" specified on the face hereof, and the first day of
each Interest Reset Period being an "Interest Reset Date"). Unless otherwise
specified on the face hereof, the Interest Reset Dates will be, if this Note
resets daily, each Business Day; if this Note (unless this Note is a Treasury
Rate Note) resets weekly, Wednesday of each week; if this Note is a Treasury
Rate Note that resets weekly, Tuesday of each week (except as provided below
under "Determination of Treasury Rate"); if this Note resets 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);
if this Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
the two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of the month of each year specified on the
face hereof. If an Interest Reset Date 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, if the Base Rate specified on the face hereof is
LIBOR and 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 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 on the face hereof, the interest payable hereon
on each Interest Payment Date 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 such Interest Payment Date, provided, however,
that if the interest rate is reset daily or
2
<PAGE> 9
weekly, the interest payable hereon 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 such Interest Payment Date, except that, at Maturity, the
interest payable will include interest accrued to, but excluding, the date of
Maturity.
If more than one Interest Reset Date occurs during any period for which
accrued interest is being calculated, accrued interest shall be calculated by
multiplying the principal amount hereof (or if this Note is an Indexed Principal
Note, the Face Amount specified on the face hereof) 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 on the face hereof, by dividing the interest rate in effect
on such day by 360 if the Base Rate specified on the face hereof is the
Commercial Paper Rate, the Federal Funds Rate, the CD Rate, the J.J. Kenny Rate,
the Prime Rate, the Eleventh District Cost of Funds Rate or LIBOR, or by the
actual number of days in the year, if the Base Rate specified on the face hereof
is the Treasury Rate. In all other cases, accrued interest shall be calculated
by multiplying the principal amount hereof (or if this Note is an Indexed
Principal Note, the Face Amount specified on the face hereof) 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 if the
Base Rate specified on the face hereof is the Commercial Paper Rate, the Federal
Funds Rate, the CD Rate the J.J. Kenny Rate, the prime Rate, the Eleventh
District cost of Funds Rate or LIBOR, or by the actual number of days in the
year, if the Base Rate specified on the face hereof is the Treasury Rate. For
purposes of making the foregoing calculations, the interest rate in effect on
any Interest Reset Date will be the applicable rate as reset on such date.
Unless otherwise specified on the face hereof, all percentages resulting
from any calculation of the rate of interest hereof 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 will be rounded to the nearest one-hundredth of
a unit (with .005 of a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will be payable,
if this Note resets 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 on
the face hereof or, in the case of Eleventh District Cost of Funds Rate Notes,
on the first calendar day of each March, June, September and December; if this
Note resets quarterly, on the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, on the third Wednesday
of the two months of each year specified on the face hereof; and if this Note
resets annually, on the third Wednesday of the month of each year specified on
the face hereof, and in each case at Maturity (each such day being an "Interest
Payment Date"). If
3
<PAGE> 10
an Interest Payment Date would otherwise fall on a day that is not a Business
Day, such Interest Payment Date shall be postponed to the next succeeding
Business Day, except that, if the Base Rate specified on the face hereof is
LIBOR and 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 Note for which "Accrue to Pay" is not specified
on the face hereof, if an Interest Payment Date with respect to such 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 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.
Subject to applicable provisions of law and except as specified herein, on
each Interest Reset Date the rate of interest hereon shall be the rate
determined in accordance with the provisions under the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this 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 on the face hereof. 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 specified on the face hereof
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 specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("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 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 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 on the face
hereof in a denomination of $5,000,000, provided, however, that if the dealers
selected as aforesaid by the 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
4
<PAGE> 11
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.
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper Rate,
this 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 on the face hereof. The "Commercial Paper Rate"
for each Interest Reset Period will be determined by the Calculation Agent 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 on the face
hereof, 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 tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day, (the "Calculation 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
Index Maturity specified on the face hereof 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 commercial paper of the Index
Maturity specified on the face hereof 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 the 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 the yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = --------------- X 100
360 - (D x M)
5
<PAGE> 12
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 Index Maturity specified on the face hereof.
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.
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Federal Funds Rate and Spread or Spread
Multiplier, if any, specified on the face hereof. 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 is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the succeeding
Monday will be reset by the Calculation Agent 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.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, this 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
on the face hereof. "LIBOR" for each Interest Reset Period will be determined by
the Calculation Agent as follows:
6
<PAGE> 13
(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 arithmetic mean
of the offered rates for deposits in the Specified Currency for the period
of the Index Maturity specified on the face hereof, 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.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
on the face hereof, 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) or (b) if "LIBOR Reuters" is designated on the face
hereof, 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). If neither LIBOR Reuters nor LIBOR Telerate is specified
on the face hereof, LIBOR will be determined as if LIBOR Telerate had been
specified. If at least two such offered rates appear on the Designated
LIBOR Page, "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 fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will request
the principal London offices of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, 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 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 Index Maturity specified on the face hereof,
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 the Calculation Agent are
quoting rates as mentioned in this sentence, "LIBOR" for such Interest
Reset Period will be the same
7
<PAGE> 14
as LIBOR for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the Initial Interest Rate).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate, this
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 on the face hereof. Unless "Treasury Rate Constant
Maturity" is specified on the face hereof, 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 bills") having the Index Maturity
specified on the face hereof, as published in H.15(519) under the heading "U.S.
Government Securities-Treasury bills-auction average (investment)" or, if not so
published by 3:00 p.m., New York City time, on the tenth calendar day after such
Treasury Rate Determination Date (or, if such day is not a Business Day, the
next succeeding Business Day) (the "Calculation 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 bills having the Index
Maturity specified on the face hereof 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 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
the Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity specified on the face hereof, provided, however,
that if the dealers selected as aforesaid by the 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 bills would normally be auctioned. Treasury bills
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 Note whose Base
Rate is the Treasury Rate, then such Interest Reset Date shall instead be the
Business Day immediately following such auction date.
8
<PAGE> 15
If "Treasury Rate 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 "Constant Maturity -- 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 or more 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 "Calculation Date" pertaining to any Treasury Rate Determination Date
or Constant Maturity Treasury Rate Determination Date, as applicable, shall be
the tenth calendar day after such Treasury Rate Determination Date or Constant
Maturity Treasury Rate Determination Date, as applicable, or, if such a day is
not a Business Day, the next succeeding Business Day.
Determination of Prime Rate
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
9
<PAGE> 16
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.
Determination of J.J. Kenny Rate
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
10
<PAGE> 17
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 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 no 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.
Determination of Eleventh District Cost of Funds Rate
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
11
<PAGE> 18
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
If this Note is designated as an Inverse Floating Rate Note on the face
hereof, the Inverse Floating Rate shall be equal to (i) in the case of the
period, if any, commencing on the Original Issue Date (or such other date which
may be specified on the face hereof as the date on which this Note shall begin
to accrue interest), up to the first Interest Reset Date, the Initial Fixed
Interest Rate shown above, and (ii) in the case of each period commencing on an
Interest Reset Date, the Reset Fixed Reference Rate shown above minus the
interest rate determined by reference to the Base Rate shown above, as adjusted
by the Spread or Spread Multiplier, if any, as determined in accordance with the
provisions hereof, 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 the date of Maturity will be the the rate in effect on the
tenth day preceding such date.
Floating Rate / Fixed Rate Notes
If this Note is designated as a Floating Rate / Fixed Rate Note, this 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
this Note will be determined as provided herein as if it were a Floating Rate
Note and a Fixed Rate Note hereunder for each such respective period, all as
described herein and in the applicable Pricing Supplement.
Subsequent Interest Periods
If so specified on the face hereof, the Spread or Spread Multiplier on
this Note may be reset by the Company on the date or dates specified on the face
hereof (each an "Optional Reset Date"). Not later than 40 days prior to each
Optional Reset Date, the Trustee will mail to the Holder of this Note a notice
(the "Reset Notice"), first class, postage prepaid, indicating whether the
Company has elected to reset the Spread or Spread Multiplier, and if so, (i)
such new Spread or Spread Multiplier 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 this 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 the Subsequent
Interest Period. Notwithstanding the foregoing, not later than 20 days prior to
the Optional Reset Date, the Company may, at its option, revoke the Spread or
Spread Multiplier provided for in the Reset Notice and establish a higher Spread
or Spread Multiplier for the Subsequent Interest Period by causing the Trustee
to mail notice of such higher Spread or Spread
12
<PAGE> 19
Multiplier to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Spread or Spread Multiplier is reset
on an Optional Reset Date will bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
Indexed Notes
If this Note is an Indexed Note, then 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 amount designated on the face
hereof as the Face Amount of this Note and by reference to the Index as
described on the face hereof. If this Note is a 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 described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by 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 this Note shall be calculated in the manner described on the face
hereof. Any determination of such third party shall in the absence of manifest
error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
Except as set forth below, if any payment in respect hereof 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
13
<PAGE> 20
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 such payment shall be made in U.S. dollars until such
currency is again available or so used. The amount so payable in such foreign
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 on
the face hereof. Any payment made under such circumstances in U.S. dollars will
not constitute an Event of Default under the Indenture.
In the event of an official redenomination of the Specified Currency of
this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 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 this Note and the Indenture, and, except as
provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of this Note 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, this Note 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
14
<PAGE> 21
terms and conditions of this Note 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 paragraph and any resultant amendment to the terms and conditions of
this Note will not entitle any Holder hereof (i) to any legal remedy, including,
without limitation, redemption, rescission, notice, repudiation, adjustment or
renegotiation of the terms and conditions of this Note or the Indenture, 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 this Note or the
Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency Note, the
Company may have a one time option, exercisable on one or more dates (each an
"Option Election Date") in whole, but not in part, with respect to all 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 an optional
currency (the "Optional Payment 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.
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note, this
Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or,
15
<PAGE> 22
if a Special Election Interval is specified on the face hereof, the last month
in a period equal to twice the Special Election Interval) after such Renewal
Date, if the Holder of this Note elects to extend the term of this Note or any
portion thereof as described below. If the Holder does not elect to extend the
term of any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so specified,
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. Such election will be irrevocable and will be
binding upon each subsequent holder of this Note. An election to renew the term
of this Note may be exercised with respect to less than the entire principal
amount of this Note only if so specified on the face hereof and then only in
such principal amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the term of this
Note may not be extended beyond the Stated Maturity specified for this Note on
the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Spread or Spread
Multiplier applicable to the Extension Period, and (iv) the provisions, if any,
for redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
16
<PAGE> 23
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the Spread
or Spread Multiplier provided for in the Extension Notice and establish a higher
Spread or Spread Multiplier for the Extension Period by causing the Trustee to
mail notice of such higher Spread or Spread Multiplier, first class, postage
prepaid to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Maturity is extended will bear such
higher Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will have the
option to elect repayment of this Note by the Company on the old Stated Maturity
at a price equal to the principal amount hereof, plus interest accrued to such
date. In order to obtain repayment on such old Stated Maturity once the Company
has extended the Maturity hereof, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must
17
<PAGE> 24
be presented for payment together with all unmatured Coupons, if any,
appertaining hereto, failing which the amount of any missing unmatured Coupon
will be deducted from the sum due for payment.
Unless otherwise specified herein, the Bearer Notes will not be subject to
any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below (which notice shall be irrevocable) at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described 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 the Original Issue Date, and such obligation cannot be avoided by the
Company taking reasonable measures available to it. 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 the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
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.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable. The
repayment option may be exercised by the Holder hereof for less than the entire
principal amount hereof, provided, that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof plus (ii) that portion of the
difference
18
<PAGE> 25
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
hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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 in the applicable Pricing Supplement) or surrendered to
the Trustee for such Notes for cancellation (together with any unmatured Coupons
attached thereto or purchased therewith).
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 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 in
the following paragraph as a result of any chance 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 thie 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.
19
<PAGE> 26
Payment of Additional Interest
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such 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 this Note or such 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 an 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, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or other
tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States 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 this Note or
such 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 this Note or
such Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on this Note or
such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
20
<PAGE> 27
(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 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 this Note or such 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 this Note or such Coupon.
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.
Paying Agents
The Company has initially appointed as its Paying Agents for Bearer Notes
of this Series the offices listed below:
Principal Paying Agent:
Citibank, N.A.
Issuer Services
336 Strand
London, WC2R 1HB
Paying Agent:
Citibank (Luxembourg) S.A.
58 Boulevard Grande-Duchesse Charlotte
P.O. Box 807
L-1330 Luxembourg
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 the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that exchange shall so require,
shall include Luxembourg. Notice of any such termination or appointment and of
any changes in the specified offices of the Trustee or any Paying Agent will be
given to the Holder hereof as described below.
Notices
21
<PAGE> 28
All notices to Holders of this Note 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 such exchange so requires, 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.
Other Provisions
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of all Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is exchangeable for a like aggregate principal amount of
Bearer Notes of different authorized denominations, as requested by the Person
surrendering the same.
No service charge shall be made for any such exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent 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 may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before
replacements will be issued.
All monies paid by the Company to a Trustee or 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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past
22
<PAGE> 29
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Debt Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Debt Security and of any Debt
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Debt Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof (and
premium, if any) and interest hereon in the designated currency of payment is of
the essence. To the fullest extent possible under applicable law, judgments in
respect of this Note shall be given in such currency. The obligation of the
Company to make such payments in the designated currency of payment shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
designated currency of payment that the Holder of this Note may, in accordance
with normal banking procedures, purchase with the sum paid in such other
currency (after any premium and cost of exchange) on the business day in the
country of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount in the
designated currency of payment that may be so purchased is for any reason less
than the amount originally due, the Company shall, as a separate and independent
obligation, pay such additional amounts in the designated currency of payment as
may be necessary to compensate for any such shortfall.
If the Specified Currency of this Note is Pounds sterling, the following
applies: The Company is not an institution authorised under the Banking Act 1987
of the United Kingdom, and this Note is a medium-term note issued in accordance
with regulations made under Section 4 of the Banking Act 1987. The Company
represents that as of the date of issuance of this Note, (1) the Company is in
compliance with its listing obligations to The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in connection with the
Company's securities that are listed on such Exchange; and (2) since information
was last published in compliance with such listing obligations, the Company,
23
<PAGE> 30
having made all reasonable enquiries, has not become aware of any change in
circumstances which could reasonably be regarded as significantly and adversely
affecting its ability to meet its obligations on this Note as they fall due.
Repayment of principal and payment of interest and any premium on this Note have
not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed solely
in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
24
<PAGE> 31
Exhibit 4(v)(ii)
FORM OF SERIES H FIXED RATE BEARER NOTE
BEARER PRINCIPAL AMOUNT
No. FX-____ OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
<PAGE> 32
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
2
<PAGE> 33
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein, and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
to the bearer of the interest coupons attached hereto (the "Coupons") at the
Interest Rate shown above, annually in arrears on the Interest Payment Dates
specified on the face of this Note, commencing on the first Interest Payment
Date following the Original Issue Date shown above upon presentation and
surrender of the Coupons as they shall severally mature, and on the Stated
Maturity shown above, or upon earlier redemption or repayment, until, in either
case, the Principal Amount then outstanding or the Face Amount is paid or duly
provided for in accordance with the terms hereof. Interest on this Note, if any,
will be computed on the basis of a 360-day year of twelve 30-day months. If an
Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is specified on the face thereof
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.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which, in the case of the Euro, shall be Brussels, Belgium).
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
Except under certain circumstances for Notes having Specified
Currencies other than U.S. dollars, payments of the principal hereof and any
premium and interest hereon will be made only in the Specified Currency.
Payments in respect of this Note and any Coupon will be made only against
surrender of this Note or such Coupon, at the offices of the Paying Agents
outside the United States listed on the reverse hereof. At the direction of the
Holder of this Note
3
<PAGE> 34
or any 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
U.S. dollar payments) or outside the United States (in the case of payments in a
currency other than U.S. dollars) mailed to an address outside the United States
furnished by the Holder hereof or, at the option of the Holder hereof, by wire
transfer (pursuant to written instructions supplied by the Holder hereof) to an
account maintained by the payee with a bank located outside the United States.
No payment in respect of this Note or any Coupon will be made upon presentation
of this Note or such Coupon at any office or agency of the 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 this Note 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 the Trustee) in the United States at which such payments
may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
4
<PAGE> 35
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
5
<PAGE> 36
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FIXED RATE)
General
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture) to which indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, as exchange rate agent for the Notes (the "Exchange
Rate Agent") 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 currencies on the
applicable issue dates.
Unless otherwise specified on the face hereof, 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. The authorized
denominations of Bearer Notes having a specified currency other than U.S.
dollars will be, unless otherwise specified herein, the approximate equivalents
thereof in the Specified Currency.
Fixed Rate Notes
This 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 Interest Rate stated on the face hereof until the principal amount hereof
is paid or made available for payment, except as otherwise described below under
"Subsequent Interest Periods" and "Extension of Maturity", and except that if so
specified in the attached Pricing Supplement, the rate of interest payable may
be subject to adjustment as specified therein.
Unless otherwise set forth herein, interest on this Note will be payable
semiannually in arrears on the Interest Payment Dates set forth above and at
Stated Maturity. If an Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is
specified on the face hereof, and any Interest
<PAGE> 37
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.
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 herein, interest on this Note will be computed on the
basis of a 360-day year of twelve 30-day months ("30 over "360").
Subsequent Interest Periods
If so specified on the face hereof, the Interest Rate on this Note may be
reset by the Company on the date or dates specified on the face hereof (each an
"Optional Reset Date"). Not later than 40 days prior to each Optional Reset
Date, the Paying Agent will mail to the Holder of this Note a notice (the "Reset
Notice"), first class, postage prepaid, indicating whether the Company has
elected to reset the Interest Rate, and if so, (i) such new Interest Rate 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 this 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 the Subsequent Interest Period. Notwithstanding the foregoing,
not later than 20 days prior to the Optional Reset Date, the Company may, at its
option, revoke the Interest Rate provided for in the Reset Notice and establish
a higher Interest Rate for the Subsequent Interest Period by causing the Paying
Agent to mail notice of such higher Interest Rate to the Holder of this Note.
Such notice shall be irrevocable. All Bearer Notes with respect to which the
Interest Rate is reset on an Optional Reset Date will bear such higher Interest
Rate.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Paying Agent shall be at least 25 but not more than 35 days
prior to such Optional Reset Date, and except that if the Holder has tendered
this Note for repayment pursuant to a Reset Notice, the Holder may, by written
notice to the Paying Agent, revoke such tender for repayment until the close of
business on the tenth day before the Optional Reset Date.
Indexed Notes
If this Note is an Indexed Principal Note, then the principal amount
payable at Stated Maturity or earlier redemption or retirement is determined by
reference to the amount designated on the face hereof as the Face Amount of this
Note and by reference to the Index as described on the face hereof. If this Note
is an Indexed Principal Note, the principal amount payable at Stated Maturity or
any earlier redemption or repayment of this Note may be different from the Face
Amount. If the determination of the Index is calculated or announced by a third
party, which
2
<PAGE> 38
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by 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 principal amount of this Note shall be calculated in the
manner described on the face hereof. Any determination of such third party shall
in the absence of manifest error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment
shall be made in U.S. dollars until such currency is again available or so used.
The amount so payable in such foreign 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 on the face hereof. Any payment made
under such circumstances in U.S. dollars will not constitute an Event of Default
under the Indenture.
In the event of an official redenomination of the Specified Currency of
this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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
3
<PAGE> 39
regulations or other legislation providing specific rules for the introduction
of the Euro in substitution for the respective 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 this
Note and the Indenture, and, except as provided in the following paragraph, the
payment of principal of, or interest on, or any other amounts in respect of this
Note 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, this Note 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 this Note 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 paragraph and any resultant amendment to the terms and conditions of
this Note will not entitle any Holder hereof (i) to any legal remedy, including,
without limitation, redemption, rescission, notice, repudiation, adjustment or
renegotiation of the terms and conditions of this Note or the Indenture, 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 this Note or the
Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency Note, the
Company may have a one time option, exercisable on one or more dates (each an
"Option Election Date") in whole, but not in part, with respect to all 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 an optional
currency (the "Optional Payment 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.
Renewable Notes
4
<PAGE> 40
If this Note is specified on the face hereof as a Renewable Note, this
Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so specified,
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. Such election will be irrevocable and will be
binding upon each subsequent holder of this Note. An election to renew the term
of this Note may be exercised with respect to less than the entire principal
amount of this Note only if so specified on the face hereof and then only in
such principal amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the term of this
Note may not be extended beyond the Stated Maturity specified for this Note on
the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an
5
<PAGE> 41
"Extension Period") up to but not beyond the date (the "Final Maturity") set
forth on the face hereof. If the Company exercises such option, the Paying Agent
will mail to the Holder of this Note not later than 40 days prior to the old
Stated Maturity a notice (the "Extension Notice") first class, postage prepaid
indicating (i) the election of the Company to extend the Maturity, (ii) the new
Stated Maturity, (iii) the Interest Rate applicable to the Extension Period, and
(iv) the provisions, if any, for redemption during such Extension Period. Upon
the Paying Agent's mailing of the Extension Notice, the Maturity of this Note
shall be extended automatically and, except as modified by the Extension Notice
and as described in the next paragraph, this Note will have the same terms as
prior to the mailing of such Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the
Interest Rate provided for in the Extension Notice and establish a higher
Interest Rate for the Extension Period by causing the Paying Agent to mail
notice of such higher Interest Rate, first class, postage prepaid to the Holder
of this Note. Such notice shall be irrevocable. All Bearer Notes with respect to
which the Maturity is extended will bear such higher Interest Rate.
If the Company extends the Maturity of this Note, the Holder will have the
option to elect repayment of this Note by the Company on the old Stated Maturity
at a price equal to the principal amount hereof, plus interest accrued to such
date. In order to obtain repayment on such old Stated Maturity once the Company
has extended the Maturity hereof, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Paying Agent shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Paying Agent, revoke such tender for repayment until the
close of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at
6
<PAGE> 42
the price (the "Redemption Price")(together with accrued interest to such
Optional Redemption Date) specified herein. Unless otherwise stated herein, the
Company may exercise such option with respect to this Note by notifying the
Trustee for this 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, the Trustee
shall provide notice of such redemption to the Holder hereof in accordance with
"Notices" below. In the event of redemption of this Note in part only, a new
Note or Notes for the unredeemed portion hereof will be issued to the Holder
hereof upon the cancellation hereof. If redeemed prior to its Stated Maturity,
this Note must be presented for payment together with all unmatured Coupons, if
any, appertaining hereto, failing which the amount of any missing unmatured
Coupon will be deducted from the sum due for payment.
Unless otherwise specified herein, the Bearer Notes will not be subject to
any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below (which notice shall be irrevocable) at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described 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 the Original Issue Date, and such obligation cannot be avoided by the
Company taking reasonable measures available to it. 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 the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
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.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable. The
repayment option may be exercised by the Holder hereof for less than the entire
principal amount hereof, provided, that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
7
<PAGE> 43
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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 in the applicable Pricing Supplement) or surrendered to
the Trustee for such Notes for cancellation (together with any unmatured Coupons
attached thereto or purchased therewith).
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 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 in
the following paragraph as a result of any chance 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 thie 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
8
<PAGE> 44
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.
Payment of Additional Interest
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such 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 this Note or such 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 an 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, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or other
tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States 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 this Note or
such 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 this Note or
such Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on this Note or
such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
9
<PAGE> 45
(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 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 this Note or such 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 this Note or such Coupon.
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.
Paying Agents
The Company has initially appointed as its Paying Agents for Bearer Notes
of this Series the offices listed below:
Principal Paying Agent:
Citibank, N.A.
Issuer Services
336 Strand
London, WC2R 1HB
Paying Agent:
Citibank (Luxembourg) S.A.
58 Boulevard Grande-Duchesse Charlotte
P.O. Box 807
L-1330 Luxembourg
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 the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that exchange shall so require,
shall include Luxembourg. Notice of any such termination or appointment and of
any changes in the specified offices of the Trustee or any Paying Agent will be
given to the Holder hereof as described below.
Notices
10
<PAGE> 46
All notices to Holders of this Note 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 such exchange so requires, 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.
Other Provisions
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of all Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is exchangeable for a like aggregate principal amount of
Bearer Notes of different authorized denominations, as requested by the Person
surrendering the same.
No service charge shall be made for any such exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent 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 may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before
replacements will be issued.
All monies paid by the Company to a Trustee or 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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be
11
<PAGE> 47
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Debt Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof (and
premium, if any) and interest hereon in the designated currency of payment is of
the essence. To the fullest extent possible under applicable law, judgments in
respect of this Note shall be given in such currency. The obligation of the
Company to make such payments in the designated currency of payment shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
designated currency of payment that the Holder of this Note may, in accordance
with normal banking procedures, purchase with the sum paid in such other
currency (after any premium and cost of exchange) on the business day in the
country of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount in the
designated currency of payment that may be so purchased is for any reason less
than the amount originally due, the Company shall, as a separate and independent
obligation, pay such additional amounts in the designated currency of payment as
may be necessary to compensate for any such shortfall.
If the Specified Currency of this Note is Pounds sterling, the following
applies: The Company is not an institution authorised under the Banking Act 1987
of the United Kingdom, and this Note is a medium-term note issued in accordance
with regulations made under Section 4 of the Banking Act 1987. The Company
represents that as of the date of issuance of this Note, (1) the Company is in
compliance with its listing obligations to The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in connection with the
Company's securities that are listed on such Exchange; and (2) since information
was last published in compliance with such listing obligations, the Company,
having made all reasonable enquiries, has not become aware of any change in
circumstances which could reasonably be regarded as significantly and adversely
affecting its ability to meet its obligations on this Note as they fall due.
Repayment of principal and payment of interest and any premium on this Note have
not been guaranteed by any person.
12
<PAGE> 48
This Note shall be deemed to be a contract made and to be performed solely
in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
13
<PAGE> 49
Exhibit 4(v)(iii)
FORM OF SERIES I FLOATING RATE OR INDEXED RATE BEARER NOTE
BEARER PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
No. FL- MEDIUM-TERM NOTE, SERIES I
(FLOATING RATE OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: |_| CD Rate |_| Commercial Paper Rate |_| Federal Funds Rate
|_| LIBOR Telerate |_| LIBOR Reuters |_| Treasury Rate
|_| Treasury Rate Constant Maturity |_| Prime Rate
|_| J. J. Kenny Rate |_| Eleventh District Cost of Funds Rate
|_| Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
<PAGE> 50
Indexed Principal Note: |_| Yes (see attached) |_| No
Floating Rate: |_| Indexed Interest Rate: |_| (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset |_| The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
|_| The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: |_| Yes (see attached) |_| No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: |_| Yes (see attached) |_| No
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
2
<PAGE> 51
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 52
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, or earlier if and to the extent so provided herein, (a) the Principal
Amount or, in the case of an Indexed Principal Note, the Face Amount adjusted 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 (an "Index") as described on
the face hereof or in the Pricing Supplement attached hereto or delivered
herewith, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
on the Principal Amount then outstanding (or, in the case of an Indexed
Principal Note, the Face Amount then outstanding): (i) if this is a Floating
Rate Note, at the Initial Interest Rate shown above from the Original Issue Date
shown above until the first Interest Reset Date shown above following the
Original Issue Date and thereafter at the Base Rate shown above, adjusted by the
Spread or Spread Multiplier, if any, shown above, determined in accordance with
the provisions hereof, (ii) if this is an Indexed Rate Note, at a rate
determined by reference to an Index as described herein, (iii) if this is an
Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein, in
arrears to the bearer of the interest coupons attached hereto (the "Coupons")
upon surrender thereof as they shall severally mature at the rates per annum and
on the dates, determined as described on the reverse hereof, until, in either
case, the Principal Amount or the Face Amount is paid or duly provided for in
accordance with the terms hereof.
For purposes of this Note, "Business Day" 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 this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which in the case of the Euro shall be Brussels, Belgium)
and (ii) if the Base Rate specified above is LIBOR, a London Banking Day.
"London Banking Day means any day on which dealings in deposits in the Specified
currency are transacted in the London interbank market.
The indebtedness evidenced by this Note is, to the extent set forth in the
Indenture, expressly subordinated and subject in right of payment to the prior
payment in full of Senior Indebtedness as defined in the Indenture, and this
Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
4
<PAGE> 53
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in respect
of this Note and any Coupon will be made only against surrender of this Note or
such Coupon, at the offices of the Paying Agents outside the United States
listed on the reverse hereof. At the direction of the Holder of this Note or any
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 U.S.
dollar payments) or outside the United States (in the case of payments in a
currency other than U.S. dollars) mailed to an address outside the United States
furnished by the Holder hereof or, at the option of the Holder hereof, by wire
transfer (pursuant to written instructions supplied by the Holder hereof) to an
account maintained by the payee with a bank located outside the United States.
No payment in respect of this Note or any Coupon will be made upon presentation
of this Note or such Coupon at any office or agency of the 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 this Note 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 the Trustee) in the United States at which such payments
may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR DELIVERED
HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Bankers Trust Company, or its
successor, as Trustee.
5
<PAGE> 54
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY,
as Trustee
By
--------------------------
Authorized Signatory
6
<PAGE> 55
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FLOATING OR INDEXED RATE)
General
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee", which
term includes any successor Trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Debt Securities and of the
terms upon which the Debt Securities are, and are to be, authenticated and
delivered. The U.S. dollar equivalent of the public offering price or purchase
price of Notes denominated in currencies other than U.S. dollars will be
determined by the Company or its agent, as exchange rate agent for the Notes
(the "Exchange Rate Agent"), 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
currencies on the applicable issue dates.
Unless otherwise specified on the face hereof, 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. The authorized
denominations of Bearer Notes having a specified currency other than U.S.
dollars will be, unless otherwise specified herein, the approximate equivalents
thereof in the Specified Currency.
Floating Rate Notes
Unless otherwise specified on the face hereof, if this Note is a Floating
Rate Note, this Note will bear interest from its Original Issue Date to the
first Interest Reset Date (as defined below) at the Initial Interest Rate set
forth on the face hereof. Thereafter, the interest rate hereon for each Interest
Reset Period (as defined below) 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, specified on the face hereof. The face of this
Note will designate one of the following Base Rates as applicable hereto: (i)
the CD Rate, (ii) the Commercial Paper Rate, (iii) the Federal Funds Rate, (iv)
LIBOR, (v) the Treasury Rate, the Prime Rate, the J.J. Kenny Rate, the Eleventh
District Cost of Funds Rate or (vi) such other Base Rate as set forth herein.
"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.
<PAGE> 56
As specified on the face hereof, this 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 specified on the face hereof, the interest rate 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 Company will appoint, and enter into an agreement with, agents (each,
a "Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof. Unless otherwise specified on the face hereof, Bankers Trust Company
shall be the Calculation Agent for this Note. At the request of the Holder
hereof, the Calculation Agent will provide the interest rate then in effect and,
if determined, the interest rate that will become effective on the next Interest
Reset Date. In addition, such information will be communicated to the Luxembourg
Stock Exchange and will be made available at the offices of the Paying Agent in
Luxembourg and at the Luxembourg Stock Exchange.
As specified on the face hereof, the interest rate hereon will be reset
daily, weekly, monthly, quarterly, semiannually or annually (such period being
the "Interest Reset Period" specified on the face hereof, and the first day of
each Interest Reset Period being an "Interest Reset Date"). Unless otherwise
specified on the face hereof, the Interest Reset Dates will be, if this Note
resets daily, each Business Day; if this Note (unless this Note is a Treasury
Rate Note) resets weekly, Wednesday of each week; if this Note is a Treasury
Rate Note that resets weekly, Tuesday of each week (except as provided below
under "Determination of Treasury Rate"); if this Note resets 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);
if this Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
the two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of the month of each year specified on the
face hereof. If an Interest Reset Date 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, if the Base Rate specified on the face hereof is
LIBOR and 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 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 on the face hereof, the interest payable hereon
on each Interest Payment Date 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 such Interest Payment Date, provided, however,
that if the interest rate is reset daily or
2
<PAGE> 57
weekly, the interest payable hereon 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 such Interest Payment Date, except that, at Maturity, the
interest payable will include interest accrued to, but excluding, the date of
Maturity.
If more than one Interest Reset Date occurs during any period for which
accrued interest is being calculated, accrued interest shall be calculated by
multiplying the principal amount hereof (or if this Note is an Indexed Principal
Note, the Face Amount specified on the face hereof) 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 on the face hereof, by dividing the interest rate in effect
on such day by 360 if the Base Rate specified on the face hereof is the
Commercial Paper Rate, the Federal Funds Rate, the CD Rate, the J.J. Kenny Rate,
the Prime Rate, the Eleventh District Cost of Funds Rate or LIBOR, or by the
actual number of days in the year, if the Base Rate specified on the face hereof
is the Treasury Rate. In all other cases, accrued interest shall be calculated
by multiplying the principal amount hereof (or if this Note is an Indexed
Principal Note, the Face Amount specified on the face hereof) 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 if the
Base Rate specified on the face hereof is the Commercial Paper Rate, the Federal
Funds Rate, the CD Rate the J.J. Kenny Rate, the prime Rate, the Eleventh
District cost of Funds Rate or LIBOR, or by the actual number of days in the
year, if the Base Rate specified on the face hereof is the Treasury Rate. For
purposes of making the foregoing calculations, the interest rate in effect on
any Interest Reset Date will be the applicable rate as reset on such date.
Unless otherwise specified on the face hereof, all percentages resulting
from any calculation of the rate of interest hereof 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 will be rounded to the nearest one-hundredth of
a unit (with .005 of a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will be payable,
if this Note resets 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 on
the face hereof or, in the case of Eleventh District Cost of Funds Rate Notes,
on the first calendar day of each March, June, September and December; if this
Note resets quarterly, on the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, on the third Wednesday
of the two months of each year specified on the face hereof; and if this Note
resets annually, on the third Wednesday of the month of each year specified on
the face hereof, and in each case at Maturity (each such day being an "Interest
Payment Date"). If an
3
<PAGE> 58
Interest Payment Date would otherwise fall on a day that is not a Business Day,
such Interest Payment Date shall be postponed to the next succeeding Business
Day, except that, if the Base Rate specified on the face hereof is LIBOR and
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 Note for which "Accrue to Pay" is not specified on the
face hereof, if an Interest Payment Date with respect to such 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 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.
Subject to applicable provisions of law and except as specified herein, on
each Interest Reset Date the rate of interest hereon shall be the rate
determined in accordance with the provisions under the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this 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 on the face hereof. 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 specified on the face hereof
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 specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("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 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 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 on the face
hereof in a denomination of $5,000,000, provided, however, that if the dealers
selected as aforesaid by the 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).
4
<PAGE> 59
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.
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper Rate,
this 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 on the face hereof. The "Commercial Paper Rate"
for each Interest Reset Period will be determined by the Calculation Agent 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 on the face
hereof, 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 tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day, (the "Calculation 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
Index Maturity specified on the face hereof 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 commercial paper of the Index
Maturity specified on the face hereof 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 the 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 the yield calculated in accordance with the
following formula:
D x 360
Money Market Yield = --------------- X 100
360 - (D x M)
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 Index Maturity specified on the face hereof.
5
<PAGE> 60
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.
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Federal Funds Rate and Spread or Spread
Multiplier, if any, specified on the face hereof. 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 is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the succeeding
Monday will be reset by the Calculation Agent 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.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, this 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
on the face hereof. "LIBOR" for each Interest Reset Period will be determined by
the Calculation Agent 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 arithmetic mean
of the offered rates for deposits in the Specified Currency for the period
of the Index Maturity specified on
6
<PAGE> 61
the face hereof, 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. "Designated LIBOR Page" means either (a) if
"LIBOR Telerate" is designated on the face hereof, 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) or (b) if
"LIBOR Reuters" is designated on the face hereof, 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). If neither
LIBOR Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR
will be determined as if LIBOR Telerate had been specified. If at least
two such offered rates appear on the Designated LIBOR Page, "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 fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will request
the principal London offices of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, 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 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 Index Maturity specified on the face hereof,
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 the 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).
Determination of Treasury Rate
7
<PAGE> 62
If the Base Rate specified on the face hereof is the Treasury Rate, this
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 on the face hereof. Unless "Treasury Rate Constant
Maturity" is specified on the face hereof, 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 bills") having the Index Maturity
specified on the face hereof, as published in H.15(519) under the heading "U.S.
Government Securities-Treasury bills-auction average (investment)" or, if not so
published by 3:00 p.m., New York City time, on the tenth calendar day after such
Treasury Rate Determination Date (or, if such day is not a Business Day, the
next succeeding Business Day) (the "Calculation 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 bills having the Index
Maturity specified on the face hereof 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 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
the Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity specified on the face hereof, provided, however,
that if the dealers selected as aforesaid by the 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 bills would normally be auctioned. Treasury bills
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 Note whose Base
Rate is the Treasury Rate, then such Interest Reset Date shall instead be the
Business Day immediately following such auction date.
If "Treasury Rate 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
8
<PAGE> 63
the applicable Constant Maturity Treasury Rate Determination Date (as defined
below). If the H.15(519) is not published, the "Constant Maturity -- 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 or more 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 "Calculation Date" pertaining to any Treasury Rate Determination Date
or Constant Maturity Treasury Rate Determination Date, as applicable, shall be
the tenth calendar day after such Treasury Rate Determination Date or Constant
Maturity Treasury Rate Determination Date, as applicable, or, if such a day is
not a Business Day, the next succeeding Business Day.
Determination of Prime Rate
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
9
<PAGE> 64
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.
Determination of J.J. Kenny Rate
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 bonds the interest on which is subject to an "alternate minimum tax"
or similar tax under the Code, unless all tax-exempt
10
<PAGE> 65
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 no 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.
Determination of Eleventh District Cost of Funds Rate
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
11
<PAGE> 66
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
If this Note is designated as an Inverse Floating Rate Note on the face
hereof, the Inverse Floating Rate shall be equal to (i) in the case of the
period, if any, commencing on the Original Issue Date (or such other date which
may be specified on the face hereof as the date on which this Note shall begin
to accrue interest), up to the first Interest Reset Date, the Initial Fixed
Interest Rate shown above, and (ii) in the case of each period commencing on an
Interest Reset Date, the Reset Fixed Reference Rate shown above minus the
interest rate determined by reference to the Base Rate shown above, as adjusted
by the Spread or Spread Multiplier, if any, as determined in accordance with the
provisions hereof, 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 the date of Maturity will be the the rate in effect on the
tenth day preceding such date.
Floating Rate / Fixed Rate Notes
If this Note is designated as a Floating Rate / Fixed Rate Note, this 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
this Note will be determined as provided herein as if it were a Floating Rate
Note and a Fixed Rate Note hereunder for each such respective period, all as
described herein and in the applicable Pricing Supplement.
Subsequent Interest Periods
If so specified on the face hereof, the Spread or Spread Multiplier on
this Note may be reset by the Company on the date or dates specified on the face
hereof (each an "Optional Reset Date"). Not later than 40 days prior to each
Optional Reset Date, the Trustee will mail to the Holder of this Note a notice
(the "Reset Notice"), first class, postage prepaid, indicating whether the
Company has elected to reset the Spread or Spread Multiplier, and if so, (i)
such new Spread or Spread Multiplier 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 this 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 the Subsequent
Interest Period. Notwithstanding the foregoing, not later than 20 days prior to
the Optional Reset Date, the Company may, at its option, revoke the Spread or
Spread Multiplier provided for in the Reset Notice and establish a higher Spread
or Spread Multiplier for the Subsequent Interest Period by causing the Trustee
to mail notice of such higher Spread or Spread Multiplier to the Holder of this
Note. Such notice shall be irrevocable. All Registered Notes with respect to
which the Spread or Spread Multiplier is reset on an Optional Reset Date will
bear such higher Spread or Spread Multiplier.
12
<PAGE> 67
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
Indexed Notes
If this Note is an Indexed Note, then 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 amount designated on the face
hereof as the Face Amount of this Note and by reference to the Index as
described on the face hereof. If this Note is a 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 described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by 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 this Note shall be calculated in the manner described on the face
hereof. Any determination of such third party shall in the absence of manifest
error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment
shall be made in U.S. dollars until such currency is again available or so used.
The amount so payable in such foreign 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
13
<PAGE> 68
indicated on the face hereof. Any payment made under such circumstances in U.S.
dollars will not constitute an Event of Default under the Indenture.
In the event of an official redenomination of the Specified Currency of
this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 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 this Note and the Indenture, and, except as
provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of this Note 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, this Note 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 this Note 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 paragraph and any resultant
amendment to the terms and conditions of this Note will not entitle any Holder
hereof (i) to any legal remedy, including, without limitation, redemption,
rescission, notice, repudiation,
14
<PAGE> 69
adjustment or renegotiation of the terms and conditions of this Note or the
Indenture, 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 this Note or the Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency Note, the
Company may have a one time option, exercisable on one or more dates (each an
"Option Election Date") in whole, but not in part, with respect to all 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 an optional
currency (the "Optional Payment 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.
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note, this
Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this Note during the
specified period prior to any Renewal Date, such portion will become due and
15
<PAGE> 70
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").
The Holder may elect to renew the term of this Note, or if so specified,
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. Such election will be irrevocable and will be
binding upon each subsequent holder of this Note. An election to renew the term
of this Note may be exercised with respect to less than the entire principal
amount of this Note only if so specified on the face hereof and then only in
such principal amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the term of this
Note may not be extended beyond the Stated Maturity specified for this Note on
the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Spread or Spread
Multiplier applicable to the Extension Period, and (iv) the provisions, if any,
for redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the Spread
or Spread Multiplier provided for in the Extension Notice and establish a higher
Spread or Spread
16
<PAGE> 71
Multiplier for the Extension Period by causing the Trustee to mail notice of
such higher Spread or Spread Multiplier, first class, postage prepaid to the
Holder of this Note. Such notice shall be irrevocable. All Registered Notes with
respect to which the Maturity is extended will bear such higher Spread or Spread
Multiplier.
If the Company extends the Maturity of this Note, the Holder will have the
option to elect repayment of this Note by the Company on the old Stated Maturity
at a price equal to the principal amount hereof, plus interest accrued to such
date. In order to obtain repayment on such old Stated Maturity once the Company
has extended the Maturity hereof, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
17
<PAGE> 72
Unless otherwise specified herein, the Bearer Notes will not be subject to
any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below (which notice shall be irrevocable) at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described 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 the Original Issue Date, and such obligation cannot be avoided by the
Company taking reasonable measures available to it. 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 the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
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.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable. The
repayment option may be exercised by the Holder hereof for less than the entire
principal amount hereof, provided, that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (computed in each case in accordance with generally accepted United
States bond yield computation principles), provided,
18
<PAGE> 73
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 this Note
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 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 in the applicable Pricing Supplement) or surrendered to
the Trustee for such Notes for cancellation (together with any unmatured Coupons
attached thereto or purchased therewith).
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 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 in
the following paragraph as a result of any chance 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 thie 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.
Payment of Additional Interest
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such Coupon, after deduction or
withholding for or on account of any present or future tax,
19
<PAGE> 74
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 this Note or
such 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
an 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, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or other
tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States 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 this Note or
such 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 this Note or
such Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on this Note or
such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the 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 this Note or such 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
20
<PAGE> 75
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 this Note or such Coupon.
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.
Paying Agents
The Company has initially appointed as its Paying Agents for Bearer Notes
of this Series the offices listed below:
Principal Paying Agent:
Bankers Trust Company
1 Appold Street, Broadgate
London, EC2A 2HE
Paying Agent:
Bankers Trust Luxembourg, S.A.
F.D. Roosevelt
14 Boulevard
L-2450 Luxembourg
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 the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that exchange shall so require,
shall include Luxembourg. Notice of any such termination or appointment and of
any changes in the specified offices of the Trustee or any Paying Agent will be
given to the Holder hereof as described below.
Notices
All notices to Holders of this Note 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 such exchange so requires, 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.
21
<PAGE> 76
Other Provisions
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of all Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is exchangeable for a like aggregate principal amount of
Bearer Notes of different authorized denominations, as requested by the Person
surrendering the same.
No service charge shall be made for any such exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent 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 may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before
replacements will be issued.
All monies paid by the Company to a Trustee or 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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Debt Security and of any Debt Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Debt
Security.
22
<PAGE> 77
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof (and
premium, if any) and interest hereon in the designated currency of payment is of
the essence. To the fullest extent possible under applicable law, judgments in
respect of this Note shall be given in such currency. The obligation of the
Company to make such payments in the designated currency of payment shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
designated currency of payment that the Holder of this Note may, in accordance
with normal banking procedures, purchase with the sum paid in such other
currency (after any premium and cost of exchange) on the business day in the
country of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount in the
designated currency of payment that may be so purchased is for any reason less
than the amount originally due, the Company shall, as a separate and independent
obligation, pay such additional amounts in the designated currency of payment as
may be necessary to compensate for any such shortfall.
If the Specified Currency of this Note is Pounds sterling, the following
applies: The Company is not an institution authorised under the Banking Act 1987
of the United Kingdom, and this Note is a medium-term note issued in accordance
with regulations made under Section 4 of the Banking Act 1987. The Company
represents that as of the date of issuance of this Note, (1) the Company is in
compliance with its listing obligations to The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in connection with the
Company's securities that are listed on such Exchange; and (2) since information
was last published in compliance with such listing obligations, the Company,
having made all reasonable enquiries, has not become aware of any change in
circumstances which could reasonably be regarded as significantly and adversely
affecting its ability to meet its obligations on this Note as they fall due.
Repayment of principal and payment of interest and any premium on this Note have
not been guaranteed by any person.
23
<PAGE> 78
This Note shall be deemed to be a contract made and to be performed solely
in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
24
<PAGE> 79
Exhibit 4(v)(iv)
FORM OF SERIES I FIXED RATE BEARER NOTE
BEARER PRINCIPAL AMOUNT
No. FX- OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
<PAGE> 80
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
2
<PAGE> 81
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein, and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
to the bearer of the interest coupons attached hereto (the "Coupons") at the
Interest Rate shown above, annually in arrears on the Interest Payment Dates
specified on the face of this Note, commencing on the first Interest Payment
Date following the Original Issue Date shown above upon presentation and
surrender of the Coupons as they shall severally mature, and on the Stated
Maturity shown above, or upon earlier redemption or repayment, until, in either
case, the Principal Amount then outstanding or the Face Amount is paid or duly
provided for in accordance with the terms hereof. Interest on this Note, if any,
will be computed on the basis of a 360-day year of twelve 30-day months. If an
Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is specified on the face thereof
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.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which, in the case of the Euro, shall be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth
in the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
3
<PAGE> 82
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
Except under certain circumstances for Notes having Specified
Currencies other than U.S. dollars, payments of the principal hereof and any
premium and interest hereon will be made only in the Specified Currency.
Payments in respect of this Note and any Coupon will be made only against
surrender of this Note or such Coupon, at the offices of the Paying Agents
outside the United States listed on the reverse hereof. At the direction of the
Holder of this Note or any 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 U.S. dollar payments) or outside the United States (in
the case of payments in a currency other than U.S. dollars) mailed to an address
outside the United States furnished by the Holder hereof or, at the option of
the Holder hereof, by wire transfer (pursuant to written instructions supplied
by the Holder hereof) to an account maintained by the payee with a bank located
outside the United States. No payment in respect of this Note or any Coupon will
be made upon presentation of this Note or such Coupon at any office or agency of
the 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 this Note 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 the Trustee) in the United States at
which such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Bankers Trust Company, or
its successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
4
<PAGE> 83
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY,
as Trustee
By
--------------------------
Authorized Signatory
5
<PAGE> 84
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FIXED RATE)
General
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee," which
term includes any successor Trustee under the Indenture) to which indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Debt Securities and of the
terms upon which the Debt Securities are, and are to be, authenticated and
delivered. The U.S. dollar equivalent of the public offering price or purchase
price of Notes denominated in currencies other than U.S. dollars will be
determined by the Company or its agent, as exchange rate agent for the Notes
(the "Exchange Rate Agent") 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
currencies on the applicable issue dates.
Unless otherwise specified on the face hereof, 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. The authorized
denominations of Bearer Notes having a specified currency other than U.S.
dollars will be, unless otherwise specified herein, the approximate equivalents
thereof in the Specified Currency.
Fixed Rate Notes
This 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 Interest Rate stated on the face hereof until the principal amount hereof
is paid or made available for payment, except as otherwise described below under
"Subsequent Interest Periods" and "Extension of Maturity", and except that if so
specified in the attached Pricing Supplement, the rate of interest payable may
be subject to adjustment as specified therein.
Unless otherwise set forth herein, interest on this Note will be payable
semiannually in arrears on the Interest Payment Dates set forth above and at
Stated Maturity. If an Interest Payment Date with respect to any 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
<PAGE> 85
respect to any Note for which "Accrue to Pay" is specified on the face hereof,
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.
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 herein, interest on this Note will be computed on the
basis of a 360-day year of twelve 30-day months ("30 over "360").
Subsequent Interest Periods
If so specified on the face hereof, the Interest Rate on this Note may be
reset by the Company on the date or dates specified on the face hereof (each an
"Optional Reset Date"). Not later than 40 days prior to each Optional Reset
Date, the Paying Agent will mail to the Holder of this Note a notice (the "Reset
Notice"), first class, postage prepaid, indicating whether the Company has
elected to reset the Interest Rate, and if so, (i) such new Interest Rate 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 this 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 the Subsequent Interest Period. Notwithstanding the foregoing,
not later than 20 days prior to the Optional Reset Date, the Company may, at its
option, revoke the Interest Rate provided for in the Reset Notice and establish
a higher Interest Rate for the Subsequent Interest Period by causing the Paying
Agent to mail notice of such higher Interest Rate to the Holder of this Note.
Such notice shall be irrevocable. All Bearer Notes with respect to which the
Interest Rate is reset on an Optional Reset Date will bear such higher Interest
Rate.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Paying Agent shall be at least 25 but not more than 35 days
prior to such Optional Reset Date, and except that if the Holder has tendered
this Note for repayment pursuant to a Reset Notice, the Holder may, by written
notice to the Paying Agent, revoke such tender for repayment until the close of
business on the tenth day before the Optional Reset Date.
Indexed Notes
If this Note is an Indexed Principal Note, then the principal amount
payable at Stated Maturity or earlier redemption or retirement is determined by
reference to the amount designated on the face hereof as the Face Amount of this
Note and by reference to the Index as described on the face hereof. If this Note
is an Indexed Principal Note, the principal amount payable at Stated Maturity or
any earlier redemption or repayment of this Note may be different from the Face
2
<PAGE> 86
Amount. If the determination of the Index is calculated or announced by a third
party, which may be an 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 this Note was issued and permitted changes described on the
face hereof), then such Index shall be calculated for this Note's purposes by
another third party, which may be an affiliate of the Company, selected by 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 principal amount of this Note shall be calculated in the
manner described on the face hereof. Any determination of such third party shall
in the absence of manifest error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment
shall be made in U.S. dollars until such currency is again available or so used.
The amount so payable in such foreign 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 on the face hereof. Any payment made
under such circumstances in U.S. dollars will not constitute an Event of Default
under the Indenture.
In the event of an official redenomination of the Specified Currency of
this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). Stage III includes the introduction of a single currency
(the "Euro") which
3
<PAGE> 87
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 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 this Note and the Indenture, and, except as provided in the following
paragraph, the payment of principal of, or interest on, or any other amounts in
respect of this Note 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, this Note 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 this Note 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 paragraph and any resultant amendment to the terms and conditions of
this Note will not entitle any Holder hereof (i) to any legal remedy, including,
without limitation, redemption, rescission, notice, repudiation, adjustment or
renegotiation of the terms and conditions of this Note or the Indenture, 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 this Note or the
Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency Note, the
Company may have a one time option, exercisable on one or more dates (each an
"Option Election Date") in whole, but not in part, with respect to all 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 an optional
currency (the "Optional Payment 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.
4
<PAGE> 88
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note, this
Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so specified,
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. Such election will be irrevocable and will be
binding upon each subsequent holder of this Note. An election to renew the term
of this Note may be exercised with respect to less than the entire principal
amount of this Note only if so specified on the face hereof and then only in
such principal amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the term of this
Note may not be extended beyond the Stated Maturity specified for this Note on
the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
5
<PAGE> 89
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Paying Agent will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Interest Rate
applicable to the Extension Period, and (iv) the provisions, if any, for
redemption during such Extension Period. Upon the Paying Agent's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the
Interest Rate provided for in the Extension Notice and establish a higher
Interest Rate for the Extension Period by causing the Paying Agent to mail
notice of such higher Interest Rate, first class, postage prepaid to the Holder
of this Note. Such notice shall be irrevocable. All Bearer Notes with respect to
which the Maturity is extended will bear such higher Interest Rate.
If the Company extends the Maturity of this Note, the Holder will have the
option to elect repayment of this Note by the Company on the old Stated Maturity
at a price equal to the principal amount hereof, plus interest accrued to such
date. In order to obtain repayment on such old Stated Maturity once the Company
has extended the Maturity hereof, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Paying Agent shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Paying Agent, revoke such tender for repayment until the
close of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
6
<PAGE> 90
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
Unless otherwise specified herein, the Bearer Notes will not be subject to
any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below (which notice shall be irrevocable) at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described 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 the Original Issue Date, and such obligation cannot be avoided by the
Company taking reasonable measures available to it. 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 the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
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.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable. The
repayment option may be exercised by the Holder hereof for less than the entire
principal amount hereof, provided, that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
7
<PAGE> 91
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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 in the applicable Pricing Supplement) or surrendered to
the Trustee for such Notes for cancellation (together with any unmatured Coupons
attached thereto or purchased therewith).
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 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 in
the following paragraph as a result of any chance 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 thie 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
8
<PAGE> 92
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.
Payment of Additional Interest
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such 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 this Note or such 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 an 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, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or other
tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States 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 this Note or
such 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 this Note or
such Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on this Note or
such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
9
<PAGE> 93
(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 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 this Note or such 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 this Note or such Coupon.
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.
Paying Agents
The Company has initially appointed as its Paying Agents for Bearer Notes
of this Series the offices listed below:
Principal Paying Agent:
Bankers Trust Company
1 Appold Street, Broadgate
London, EC2A 2HE
Paying Agent:
Bankers Trust Luxembourg, S.A.
F.D. Roosevelt
14 Boulevard
L-2450 Luxembourg
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 the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that exchange shall so require,
shall include Luxembourg. Notice of any such termination or appointment and of
any changes in the specified offices of the Trustee or any Paying Agent will be
given to the Holder hereof as described below.
Notices
All notices to Holders of this Note 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
10
<PAGE> 94
Financial Times) and, so long as the Bearer Notes are listed on the Luxembourg
Stock Exchange and such exchange so requires, 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.
Other Provisions
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of all Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is exchangeable for a like aggregate principal amount of
Bearer Notes of different authorized denominations, as requested by the Person
surrendering the same.
No service charge shall be made for any such exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent 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 may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before
replacements will be issued.
All monies paid by the Company to a Trustee or 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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Debt Security and
11
<PAGE> 95
of any Debt Security issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Debt Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof (and
premium, if any) and interest hereon in the designated currency of payment is of
the essence. To the fullest extent possible under applicable law, judgments in
respect of this Note shall be given in such currency. The obligation of the
Company to make such payments in the designated currency of payment shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
designated currency of payment that the Holder of this Note may, in accordance
with normal banking procedures, purchase with the sum paid in such other
currency (after any premium and cost of exchange) on the business day in the
country of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount in the
designated currency of payment that may be so purchased is for any reason less
than the amount originally due, the Company shall, as a separate and independent
obligation, pay such additional amounts in the designated currency of payment as
may be necessary to compensate for any such shortfall.
If the Specified Currency of this Note is Pounds sterling, the following
applies: The Company is not an institution authorised under the Banking Act 1987
of the United Kingdom, and this Note is a medium-term note issued in accordance
with regulations made under Section 4 of the Banking Act 1987. The Company
represents that as of the date of issuance of this Note, (1) the Company is in
compliance with its listing obligations to The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in connection with the
Company's securities that are listed on such Exchange; and (2) since information
was last published in compliance with such listing obligations, the Company,
having made all reasonable enquiries, has not become aware of any change in
circumstances which could reasonably be regarded as significantly and adversely
affecting its ability to meet its obligations on this Note as they fall due.
Repayment of principal and payment of interest and any premium on this Note have
not been guaranteed by any person.
12
<PAGE> 96
This Note shall be deemed to be a contract made and to be performed solely
in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
13
<PAGE> 1
Exhibit 4(w)(i)
FORM OF SERIES H TEMPORARY GLOBAL NOTE
SALOMON SMITH BARNEY HOLDINGS INC.
TEMPORARY GLOBAL NOTE
(FLOATING OR INDEXED RATE)
representing
BEARER PRINCIPAL
OR FACE AMOUNT
NO. FX-___________ TRANCHE NO.__
MEDIUM-TERM NOTES, SERIES H
THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
REPRESENTING (AND EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS
ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR A PERMANENT GLOBAL NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
<PAGE> 2
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: |_| CD Rate |_| Commercial Paper Rate |_| Federal Funds Rate
|_| LIBOR Telerate |_| LIBOR Reuters |_| Treasury Rate
|_| Treasury Rate Constant Maturity |_| Prime Rate
|_| J. J. Kenny Rate |_| Eleventh District Cost of Funds Rate
|_| Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Floating Rate: |_| Indexed Interest Rate: |_| (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset |_| The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
|_| The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: |_| Yes (see attached) |_| No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: |_| Yes (see attached) |_| No
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
2
<PAGE> 3
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 4
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, or earlier if and to the extent so provided herein, (a) the Principal
Amount then outstanding or, in the case of an Indexed Principal Note, the Face
Amount adjusted 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 (an
"Index") as described on the face hereof or in the Pricing Supplement attached
hereto or delivered herewith, in the Specified Currency on the Stated Maturity
shown above or earlier if and to the extent so provided herein, and (b) to pay
accrued interest on the Principal Amount then outstanding (or, in the case of an
Indexed Principal Note, the Face Amount then outstanding): (i) if this is a
Floating Rate Note, at the Initial Interest Rate shown above from the Original
Issue Date shown above until the first Interest Reset Date shown above following
the Original Issue Date and thereafter at the Base Rate shown above, adjusted by
the Spread or Spread Multiplier, if any, shown above, determined in accordance
with the provisions hereof, (ii) if this is an Indexed Rate Note, at a rate
determined by reference to an Index as described herein, (iii) if this is an
Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein,
until, in either case, the Principal Amount or the Face Amount is paid or duly
provided for in accordance with the terms hereof; but, in the case of principal,
only after exchange of this Note for interests in a Permanent Global Note, as
provided herein and in the Indenture (as defined on the reverse hereof) and, in
the case of interest due on or before the exchange of this Note for interests in
a Permanent Global Note, any interest payable will be paid to each of Euroclear
and CEDEL (as defined below) with respect to that portion of this Note held for
its account, but only upon receipt in each case, as of the relevant Interest
Payment Date, of a Certificate of Non-U.S. Beneficial Ownership (as defined on
the reverse hereof). Each of Euroclear and CEDEL will undertake in such
circumstances to credit such interest received by it in respect of this Note to
the respective accounts having an interest therein.
For purposes of this Note, "Business Day" 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 this Note is presented for
payment or (d) if the Specified Currency (as defined below) is other than U.S.
dollars, the financial center of the country issuing the Specified Currency
(which in the case of the Euro shall be Brussels, Belgium) and (ii) if the Base
Rate specified above is LIBOR, a London Banking Day. "London Banking Day means
any day on which dealings in deposits in the Specified currency are transacted
in the London interbank market.
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
4
<PAGE> 5
This Note will 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, Societe Anonyme
("CEDEL"), for credit to the accounts designated by or on behalf of the
purchasers hereof. On or after the 40th day following the issuance of this Note,
beneficial interests in this Note will be exchangeable for interests in a
definitive Global Security in bearer form, without Coupons attached (a
"Permanent Global Note"), in a denomination equal to the aggregate principal
amount of all interests in this Note so exchanged, only upon receipt (at such
time or in connection with an Interest Payment Date prior to such day) of a
Certificate of Non-U.S. Beneficial Ownership. 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. The beneficial owner
of a Bearer Note represented by an interest in a Permanent Global Note may, upon
30 days' notice to the Trustee given through either Euroclear or CEDEL, exchange
such interest for one or more individual Bearer Notes, with appropriate Coupons
attached, in any authorized denomination or denominations. References herein to
"Bearer Notes" shall, except where otherwise indicated, include interests in a
Permanent Global Note as well as individual Bearer Notes and any appurtenant
Coupons. Upon any exchange of any portion of this Note for an interest in a
Permanent Global Note, the portion of the principal amount hereof so exchanged
shall be endorsed by the Trustee on the Schedule of Exchanges hereto, and the
principal amount hereof shall be reduced for all purposes by the amount so
exchanged.
Except as otherwise provided herein or in the Indenture, until exchanged
in whole for an interest in a Permanent Global Note, this Note shall in all
respects be entitled to the same benefits and be subject to the same terms and
conditions of and the Company shall be subject to the same restrictions as those
contained on the Permanent Global Note and in the Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR DELIVERED
HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Citibank, N.A., or its successor, as
Trustee.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
6
<PAGE> 7
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FLOATING OR INDEXED RATE)
This Note represents one or more Bearer Notes having the same
Original Issue Date and otherwise identical in terms of a series of a duly
authorized issue of securities of the Company designated as specified in the
title hereof, and issued and to be issued in either registered or bearer form
under an indenture dated as of December 1, 1988 (the
"Indenture"), between the Company and Citibank, N.A., as Trustee (the
"Trustee"). This Note is governed by the terms and conditions of the Permanent
Global Note to be issued in exchange for this Note, which terms and conditions
are incorporated herein by reference mutatis mutandis and, except as otherwise
provided herein, shall be binding on the Company, the Holder hereof and the
Holders of the Bearer Notes represented hereby as if fully set forth herein.
Capitalized terms used in this Note that are defined in the Indenture or the
Permanent Global Note and are not otherwise defined herein shall have the
meanings assigned to them therein.
Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a business day 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.
Except as set forth on the Permanent Global Note, the principal
hereof and any premium and interest hereon will be paid by the Company in such
coin or currency as specified above as at the time of payment shall be legal
tender for the payment of public and private debts (the "Specified Currency"),
at the office of any paying agent located outside the United States as the
Company may appoint from time to time (the "Paying Agents").
As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is
a certificate, in the form adopted by the Company, as to beneficial ownership by
persons other than United States persons or as to other qualifying ownership by
or through financial institutions in compliance with applicable U.S. Treasury
regulations.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorized under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note, (1)
the Company is in compliance with its listing obligations to The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited in
connection with the Company's securities that are listed on such Exchange; and
(2) since information was last published in compliance with such listing
obligations, the Company, having made all reasonable enquiries, has not become
aware of
<PAGE> 8
any change in circumstances which could reasonably be regarded as significantly
and adversely affecting its ability to meet its obligations on this Note as they
fall due. Repayment of principal and payment of interest and any premium on this
Note have not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
2
<PAGE> 9
SCHEDULE OF EXCHANGES
The following exchanges of a portion of this Note for interests in a
Permanent Global Note and the following payments of interest in respect of this
Note have been made.
Principal
Amount
Date of Exchanged for Remaining
Exchange or an Interest in Principal Notation made
Interest Interest a Permanent Amount of on behalf of
Payment Paid Global Note this Note the Trustee
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
3
<PAGE> 10
Exhibit 4(w)(ii)
FORM OF SERIES H TEMPORARY GLOBAL NOTE
SALOMON SMITH BARNEY HOLDINGS INC.
TEMPORARY GLOBAL NOTE
(FIXED RATE)
representing
BEARER PRINCIPAL
OR FACE AMOUNT
NO. FX-___________ TRANCHE NO.__
MEDIUM-TERM NOTES, SERIES H
THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
REPRESENTING (AND EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS
ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR A PERMANENT GLOBAL NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE> 11
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
2
<PAGE> 12
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 13
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein, and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
at the Interest Rate shown above, annually in arrears on the Interest Payment
Dates specified on the face of this Note, commencing on the first Interest
Payment Date following the Original Issue Date shown above, and on the Stated
Maturity shown above, or upon earlier redemption or repayment, until, in either
case, the Principal Amount then outstanding or the Face Amount is paid or duly
provided for in accordance with the terms hereof; but, in the case of principal,
only after exchange of this Note for interests in a Permanent Global Note, as
provided herein and in the Indenture (as defined on the reverse hereof) and, in
the case of interest due on or before the exchange of this Note for interests in
a Permanent Global Note, any interest payable will be paid to each of Euroclear
and CEDEL (as defined below) with respect to that portion of this Note held for
its account, but only upon receipt in each case, as of the relevant Interest
Payment Date, of a Certificate of Non-U.S. Beneficial Ownership (as defined on
the reverse hereof). Each of Euroclear and CEDEL will undertake in such
circumstances to credit such interest received by it in respect of this Note to
the respective accounts having an interest therein. Interest on this Note, if
any, will be computed on the basis of a 360-day year of twelve 30-day months. If
an Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is specified on the face
thereof 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.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 this Note is presented for
payment or (d) if the Specified Currency (as defined below) is other than U.S.
dollars, the financial center of the country issuing the Specified Currency
(which, in the case of the Euro, shall be Brussels, Belgium).
4
<PAGE> 14
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
This Note will 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, Societe Anonyme
("CEDEL"), for credit to the accounts designated by or on behalf of the
purchasers hereof. On or after the 40th day following the issuance of this Note,
beneficial interests in this Note will be exchangeable for interests in a
definitive Global Security in bearer form, without Coupons attached (a
"Permanent Global Note"), in a denomination equal to the aggregate principal
amount of all interests in this Note so exchanged, only upon receipt (at such
time or in connection with an Interest Payment Date prior to such day) of a
Certificate of Non-U.S. Beneficial Ownership. 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. The beneficial owner
of a Bearer Note represented by an interest in a Permanent Global Note may, upon
30 days' notice to the Trustee given through either Euroclear or CEDEL, exchange
such interest for one or more individual Bearer Notes, with appropriate Coupons
attached, in any authorized denomination or denominations. References herein to
"Bearer Notes" shall, except where otherwise indicated, include interests in a
Permanent Global Note as well as individual Bearer Notes and any appurtenant
Coupons. Upon any exchange of any portion of this Note for an interest in a
Permanent Global Note, the portion of the principal amount hereof so exchanged
shall be endorsed by the Trustee on the Schedule of Exchanges hereto, and the
principal amount hereof shall be reduced for all purposes by the amount so
exchanged.
Except as otherwise provided herein or in the Indenture, until
exchanged in whole for an interest in a Permanent Global Note, this Note shall
in all respects be entitled to the same benefits and be subject to the same
terms and conditions of and the Company shall be subject to the same
restrictions as those contained on the Permanent Global Note and in the
Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
5
<PAGE> 15
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
6
<PAGE> 16
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FIXED RATE)
General
This Note represents one or more Bearer Notes having the same
Original Issue Date and otherwise identical in terms of a series of a duly
authorized issue of securities of the Company designated as specified in the
title hereof, and issued and to be issued in either registered or bearer form
under an indenture dated as of December 1, 1988 (the "Indenture"), between the
Company and Citibank, N.A., as Trustee (the "Trustee"). This Note is governed by
the terms and conditions of the Permanent Global Note to be issued in exchange
for this Note, which terms and conditions are incorporated herein by reference
mutatis mutandis and, except as otherwise provided herein, shall be binding on
the Company, the Holder hereof and the Holders of the Bearer Notes represented
hereby as if fully set forth herein. Capitalized terms used in this Note that
are defined in the Indenture or the Permanent Global Note and are not otherwise
defined herein shall have the meanings assigned to them therein.
Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a business day 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.
Except as set forth on the Permanent Global Note, the principal
hereof and any premium and interest hereon will be paid by the Company in such
coin or currency as specified above as at the time of payment shall be legal
tender for the payment of public and private debts (the "Specified Currency"),
at the office of any paying agent located outside the United States as the
Company may appoint from time to time (the "Paying Agents").
As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is
a certificate, in the form adopted by the Company, as to beneficial ownership by
persons other than United States persons or as to other qualifying ownership by
or through financial institutions in compliance with applicable U.S. Treasury
regulations.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorized under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note, (1)
the Company is in compliance with its listing obligations to The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited in
connection with the Company's securities that are listed on such Exchange; and
(2) since information was last published in compliance with such listing
obligations, the Company, having made all reasonable enquiries, has not become
aware of any change in circumstances
<PAGE> 17
which could reasonably be regarded as significantly and adversely affecting its
ability to meet its obligations on this Note as they fall due. Repayment of
principal and payment of interest and any premium on this Note have not been
guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
2
<PAGE> 18
SCHEDULE OF EXCHANGES
The following exchanges of a portion of this Note for interests in a
Permanent Global Note and the following payments of interest in respect of this
Note have been made.
Principal
Amount
Date of Exchanged for Remaining
Exchange or an Interest in Principal Notation made
Interest Interest a Permanent Amount of on behalf of
Payment Paid Global Note this Note the Trustee
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
3
<PAGE> 19
Exhibit 4(w)(iii)
FORM OF SERIES I TEMPORARY GLOBAL NOTE
SALOMON SMITH BARNEY HOLDINGS INC.
TEMPORARY GLOBAL NOTE
(FLOATING OR INDEXED RATE)
representing
BEARER PRINCIPAL
OR FACE AMOUNT
NO. FL-___________ TRANCHE NO.__
MEDIUM-TERM NOTES, SERIES I
THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
REPRESENTING (AND EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS
ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR A PERMANENT GLOBAL NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
<PAGE> 20
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: |_| CD Rate |_| Commercial Paper Rate |_| Federal Funds Rate
|_| LIBOR Telerate |_| LIBOR Reuters |_| Treasury Rate
|_| Treasury Rate Constant Maturity |_| Prime Rate
|_| J. J. Kenny Rate |_| Eleventh District Cost of Funds Rate
|_| Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Floating Rate: |_| Indexed Interest Rate: |_| (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset |_| The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
|_| The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: |_| Yes (see attached) |_| No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: |_| Yes (see attached) |_| No
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
2
<PAGE> 21
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 22
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, or earlier if and to the extent so provided herein, (a) the Principal
Amount then outstanding or, in the case of an Indexed Principal Note, the Face
Amount adjusted 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 (an
"Index") as described on the face hereof or in the Pricing Supplement attached
hereto or delivered herewith, in the Specified Currency on the Stated Maturity
shown above or earlier if and to the extent so provided herein, and (b) to pay
accrued interest on the Principal Amount then outstanding (or, in the case of an
Indexed Principal Note, the Face Amount then outstanding): (i) if this is a
Floating Rate Note, at the Initial Interest Rate shown above from the Original
Issue Date shown above until the first Interest Reset Date shown above following
the Original Issue Date and thereafter at the Base Rate shown above, adjusted by
the Spread or Spread Multiplier, if any, shown above, determined in accordance
with the provisions hereof, (ii) if this is an Indexed Rate Note, at a rate
determined by reference to an Index as described herein, (iii) if this is an
Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein,
until, in either case, the Principal Amount or the Face Amount is paid or duly
provided for in accordance with the terms hereof; but, in the case of principal,
only after exchange of this Note for interests in a Permanent Global Note, as
provided herein and in the Indenture (as defined on the reverse hereof) and, in
the case of interest due on or before the exchange of this Note for interests in
a Permanent Global Note, any interest payable will be paid to each of Euroclear
and CEDEL (as defined below) with respect to that portion of this Note held for
its account, but only upon receipt in each case, as of the relevant Interest
Payment Date, of a Certificate of Non-U.S. Beneficial Ownership (as defined on
the reverse hereof). Each of Euroclear and CEDEL will undertake in such
circumstances to credit such interest received by it in respect of this Note to
the respective accounts having an interest therein.
For purposes of this Note, "Business Day" 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 this Note is presented for
payment or (d) if the Specified Currency (as defined below) is other than U.S.
dollars, the financial center of the country issuing the Specified Currency
(which in the case of the Euro shall be Brussels, Belgium) and (ii) if the Base
Rate specified above is LIBOR, a London Banking Day. "London Banking Day means
any day on which dealings in deposits in the Specified currency are transacted
in the London interbank market.
The indebtedness evidenced by this Note is, to the extent set forth in the
Indenture, expressly subordinated and subject in right of payment to the prior
payment in full of Senior Indebtedness as defined in the Indenture, and this
Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such
4
<PAGE> 23
provisions and authorizes and directs the Trustee in his behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination as provided in the Indenture and appoints the Trustee as his
attorney-in-fact for any and all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
This Note will 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, Societe Anonyme
("CEDEL"), for credit to the accounts designated by or on behalf of the
purchasers hereof. On or after the 40th day following the issuance of this Note,
beneficial interests in this Note will be exchangeable for interests in a
definitive Global Security in bearer form, without Coupons attached (a
"Permanent Global Note"), in a denomination equal to the aggregate principal
amount of all interests in this Note so exchanged, only upon receipt (at such
time or in connection with an Interest Payment Date prior to such day) of a
Certificate of Non-U.S. Beneficial Ownership. 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. The beneficial owner
of a Bearer Note represented by an interest in a Permanent Global Note may, upon
30 days' notice to the Trustee given through either Euroclear or CEDEL, exchange
such interest for one or more individual Bearer Notes, with appropriate Coupons
attached, in any authorized denomination or denominations. References herein to
"Bearer Notes" shall, except where otherwise indicated, include interests in a
Permanent Global Note as well as individual Bearer Notes and any appurtenant
Coupons. Upon any exchange of any portion of this Note for an interest in a
Permanent Global Note, the portion of the principal amount hereof so exchanged
shall be endorsed by the Trustee on the Schedule of Exchanges hereto, and the
principal amount hereof shall be reduced for all purposes by the amount so
exchanged.
Except as otherwise provided herein or in the Indenture, until exchanged
in whole for an interest in a Permanent Global Note, this Note shall in all
respects be entitled to the same benefits and be subject to the same terms and
conditions of and the Company shall be subject to the same restrictions as those
contained on the Permanent Global Note and in the Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR DELIVERED
HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Bankers Trust Company, or its
successor, as Trustee.
5
<PAGE> 24
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY,
as Trustee
By
--------------------------
Authorized Signatory
6
<PAGE> 25
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FLOATING OR INDEXED RATE)
This Note represents one or more Bearer Notes having the same
Original Issue Date and otherwise identical in terms of a series of a duly
authorized issue of securities of the Company designated as specified in the
title hereof, and issued and to be issued in either registered or bearer form
under the Subordinated Debt Indenture dated as of December 1, 1988 (the
"Indenture"), between the Company and Bankers Trust Company, as Trustee (the
"Trustee"). This Note is governed by the terms and conditions of the Permanent
Global Note to be issued in exchange for this Note, which terms and conditions
are incorporated herein by reference mutatis mutandis and, except as otherwise
provided herein, shall be binding on the Company, the Holder hereof and the
Holders of the Bearer Notes represented hereby as if fully set forth herein.
Capitalized terms used in this Note that are defined in the Indenture or the
Permanent Global Note and are not otherwise defined herein shall have the
meanings assigned to them therein.
Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a business day 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.
Except as set forth on the Permanent Global Note, the principal
hereof and any premium and interest hereon will be paid by the Company in such
coin or currency as specified above as at the time of payment shall be legal
tender for the payment of public and private debts (the "Specified Currency"),
at the office of any paying agent located outside the United States as the
Company may appoint from time to time (the "Paying Agents").
As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is
a certificate, in the form adopted by the Company, as to beneficial ownership by
persons other than United States persons or as to other qualifying ownership by
or through financial institutions in compliance with applicable U.S. Treasury
regulations.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorized under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note, (1)
the Company is in compliance with its listing obligations to The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited in
connection with the Company's securities that are listed on such Exchange; and
(2) since information was last published in compliance with such listing
obligations, the Company, having made all reasonable enquiries, has not become
aware of
<PAGE> 26
any change in circumstances which could reasonably be regarded as significantly
and adversely affecting its ability to meet its obligations on this Note as they
fall due. Repayment of principal and payment of interest and any premium on this
Note have not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
2
<PAGE> 27
SCHEDULE OF EXCHANGES
The following exchanges of a portion of this Note for interests in a
Permanent Global Note and the following payments of interest in respect of this
Note have been made.
Principal
Amount
Date of Exchanged for Remaining
Exchange or an Interest in Principal Notation made
Interest Interest a Permanent Amount of on behalf of
Payment Paid Global Note this Note the Trustee
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
3
<PAGE> 28
Exhibit 4(w)(iv)
FORM OF SERIES I TEMPORARY GLOBAL NOTE
SALOMON SMITH BARNEY HOLDINGS INC.
TEMPORARY GLOBAL NOTE
(FIXED RATE)
representing
BEARER PRINCIPAL
OR FACE AMOUNT
NO. FX-___________ TRANCHE NO.__
MEDIUM-TERM NOTES, SERIES I
THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
REPRESENTING (AND EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS
ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR A PERMANENT GLOBAL NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE> 29
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
2
<PAGE> 30
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 31
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein, and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
at the Interest Rate shown above, annually in arrears on the Interest Payment
Dates specified on the face of this Note, commencing on the first Interest
Payment Date following the Original Issue Date shown above, and on the Stated
Maturity shown above, or upon earlier redemption or repayment, until, in either
case, the Principal Amount then outstanding or the Face Amount is paid or duly
provided for in accordance with the terms hereof; but, in the case of principal,
only after exchange of this Note for interests in a Permanent Global Note, as
provided herein and in the Indenture (as defined on the reverse hereof) and, in
the case of interest due on or before the exchange of this Note for interests in
a Permanent Global Note, any interest payable will be paid to each of Euroclear
and CEDEL (as defined below) with respect to that portion of this Note held for
its account, but only upon receipt in each case, as of the relevant Interest
Payment Date, of a Certificate of Non-U.S. Beneficial Ownership (as defined on
the reverse hereof). Each of Euroclear and CEDEL will undertake in such
circumstances to credit such interest received by it in respect of this Note to
the respective accounts having an interest therein. Interest on this Note, if
any, will be computed on the basis of a 360-day year of twelve 30-day months. If
an Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is specified on the face
thereof 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.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 this Note is presented for
payment or (d) if the Specified Currency (as defined below) is other than U.S.
dollars, the financial center of the country issuing the Specified Currency
(which, in the case of the Euro, shall be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth
in the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of
4
<PAGE> 32
Senior Indebtedness as defined in the Indenture, and this Note is issued subject
to such provisions, and each Holder of this Note, by accepting the same, agrees
to and shall be bound by such provisions and authorizes and directs the Trustee
in his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination as provided in the Indenture and
appoints the Trustee as his attorney-in-fact for any and all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
This Note will 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, Societe Anonyme
("CEDEL"), for credit to the accounts designated by or on behalf of the
purchasers hereof. On or after the 40th day following the issuance of this Note,
beneficial interests in this Note will be exchangeable for interests in a
definitive Global Security in bearer form, without Coupons attached (a
"Permanent Global Note"), in a denomination equal to the aggregate principal
amount of all interests in this Note so exchanged, only upon receipt (at such
time or in connection with an Interest Payment Date prior to such day) of a
Certificate of Non-U.S. Beneficial Ownership. 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. The beneficial owner
of a Bearer Note represented by an interest in a Permanent Global Note may, upon
30 days' notice to the Trustee given through either Euroclear or CEDEL, exchange
such interest for one or more individual Bearer Notes, with appropriate Coupons
attached, in any authorized denomination or denominations. References herein to
"Bearer Notes" shall, except where otherwise indicated, include interests in a
Permanent Global Note as well as individual Bearer Notes and any appurtenant
Coupons. Upon any exchange of any portion of this Note for an interest in a
Permanent Global Note, the portion of the principal amount hereof so exchanged
shall be endorsed by the Trustee on the Schedule of Exchanges hereto, and the
principal amount hereof shall be reduced for all purposes by the amount so
exchanged.
Except as otherwise provided herein or in the Indenture, until
exchanged in whole for an interest in a Permanent Global Note, this Note shall
in all respects be entitled to the same benefits and be subject to the same
terms and conditions of and the Company shall be subject to the same
restrictions as those contained on the Permanent Global Note and in the
Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
5
<PAGE> 33
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Bankers Trust Company, or
its successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By _________________________________
Authorized Officer
[Seal]
Attest: ____________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY,
as Trustee
By _________________________________
Authorized Officer
6
<PAGE> 34
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FIXED RATE)
General
This Note represents one or more Bearer Notes having the same
Original Issue Date and otherwise identical in terms of a series of a duly
authorized issue of securities of the Company designated as specified in the
title hereof, and issued and to be issued in either registered or bearer form
under the Subordinated Debt Indenture dated as of December 1, 1988 (the
"Indenture"), between the Company and Bankers Trust Company, as Trustee (the
"Trustee"). This Note is governed by the terms and conditions of the Permanent
Global Note to be issued in exchange for this Note, which terms and conditions
are incorporated herein by reference mutatis mutandis and, except as otherwise
provided herein, shall be binding on the Company, the Holder hereof and the
Holders of the Bearer Notes represented hereby as if fully set forth herein.
Capitalized terms used in this Note that are defined in the Indenture or the
Permanent Global Note and are not otherwise defined herein shall have the
meanings assigned to them therein.
Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a business day 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.
Except as set forth on the Permanent Global Note, the principal
hereof and any premium and interest hereon will be paid by the Company in such
coin or currency as specified above as at the time of payment shall be legal
tender for the payment of public and private debts (the "Specified Currency"),
at the office of any paying agent located outside the United States as the
Company may appoint from time to time (the "Paying Agents").
As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is
a certificate, in the form adopted by the Company, as to beneficial ownership by
persons other than United States persons or as to other qualifying ownership by
or through financial institutions in compliance with applicable U.S. Treasury
regulations.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorized under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note, (1)
the Company is in compliance with its listing obligations to The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited in
connection with the Company's securities that are listed on such Exchange; and
(2) since information was last published in compliance with such listing
obligations, the Company, having made all reasonable enquiries, has not become
aware of any change in circumstances
<PAGE> 35
which could reasonably be regarded as significantly and adversely affecting its
ability to meet its obligations on this Note as they fall due. Repayment of
principal and payment of interest and any premium on this Note have not been
guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
2
<PAGE> 36
SCHEDULE OF EXCHANGES
The following exchanges of a portion of this Note for interests in a
Permanent Global Note and the following payments of interest in respect of this
Note have been made.
Principal
Amount
Date of Exchanged for Remaining
Exchange or an Interest in Principal Notation made
Interest Interest a Permanent Amount of on behalf of
Payment Paid Global Note this Note the Trustee
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
- ----------- ---------- -------------- ------------ -------------
3
<PAGE> 1
Exhibit 4(x)(i)
FORM OF
SERIES H PERMANENT GLOBAL FLOATING OR INDEXED RATE NOTE
BEARER PRINCIPAL AMOUNT
No. FL- OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
PERMANENT GLOBAL NOTE
(Floating or Indexed Rate)
representing
MEDIUM-TERM NOTES, SERIES H
Due More Than Nine Months from Date of Issue
THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE
DENOMINATION OF U.S. $10,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE
OF U.S. $1,000 (OR SUCH OTHER DENOMINATIONS AS ARE SPECIFIED BELOW FOR ANOTHER
CURRENCY). THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE
INDENTURE (AS DEFINED HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH BELOW
WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE> 2
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: |_| CD Rate |_| Commercial Paper Rate |_| Federal Funds Rate
|_| LIBOR Telerate |_| LIBOR Reuters |_| Treasury Rate
|_| Treasury Rate Constant Maturity |_| Prime Rate
|_| J. J. Kenny Rate |_| Eleventh District Cost of Funds Rate
|_| Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Floating Rate: |_| Indexed Interest Rate: |_| (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset |_| The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
|_| The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: |_| Yes (see attached) |_| No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: |_| Yes (see attached) |_| No
2
<PAGE> 3
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 4
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, or earlier if and to the extent so provided herein, (a) the Principal
Amount or, in the case of an Indexed Principal Note, the Face Amount adjusted 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 (an "Index") as described on
the face hereof or in the Pricing Supplement attached hereto or delivered
herewith, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
on the Principal Amount then outstanding (or, in the case of an Indexed
Principal Note, the Face Amount then outstanding): (i) if this is a Floating
Rate Note, at the Initial Interest Rate shown above from the Original Issue Date
shown above until the first Interest Reset Date shown above following the
Original Issue Date and thereafter at the Base Rate shown above, adjusted by the
Spread or Spread Multiplier, if any, shown above, determined in accordance with
the provisions hereof, (ii) if this is an Indexed Rate Note, at a rate
determined by reference to an Index as described herein, (iii) if this is an
Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein, at
the rates per annum and on the dates, determined as described on the reverse
hereof, until, in either case, the Principal Amount or the Face Amount is paid
or duly provided for in accordance with the terms hereof.
For purposes of this Note, "Business Day" 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 this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which in the case of the Euro shall be Brussels, Belgium)
and (ii) if the Base Rate specified above is LIBOR, a London Banking Day.
"London Banking Day means any day on which dealings in deposits in the Specified
currency are transacted in the London interbank market.
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
This Note is exchangeable in whole or from time to time in part without
charge for individual Bearer Notes, with appropriate Coupons attached, if any,
in the denomination of U.S.$10,000 or any larger amount that is an integral
multiple of U.S.$1,000 (or such other denominations as are specified above for
another currency), upon 30 days' notice to the Trustee given through either
Euroclear or Cedel Bank, Societe Anonyme. Upon any exchange of any portion of
this Note for individual Bearer Notes, the portion of the principal amount
4
<PAGE> 5
hereof so exchanged shall be endorsed by the Trustee in the Schedule of
Issuances, Exchanges and Aggregate principal amount hereto, and the principal
amount hereof shall be reduced for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until exchanged
in full for individual Bearer Notes, this Note shall in all respects be entitled
to the same benefits and subject to the same terms and conditions of, and the
Company shall be subject to the same restrictions as those contained on the
individual Bearer Notes and in the Indenture.
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in respect
of this Note and any Coupon will be made only against surrender of this Note or
such Coupon, at the offices of the Paying Agents outside the United States
listed on the reverse hereof. At the direction of the Holder of this Note or any
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 U.S.
dollar payments) or outside the United States (in the case of payments in a
currency other than U.S. dollars) mailed to an address outside the United States
furnished by the Holder hereof or, at the option of the Holder hereof, by wire
transfer (pursuant to written instructions supplied by the Holder hereof) to an
account maintained by the payee with a bank located outside the United States.
No payment in respect of this Note or any Coupon will be made upon presentation
of this Note or such Coupon at any office or agency of the 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 this Note 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 the Trustee) in the United States at which such payments
may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR DELIVERED
HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Citibank, N.A., or its successor, as
Trustee.
5
<PAGE> 6
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
6
<PAGE> 7
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FLOATING OR INDEXED RATE)
General
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, as exchange rate agent for the Notes (the "Exchange
Rate Agent"), 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 currencies on the
applicable issue dates.
Unless otherwise specified on the face hereof, 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. The authorized
denominations of Bearer Notes having a specified currency other than U.S.
dollars will be, unless otherwise specified herein, the approximate equivalents
thereof in the Specified Currency.
Floating Rate Notes
Unless otherwise specified on the face hereof, if this Note is a Floating
Rate Note, this Note will bear interest from its Original Issue Date to the
first Interest Reset Date (as defined below) at the Initial Interest Rate set
forth on the face hereof. Thereafter, the interest rate hereon for each Interest
Reset Period (as defined below) 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, specified on the face hereof. The face of this
Note will designate one of the following Base Rates as applicable hereto: (i)
the CD Rate, (ii) the Commercial Paper Rate, (iii) the Federal Funds Rate, (iv)
LIBOR, (v) the Treasury Rate, the Prime Rate, the J.J. Kenny Rate, the Eleventh
District Cost of Funds Rate or (vi) such other Base Rate as set forth herein.
"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.
<PAGE> 8
As specified on the face hereof, this 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 specified on the face hereof, the interest rate 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 Company will appoint, and enter into an agreement with, agents (each,
a "Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof. Unless otherwise specified on the face hereof, Citibank, N.A. shall be
the Calculation Agent for this Note. At the request of the Holder hereof, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date. In addition, such information will be communicated to the Luxembourg
Stock Exchange and will be made available at the offices of the Paying Agent in
Luxembourg and at the Luxembourg Stock Exchange.
As specified on the face hereof, the interest rate hereon will be reset
daily, weekly, monthly, quarterly, semiannually or annually (such period being
the "Interest Reset Period" specified on the face hereof, and the first day of
each Interest Reset Period being an "Interest Reset Date"). Unless otherwise
specified on the face hereof, the Interest Reset Dates will be, if this Note
resets daily, each Business Day; if this Note (unless this Note is a Treasury
Rate Note) resets weekly, Wednesday of each week; if this Note is a Treasury
Rate Note that resets weekly, Tuesday of each week (except as provided below
under "Determination of Treasury Rate"); if this Note resets 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);
if this Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
the two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of the month of each year specified on the
face hereof. If an Interest Reset Date 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, if the Base Rate specified on the face hereof is
LIBOR and 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 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 on the face hereof, the interest payable hereon
on each Interest Payment Date 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
2
<PAGE> 9
such Interest Payment Date, provided, however, that if the interest rate is
reset daily or weekly, the interest payable hereon 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 such Interest Payment Date, except that, at Maturity, the
interest payable will include interest accrued to, but excluding, the date of
Maturity.
If more than one Interest Reset Date occurs during any period for which
accrued interest is being calculated, accrued interest shall be calculated by
multiplying the principal amount hereof (or if this Note is an Indexed Principal
Note, the Face Amount specified on the face hereof) 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 on the face hereof, by dividing the interest rate in effect
on such day by 360 if the Base Rate specified on the face hereof is the
Commercial Paper Rate, the Federal Funds Rate, the CD Rate, the J.J. Kenny Rate,
the Prime Rate, the Eleventh District Cost of Funds Rate or LIBOR, or by the
actual number of days in the year, if the Base Rate specified on the face hereof
is the Treasury Rate. In all other cases, accrued interest shall be calculated
by multiplying the principal amount hereof (or if this Note is an Indexed
Principal Note, the Face Amount specified on the face hereof) 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 if the
Base Rate specified on the face hereof is the Commercial Paper Rate, the Federal
Funds Rate, the CD Rate the J.J. Kenny Rate, the prime Rate, the Eleventh
District cost of Funds Rate or LIBOR, or by the actual number of days in the
year, if the Base Rate specified on the face hereof is the Treasury Rate. For
purposes of making the foregoing calculations, the interest rate in effect on
any Interest Reset Date will be the applicable rate as reset on such date.
Unless otherwise specified on the face hereof, all percentages resulting
from any calculation of the rate of interest hereof 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 will be rounded to the nearest one-hundredth of
a unit (with .005 of a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will be payable,
if this Note resets 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 on
the face hereof or, in the case of Eleventh District Cost of Funds Rate Notes,
on the first calendar day of each March, June, September and December; if this
Note resets quarterly, on the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, on the third Wednesday
of the two months of each year specified on the face hereof; and if
3
<PAGE> 10
this Note resets annually, on the third Wednesday of the month of each year
specified on the face hereof, and in each case at Maturity (each such day being
an "Interest Payment Date"). If an Interest Payment Date would otherwise fall on
a day that is not a Business Day, such Interest Payment Date shall be postponed
to the next succeeding Business Day, except that, if the Base Rate specified on
the face hereof is LIBOR and 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 Note for which "Accrue to
Pay" is not specified on the face hereof, if an Interest Payment Date with
respect to such 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 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.
Subject to applicable provisions of law and except as specified herein, on
each Interest Reset Date the rate of interest hereon shall be the rate
determined in accordance with the provisions under the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this 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 on the face hereof. 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 specified on the face hereof
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 specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("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 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 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 on the face
hereof in a denomination of $5,000,000,
4
<PAGE> 11
provided, however, that if the dealers selected as aforesaid by the 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.
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper Rate,
this 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 on the face hereof. The "Commercial Paper Rate"
for each Interest Reset Period will be determined by the Calculation Agent 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 on the face
hereof, 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 tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day, (the "Calculation 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
Index Maturity specified on the face hereof 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 commercial paper of the Index
Maturity specified on the face hereof 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 the 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 the yield calculated in accordance with the
following formula:
5
<PAGE> 12
D x 360
Money Market Yield = --------------- X 100
360 - (D x M)
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 Index Maturity specified on the face hereof.
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.
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Federal Funds Rate and Spread or Spread
Multiplier, if any, specified on the face hereof. 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 is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the succeeding
Monday will be reset by the Calculation Agent 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.
Determination of LIBOR
6
<PAGE> 13
If the Base Rate specified on the face hereof is LIBOR, this 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
on the face hereof. "LIBOR" for each Interest Reset Period will be determined by
the Calculation Agent 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 arithmetic mean
of the offered rates for deposits in the Specified Currency for the period
of the Index Maturity specified on the face hereof, 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.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
on the face hereof, 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) or (b) if "LIBOR Reuters" is designated on the face
hereof, 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). If neither LIBOR Reuters nor LIBOR Telerate is specified
on the face hereof, LIBOR will be determined as if LIBOR Telerate had been
specified. If at least two such offered rates appear on the Designated
LIBOR Page, "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 fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will request
the principal London offices of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, 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 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 Index Maturity specified on the face hereof,
commencing on such Interest Reset Date, and in a principal amount equal
7
<PAGE> 14
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 the 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).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate, this
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 on the face hereof. Unless "Treasury Rate Constant
Maturity" is specified on the face hereof, 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 bills") having the Index Maturity
specified on the face hereof, as published in H.15(519) under the heading "U.S.
Government Securities-Treasury bills-auction average (investment)" or, if not so
published by 3:00 p.m., New York City time, on the tenth calendar day after such
Treasury Rate Determination Date (or, if such day is not a Business Day, the
next succeeding Business Day) (the "Calculation 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 bills having the Index
Maturity specified on the face hereof 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 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
the Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity specified on the face hereof, provided, however,
that if the dealers selected as aforesaid by the 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 bills would normally be auctioned. Treasury bills
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
8
<PAGE> 15
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 Note whose Base Rate is the Treasury
Rate, then such Interest Reset Date shall instead be the Business Day
immediately following such auction date.
If "Treasury Rate 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 "Constant Maturity -- 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 or more 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 "Calculation Date" pertaining to any Treasury Rate Determination Date
or Constant Maturity Treasury Rate Determination Date, as applicable, shall be
the tenth calendar day after such Treasury Rate Determination Date or Constant
Maturity Treasury Rate Determination Date, as applicable, or, if such a day is
not a Business Day, the next succeeding Business Day.
Determination of Prime Rate
9
<PAGE> 16
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.
Determination of J.J. Kenny Rate
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.
10
<PAGE> 17
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 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 no 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.
Determination of Eleventh District Cost of Funds Rate
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
11
<PAGE> 18
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
If this Note is designated as an Inverse Floating Rate Note on the face
hereof, the Inverse Floating Rate shall be equal to (i) in the case of the
period, if any, commencing on the Original Issue Date (or such other date which
may be specified on the face hereof as the date on which this Note shall begin
to accrue interest), up to the first Interest Reset Date, the Initial Fixed
Interest Rate shown above, and (ii) in the case of each period commencing on an
Interest Reset Date, the Reset Fixed Reference Rate shown above minus the
interest rate determined by reference to the Base Rate shown above, as adjusted
by the Spread or Spread Multiplier, if any, as determined in accordance with the
provisions hereof, 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 the date of Maturity will be the rate in effect on the
tenth day preceding such date.
Floating Rate / Fixed Rate Notes
If this Note is designated as a Floating Rate / Fixed Rate Note, this 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
this Note will be determined as provided herein as if it were a Floating Rate
Note and a Fixed Rate Note hereunder for each such respective period, all as
described herein and in the applicable Pricing Supplement.
Subsequent Interest Periods
If so specified on the face hereof, the Spread or Spread Multiplier on
this Note may be reset by the Company on the date or dates specified on the face
hereof (each an "Optional Reset Date"). Not later than 40 days prior to each
Optional Reset Date, the
12
<PAGE> 19
Trustee will mail to the Holder of this Note a notice (the "Reset Notice"),
first class, postage prepaid, indicating whether the Company has elected to
reset the Spread or Spread Multiplier, and if so, (i) such new Spread or Spread
Multiplier 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 this 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 the Subsequent Interest Period. Notwithstanding the
foregoing, not later than 20 days prior to the Optional Reset Date, the Company
may, at its option, revoke the Spread or Spread Multiplier provided for in the
Reset Notice and establish a higher Spread or Spread Multiplier for the
Subsequent Interest Period by causing the Trustee to mail notice of such higher
Spread or Spread Multiplier to the Holder of this Note. Such notice shall be
irrevocable. All Registered Notes with respect to which the Spread or Spread
Multiplier is reset on an Optional Reset Date will bear such higher Spread or
Spread Multiplier.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
Indexed Notes
If this Note is an Indexed Note, then 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 amount designated on the face
hereof as the Face Amount of this Note and by reference to the Index as
described on the face hereof. If this Note is a 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 described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by the Company
subject to the same conditions and controls as applied to the original third
party. If for any reason such
13
<PAGE> 20
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 this Note shall be
calculated in the manner described on the face hereof. Any determination of such
third party shall in the absence of manifest error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment
shall be made in U.S. dollars until such currency is again available or so used.
The amount so payable in such foreign 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 on the face hereof. Any payment made
under such circumstances in U.S. dollars will not constitute an Event of Default
under the Indenture.
In the event of an official redenomination of the Specified Currency of
this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 national currencies of such member states, which regulations or
legislation may be
14
<PAGE> 21
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 this Note and the Indenture, and, except as provided in the following
paragraph, the payment of principal of, or interest on, or any other amounts in
respect of this Note 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, this Note 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 this Note 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 paragraph and any resultant amendment to the terms and conditions of
this Note will not entitle any Holder hereof (i) to any legal remedy, including,
without limitation, redemption, rescission, notice, repudiation, adjustment or
renegotiation of the terms and conditions of this Note or the Indenture, 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 this Note or the
Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency Note, the
Company may have a one time option, exercisable on one or more dates (each an
"Option Election Date") in whole, but not in part, with respect to all 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 an optional
currency (the "Optional Payment 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.
15
<PAGE> 22
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note, this
Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so specified,
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. Such election will be irrevocable and will be
binding upon each subsequent holder of this Note. An election to renew the term
of this Note may be exercised with respect to less than the entire principal
amount of this Note only if so specified on the face hereof and then only in
such principal amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the term of this
Note may not be extended beyond the Stated Maturity specified for this Note on
the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
16
<PAGE> 23
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Spread or Spread
Multiplier applicable to the Extension Period, and (iv) the provisions, if any,
for redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the Spread
or Spread Multiplier provided for in the Extension Notice and establish a higher
Spread or Spread Multiplier for the Extension Period by causing the Trustee to
mail notice of such higher Spread or Spread Multiplier, first class, postage
prepaid to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Maturity is extended will bear such
higher Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will have the
option to elect repayment of this Note by the Company on the old Stated Maturity
at a price equal to the principal amount hereof, plus interest accrued to such
date. In order to obtain repayment on such old Stated Maturity once the Company
has extended the Maturity hereof, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder
17
<PAGE> 24
hereof upon the cancellation hereof. If redeemed prior to its Stated Maturity,
this Note must be presented for payment.
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
Unless otherwise specified herein, the Bearer Notes will not be subject to
any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below (which notice shall be irrevocable) at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described 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 the Original Issue Date, and such obligation cannot be avoided by the
Company taking reasonable measures available to it. 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 the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
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.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable.
18
<PAGE> 25
The repayment option may be exercised by the Holder hereof for less than the
entire principal amount hereof, provided, that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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 in the applicable Pricing Supplement) or surrendered to
the Trustee for such Notes for cancellation (together with any unmatured Coupons
attached thereto or purchased therewith).
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 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 in
the following paragraph as a result of any chance 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,
19
<PAGE> 26
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 thie 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.
Payment of Additional Interest
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such 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 this Note or such 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 an 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, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or other
tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States 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 this Note or
such Coupon for payment more than 15 days after the date on which such
payment became due and
20
<PAGE> 27
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 this Note or
such Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on this Note or
such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the 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 this Note or such 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 this Note or such Coupon.
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.
Paying Agents
The Company has initially appointed as its Paying Agents for Bearer Notes
of this Series the offices listed below:
Principal Paying Agent:
Citibank, N.A.
Issuer Services
336 Strand
London, WC2R 1HB
Paying Agent:
Citibank (Luxembourg) S.A.
58 Boulevard Grande-Duchesse Charlotte
P.O. Box 807
21
<PAGE> 28
L-1330 Luxembourg
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 the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that exchange shall so require,
shall include Luxembourg. Notice of any such termination or appointment and of
any changes in the specified offices of the Trustee or any Paying Agent will be
given to the Holder hereof as described below.
Notices
All notices to Holders of this Note 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 such exchange so requires, 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.
Other Provisions
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of all Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is exchangeable for a like aggregate principal amount of
Bearer Notes of different authorized denominations, as requested by the Person
surrendering the same.
No service charge shall be made for any such exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent 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 may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before
replacements will be issued.
All monies paid by the Company to a Trustee or 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
22
<PAGE> 29
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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Debt Security and of any Debt Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Debt
Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof (and
premium, if any) and interest hereon in the designated currency of payment is of
the essence. To the fullest extent possible under applicable law, judgments in
respect of this Note shall be given in such currency. The obligation of the
Company to make such payments in the designated currency of payment shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
designated currency of payment that the Holder of this Note may, in accordance
with normal banking procedures, purchase with the sum paid in such other
currency (after any premium and cost of exchange) on the business day in the
country of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount
23
<PAGE> 30
in the designated currency of payment that may be so purchased is for any reason
less than the amount originally due, the Company shall, as a separate and
independent obligation, pay such additional amounts in the designated currency
of payment as may be necessary to compensate for any such shortfall.
If the Specified Currency of this Note is Pounds sterling, the following
applies: The Company is not an institution authorised under the Banking Act 1987
of the United Kingdom, and this Note is a medium-term note issued in accordance
with regulations made under Section 4 of the Banking Act 1987. The Company
represents that as of the date of issuance of this Note, (1) the Company is in
compliance with its listing obligations to The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in connection with the
Company's securities that are listed on such Exchange; and (2) since information
was last published in compliance with such listing obligations, the Company,
having made all reasonable enquiries, has not become aware of any change in
circumstances which could reasonably be regarded as significantly and adversely
affecting its ability to meet its obligations on this Note as they fall due.
Repayment of principal and payment of interest and any premium on this Note have
not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed solely
in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
24
<PAGE> 31
Exhibit 4(x)(ii)
FORM OF
SERIES H PERMANENT GLOBAL FIXED RATE NOTE
BEARER PRINCIPAL AMOUNT
No. FX- OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
PERMANENT GLOBAL NOTE
(Fixed Rate)
representing
MEDIUM-TERM NOTES, SERIES H
Due More Than Nine Months from Date of Issue
THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE
DENOMINATION OF U.S. $10,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE
OF U.S. $1,000 (OR SUCH OTHER DENOMINATIONS AS ARE SPECIFIED BELOW FOR ANOTHER
CURRENCY). THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE
INDENTURE (AS DEFINED HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH BELOW
WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE> 32
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
2
<PAGE> 33
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 34
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein, and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
at the Interest Rate shown above, annually in arrears on the Interest Payment
Dates specified on the face of this Note, commencing on the first Interest
Payment Date following the Original Issue Date shown above, and on the Stated
Maturity shown above, or upon earlier redemption or repayment, until, in either
case, the Principal Amount then outstanding or the Face Amount is paid or duly
provided for in accordance with the terms hereof. Interest on this Note, if any,
will be computed on the basis of a 360-day year of twelve 30-day months. If an
Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is specified on the face thereof
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.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which, in the case of the Euro, shall be Brussels, Belgium).
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
This Note is exchangeable in whole or from time to time in part
without charge for individual Bearer Notes, with appropriate Coupons attached,
if any, in the denomination of U.S.$10,000 or any larger amount that is an
integral multiple of U.S.$1,000 (or such other denominations as are specified
above for another currency), upon 30 days' notice to the Trustee given through
either Euroclear or Cedel Bank, Societe Anonyme. Upon any exchange of any
portion of this Note for individual Bearer Notes, the portion of the principal
amount hereof so exchanged
4
<PAGE> 35
shall be endorsed by the Trustee in the Schedule of Issuances, Exchanges and
Aggregate principal amount hereto, and the principal amount hereof shall be
reduced for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until
exchanged in full for individual Bearer Notes, this Note shall in all respects
be entitled to the same benefits and subject to the same terms and conditions
of, and the Company shall be subject to the same restrictions as those contained
on the individual Bearer Notes and in the Indenture.
Except under certain circumstances for Notes having Specified
Currencies other than U.S. dollars, payments of the principal hereof and any
premium and interest hereon will be made only in the Specified Currency.
Payments in respect of this Note and any Coupon will be made only against
surrender of this Note or such Coupon, at the offices of the Paying Agents
outside the United States listed on the reverse hereof. At the direction of the
Holder of this Note or any 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 U.S. dollar payments) or outside the United States (in
the case of payments in a currency other than U.S. dollars) mailed to an address
outside the United States furnished by the Holder hereof or, at the option of
the Holder hereof, by wire transfer (pursuant to written instructions supplied
by the Holder hereof) to an account maintained by the payee with a bank located
outside the United States. No payment in respect of this Note or any Coupon will
be made upon presentation of this Note or such Coupon at any office or agency of
the 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 this Note 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 the Trustee) in the United States at
which such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
5
<PAGE> 36
SALOMON SMITH BARNEY HOLDINGS INC.
By _________________________________
Authorized Officer
[Seal]
Attest: ____________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By _________________________________
Authorized Officer
6
<PAGE> 37
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES H
(FIXED RATE)
General
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture) to which indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, as exchange rate agent for the Notes (the "Exchange
Rate Agent") 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 currencies on the
applicable issue dates.
Unless otherwise specified on the face hereof, 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. The authorized
denominations of Bearer Notes having a specified currency other than U.S.
dollars will be, unless otherwise specified herein, the approximate equivalents
thereof in the Specified Currency.
Fixed Rate Notes
This 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 Interest Rate stated on the face hereof until the principal amount hereof
is paid or made available for payment, except as otherwise described below under
"Subsequent Interest Periods" and "Extension of Maturity", and except that if so
specified in the attached Pricing Supplement, the rate of interest payable may
be subject to adjustment as specified therein.
Unless otherwise set forth herein, interest on this Note will be payable
semiannually in arrears on the Interest Payment Dates set forth above and at
Stated Maturity. If an Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is
specified on the face hereof, and any Interest
<PAGE> 38
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.
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 herein, interest on this Note will be computed on the
basis of a 360-day year of twelve 30-day months ("30 over "360").
Subsequent Interest Periods
If so specified on the face hereof, the Interest Rate on this Note may be
reset by the Company on the date or dates specified on the face hereof (each an
"Optional Reset Date"). Not later than 40 days prior to each Optional Reset
Date, the Paying Agent will mail to the Holder of this Note a notice (the "Reset
Notice"), first class, postage prepaid, indicating whether the Company has
elected to reset the Interest Rate, and if so, (i) such new Interest Rate 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 this 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 the Subsequent Interest Period. Notwithstanding the foregoing,
not later than 20 days prior to the Optional Reset Date, the Company may, at its
option, revoke the Interest Rate provided for in the Reset Notice and establish
a higher Interest Rate for the Subsequent Interest Period by causing the Paying
Agent to mail notice of such higher Interest Rate to the Holder of this Note.
Such notice shall be irrevocable. All Bearer Notes with respect to which the
Interest Rate is reset on an Optional Reset Date will bear such higher Interest
Rate.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Paying Agent shall be at least 25 but not more than 35 days
prior to such Optional Reset Date, and except that if the Holder has tendered
this Note for repayment pursuant to a Reset Notice, the Holder may, by written
notice to the Paying Agent, revoke such tender for repayment until the close of
business on the tenth day before the Optional Reset Date.
Indexed Notes
If this Note is an Indexed Principal Note, then the principal amount
payable at Stated Maturity or earlier redemption or retirement is determined by
reference to the amount designated on the face hereof as the Face Amount of this
Note and by reference to the Index as described on the face hereof. If this Note
is an Indexed Principal Note, the principal amount payable at Stated Maturity or
any earlier redemption or repayment of this Note may be different from the Face
Amount. If the determination of the Index is calculated or announced by a third
party, which
2
<PAGE> 39
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by 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 principal amount of this Note shall be calculated in the
manner described on the face hereof. Any determination of such third party shall
in the absence of manifest error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment
shall be made in U.S. dollars until such currency is again available or so used.
The amount so payable in such foreign 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 on the face hereof. Any payment made
under such circumstances in U.S. dollars will not constitute an Event of Default
under the Indenture.
In the event of an official redenomination of the Specified Currency of
this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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
3
<PAGE> 40
regulations or other legislation providing specific rules for the introduction
of the Euro in substitution for the respective 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 this
Note and the Indenture, and, except as provided in the following paragraph, the
payment of principal of, or interest on, or any other amounts in respect of this
Note 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, this Note 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 this Note 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 paragraph and any resultant amendment to the terms and conditions of
this Note will not entitle any Holder hereof (i) to any legal remedy, including,
without limitation, redemption, rescission, notice, repudiation, adjustment or
renegotiation of the terms and conditions of this Note or the Indenture, 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 this Note or the
Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency Note, the
Company may have a one time option, exercisable on one or more dates (each an
"Option Election Date") in whole, but not in part, with respect to all 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 an optional
currency (the "Optional Payment 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.
Renewable Notes
4
<PAGE> 41
If this Note is specified on the face hereof as a Renewable Note, this
Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so specified,
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. Such election will be irrevocable and will be
binding upon each subsequent holder of this Note. An election to renew the term
of this Note may be exercised with respect to less than the entire principal
amount of this Note only if so specified on the face hereof and then only in
such principal amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the term of this
Note may not be extended beyond the Stated Maturity specified for this Note on
the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an
5
<PAGE> 42
"Extension Period") up to but not beyond the date (the "Final Maturity") set
forth on the face hereof. If the Company exercises such option, the Paying Agent
will mail to the Holder of this Note not later than 40 days prior to the old
Stated Maturity a notice (the "Extension Notice") first class, postage prepaid
indicating (i) the election of the Company to extend the Maturity, (ii) the new
Stated Maturity, (iii) the Interest Rate applicable to the Extension Period, and
(iv) the provisions, if any, for redemption during such Extension Period. Upon
the Paying Agent's mailing of the Extension Notice, the Maturity of this Note
shall be extended automatically and, except as modified by the Extension Notice
and as described in the next paragraph, this Note will have the same terms as
prior to the mailing of such Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the
Interest Rate provided for in the Extension Notice and establish a higher
Interest Rate for the Extension Period by causing the Paying Agent to mail
notice of such higher Interest Rate, first class, postage prepaid to the Holder
of this Note. Such notice shall be irrevocable. All Bearer Notes with respect to
which the Maturity is extended will bear such higher Interest Rate.
If the Company extends the Maturity of this Note, the Holder will have the
option to elect repayment of this Note by the Company on the old Stated Maturity
at a price equal to the principal amount hereof, plus interest accrued to such
date. In order to obtain repayment on such old Stated Maturity once the Company
has extended the Maturity hereof, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Paying Agent shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Paying Agent, revoke such tender for repayment until the
close of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at
6
<PAGE> 43
the price (the "Redemption Price")(together with accrued interest to such
Optional Redemption Date) specified herein. Unless otherwise stated herein, the
Company may exercise such option with respect to this Note by notifying the
Trustee for this 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, the Trustee
shall provide notice of such redemption to the Holder hereof in accordance with
"Notices" below. In the event of redemption of this Note in part only, a new
Note or Notes for the unredeemed portion hereof will be issued to the Holder
hereof upon the cancellation hereof. If redeemed prior to its Stated Maturity,
this Note must be presented for payment together with all unmatured Coupons, if
any, appertaining hereto, failing which the amount of any missing unmatured
Coupon will be deducted from the sum due for payment.
Unless otherwise specified herein, the Bearer Notes will not be subject to
any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below (which notice shall be irrevocable) at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described 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 the Original Issue Date, and such obligation cannot be avoided by the
Company taking reasonable measures available to it. 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 the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
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.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable. The
repayment option may be exercised by the Holder hereof for less than the entire
principal amount hereof, provided, that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
7
<PAGE> 44
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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 in the applicable Pricing Supplement) or surrendered to
the Trustee for such Notes for cancellation (together with any unmatured Coupons
attached thereto or purchased therewith).
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 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 in
the following paragraph as a result of any chance 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 thie 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
8
<PAGE> 45
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.
Payment of Additional Interest
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such 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 this Note or such 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 an 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, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or other
tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States 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 this Note or
such 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 this Note or
such Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on this Note or
such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
9
<PAGE> 46
(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 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 this Note or such 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 this Note or such Coupon.
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.
Paying Agents
The Company has initially appointed as its Paying Agents for Bearer Notes
of this Series the offices listed below:
Principal Paying Agent:
Citibank, N.A.
Issuer Services
336 Strand
London, WC2R 1HB
Paying Agent:
Citibank (Luxembourg) S.A.
58 Boulevard Grande-Duchesse Charlotte
P.O. Box 807
L-1330 Luxembourg
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 the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that exchange shall so require,
shall include Luxembourg. Notice of any such termination or appointment and of
any changes in the specified offices of the Trustee or any Paying Agent will be
given to the Holder hereof as described below.
Notices
10
<PAGE> 47
All notices to Holders of this Note 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 such exchange so requires, 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.
Other Provisions
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of all Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is exchangeable for a like aggregate principal amount of
Bearer Notes of different authorized denominations, as requested by the Person
surrendering the same.
No service charge shall be made for any such exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent 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 may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before
replacements will be issued.
All monies paid by the Company to a Trustee or 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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be
11
<PAGE> 48
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Debt Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof (and
premium, if any) and interest hereon in the designated currency of payment is of
the essence. To the fullest extent possible under applicable law, judgments in
respect of this Note shall be given in such currency. The obligation of the
Company to make such payments in the designated currency of payment shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
designated currency of payment that the Holder of this Note may, in accordance
with normal banking procedures, purchase with the sum paid in such other
currency (after any premium and cost of exchange) on the business day in the
country of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount in the
designated currency of payment that may be so purchased is for any reason less
than the amount originally due, the Company shall, as a separate and independent
obligation, pay such additional amounts in the designated currency of payment as
may be necessary to compensate for any such shortfall.
If the Specified Currency of this Note is Pounds sterling, the following
applies: The Company is not an institution authorised under the Banking Act 1987
of the United Kingdom, and this Note is a medium-term note issued in accordance
with regulations made under Section 4 of the Banking Act 1987. The Company
represents that as of the date of issuance of this Note, (1) the Company is in
compliance with its listing obligations to The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in connection with the
Company's securities that are listed on such Exchange; and (2) since information
was last published in compliance with such listing obligations, the Company,
having made all reasonable enquiries, has not become aware of any change in
circumstances which could reasonably be regarded as significantly and adversely
affecting its ability to meet its obligations on this Note as they fall due.
Repayment of principal and payment of interest and any premium on this Note have
not been guaranteed by any person.
12
<PAGE> 49
This Note shall be deemed to be a contract made and to be performed solely
in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
13
<PAGE> 50
Exhibit 4(x)(iii)
FORM OF
SERIES I PERMANENT GLOBAL FLOATING OR INDEXED RATE NOTE
BEARER PRINCIPAL AMOUNT
No. FL- OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
PERMANENT GLOBAL NOTE
(Floating or Indexed Rate)
representing
MEDIUM-TERM NOTES, SERIES I
Due More Than Nine Months from Date of Issue
THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE
DENOMINATION OF U.S. $10,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE
OF U.S. $1,000 (OR SUCH OTHER DENOMINATIONS AS ARE SPECIFIED BELOW FOR ANOTHER
CURRENCY). THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE
INDENTURE (AS DEFINED HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH BELOW
WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE> 51
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: |_| CD Rate |_| Commercial Paper Rate |_| Federal Funds Rate
|_| LIBOR Telerate |_| LIBOR Reuters |_| Treasury Rate
|_| Treasury Rate Constant Maturity |_| Prime Rate
|_| J. J. Kenny Rate |_| Eleventh District Cost of Funds Rate
|_| Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Floating Rate: |_| Indexed Interest Rate: |_| (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset |_| The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
|_| The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: |_| Yes (see attached) |_| No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: |_| Yes (see attached) |_| No
2
<PAGE> 52
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 53
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, or earlier if and to the extent so provided herein, (a) the Principal
Amount or, in the case of an Indexed Principal Note, the Face Amount adjusted 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 (an "Index") as described on
the face hereof or in the Pricing Supplement attached hereto or delivered
herewith, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
on the Principal Amount then outstanding (or, in the case of an Indexed
Principal Note, the Face Amount then outstanding): (i) if this is a Floating
Rate Note, at the Initial Interest Rate shown above from the Original Issue Date
shown above until the first Interest Reset Date shown above following the
Original Issue Date and thereafter at the Base Rate shown above, adjusted by the
Spread or Spread Multiplier, if any, shown above, determined in accordance with
the provisions hereof, (ii) if this is an Indexed Rate Note, at a rate
determined by reference to an Index as described herein, (iii) if this is an
Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein, at
the rates per annum and on the dates, determined as described on the reverse
hereof, until, in either case, the Principal Amount or the Face Amount is paid
or duly provided for in accordance with the terms hereof.
For purposes of this Note, "Business Day" 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 this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which in the case of the Euro shall be Brussels, Belgium)
and (ii) if the Base Rate specified above is LIBOR, a London Banking Day.
"London Banking Day means any day on which dealings in deposits in the Specified
currency are transacted in the London interbank market.
The indebtedness evidenced by this Note is, to the extent set forth in the
Indenture, expressly subordinated and subject in right of payment to the prior
payment in full of Senior Indebtedness as defined in the Indenture, and this
Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
4
<PAGE> 54
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
This Note is exchangeable in whole or from time to time in part without
charge for individual Bearer Notes, with appropriate Coupons attached, if any,
in the denomination of U.S.$10,000 or any larger amount that is an integral
multiple of U.S.$1,000 (or such other denominations as are specified above for
another currency), upon 30 days' notice to the Trustee given through either
Euroclear or Cedel Bank, Societe Anonyme. Upon any exchange of any portion of
this Note for individual Bearer Notes, the portion of the principal amount
hereof so exchanged shall be endorsed by the Trustee in the Schedule of
Issuances, Exchanges and Aggregate principal amount hereto, and the principal
amount hereof shall be reduced for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until exchanged
in full for individual Bearer Notes, this Note shall in all respects be entitled
to the same benefits and subject to the same terms and conditions of, and the
Company shall be subject to the same restrictions as those contained on the
individual Bearer Notes and in the Indenture.
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in respect
of this Note and any Coupon will be made only against surrender of this Note or
such Coupon, at the offices of the Paying Agents outside the United States
listed on the reverse hereof. At the direction of the Holder of this Note or any
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 U.S.
dollar payments) or outside the United States (in the case of payments in a
currency other than U.S. dollars) mailed to an address outside the United States
furnished by the Holder hereof or, at the option of the Holder hereof, by wire
transfer (pursuant to written instructions supplied by the Holder hereof) to an
account maintained by the payee with a bank located outside the United States.
No payment in respect of this Note or any Coupon will be made upon presentation
of this Note or such Coupon at any office or agency of the 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 this Note 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 the Trustee) in the United States at which such payments
may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR DELIVERED
HEREWITH, AND SUCH
5
<PAGE> 55
FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY
SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Bankers Trust Company, or its
successor, as Trustee.
6
<PAGE> 56
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By
--------------------------
Authorized Signatory
7
<PAGE> 57
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FLOATING OR INDEXED RATE)
General
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee", which
term includes any successor Trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Debt Securities and of the
terms upon which the Debt Securities are, and are to be, authenticated and
delivered. The U.S. dollar equivalent of the public offering price or purchase
price of Notes denominated in currencies other than U.S. dollars will be
determined by the Company or its agent, as exchange rate agent for the Notes
(the "Exchange Rate Agent"), 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
currencies on the applicable issue dates.
Unless otherwise specified on the face hereof, 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. The authorized
denominations of Bearer Notes having a specified currency other than U.S.
dollars will be, unless otherwise specified herein, the approximate equivalents
thereof in the Specified Currency.
Floating Rate Notes
Unless otherwise specified on the face hereof, if this Note is a Floating
Rate Note, this Note will bear interest from its Original Issue Date to the
first Interest Reset Date (as defined below) at the Initial Interest Rate set
forth on the face hereof. Thereafter, the interest rate hereon for each Interest
Reset Period (as defined below) 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, specified on the face hereof. The face of this
Note will designate one of the following Base Rates as applicable hereto: (i)
the CD Rate, (ii) the Commercial Paper Rate, (iii) the Federal Funds Rate, (iv)
LIBOR, (v) the Treasury Rate, the Prime Rate, the J.J. Kenny Rate, the Eleventh
District Cost of Funds Rate or (vi) such other Base Rate as set forth herein.
"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.
<PAGE> 58
As specified on the face hereof, this 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 specified on the face hereof, the interest rate 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 Company will appoint, and enter into an agreement with, agents (each,
a "Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof. Unless otherwise specified on the face hereof, Bankers Trust Company
shall be the Calculation Agent for this Note. At the request of the Holder
hereof, the Calculation Agent will provide the interest rate then in effect and,
if determined, the interest rate that will become effective on the next Interest
Reset Date. In addition, such information will be communicated to the Luxembourg
Stock Exchange and will be made available at the offices of the Paying Agent in
Luxembourg and at the Luxembourg Stock Exchange.
As specified on the face hereof, the interest rate hereon will be reset
daily, weekly, monthly, quarterly, semiannually or annually (such period being
the "Interest Reset Period" specified on the face hereof, and the first day of
each Interest Reset Period being an "Interest Reset Date"). Unless otherwise
specified on the face hereof, the Interest Reset Dates will be, if this Note
resets daily, each Business Day; if this Note (unless this Note is a Treasury
Rate Note) resets weekly, Wednesday of each week; if this Note is a Treasury
Rate Note that resets weekly, Tuesday of each week (except as provided below
under "Determination of Treasury Rate"); if this Note resets 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);
if this Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
the two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of the month of each year specified on the
face hereof. If an Interest Reset Date 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, if the Base Rate specified on the face hereof is
LIBOR and 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 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 on the face hereof, the interest payable hereon
on each Interest Payment Date 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
2
<PAGE> 59
such Interest Payment Date, provided, however, that if the interest rate is
reset daily or weekly, the interest payable hereon 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 such Interest Payment Date, except that, at Maturity, the
interest payable will include interest accrued to, but excluding, the date of
Maturity.
If more than one Interest Reset Date occurs during any period for which
accrued interest is being calculated, accrued interest shall be calculated by
multiplying the principal amount hereof (or if this Note is an Indexed Principal
Note, the Face Amount specified on the face hereof) 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 on the face hereof, by dividing the interest rate in effect
on such day by 360 if the Base Rate specified on the face hereof is the
Commercial Paper Rate, the Federal Funds Rate, the CD Rate, the J.J. Kenny Rate,
the Prime Rate, the Eleventh District Cost of Funds Rate or LIBOR, or by the
actual number of days in the year, if the Base Rate specified on the face hereof
is the Treasury Rate. In all other cases, accrued interest shall be calculated
by multiplying the principal amount hereof (or if this Note is an Indexed
Principal Note, the Face Amount specified on the face hereof) 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 if the
Base Rate specified on the face hereof is the Commercial Paper Rate, the Federal
Funds Rate, the CD Rate the J.J. Kenny Rate, the prime Rate, the Eleventh
District cost of Funds Rate or LIBOR, or by the actual number of days in the
year, if the Base Rate specified on the face hereof is the Treasury Rate. For
purposes of making the foregoing calculations, the interest rate in effect on
any Interest Reset Date will be the applicable rate as reset on such date.
Unless otherwise specified on the face hereof, all percentages resulting
from any calculation of the rate of interest hereof 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 will be rounded to the nearest one-hundredth of
a unit (with .005 of a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will be payable,
if this Note resets 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 on
the face hereof or, in the case of Eleventh District Cost of Funds Rate Notes,
on the first calendar day of each March, June, September and December; if this
Note resets quarterly, on the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, on the third Wednesday
of the two months of each year specified on the face hereof; and if
3
<PAGE> 60
this Note resets annually, on the third Wednesday of the month of each year
specified on the face hereof, and in each case at Maturity (each such day being
an "Interest Payment Date"). If an Interest Payment Date would otherwise fall on
a day that is not a Business Day, such Interest Payment Date shall be postponed
to the next succeeding Business Day, except that, if the Base Rate specified on
the face hereof is LIBOR and 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 Note for which "Accrue to
Pay" is not specified on the face hereof, if an Interest Payment Date with
respect to such 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 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.
Subject to applicable provisions of law and except as specified herein, on
each Interest Reset Date the rate of interest hereon shall be the rate
determined in accordance with the provisions under the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this 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 on the face hereof. 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 specified on the face hereof
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 specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("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 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 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 on the face
hereof in a denomination of $5,000,000,
4
<PAGE> 61
provided, however, that if the dealers selected as aforesaid by the 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.
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper Rate,
this 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 on the face hereof. The "Commercial Paper Rate"
for each Interest Reset Period will be determined by the Calculation Agent 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 on the face
hereof, 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 tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day, (the "Calculation 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
Index Maturity specified on the face hereof 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 commercial paper of the Index
Maturity specified on the face hereof 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 the 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 the yield calculated in accordance with the
following formula:
5
<PAGE> 62
D x 360
Money Market Yield = --------------- X 100
360 - (D x M)
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 Index Maturity specified on the face hereof.
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.
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Federal Funds Rate and Spread or Spread
Multiplier, if any, specified on the face hereof. 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 is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the succeeding
Monday will be reset by the Calculation Agent 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.
Determination of LIBOR
6
<PAGE> 63
If the Base Rate specified on the face hereof is LIBOR, this 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
on the face hereof. "LIBOR" for each Interest Reset Period will be determined by
the Calculation Agent 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 arithmetic mean
of the offered rates for deposits in the Specified Currency for the period
of the Index Maturity specified on the face hereof, 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.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
on the face hereof, 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) or (b) if "LIBOR Reuters" is designated on the face
hereof, 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). If neither LIBOR Reuters nor LIBOR Telerate is specified
on the face hereof, LIBOR will be determined as if LIBOR Telerate had been
specified. If at least two such offered rates appear on the Designated
LIBOR Page, "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 fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will request
the principal London offices of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, 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 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 Index Maturity specified on the face hereof,
commencing on such Interest Reset Date, and in a principal amount equal
7
<PAGE> 64
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 the 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).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate, this
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 on the face hereof. Unless "Treasury Rate Constant
Maturity" is specified on the face hereof, 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 bills") having the Index Maturity
specified on the face hereof, as published in H.15(519) under the heading "U.S.
Government Securities-Treasury bills-auction average (investment)" or, if not so
published by 3:00 p.m., New York City time, on the tenth calendar day after such
Treasury Rate Determination Date (or, if such day is not a Business Day, the
next succeeding Business Day) (the "Calculation 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 bills having the Index
Maturity specified on the face hereof 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 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
the Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity specified on the face hereof, provided, however,
that if the dealers selected as aforesaid by the 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 bills would normally be auctioned. Treasury bills
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
8
<PAGE> 65
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 Note whose Base Rate is the Treasury
Rate, then such Interest Reset Date shall instead be the Business Day
immediately following such auction date.
If "Treasury Rate 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 "Constant Maturity -- 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 or more 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 "Calculation Date" pertaining to any Treasury Rate Determination Date
or Constant Maturity Treasury Rate Determination Date, as applicable, shall be
the tenth calendar day after such Treasury Rate Determination Date or Constant
Maturity Treasury Rate Determination Date, as applicable, or, if such a day is
not a Business Day, the next succeeding Business Day.
Determination of Prime Rate
9
<PAGE> 66
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.
Determination of J.J. Kenny Rate
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.
10
<PAGE> 67
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 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 no 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.
Determination of Eleventh District Cost of Funds Rate
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
11
<PAGE> 68
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
If this Note is designated as an Inverse Floating Rate Note on the face
hereof, the Inverse Floating Rate shall be equal to (i) in the case of the
period, if any, commencing on the Original Issue Date (or such other date which
may be specified on the face hereof as the date on which this Note shall begin
to accrue interest), up to the first Interest Reset Date, the Initial Fixed
Interest Rate shown above, and (ii) in the case of each period commencing on an
Interest Reset Date, the Reset Fixed Reference Rate shown above minus the
interest rate determined by reference to the Base Rate shown above, as adjusted
by the Spread or Spread Multiplier, if any, as determined in accordance with the
provisions hereof, 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 the date of Maturity will be the the rate in effect on the
tenth day preceding such date.
Floating Rate / Fixed Rate Notes
If this Note is designated as a Floating Rate / Fixed Rate Note, this 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
this Note will be determined as provided herein as if it were a Floating Rate
Note and a Fixed Rate Note hereunder for each such respective period, all as
described herein and in the applicable Pricing Supplement.
Subsequent Interest Periods
If so specified on the face hereof, the Spread or Spread Multiplier on
this Note may be reset by the Company on the date or dates specified on the face
hereof (each an "Optional Reset Date"). Not later than 40 days prior to each
Optional Reset Date, the
12
<PAGE> 69
Trustee will mail to the Holder of this Note a notice (the "Reset Notice"),
first class, postage prepaid, indicating whether the Company has elected to
reset the Spread or Spread Multiplier, and if so, (i) such new Spread or Spread
Multiplier 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 this 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 the Subsequent Interest Period. Notwithstanding the
foregoing, not later than 20 days prior to the Optional Reset Date, the Company
may, at its option, revoke the Spread or Spread Multiplier provided for in the
Reset Notice and establish a higher Spread or Spread Multiplier for the
Subsequent Interest Period by causing the Trustee to mail notice of such higher
Spread or Spread Multiplier to the Holder of this Note. Such notice shall be
irrevocable. All Registered Notes with respect to which the Spread or Spread
Multiplier is reset on an Optional Reset Date will bear such higher Spread or
Spread Multiplier.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
Indexed Notes
If this Note is an Indexed Note, then 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 amount designated on the face
hereof as the Face Amount of this Note and by reference to the Index as
described on the face hereof. If this Note is a 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 described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by the Company
subject to the same conditions and controls as applied to the original third
party. If for any reason such
13
<PAGE> 70
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 this Note shall be
calculated in the manner described on the face hereof. Any determination of such
third party shall in the absence of manifest error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment
shall be made in U.S. dollars until such currency is again available or so used.
The amount so payable in such foreign 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 on the face hereof. Any payment made
under such circumstances in U.S. dollars will not constitute an Event of Default
under the Indenture.
In the event of an official redenomination of the Specified Currency of
this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 national currencies of such member states, which regulations or
legislation may be
14
<PAGE> 71
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 this Note and the Indenture, and, except as provided in the following
paragraph, the payment of principal of, or interest on, or any other amounts in
respect of this Note 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, this Note 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 this Note 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 paragraph and any resultant amendment to the terms and conditions of
this Note will not entitle any Holder hereof (i) to any legal remedy, including,
without limitation, redemption, rescission, notice, repudiation, adjustment or
renegotiation of the terms and conditions of this Note or the Indenture, 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 this Note or the
Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency Note, the
Company may have a one time option, exercisable on one or more dates (each an
"Option Election Date") in whole, but not in part, with respect to all 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 an optional
currency (the "Optional Payment 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.
15
<PAGE> 72
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note, this
Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so specified,
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. Such election will be irrevocable and will be
binding upon each subsequent holder of this Note. An election to renew the term
of this Note may be exercised with respect to less than the entire principal
amount of this Note only if so specified on the face hereof and then only in
such principal amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the term of this
Note may not be extended beyond the Stated Maturity specified for this Note on
the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
16
<PAGE> 73
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Spread or Spread
Multiplier applicable to the Extension Period, and (iv) the provisions, if any,
for redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the Spread
or Spread Multiplier provided for in the Extension Notice and establish a higher
Spread or Spread Multiplier for the Extension Period by causing the Trustee to
mail notice of such higher Spread or Spread Multiplier, first class, postage
prepaid to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Maturity is extended will bear such
higher Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will have the
option to elect repayment of this Note by the Company on the old Stated Maturity
at a price equal to the principal amount hereof, plus interest accrued to such
date. In order to obtain repayment on such old Stated Maturity once the Company
has extended the Maturity hereof, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder
17
<PAGE> 74
hereof upon the cancellation hereof. If redeemed prior to its Stated Maturity,
this Note must be presented for payment.
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
Unless otherwise specified herein, the Bearer Notes will not be subject to
any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below (which notice shall be irrevocable) at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described 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 the Original Issue Date, and such obligation cannot be avoided by the
Company taking reasonable measures available to it. 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 the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
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.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable.
18
<PAGE> 75
The repayment option may be exercised by the Holder hereof for less than the
entire principal amount hereof, provided, that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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 in the applicable Pricing Supplement) or surrendered to
the Trustee for such Notes for cancellation (together with any unmatured Coupons
attached thereto or purchased therewith).
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 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 in
the following paragraph as a result of any chance 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,
19
<PAGE> 76
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 thie 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.
Payment of Additional Interest
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such 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 this Note or such 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 an 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, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or other
tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States 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 this Note or
such Coupon for payment more than 15 days after the date on which such
payment became due and
20
<PAGE> 77
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 this Note or
such Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on this Note or
such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the 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 this Note or such 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 this Note or such Coupon.
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.
Paying Agents
The Company has initially appointed as its Paying Agents for Bearer Notes
of this Series the offices listed below:
Principal Paying Agent:
Bankers Trust Company
1 Appold Street, Broadgate
London, EC2A 2HE
Paying Agent:
Bankers Trust Luxembourg, S.A.
F.D. Roosevelt
14 Boulevard
L-2450 Luxembourg
21
<PAGE> 78
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 the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that exchange shall so require,
shall include Luxembourg. Notice of any such termination or appointment and of
any changes in the specified offices of the Trustee or any Paying Agent will be
given to the Holder hereof as described below.
Notices
All notices to Holders of this Note 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 such exchange so requires, 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.
Other Provisions
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of all Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is exchangeable for a like aggregate principal amount of
Bearer Notes of different authorized denominations, as requested by the Person
surrendering the same.
No service charge shall be made for any such exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent 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 may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before
replacements will be issued.
All monies paid by the Company to a Trustee or 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
22
<PAGE> 79
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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Debt Security and of any Debt Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Debt
Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof (and
premium, if any) and interest hereon in the designated currency of payment is of
the essence. To the fullest extent possible under applicable law, judgments in
respect of this Note shall be given in such currency. The obligation of the
Company to make such payments in the designated currency of payment shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
designated currency of payment that the Holder of this Note may, in accordance
with normal banking procedures, purchase with the sum paid in such other
currency (after any premium and cost of exchange) on the business day in the
country of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount in the
designated currency of payment that may be so purchased is for any reason less
than
23
<PAGE> 80
the amount originally due, the Company shall, as a separate and independent
obligation, pay such additional amounts in the designated currency of payment as
may be necessary to compensate for any such shortfall.
If the Specified Currency of this Note is Pounds sterling, the following
applies: The Company is not an institution authorised under the Banking Act 1987
of the United Kingdom, and this Note is a medium-term note issued in accordance
with regulations made under Section 4 of the Banking Act 1987. The Company
represents that as of the date of issuance of this Note, (1) the Company is in
compliance with its listing obligations to The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in connection with the
Company's securities that are listed on such Exchange; and (2) since information
was last published in compliance with such listing obligations, the Company,
having made all reasonable enquiries, has not become aware of any change in
circumstances which could reasonably be regarded as significantly and adversely
affecting its ability to meet its obligations on this Note as they fall due.
Repayment of principal and payment of interest and any premium on this Note have
not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed solely
in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
24
<PAGE> 81
Exhibit 4(x)(iv)
FORM OF
SERIES I PERMANENT GLOBAL FIXED RATE NOTE
BEARER PRINCIPAL AMOUNT
No. FX- OR FACE AMOUNT
SALOMON SMITH BARNEY HOLDINGS INC.
PERMANENT GLOBAL NOTE
(Fixed Rate)
representing
MEDIUM-TERM NOTES, SERIES I
Due More Than Nine Months from Date of Issue
THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE
DENOMINATION OF U.S. $10,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE
OF U.S. $1,000 (OR SUCH OTHER DENOMINATIONS AS ARE SPECIFIED BELOW FOR ANOTHER
CURRENCY). THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE
INDENTURE (AS DEFINED HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH BELOW
WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE> 82
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
2
<PAGE> 83
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE> 84
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), for value
received, hereby promises to pay to bearer, upon presentation and surrender
hereof, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein, and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
at the Interest Rate shown above, annually in arrears on the Interest Payment
Dates specified on the face of this Note, commencing on the first Interest
Payment Date following the Original Issue Date shown above, and on the Stated
Maturity shown above, or upon earlier redemption or repayment, until, in either
case, the Principal Amount then outstanding or the Face Amount is paid or duly
provided for in accordance with the terms hereof. Interest on this Note, if any,
will be computed on the basis of a 360-day year of twelve 30-day months. If an
Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is specified on the face thereof
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.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which, in the case of the Euro, shall be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth
in the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
4
<PAGE> 85
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
This Note is exchangeable in whole or from time to time in part
without charge for individual Bearer Notes, with appropriate Coupons attached,
if any, in the denomination of U.S.$10,000 or any larger amount that is an
integral multiple of U.S.$1,000 (or such other denominations as are specified
above for another currency), upon 30 days' notice to the Trustee given through
either Euroclear or Cedel Bank, Societe Anonyme. Upon any exchange of any
portion of this Note for individual Bearer Notes, the portion of the
principal amount hereof so exchanged shall be endorsed by the Trustee in
the Schedule of Issuances, Exchanges and Aggregate principal amount hereto,
and the principal amount hereof shall be reduced for all purposes by the
amount so exchanged.
Except as otherwise provided herein or in the Indenture, until
exchanged in full for individual Bearer Notes, this Note shall in all respects
be entitled to the same benefits and subject to the same terms and conditions
of, and the Company shall be subject to the same restrictions as those contained
on the individual Bearer Notes and in the Indenture.
Except under certain circumstances for Notes having Specified
Currencies other than U.S. dollars, payments of the principal hereof and any
premium and interest hereon will be made only in the Specified Currency.
Payments in respect of this Note and any Coupon will be made only against
surrender of this Note or such Coupon, at the offices of the Paying Agents
outside the United States listed on the reverse hereof. At the direction of the
Holder of this Note or any 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 U.S. dollar payments) or outside the United States (in
the case of payments in a currency other than U.S. dollars) mailed to an address
outside the United States furnished by the Holder hereof or, at the option of
the Holder hereof, by wire transfer (pursuant to written instructions supplied
by the Holder hereof) to an account maintained by the payee with a bank located
outside the United States. No payment in respect of this Note or any Coupon will
be made upon presentation of this Note or such Coupon at any office or agency of
the 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 this Note 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 the Trustee) in the United States at
which such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH
5
<PAGE> 86
FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY
SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Bankers Trust Company, or
its successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed under its corporate seal.
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By _________________________________
Authorized Officer
[Seal]
Attest: ____________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY,
as Trustee
By _________________________________
Authorized Officer
6
<PAGE> 87
SALOMON SMITH BARNEY HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES I
(FIXED RATE)
General
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee," which
term includes any successor Trustee under the Indenture) to which indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Debt Securities and of the
terms upon which the Debt Securities are, and are to be, authenticated and
delivered. The U.S. dollar equivalent of the public offering price or purchase
price of Notes denominated in currencies other than U.S. dollars will be
determined by the Company or its agent, as exchange rate agent for the Notes
(the "Exchange Rate Agent") 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
currencies on the applicable issue dates.
Unless otherwise specified on the face hereof, 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. The authorized
denominations of Bearer Notes having a specified currency other than U.S.
dollars will be, unless otherwise specified herein, the approximate equivalents
thereof in the Specified Currency.
Fixed Rate Notes
This 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 Interest Rate stated on the face hereof until the principal amount hereof
is paid or made available for payment, except as otherwise described below under
"Subsequent Interest Periods" and "Extension of Maturity", and except that if so
specified in the attached Pricing Supplement, the rate of interest payable may
be subject to adjustment as specified therein.
Unless otherwise set forth herein, interest on this Note will be payable
semiannually in arrears on the Interest Payment Dates set forth above and at
Stated Maturity. If an Interest Payment Date with respect to any 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
<PAGE> 88
respect to any Note for which "Accrue to Pay" is specified on the face hereof,
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.
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 herein, interest on this Note will be computed on the
basis of a 360-day year of twelve 30-day months ("30 over "360").
Subsequent Interest Periods
If so specified on the face hereof, the Interest Rate on this Note may be
reset by the Company on the date or dates specified on the face hereof (each an
"Optional Reset Date"). Not later than 40 days prior to each Optional Reset
Date, the Paying Agent will mail to the Holder of this Note a notice (the "Reset
Notice"), first class, postage prepaid, indicating whether the Company has
elected to reset the Interest Rate, and if so, (i) such new Interest Rate 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 this 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 the Subsequent Interest Period. Notwithstanding the foregoing,
not later than 20 days prior to the Optional Reset Date, the Company may, at its
option, revoke the Interest Rate provided for in the Reset Notice and establish
a higher Interest Rate for the Subsequent Interest Period by causing the Paying
Agent to mail notice of such higher Interest Rate to the Holder of this Note.
Such notice shall be irrevocable. All Bearer Notes with respect to which the
Interest Rate is reset on an Optional Reset Date will bear such higher Interest
Rate.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Paying Agent shall be at least 25 but not more than 35 days
prior to such Optional Reset Date, and except that if the Holder has tendered
this Note for repayment pursuant to a Reset Notice, the Holder may, by written
notice to the Paying Agent, revoke such tender for repayment until the close of
business on the tenth day before the Optional Reset Date.
Indexed Notes
If this Note is an Indexed Principal Note, then the principal amount
payable at Stated Maturity or earlier redemption or retirement is determined by
reference to the amount designated on the face hereof as the Face Amount of this
Note and by reference to the Index as described on the face hereof. If this Note
is an Indexed Principal Note, the principal amount payable at Stated Maturity or
any earlier redemption or repayment of this Note may be different from the Face
2
<PAGE> 89
Amount. If the determination of the Index is calculated or announced by a third
party, which may be an 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 this Note was issued and permitted changes described on the
face hereof), then such Index shall be calculated for this Note's purposes by
another third party, which may be an affiliate of the Company, selected by 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 principal amount of this Note shall be calculated in the
manner described on the face hereof. Any determination of such third party shall
in the absence of manifest error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment
shall be made in U.S. dollars until such currency is again available or so used.
The amount so payable in such foreign 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 on the face hereof. Any payment made
under such circumstances in U.S. dollars will not constitute an Event of Default
under the Indenture.
In the event of an official redenomination of the Specified Currency of
this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). Stage III includes the introduction of a single currency
(the "Euro") which
3
<PAGE> 90
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 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 this Note and the Indenture, and, except as provided in the following
paragraph, the payment of principal of, or interest on, or any other amounts in
respect of this Note 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, this Note 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 this Note 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 paragraph and any resultant amendment to the terms and conditions of
this Note will not entitle any Holder hereof (i) to any legal remedy, including,
without limitation, redemption, rescission, notice, repudiation, adjustment or
renegotiation of the terms and conditions of this Note or the Indenture, 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 this Note or the
Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency Note, the
Company may have a one time option, exercisable on one or more dates (each an
"Option Election Date") in whole, but not in part, with respect to all 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 an optional
currency (the "Optional Payment 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.
4
<PAGE> 91
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note, this
Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so specified,
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. Such election will be irrevocable and will be
binding upon each subsequent holder of this Note. An election to renew the term
of this Note may be exercised with respect to less than the entire principal
amount of this Note only if so specified on the face hereof and then only in
such principal amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the term of this
Note may not be extended beyond the Stated Maturity specified for this Note on
the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
5
<PAGE> 92
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Paying Agent will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Interest Rate
applicable to the Extension Period, and (iv) the provisions, if any, for
redemption during such Extension Period. Upon the Paying Agent's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the
Interest Rate provided for in the Extension Notice and establish a higher
Interest Rate for the Extension Period by causing the Paying Agent to mail
notice of such higher Interest Rate, first class, postage prepaid to the Holder
of this Note. Such notice shall be irrevocable. All Bearer Notes with respect to
which the Maturity is extended will bear such higher Interest Rate.
If the Company extends the Maturity of this Note, the Holder will have the
option to elect repayment of this Note by the Company on the old Stated Maturity
at a price equal to the principal amount hereof, plus interest accrued to such
date. In order to obtain repayment on such old Stated Maturity once the Company
has extended the Maturity hereof, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Paying Agent shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Paying Agent, revoke such tender for repayment until the
close of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
6
<PAGE> 93
If so specified on the face hereof, the Company may, at its option, redeem
this Note in whole or in part, on the date or dates (each an Optional Redemption
Date") specified herein, at the price (the "Redemption Price")(together with
accrued interest to such Optional Redemption Date) specified herein. Unless
otherwise stated herein, the Company may exercise such option with respect to
this Note by notifying the Trustee for this 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, the Trustee shall provide notice of such redemption to the
Holder hereof in accordance with "Notices" below. In the event of redemption of
this Note in part only, a new Note or Notes for the unredeemed portion hereof
will be issued to the Holder hereof upon the cancellation hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment together
with all unmatured Coupons, if any, appertaining hereto, failing which the
amount of any missing unmatured Coupon will be deducted from the sum due for
payment.
Unless otherwise specified herein, the Bearer Notes will not be subject to
any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below (which notice shall be irrevocable) at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described 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 the Original Issue Date, and such obligation cannot be avoided by the
Company taking reasonable measures available to it. 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 the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the Trustee
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.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable. The
repayment option may be exercised by the Holder hereof for less than the entire
principal amount hereof, provided, that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
7
<PAGE> 94
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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 in the applicable Pricing Supplement) or surrendered to
the Trustee for such Notes for cancellation (together with any unmatured Coupons
attached thereto or purchased therewith).
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 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 in
the following paragraph as a result of any chance 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 thie 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
8
<PAGE> 95
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.
Payment of Additional Interest
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such 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 this Note or such 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 an 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, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or other
tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States 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 this Note or
such 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 this Note or
such Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on this Note or
such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
9
<PAGE> 96
(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 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 this Note or such 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 this Note or such Coupon.
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.
Paying Agents
The Company has initially appointed as its Paying Agents for Bearer Notes
of this Series the offices listed below:
Principal Paying Agent:
Bankers Trust Company
1 Appold Street, Broadgate
London, EC2A 2HE
Paying Agent:
Bankers Trust Luxembourg, S.A.
F.D. Roosevelt
14 Boulevard
L-2450 Luxembourg
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 the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that exchange shall so require,
shall include Luxembourg. Notice of any such termination or appointment and of
any changes in the specified offices of the Trustee or any Paying Agent will be
given to the Holder hereof as described below.
Notices
All notices to Holders of this Note 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
10
<PAGE> 97
Financial Times) and, so long as the Bearer Notes are listed on the Luxembourg
Stock Exchange and such exchange so requires, 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.
Other Provisions
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of all Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is exchangeable for a like aggregate principal amount of
Bearer Notes of different authorized denominations, as requested by the Person
surrendering the same.
No service charge shall be made for any such exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent 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 may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before
replacements will be issued.
All monies paid by the Company to a Trustee or 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.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Debt Security and
11
<PAGE> 98
of any Debt Security issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Debt Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof (and
premium, if any) and interest hereon in the designated currency of payment is of
the essence. To the fullest extent possible under applicable law, judgments in
respect of this Note shall be given in such currency. The obligation of the
Company to make such payments in the designated currency of payment shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
designated currency of payment that the Holder of this Note may, in accordance
with normal banking procedures, purchase with the sum paid in such other
currency (after any premium and cost of exchange) on the business day in the
country of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount in the
designated currency of payment that may be so purchased is for any reason less
than the amount originally due, the Company shall, as a separate and independent
obligation, pay such additional amounts in the designated currency of payment as
may be necessary to compensate for any such shortfall.
If the Specified Currency of this Note is Pounds sterling, the following
applies: The Company is not an institution authorised under the Banking Act 1987
of the United Kingdom, and this Note is a medium-term note issued in accordance
with regulations made under Section 4 of the Banking Act 1987. The Company
represents that as of the date of issuance of this Note, (1) the Company is in
compliance with its listing obligations to The International Stock Exchange of
the United Kingdom and the Republic of Ireland Limited in connection with the
Company's securities that are listed on such Exchange; and (2) since information
was last published in compliance with such listing obligations, the Company,
having made all reasonable enquiries, has not become aware of any change in
circumstances which could reasonably be regarded as significantly and adversely
affecting its ability to meet its obligations on this Note as they fall due.
Repayment of principal and payment of interest and any premium on this Note have
not been guaranteed by any person.
12
<PAGE> 99
This Note shall be deemed to be a contract made and to be performed solely
in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
13
<PAGE> 1
Exhibit 4(y)(i)
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
GLOBAL NOTE
NO. FL_____ SALOMON SMITH BARNEY HOLDINGS INC.
NOTES, SERIES J
(FLOATING OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Base Rate: |_| CD Rate |_| Commercial Paper Rate |_| Federal Funds Rate
|_| LIBOR Telerate |_| LIBOR Reuters |_| Treasury Rate
1
<PAGE> 2
|_| Treasury Rate Constant Maturity |_| Prime Rate
|_| J. J. Kenny Rate |_| Eleventh District Cost of Funds Rate
|_| Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
Indexed Principal Note: |_| Yes (see attached) |_| No
Floating Rate: |_| Indexed Interest Rate: |_| (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset |_| The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
|_| The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Inverse Floating Rate Note: |_| Yes (see attached) |_| No
Initial Fixed Interest Rate: Reset Fixed Reference Rate:
Floating Rate / Fixed Rate Note: |_| Yes (see attached) |_| No
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
2
<PAGE> 3
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
Survivor's Option: |_| Yes (see attached) |_| No
Bond Yield to Maturity:
Bond Yield to Call:
3
<PAGE> 4
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company") for value received hereby promises to pay CEDE & Co. or registered
assigns, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described above or in the Pricing Supplement attached
hereto or delivered herewith, in the Specified Currency on the Stated Maturity
shown above or earlier if and to the extent so provided herein, and (b) to pay
accrued interest on the Principal Amount then outstanding (or, in the case of an
Indexed Principal Note, the Face Amount then outstanding): (i) if this is a
Floating Rate Note, at the Initial Interest Rate shown above from the Original
Issue Date shown above until the first Interest Reset Date shown above following
the Original Issue Date and thereafter at the Base Rate shown above, adjusted by
the Spread or Spread Multiplier, if any, shown above, determined in accordance
with the provisions hereof, (ii) if this is an Indexed Rate Note, at a rate
determined by reference to an Index as described herein, (iii) if this is an
Inverse Floating Rate Note, at the Initial Interest Rate shown above from the
Original Issue Date shown above until the first Interest Reset Date shown above
following the Original Issue Date and thereafter at the Inverse Floating Rate,
as determined in accordance with the provisions hereof, or (iv) if this is a
Floating Rate / Fixed Rate Note, at a rate determined as described herein,
until, in each case, the Principal Amount or the Face Amount is paid or duly
provided for in accordance with the terms hereof.
The interest so payable, and punctually paid or duly provided for,
on each Interest Payment Date specified herein will, as provided in the
Indenture referred to below, be paid to the person in whose name this Note (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which, in the case of any Interest
Payment Date shall be the date (whether or not a Business Day), fifteen calendar
days immediately preceding such Interest Payment Date and, in the case of
interest payable at Stated Maturity shall be the Stated Maturity of this Note.
Notwithstanding the foregoing, if this Note is issued between a Regular Record
Date and the related Interest Payment Date, the interest so payable for the
period from the Original Issue Date to such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the Registered Holder hereof on
the related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered Holder
hereof on such Regular Record Date and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
less than ten 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 Registered Notes may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
Payment of the principal of and interest on this Note will be made
by the Company to the Trustee in immediately available funds, and if such
payments are made by the
4
<PAGE> 5
Company, the Trustee in turn will make such payments to the registered Holder
hereof in funds immediately available to such Holder.
If the Holder of this Note has a Survivor's Option, as indicated
above, to elect repayment of this Note prior to Stated Maturity in the event of
the death of any beneficial owner hereof, then, pursuant to exercise of such
Survivor's Option, the Company will repay this Note (or applicable portion
hereof) when 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 hereof 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 (calculated as set forth below) payable
hereunder with respect to such beneficial owner, plus accrued interest thereon
to the date of such repayment; provided, however, that the Company may, in its
sole discretion, limit to $2,500,000 (or the approximate equivalent thereof in
other currencies) the aggregate principal amount of Notes of this series 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 (or the approximate equivalent thereof in other
currencies) the aggregate principal amount of Notes (or portions thereof) as to
which exercises of the Survivor's Option will be accepted in such calendar year
with respect to any individual deceased beneficial owner of Notes; and provided,
further, that the Company will not make any principal payment pursuant to
exercise of the Survivor's Option in an amount that is less than $5,000 (or the
approximate equivalent thereof in other currencies), and, in the event that the
foregoing limitations would result in the partial repayment to any individual
deceased beneficial owner of Notes, the principal amount owned by such deceased
beneficial owner must not be less than $5,000 (or the approximate equivalent
thereof in other currencies) as a result of such repayment, which is the minimum
authorized denomination of the Notes. This Note, or any portion hereof, tendered
pursuant to an exercise of the Survivor's Option, may be withdrawn by a written
request of the Holder hereof received by the Trustee prior to its repayment.
The Amortized Face Amount of this Note on any date shall be the
amount equal to (i) the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to
Call set forth on the face hereof (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 this Note
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 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.
5
<PAGE> 6
This Note (or any portion hereof), if tendered pursuant to a valid
exercise of the Survivor's Option, will be accepted promptly based on the order
in which all such Notes (or any portion thereof) are tendered, unless the
acceptance hereof 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 (or the
approximate equivalent thereof) with respect to any 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
of the Survivor's Option with respect to this Note (or any portion hereof) not
accepted during such calendar year because more than $250,000 (or the
approximate equivalent thereof) aggregate principal amount of Notes (or portions
thereof) was tendered with respect to the individual deceased beneficial owner
hereof 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. This Note (or portion hereof), if accepted for repayment
pursuant to exercise of the Survivor's Option, will be repaid on the first
Interest Payment Date that occurs twenty or more calendar days after the date of
such acceptance. If this Note (or any portion hereof) is tendered for repayment
and is not accepted in any calendar year due to the application of the Annual
Put Limitation, then this Note (or any such portion) will be deemed to be
tendered in the following calendar year based on the order in which all such
Notes (or any portion thereof) were originally tendered, unless this Note (or
any such portion hereof) is withdrawn by the Holder. In the event that this Note
(or any portion hereof) tendered for repayment pursuant to valid exercise of the
Survivor's Option is not accepted, the Trustee will deliver a notice to the
affected Representative by first-class mail to the broker or other entity that
represents the deceased beneficial owner of this Note that states the reasons
this Note (or such portion) has not been accepted for repayment.
Subject to the foregoing, in order for the 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 this Note (or
applicable portion hereof), (iii) appropriate evidence satisfactory to the
Company and the Trustee that (A) the Representative has authority to act on
behalf of the applicable deceased beneficial owner hereof, (B) the death of such
beneficial owner has occurred and (C) the deceased was a beneficial owner hereof
at the time of death, and (iv) if applicable, aa 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 determination will be final and binding.
This Note will not be subject to any sinking fund.
6
<PAGE> 7
For purposes of this Note, "Business Day" 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 shown above (as defined below) is other
than U.S. dollars, the financial center of the country issuing the Specified
Currency (which, in the case of the Euro, shall be Brussels, Belgium) and (ii)
if the Base Rate specified above is LIBOR, a London Banking Day. "London Banking
Day" means any day on which dealings in deposits in the Specified Currency are
transacted in the London interbank market.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are payable
by the Company in the Specified Currency shown above. If the Specified Currency
shown above is other than U.S. dollars, the Company will arrange to convert all
payments in respect hereof into U.S. dollars in the manner described on the
reverse hereof. The Holder hereof may, if so indicated above, elect to receive
all payments in respect hereof in the Specified Currency by delivery of a
written notice to the Trustee not later than fifteen calendar days prior to the
applicable payment date. Such election will remain in effect until revoked by
written notice to the Trustee received not later than fifteen calendar days
prior to the applicable payment date. If the Company determines that the
Specified Currency is not available for making payments in respect hereof 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 or within
the international banking community, then the Holder hereof may not so elect to
receive payments in the Specified Currency, and any such outstanding election
shall be automatically suspended, and payments shall be in U.S. dollars, until
the Company determines that the Specified Currency is again available for making
such payments.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
7
<PAGE> 8
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within - mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
8
<PAGE> 9
SALOMON SMITH BARNEY HOLDINGS INC.
NOTE, SERIES J
(FLOATING OR INDEXED RATE)
General
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture) to which indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, as exchange rate agent for the Notes (the "Exchange
Rate Agent") 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 currencies on the
applicable issue dates.
Unless otherwise specified above, the authorized denominations of
Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any larger
amount that is an integral multiple of U.S.$1,000. The authorized denominations
of Bearer Notes having a specified currency other than U.S. dollars will be,
unless otherwise specified herein, the approximate equivalents thereof in the
Specified Currency.
Each Registered Note will be issued initially as either a Book-Entry
Note or, if so specified above, a Certificated Note. Book-Entry Notes will not
be exchangeable for Certificated Notes and, except as otherwise provided in the
Indenture, will not otherwise be issuable as Certificated Notes.
Floating Rate Notes
Unless otherwise specified on the face hereof, if this Note is a
Floating Rate Note, this Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) at the Initial Interest Rate
set forth on the face hereof. Thereafter, the interest rate hereon for each
Interest Reset Period (as defined below) will be determined by reference to the
Base Rate specified on the face hereof, plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, specified on the face hereof. The
Base Rates that may be specified on the face hereof are LIBOR, the Commercial
Paper Rate, the Treasury Rate, the Federal Funds Rate, the CD Rate, the Prime
Rate, the J.J. Kenny Rate, the Eleventh District Cost of Funds Rate or any other
Base Rate specified on the face hereof. "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.
1
<PAGE> 10
As specified on the face hereof, this 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 specified on the face hereof, the interest rate 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 Company will appoint, and enter into an agreement with, agents
(each, a "Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof. Unless otherwise specified on the face hereof, Citibank, N.A. shall be
the Calculation Agent for this Note. At the request of the Holder hereof, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date.
The interest rate hereon will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" specified on the face hereof, and the first day of each Interest Reset
Period being an "Interest Reset Date"). Unless otherwise specified on the face
hereof, the Interest Reset Dates will be, if this Note resets daily, each
Business Day; if this Note (unless this Note is a Treasury Rate Note) resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets
weekly, Tuesday of each week (except as provided below under "Determination of
Treasury Rate"); if this Note resets 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); if this Note resets
quarterly, the third Wednesday of March, June, September and December of each
year; if this Note resets semiannually, the third Wednesday of the two months of
each year specified on the face hereof; and if this Note resets annually, the
third Wednesday of the month of each year specified on the face hereof. If an
Interest Reset Date 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, if the Base Rate specified on the face hereof is LIBOR and 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 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 on the face hereof, the interest payable
hereon on each Interest Payment Date 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 such Interest Payment Date, provided,
however, that if the interest rate is reset daily or weekly, the interest
payable hereon 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
2
<PAGE> 11
Date immediately preceding such Interest Payment Date, except that, at Maturity,
the interest payable will include interest accrued to, but excluding, the date
of Maturity.
If more than one Interest Reset Date occurs during any period for
which accrued interest is being calculated, accrued interest shall be calculated
by multiplying the principal amount hereof (or if this Note is an Indexed
Principal Note, the Face Amount specified on the face hereof) 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 on the face hereof, by dividing the
interest rate in effect on such day by 360 if the Base Rate specified on the
face hereof is the Commercial Paper Rate, the Federal Funds Rate, the CD Rate,
the J.J. Kenny Rate, the Prime Rate, the Eleventh District Cost of Funds Rate or
LIBOR, or by the actual number of days in the year, if the Base Rate specified
on the face hereof is the Treasury Rate. In all other cases, accrued interest
shall be calculated by multiplying the principal amount hereof (or if this Note
is an Indexed Principal Note, the Face Amount specified on the face hereof) 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 if the Base Rate specified on the face hereof is the
Commercial Paper Rate, the Federal Funds Rate, the CD Rate the J.J. Kenny Rate,
the prime Rate, the Eleventh District cost of Funds Rate or LIBOR, or by the
actual number of days in the year, if the Base Rate specified on the face hereof
is the Treasury Rate. For purposes of making the foregoing calculations, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date.
Unless otherwise specified on the face hereof, all percentages
resulting from any calculation of the rate of interest hereof 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 will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will be
payable, if this Note resets 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 on the face hereof or, in the case of Eleventh District Cost of Funds
Rate Notes, on the first calendar day of each March, June, September and
December; if this Note resets quarterly, on the third Wednesday of March, June,
September and December of each year; if this Note resets semiannually, on the
third Wednesday of the two months of each year specified on the face hereof; and
if this Note resets annually, on the third Wednesday of the month of each year
specified on the face hereof, and in each case at Maturity (each such day being
an "Interest Payment Date"). If an Interest Payment Date would otherwise fall on
a day that is not a Business Day, such Interest Payment Date shall be postponed
to the next succeeding Business Day, except that, if the Base Rate specified on
the face hereof is LIBOR and 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 Note for which
3
<PAGE> 12
"Accrue to Pay" is not specified on the face hereof, if an Interest Payment Date
with respect to such 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 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.
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of interest shall be the rate
determined in accordance with the provisions of the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this
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 on the face hereof. 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 specified on the face hereof
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 specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("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 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 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 on the face
hereof in a denomination of $5,000,000, provided, however, that if the dealers
selected as aforesaid by the 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.
4
<PAGE> 13
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper
Rate, this 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 on the face hereof. The
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent 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 on the face hereof, 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 tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day, (the "Calculation 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 Index Maturity specified on the face hereof 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 commercial
paper of the Index Maturity specified on the face hereof 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 the 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 the yield calculated in accordance
with the following formula:
D x 360
Money Market Yield = --------------- X 100
360 - (D x M)
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 Index Maturity specified on the face hereof.
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.
5
<PAGE> 14
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and Spread or
Spread Multiplier, if any, specified on the face hereof. 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 is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the succeeding
Monday will be reset by the Calculation Agent 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.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, this 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 on the face hereof. "LIBOR" for each Interest Reset Period will be
determined by the Calculation Agent 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 arithmetic mean
of the offered rates for deposits in the Specified Currency for the period
of the Index Maturity specified on the face hereof, 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.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
on the face hereof, the display designated as page "3750" on the Dow Jones
Telerate Service (or
6
<PAGE> 15
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)
or (b) if "LIBOR Reuters" is designated on the face hereof, 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). If
neither LIBOR Reuters nor LIBOR Telerate is specified on the face hereof,
LIBOR will be determined as if LIBOR Telerate had been specified. If at
least two such offered rates appear on the Designated LIBOR Page, "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 fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will request
the principal London offices of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, 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 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 Index Maturity specified on the face hereof,
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 the 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).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate,
this 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 on the face hereof. Unless "Treasury Rate Constant
Maturity" is specified on the face hereof, 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 bills") having the Index Maturity
specified on the face hereof, as published in
7
<PAGE> 16
H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction
average (investment)" or, if not so published by 3:00 p.m., New York City time,
on the tenth calendar day after such Treasury Rate Determination Date (or, if
such day is not a Business Day, the next succeeding Business Day) (the
"Calculation 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 bills having the Index Maturity specified on the face hereof
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 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 the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity specified
on the face hereof, provided, however, that if the dealers selected as aforesaid
by the 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 bills would normally be auctioned.
Treasury bills 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
Note whose Base Rate is the Treasury Rate, then such Interest Reset Date shall
instead be the Business Day immediately following such auction date.
If "Treasury Rate 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 "Constant Maturity -- 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
8
<PAGE> 17
arithmetic mean of bid-side quotations, expressed in terms of yield, reported by
three leading U.S. government securities dealers (one or more of which may be an
Underwriter involved in the distribution of the Notes (an "Underwriter"),
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 "Calculation Date" pertaining to any Treasury Rate Determination
Date or Constant Maturity Treasury Rate Determination Date, as applicable, shall
be the tenth calendar day after such Treasury Rate Determination Date or
Constant Maturity Treasury Rate Determination Date, as applicable, or, if such a
day is not a Business Day, the next succeeding Business Day.
Determination of Prime Rate
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
9
<PAGE> 18
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.
Determination of J.J. Kenny Rate
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 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;
10
<PAGE> 19
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 no 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.
Determination of Eleventh District Cost of Funds Rate
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
If this Note is designated as an Inverse Floating Rate Note on the
face hereof, the Inverse Floating Rate shall be equal to (i) in the case of the
period, if any, commencing on the Original Issue Date (or such other date which
may be specified on the face hereof as the date on which this Note shall begin
to accrue interest), up to the first Interest Reset Date, the Initial Fixed
Interest Rate shown above, and (ii) in the case of each period commencing on an
Interest Reset
11
<PAGE> 20
Date, the Reset Fixed Reference Rate shown above minus the interest rate
determined by reference to the Base Rate shown above, as adjusted by the Spread
or Spread Multiplier, if any, as determined in accordance with the provisions
hereof, 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 the date of Maturity will be the the rate in effect on the tenth day
preceding such date.
Floating Rate / Fixed Rate Notes
If this Note is designated as a Floating Rate / Fixed Rate Note,
this 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 this Note will be determined as provided herein as if it were a Floating Rate
Note and a Fixed Rate Note hereunder for each such respective period, all as
described herein and in the applicable Pricing Supplement.
Subsequent Interest Periods
If so specified on the face hereof, the Spread or Spread Multiplier
on this Note may be reset by the Company on the date or dates specified on the
face hereof (each an "Optional Reset Date"). Not later than 40 days prior to
each Optional Reset Date, the Trustee will mail to the Holder of this Note a
notice (the "Reset Notice"), first class, postage prepaid, indicating whether
the Company has elected to reset the Spread or Spread Multiplier, and if so, (i)
such new Spread or Spread Multiplier 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 this 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 the Subsequent
Interest Period. Notwithstanding the foregoing, not later than 20 days prior to
the Optional Reset Date, the Company may, at its option, revoke the Spread or
Spread Multiplier provided for in the Reset Notice and establish a higher Spread
or Spread Multiplier for the Subsequent Interest Period by causing the Trustee
to mail notice of such higher Spread or Spread Multiplier to the Holder of this
Note. Such notice shall be irrevocable. All Registered Notes with respect to
which the Spread or Spread Multiplier is reset on an Optional Reset Date will
bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by the Company
on each Optional Reset Date at a price equal to the principal amount hereof,
plus interest accrued to such Optional Reset Date. In order to obtain repayment
on an Optional Reset Date, the Holder must follow the procedures set forth below
for optional repayment, except that the period for delivery or notification to
the Trustee shall be at least 25 but not more than 35 days prior to such
Optional Reset Date, and except that if the Holder has tendered this Note for
repayment pursuant to a Reset Notice, the Holder may, by written notice to the
Trustee, revoke such tender for repayment until the close of business on the
tenth day before the Optional Reset Date.
12
<PAGE> 21
Indexed Notes
If this Note is an Indexed Note, then 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 amount designated on the face
hereof as the Face Amount of this Note and by reference to the Index as
described on the face hereof. If this Note is a 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 described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be an 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 this Note was issued and permitted changes described on the face
hereof), then such Index shall be calculated for this Note's purposes by another
third party, which may be an affiliate of the Company, selected by 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 this Note shall be calculated in the manner described on the face
hereof. Any determination of such third party shall in the absence of manifest
error be binding on all parties.
Specified Currency
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by the
Company or its agent based on the highest firm bid quotation expressed in U.S.
dollars received by the Company or its 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 selected by the Exchange Rate
Agent (one or more of which may be an Underwriter and another of which may be
the Exchange Rate Agent) for the purchase by the quoting dealer, for settlement
on such payment date, of the aggregate amount of the 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 Registered Notes by deductions from such payments. If no such bid
quotations are available, then such payments will be made in the Specified
Currency, unless the Specified Currency is unavailable due to the imposition of
exchange controls or to other circumstances beyond the Company's control, in
which case payment will be made as described in the next paragraph.
Payments in Currencies other than the Specified Currency
13
<PAGE> 22
Except as set forth below, if any payment in respect hereof 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 such payment shall be made in U.S. dollars until such currency
is again available or so used. The amount so payable in such foreign 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 on the face
hereof. Any payment made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
In the event of an official redenomination of the Specified Currency
of this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 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 this Note and the Indenture, and, except as
provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of this Note 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, this Note in either the
current national currency of such Relevant Jurisdiction or Euro, the Company
will make such
14
<PAGE> 23
payments in such national currency or Euro at its sole discretion. To the extent
that the terms and conditions of this Note 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 paragraph and any resultant amendment to the terms and
conditions of this Note will not entitle any Holder hereof (i) to any legal
remedy, including, without limitation, redemption, rescission, notice,
repudiation, adjustment or renegotiation of the terms and conditions of this
Note or the Indenture, 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 this Note or the Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency
Note, the Company may have a one time option, exercisable on one or more dates
(each an "Option Election Date") in whole, but not in part, with respect to all
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 an optional currency (the "Optional Payment 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.
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note,
this Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if
15
<PAGE> 24
a Special Election Interval is specified on the face hereof, the last month in a
period equal to twice the Special Election Interval) after such Renewal Date, if
the Holder of this Note elects to extend the term of this Note or any portion
thereof as described below. If the Holder does not elect to extend the term of
any portion of the principal amount of this 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").
The Holder may elect to renew the term of this Note, or if so
specified, 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. Such election will be
irrevocable and will be binding upon each subsequent holder of this Note. An
election to renew the term of this Note may be exercised with respect to less
than the entire principal amount of this Note only if so specified on the face
hereof and then only in such principal amount, or any integral multiple in
excess thereof, as is specified on the face hereof. Notwithstanding the
foregoing, the term of this Note may not be extended beyond the Stated Maturity
specified for this Note on the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Spread or Spread
Multiplier applicable to the Extension Period, and (iv) the provisions, if any,
for redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
16
<PAGE> 25
Notwithstanding the foregoing, not later than 20 days prior to the
old Stated Maturity of this Note, the Company may, at its option, revoke the
Spread or Spread Multiplier provided for in the Extension Notice and establish a
higher Spread or Spread Multiplier for the Extension Period by causing the
Trustee to mail notice of such higher Spread or Spread Multiplier, first class,
postage prepaid to the Holder of this Note. Such notice shall be irrevocable.
All Registered Notes with respect to which the Maturity is extended will bear
such higher Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will
have the option to elect repayment of this Note by the Company on the old Stated
Maturity at a price equal to the principal amount hereof, plus interest accrued
to such date. In order to obtain repayment on such old Stated Maturity once the
Company has extended the Maturity hereof, the Holder must follow the procedures
set forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole or in part, on the date or dates (each an Optional
Redemption Date") specified herein, at the price (the "Redemption
Price")(together with accrued interest to such Optional Redemption Date)
specified herein. Unless otherwise stated herein, the Company may exercise such
option with respect to this Note by notifying the Trustee for this 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, the Trustee shall mail to the Holder a
notice of such redemption at least 30 but not more than 60 days prior to the
date of redemption unless otherwise specified on the face hereof In the event of
redemption of this Note in part only, a new Note or Notes for the unredeemed
portion hereof will be issued to the Holder hereof upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable
prior to Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Trustee must receive at least 30 but not more than
45 days prior to an Optional Repayment Date (i) this Note with the form below
entitled "Option to Elect Repayment" duly completed; or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities exchange
or the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States of America setting forth the name of the
Holder of this Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of this Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that this Note with the form below entitled "Option to Elect
Repayment" duly completed will be received by the Trustee not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter. If the procedure described in clause (ii) of the preceding sentence is
17
<PAGE> 26
followed, this Note with form duly completed must be received by the Trustee by
such fifth Business Day. Any tender of this Note 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 this Note for less than the entire
principal amount of the Note provided that the principal amount of this Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be canceled and a new Note or Notes for the
remaining principal amount hereof shall be issued in the name of the Holder of
this Note.
Unless otherwise specified on the face hereof, this Note will not be
subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a Discount
Note, the amount payable in the event of redemption or repayment prior to the
Stated Maturity hereof (other than pursuant to an optional redemption by the
Company at a stated Redemption Price), in lieu of the principal amount due at
the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as
of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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.
Other Terms
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
18
<PAGE> 27
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company,
19
<PAGE> 28
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Note at the times, place and rate, and the coin or
currency, herein prescribed.
UNLESS OR UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES
REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY (AS DEFINED HEREIN) TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
20
<PAGE> 29
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT ENT -as joint tenants with right of
survivorship and not as tenants in
common
UNIF GIFT MIN ACT _______________Custodian_______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_______________________________________
(State)
Additional abbreviations may also be used though not in the above list
--------------------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $__________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date or repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York or, if delivery is by mail, 450 West 33rd Street, Attention: Corporate
Trust Department, New York, New York 10001.
Dated:
----------------------------------------------------------
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the
within Note in every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
_________________________________________
_________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
________________________________________________________________________attorney
appointing to transfer such Note on the books of Salomon Smith Barney Holdings
Inc. with full power of substitution in the premises.
Dated:____________________ __________________________________________________
Signature
__________________________________________________
NOTICE: The signature to this
assignment must correspond with
the name as it appears upon the
face of the Note in every
particular, without alteration
or enlargement or any change
whatsoever.
<PAGE> 30
Exhibit 4(y)(ii)
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
GLOBAL NOTE
NO. FX____ SALOMON SMITH BARNEY HOLDINGS INC.
NOTES, SERIES J
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Specified Currency (If other than U.S. dollars):
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Dual Currency Note: |_| Yes (see attached) |_| No
Optional Payment Currency:
Designated Exchange Rate:
Interest Payment Dates: Accrue to Pay: |_| Yes |_| No
1
<PAGE> 31
Indexed Principal Note: |_| Yes (see attached) |_| No
Interest Rate Reset |_| The Interest Rate may not be changed prior to Stated
Maturity.
|_| The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable):
Amortizing Note: |_| Yes |_| No
Amortization Schedule:
Optional Redemption: |_| Yes |_| No
Optional Redemption Dates:
Redemption Prices:
Bond Yield to Maturity: Bond Yield to Call:
Optional Repayment: |_| Yes |_| No
Optional Repayment Dates: Optional Repayment Prices:
Optional Extension of Stated Maturity: |_| Yes |_| No
Final Maturity:
Discount Note: |_| Yes |_| No
Total Amount of OID: Yield to Maturity:
Renewable Note: |_| Yes (see attached) |_| No
Special Election Interval (if applicable):
Amount (if less than entire principal amount)
as to which election may be exercised:
Survivor's Option: |_| Yes (see attached) |_| No
Bond Yield to Maturity:
Bond Yield to Call:
2
<PAGE> 32
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company"), for value received hereby promises to pay CEDE & Co. or registered
assigns, (a) the Principal Amount or, in the case of an Indexed Principal Note,
the Face Amount adjusted 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 (an "Index") as described on the face hereof or in the Pricing
Supplement attached hereto or delivered herewith, in the Specified Currency on
the Stated Maturity shown above or earlier if and to the extent so provided
herein and (b) to pay accrued interest on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount, then outstanding)
at the Interest Rate shown above from the Original Issue Date shown above or
from the most recent date to which interest has been paid or duly provided for,
semiannually in arrears on the Interest Payment Dates specified on the face of
this Note and at Maturity, until, in either case, the Principal Amount then
outstanding or the Face Amount is paid or duly provided for in accordance with
the terms hereof. Interest on this Note, if any, will be computed on the basis
of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture referred to on
the reverse hereof, be paid to the Person in whose name this Note (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which, (other than interest payable at
Maturity) shall be the date (whether or not a Business Day) fifteen calendar
days immediately preceding such Interest Payment Date, and, in the case of
interest payable at Stated Maturity, shall be the Stated Maturity of this Note.
Notwithstanding the foregoing, if this Note is issued between a Regular Record
Date and the related Interest Payment Date, the interest so payable for the
period from the Original Issue Date to such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the Registered Holder hereof on
the related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered Holder
hereof on such Regular Record Date, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
less than ten 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 Registered Notes may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. If an Interest Payment Date with respect to any 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 Note for which "Accrue to Pay" is
specified on the face hereof, 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
3
<PAGE> 33
Day. Each payment of interest in respect of an Interest Payment Date shall
include interest accrued through the day before such Interest Payment Date.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is 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 shown above (as defined below) 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).
If the Holder of this Note has a Survivor's Option, as indicated
above, to elect repayment of this Note prior to Stated Maturity in the event of
the death of any beneficial owner hereof, then, pursuant to exercise of such
Survivor's Option, the Company will repay this Note (or applicable portion
hereof) when 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 hereof 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 (calculated as set forth below) payable
hereunder with respect to such beneficial owner, plus accrued interest thereon
to the date of such repayment; provided, however, that the Company may, in its
sole discretion, limit to $2,500,000 (or the approximate equivalent thereof in
other currencies) the aggregate principal amount of Notes of this series 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 (or the approximate equivalent thereof in other
currencies) the aggregate principal amount of Notes (or portions thereof) as to
which exercises of the Survivor's Option will be accepted in such calendar year
with respect to any individual deceased beneficial owner of Notes; and provided,
further, that the Company will not make any principal payment pursuant to
exercise of the Survivor's Option in an amount that is less than $5,000 (or the
approximate equivalent thereof in other currencies), and, in the event that the
foregoing limitations would result in the partial repayment to any individual
deceased beneficial owner of Notes, the principal amount owned by such deceased
beneficial owner must not be less than $5,000 (or the approximate equivalent
thereof in other currencies) as a result of such repayment, which is the minimum
authorized denomination of the Notes. This Note, or any portion hereof, tendered
pursuant to an exercise of the Survivor's Option, may be withdrawn by a written
request of the Holder hereof received by the Trustee prior to its repayment.
The Amortized Face Amount of this Note on any date shall be the
amount equal to (i) the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to
Call set forth on the face hereof (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 this Note
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 such Note is not redeemed on such first occurring
Optional
4
<PAGE> 34
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.
This Note (or any portion hereof), if tendered pursuant to a valid
exercise of the Survivor's Option, will be accepted promptly based on the order
in which all such Notes (or any portion thereof) are tendered, unless the
acceptance hereof 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 (or the
approximate equivalent thereof) with respect to any 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
of the Survivor's Option with respect to this Note (or any portion hereof) not
accepted during such calendar year because more than $250,000 (or the
approximate equivalent thereof) aggregate principal amount of Notes (or portions
thereof) was tendered with respect to the individual deceased beneficial owner
hereof 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. This Note (or portion hereof), if accepted for repayment
pursuant to exercise of the Survivor's Option, will be repaid on the first
Interest Payment Date that occurs twenty or more calendar days after the date of
such acceptance. If this Note (or any portion hereof) is tendered for repayment
and is not accepted in any calendar year due to the application of the Annual
Put Limitation, then this Note (or any such portion) will be deemed to be
tendered in the following calendar year based on the order in which all such
Notes (or any portion thereof) were originally tendered, unless this Note (or
any such portion hereof) is withdrawn by the Holder. In the event that this Note
(or any portion hereof) tendered for repayment pursuant to valid exercise of the
Survivor's Option is not accepted, the Trustee will deliver a notice to the
affected Representative by first-class mail to the broker or other entity that
represents the deceased beneficial owner of this Note that states the reasons
this Note (or such portion) has not been accepted for repayment.
Subject to the foregoing, in order for the 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 this Note (or
applicable portion hereof), (iii) appropriate evidence satisfactory to the
Company and the Trustee that (A) the Representative has authority to act on
behalf of the applicable deceased beneficial owner hereof, (B) the death of such
beneficial owner has occurred and (C) the deceased was a beneficial owner hereof
at the time of death, and (iv) if applicable, aa 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
5
<PAGE> 35
will be determined by the Company, in its sole discretion, which determination
will be final and binding.
For purposes of this Note, "Business Day" 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 shown above (as defined below) is other
than U.S. dollars, the financial center of the country issuing the Specified
Currency (which, in the case of the Euro, shall be Brussels, Belgium) and (ii)
if the Base Rate specified above is LIBOR, a London Banking Day. "London Banking
Day" means any day on which dealings in deposits in the Specified Currency are
transacted in the London interbank market.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are payable
by the Company in the Specified Currency shown above. If the Specified Currency
shown above is other than U.S. dollars, the Company will arrange to convert all
payments in respect hereof into U.S. dollars in the manner described on the
reverse hereof. The Holder hereof may, if so indicated above, elect to receive
all payments in respect hereof in the Specified Currency by delivery of a
written notice to the Trustee not later than fifteen calendar days prior to the
applicable payment date. Such election will remain in effect until revoked by
written notice to the Trustee received not later than fifteen calendar days
prior to the applicable payment date. If the Company determines that the
Specified Currency is not available for making payments in respect hereof 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 or within
the international banking community, then the Holder hereof may not so elect to
receive payments in the Specified Currency, and any such outstanding election
shall be automatically suspended, and payments shall be in U.S. dollars, until
the Company determines that the Specified Currency is again available for making
such payments.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF AND IN ANY PRICING SUPPLEMENT ATTACHED HERETO OR
DELIVERED HEREWITH, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
6
<PAGE> 36
Dated:
SALOMON SMITH BARNEY HOLDINGS INC.
By
--------------------------
Authorized Officer
[Seal]
Attest:
---------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within - mentioned
Indenture.
CITIBANK, N.A.,
as Trustee
By
--------------------------
Authorized Signatory
7
<PAGE> 37
SALOMON SMITH BARNEY HOLDINGS INC.
NOTE, SERIES J
(FIXED RATE)
General
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988, as amended (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee," which term
includes any successor Trustee under the Indenture) to which indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, as exchange rate agent for the Notes (the "Exchange
Rate Agent") 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 currencies on the
applicable issue dates.
Unless otherwise specified above, the authorized denominations of
Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any larger
amount that is an integral multiple of U.S.$1,000. The authorized denominations
of Bearer Notes having a specified currency other than U.S. dollars will be,
unless otherwise specified herein, the approximate equivalents thereof in the
Specified Currency.
Each Registered Note will be issued initially as either a Book-Entry
Note or, if so specified above, a Certificated Note. Book-Entry Notes will not
be exchangeable for Certificated Notes and, except as otherwise provided in the
Indenture, will not otherwise be issuable as Certificated Notes.
Fixed Rate Notes
This 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 Interest Rate stated on the face hereof until the principal amount
hereof is paid or made available for payment, except as otherwise described
below under "Subsequent Interest Periods" and "Extension of Maturity", and
except that if so specified in the attached Pricing Supplement, the rate of
interest payable may be subject to adjustment as specified therein.
Unless otherwise set forth herein, interest on this Note will be
payable semiannually in arrears on the Interest Payment Dates set forth above
and at Stated Maturity. If an Interest Payment Date with respect to any 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
<PAGE> 38
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 Note for which
"Accrue to Pay" is specified on the face hereof, 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.
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 herein, interest on this Note will be computed
on the basis of a 360-day year of twelve 30-day months ("30 over "360").
Subsequent Interest Periods
If so specified on the face hereof, the Interest Rate on this Note
may be reset by the Company on the date or dates specified on the face hereof
(each an "Optional Reset Date"). Not later than 40 days prior to each Optional
Reset Date, the Trustee will mail to the Holder of this Note a notice (the
"Reset Notice"), first class, postage prepaid, indicating whether the Company
has elected to reset the Interest Rate, and if so, (i) such new Spread or Spread
Multiplier 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 this 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 the Subsequent Interest Period. Notwithstanding the
foregoing, not later than 20 days prior to the Optional Reset Date, the Company
may, at its option, revoke the Interest Rate provided for in the Reset Notice
and establish a higher Spread or Spread Multiplier for the Subsequent Interest
Period by causing the Trustee to mail notice of such higher Spread or Spread
Multiplier to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Interest Rate is reset on an Optional
Reset Date will bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by
the Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
Indexed Notes
2
<PAGE> 39
If this Note is an Indexed Principal Note, then the principal amount
payable at Stated Maturity or earlier redemption or retirement, is determined by
reference to the amount designated on the face hereof as the Face Amount of this
Note and by reference to the Index as described on the face hereof. If this Note
is an Indexed Principal Note, the principal amount payable at Stated Maturity or
any earlier redemption or repayment of this Note may be different from the Face
Amount. If the determination of the Index is calculated or announced by a third
party, which may be an 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 this Note was issued and permitted changes described on the
face hereof), then such Index shall be calculated for this Note's purposes by
another third party, which may be an affiliate of the Company, selected by 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 principal amount of this Note shall be calculated in the
manner described on the face hereof. Any determination of such third party shall
in the absence of manifest error be binding on all parties.
Specified Currency
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by the
Company or its agent based on the highest firm bid quotation expressed in U.S.
dollars received by the Company or its 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 selected by the Exchange Rate
Agent (one or more of which may be an Underwriter involved in the distribution
of the Notes and another of which may be the Exchange Rate Agent) for the
purchase by the quoting dealer, for settlement on such payment date, of the
aggregate amount of the 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 Registered Notes by
deductions from such payments. If no such bid quotations are available, then
such payments will be made in the Specified Currency, unless the Specified
Currency is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Company's control, in which case payment will be made
as described in the next paragraph.
Payments in Currencies other than the Specified Currency
Except as set forth below, if any payment in respect hereof 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 such payment shall be made in U.S. dollars until such currency
is again available or so used. The amount so payable in such foreign currency
shall be converted into U.S. dollars on the basis of
3
<PAGE> 40
the most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under the
Indenture.
In the event of an official redenomination of the Specified Currency
of this 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 this Note 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. This Note does not provide for any adjustment to any amount
payable under this Note as a result of (i) any change in the value of the
Specified Currency hereof 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). In the event of European Monetary Union, the
procedures described in this paragraph shall not apply, and the obligations of
the Company with respect to payments on this Note shall instead be determined as
set forth in the following paragraph.
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 this
Note may be denominated or payments in respect of this Note may be due are
signatories to such Treaty (any such country, a "Relevant Jurisdiction" with
respect to such Note). 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 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 this Note and the Indenture, and, except as
provided in the following paragraph, the payment of principal of, or interest
on, or any other amounts in respect of this Note 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, this Note 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 this Note 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 paragraph and any resultant
amendment to the terms and conditions of this Note will not entitle any Holder
hereof (i) to any legal remedy, including, without limitation, redemption,
rescission, notice, repudiation, adjustment or renegotiation of the terms and
conditions of this Note or the Indenture, or (ii) to raise any defense
4
<PAGE> 41
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 this Note or the Indenture.
Dual Currency Notes
If this Note is specified on the face hereof as a Dual Currency
Note, the Company may have a one time option, exercisable on one or more dates
(each an "Option Election Date") in whole, but not in part, with respect to all
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 an optional currency (the "Optional Payment 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.
Renewable Notes
If this Note is specified on the face hereof as a Renewable Note,
this Note will mature on an Interest Payment Date occurring in or prior to the
twelfth month following the Original Issue Date of this Note (the "Initial
Maturity Date") unless the term of all or any portion of this Note is renewed in
accordance with the following procedures:
On the Interest Payment Date occurring in the sixth month (unless a
different interval (the "Special Election Interval") is specified on the face
hereof) prior to the Initial Maturity Date of a this 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
this Note may be extended to the Interest Payment Date occurring in the twelfth
month (or, if a Special Election Interval is specified on the face hereof, the
last month in a period equal to twice the Special Election Interval) after such
Renewal Date, if the Holder of this Note elects to extend the term of this Note
or any portion thereof as described below. If the Holder does not elect to
extend the term of any portion of the principal amount of this Note during the
specified period prior to any Renewal Date, such portion will become due and
payable on the Interest
5
<PAGE> 42
Payment Date occurring in the sixth month (or the last month in the Special
Election Interval) after such Renewal Date (the "New Maturity Date").
The Holder may elect to renew the term of this Note, or if so
specified, 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. Such election will be
irrevocable and will be binding upon each subsequent holder of this Note. An
election to renew the term of this Note may be exercised with respect to less
than the entire principal amount of this Note only if so specified on the face
hereof and then only in such principal amount, or any integral multiple in
excess thereof, as is specified on the face hereof. Notwithstanding the
foregoing, the term of this Note may not be extended beyond the Stated Maturity
specified for this Note on the face hereof.
If the Holder does not elect to renew the term, this Note must be
presented to the Trustee (or any duly appointed paying agent) and, as soon as
practicable following receipt of such 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 Note
for which no election to renew the term thereof was exercised, with terms
identical to those specified on such exchanged 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 Note, a replacement Renewable Note, in a principal amount equal
to the principal amount of such exchanged Note for which the election to renew
was made, with terms identical to the exchanged Note.
Extension of Maturity
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid indicating (i) the election of the Company
to extend the Maturity, (ii) the new Stated Maturity, (iii) the Interest Rate
applicable to the Extension Period, and (iv) the provisions, if any, for
redemption during such Extension Period. Upon the Trustee's mailing of the
Extension Notice, the Maturity of this Note shall be extended automatically and,
except as modified by the Extension Notice and as described in the next
paragraph, this Note will have the same terms as prior to the mailing of such
Notice.
Notwithstanding the foregoing, not later than 20 days prior to the
old Stated Maturity of this Note, the Company may, at its option, revoke the
Interest Rate provided for in the Extension Notice and establish a higher Spread
or Spread Multiplier for the Extension Period by causing the Trustee to mail
notice of such higher Spread or Spread Multiplier, first class, postage prepaid
to the Holder of this Note. Such notice shall be irrevocable. All Registered
6
<PAGE> 43
Notes with respect to which the Maturity is extended will bear such higher
Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will
have the option to elect repayment of this Note by the Company on the old Stated
Maturity at a price equal to the principal amount hereof, plus interest accrued
to such date. In order to obtain repayment on such old Stated Maturity once the
Company has extended the Maturity hereof, the Holder must follow the procedures
set forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
Optional Redemption, Repayment and Repurchase
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole or in part, on the date or dates (each an Optional
Redemption Date") specified herein, at the price (the "Redemption
Price")(together with accrued interest to such Optional Redemption Date)
specified herein. Unless otherwise stated herein, the Company may exercise such
option with respect to this Note by notifying the Trustee for this 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, the Trustee shall mail to the Holder a
notice of such redemption at least 30 but not more than 60 days prior to the
date of redemption unless otherwise specified on the face hereof In the event of
redemption of this Note in part only, a new Note or Notes for the unredeemed
portion hereof will be issued to the Holder hereof upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable
prior to Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Trustee must receive at least 30 but not more than
45 days prior to an Optional Repayment Date (i) this Note with the form below
entitled "Option to Elect Repayment" duly completed; or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities exchange
or the National Association of Securities Dealers, Inc. or a commercial bank or
trust company in the United States of America setting forth the name of the
Holder of this Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of this Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that this Note with the form below entitled "Option to Elect
Repayment" duly completed will be received by the Trustee not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter. If the procedure described in clause (ii) of the preceding sentence is
followed, this Note with form duly completed must be received by the Trustee by
such fifth Business Day. Any tender of this Note 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 this Note for less than the entire
principal amount of the Note provided that the principal amount of this Note
remaining outstanding after repayment is an authorized denomination. Upon such
7
<PAGE> 44
partial repayment, this Note shall be canceled and a new Note or Notes for the
remaining principal amount hereof shall be issued in the name of the Holder of
this Note.
Unless otherwise specified on the face hereof, this Note will not be
subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof (other than pursuant to an optional redemption by
the Company at a stated Redemption Price), in lieu of the principal amount due
at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
Amortized Face Amount of this Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face hereof 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 hereof or (y) if so specified, the Bond Yield to Call set forth on the face
hereof (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 this Note 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 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.
Other Terms
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
8
<PAGE> 45
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note 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 Note at the times, place and rate, and the coin or currency, herein
prescribed.
UNLESS OR UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES
REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED
9
<PAGE> 46
EXCEPT AS A WHOLE BY THE DEPOSITARY (AS DEFINED HEREIN) TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
10
<PAGE> 47
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -as tenants in common
TEN ENT -as tenants by the entireties
JT ENT -as joint tenants with right of
survivorship and not as tenants in
common
UNIF GIFT MIN ACT _______________Custodian_______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
_______________________________________
(State)
Additional abbreviations may also be used though not in the above list
--------------------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $__________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date or repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York or, if delivery is by mail, 450 West 33rd Street, Attention: Corporate
Trust Department, New York, New York 10001.
Dated:
----------------------------------------------------------
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the
within Note in every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
_________________________________________
_________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
________________________________________________________________________attorney
appointing to transfer such Note on the books of Salomon Smith Barney Holdings
Inc. with full power of substitution in the premises.
Dated:____________________ __________________________________________________
Signature
__________________________________________________
NOTICE: The signature to this
assignment must correspond with
the name as it appears upon the
face of the Note in every
particular, without alteration
or enlargement or any change
whatsoever.
<PAGE> 1
Exhibit 5(a)
[Letterhead of Salomon Smith Barney Holdings Inc.]
December 1, 1997
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
I am the General Counsel of Salomon Smith Barney Holdings Inc., a
Delaware corporation (the "Company"). I refer to the filing by the Company with
the Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-3 (the "Registration Statement") relating to (i) debt
securities of the Company, which may be senior debt securities (the "Senior
Securities") or subordinated debt securities (the "Subordinated Securities"),
(ii) junior subordinated debt securities (the "Junior Subordinated Debt
Securities" and collectively with the Subordinated Securities and the Senior
Securities, the "Debt Securities") issued in connection with the offering by
certain affiliated business trusts of the Company of trust preferred securities
(the "Trust Preferred Securities"), certain payments in respect of which will be
guaranteed by the Company (the "Guarantees"), (iii) 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
measure, (iv) shares of preferred stock of the Company (the "Preferred Stock"),
and (v) depositary shares representing entitlement to all rights and preferences
of a share of Preferred Stock of a specified series (the "Depositary Shares").
The Debt Securities, Index Warrants, Preferred Stock and the Depositary Shares
are referred to herein collectively as the "Offered Securities". The Offered
Securities being registered under the Registration Statement, together with
securities registered under previously filed registration statements, will have
an aggregate initial offering price of up to $11,710,346,786 or the equivalent
thereof in foreign currencies or composite currencies and will be offered on a
continued or delayed basis pursuant to the provisions of Rule 415 under the
Securities Act of 1933, (the "Act").
Unless otherwise provided in any prospectus supplement forming a
part of the Registration Statement relating to a particular series of Debt
Securities, the Senior Securities will be issued under an Indenture dated as of
December 1, 1988, as amended (the "Senior Indenture")
<PAGE> 2
Salomon Smith Barney Holdings Inc.
December 1, 1997
Page 2
between the Company and Citibank, N.A. (the "Senior Trustee"), as Senior
Trustee; the Subordinated Securities will be issued under an Indenture dated as
of December 1, 1988, as amended (the "Subordinated Indenture"), between the
Company and Bankers Trust Company (the "Subordinated Trustee") as Subordinated
Trustee and the Junior Subordinated Debt Securities will be issued under an
Indenture to be entered into (the "Junior Subordinated Indenture") between the
Company and The Chase Manhattan Bank (the "Junior Subordinated Trustee" and each
of the Junior Subordinated Trustee, the Senior Trustee and the Subordinated
Trustee, a "Trustee"). The Index Warrants will be issued under one or more
warrant agreements (each, a "Warrant Agreement"), each to be entered into
between the Company and one or more institutions as identified in the applicable
Warrant Agreement. The Preferred Stock will be issued pursuant to a Certificate
of Designations (the "Certificate of Designations") relating to a particular
series of Preferred Stock. The Depositary Shares will be issued under a Deposit
Agreement (the "Deposit Agreement"). The Guarantees will be issued by the
Company pursuant to one or more Guarantee Agreements between the Company and the
Junior Subordinated Trustee, for the benefit of the holders of the Trust
Preferred Securities.
I, or persons employed by the Company or its affiliates with whom I
have consulted, have examined and are familiar with originals, or copies
certified or otherwise identified to my satisfaction, of such corporate records
of the Company, certificates or documents as I have deemed appropriate as a
basis for the opinions expressed below. In my examination, I have assumed the
legal capacity of all natural persons, the genuineness of all signatures, the
authenticity of all documents submitted to me (or such persons) as originals,
the conformity to original documents of all documents submitted to me (or such
persons) as certified or photostatic copies and the authenticity of the
originals of such copies.
Based upon and subject to the foregoing and assuming that (i) the
Registration Statement and any amendments thereto (including post-effective
amendments) will have become effective and comply with all applicable laws at
the time the Offered Securities are offered or issued as contemplated by the
Registration Statement; (ii) a Prospectus Supplement, Pricing Supplement and/or
term sheet will have been prepared and filed with the Commission describing the
Offered Securities offered thereby and will comply with all applicable laws;
(iii) all Offered Securities will be issued and sold in compliance with
applicable federal and state laws and in the manner stated in the Registration
Statement and the appropriate Prospectus Supplement, Pricing Supplement and/or
term sheet;(iv) a definitive purchase, underwriting or similar agreement and any
other necessary agreement with respect to any Offered Securities offered or
issued will have been duly authorized and validly executed and delivered by the
parties thereto; (vi) the Offered Securities will be sold and delivered at the
price (not less than the par or stated value in the case of the Preferred Stock)
and in accordance with the terms of such agreement and as set forth in the
Registration Statement and the Prospectus Supplement(s), Pricing Supplement(s)
or term sheet(s) referred to therein; and (vi) the Company will authorize the
offering and issuance of the Offered Securities and the terms and conditions
thereof (including in the case of the Preferred Stock the adoption of a
Certificate of Designations) and will take any other appropriate additional
corporate action, I am of the opinion that:
<PAGE> 3
Salomon Smith Barney Holdings Inc.
December 1, 1997
Page 3
1. The Company is a duly organized and existing corporation under
the laws of the State of Delaware.
2. With respect to Debt Securities to be issued under either the
Senior Indenture, Subordinated Indenture or Junior Subordinated Indenture,
assuming the (i) due qualification of the Trustee and the applicable Indenture
under the Trust Indenture Act of 1939, (ii) due authorization, execution, and
delivery of the applicable Indenture by the Trustee, and (iii) due execution,
authentication and delivery of the Debt Securities in accordance with the terms
of the applicable Indenture, such Debt Securities will be legal, valid and
binding obligations of the Company and will be entitled to the benefits of the
applicable Indenture.
3. With respect to the Index Warrants, assuming the (i) due
authorization, execution and delivery of the applicable Warrant Agreement by the
Warrant Agent, and (ii) due execution, countersignature and delivery of the
Index Warrants, such Index Warrants will be legal, valid and binding obligations
of the Company.
4. With respect to shares of Preferred Stock, assuming the due
execution, countersignature and delivery of certificates representing the shares
of Preferred Stock, such shares of Preferred Stock will be validly issued, fully
paid and nonassessable.
5. With respect to the Depositary Shares, assuming the (i) due
authorization, execution and delivery of the Deposit Agreement or Agreements
relating to the Depositary Shares and the related Depositary Receipts by the
Depositary appointed by the Company, (ii) the deposit of the shares of Preferred
Stock underlying such Depositary Shares with a bank or trust company which meets
the requirements for the Depositary set forth in the Registration Statement
under the applicable Deposit Agreement, and (iii) due execution,
countersignature and delivery of the Depositary Receipts representing the
Depositary Shares, such Depositary Shares will be validly issued.
6. With respect to the Guarantees, assuming the due
authorization, execution and delivery of the applicable Guarantee Agreement by
the Junior Subordinated Trustee, such Guarantees will be legal, valid and
binding obligations of the Company.
Insofar as my opinion relates to the validity, binding effect or
enforceability of any agreement or obligation of the Company, it is subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting creditors' rights generally from time
to time in effect and subject to general principles of equity, regardless of
whether such is considered in a proceeding in equity or at law.
My opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the state of New York and the General
Corporation Law of the state of Delaware.
<PAGE> 4
Salomon Smith Barney Holdings Inc.
December 1, 1997
Page 4
I consent to the filing of this opinion in the Registration Statement
as Exhibit 5 thereto and to the reference to my name in the Prospectuses and
Prospectus Supplements constituting a part of such Registration Statement under
the heading "Legal Matters." In giving such consent, I do not thereby admit that
I come within the category of persons whose consent is required under Section 7
of the Act, or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Robert H. Mundheim
-----------------------
Robert H. Mundheim
<PAGE> 1
EXHIBIT 5(b)
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
December 1, 1997
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
c/o Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Re: Salomon Smith Barney Holdings Inc.
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to (1) SSBH Capital I, SSBH Capital
II, SSBH Capital III and SSBH Capital IV (each, an "SSBH Trust" and, together,
the "SSBH Trusts"), each a statutory business trust formed under the laws of the
State of Delaware, and (2) Salomon Smith Barney Holdings Inc. (the "Company"), a
corporation organized under the laws of the State of Delaware, in connection
with the preparation of a Registration Statement on Form S-3 (File No.
333-38931) (the "Registration Statement") filed by the Company and the SSBH
Trusts with the Securities and Exchange Commission (the "Commission"). The
Registration Statement relates to the issuance and sale from time to time,
pursuant to Rule 415 of the General Rules and Regulations promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), of, among other
things, the following securities
<PAGE> 2
Salomon Smith Barney Holdings Inc.
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
December 1, 1997
Page 2
with an aggregate public offering price of up to $11,710,346,786: (i) preferred
securities (the "Trust Preferred Securities") of each of the SSBH Trusts and
(ii) unsecured junior subordinated debt securities (the "Junior Subordinated
Debt Securities") of the Company which are to be issued pursuant to an indenture
(the "Indenture"), between the Company and The Chase Manhattan Bank, as debt
trustee (the "Debt Trustee"). The Trust Preferred Securities and Junior
Subordinated Debt Securities are collectively referred to herein as the "Offered
Securities."
The Trust Preferred Securities of each SSBH Trust are to be issued
pursuant to the Amended and Restated Declaration of Trust of such SSBH Trust
(each, a "Declaration" and, collectively, the "Declarations"), each such
Declaration being among the Company, as sponsor and as the issuer of the Junior
Subordinated Debt Securities to be held by the Property Trustee (as defined
below) of such SSBH Trust, Chase Manhattan Bank Delaware, as Delaware trustee
(the "Delaware Trustee"), The Chase Manhattan Bank, as property trustee (the
"Property Trustee"), and Charles W. Scharf and Michael J. Day, as regular
trustees (together, the "Regular Trustees").
This opinion is being delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement; (ii) the form of Prospectus and Prospectus Supplement relating to the
Trust Preferred Securities included in the Registration Statement (collectively,
the "Prospectus"); (iii) the certificate of trust of each of (A) SBH Capital I,
SBH Capital II and SBH Capital III (the "1996 Certificates of Trust") filed with
the Secretary of State of the State of Delaware on December 19, 1996 and (B) the
certificate of trust of SSBH Capital IV filed
<PAGE> 3
Salomon Smith Barney Holdings Inc.
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
December 1, 1997
Page 3
with the Secretary of State of the State of Delaware on October 24, 1997 (the
"1997 Certificate of Trust"); (iv) the certificate of amendment of each of the
1996 Certificates of Trust changing the names of SBH Capital I, SBH Capital II,
and SBH Capital III to, respectively, SSBH Capital I, SSBH Capital II and SSBH
Capital III (as amended, and together with the 1997 Certificate of Trust, the
"Certificates of Trust") (v) the form of the Declaration of each of the SSBH
Trusts (including the designations of the terms of the Trust Preferred
Securities of such SSBH Trust annexed thereto); (vi) the form of the Trust
Preferred Securities of each of the SSBH Trusts; (vii) the form of the preferred
securities guarantee agreement (the "Preferred Securities Guarantee"), between
the Company and The Chase Manhattan Bank, as guarantee trustee (the "Preferred
Securities Guarantee Trustee"); (viii) the form of the Junior Subordinated Debt
Securities; (ix) the form of the Indenture; (x) the Amended and Restated
Certificate of Incorporation of the Company, as amended to date; (xi) the
By-laws of the Company as currently in effect; and (xii) certain resolutions
adopted by the Board of Directors of the Company (the "Board of Directors"). We
have also examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed or to be executed by parties other than the Company and the
SSBH Trusts, we have assumed that such parties had or will have the power,
corporate or other, to enter into and perform all obligations thereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and that,
except to the extent set forth in paragraphs (2) and (3) below, such
<PAGE> 4
Salomon Smith Barney Holdings Inc.
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
December 1, 1997
Page 4
documents constitute or will constitute valid and binding obligations of such
parties. In addition, we have assumed that the Declaration of each SSBH Trust,
the Preferred Securities of each SSBH Trust, the Preferred Securities Guarantee,
the Junior Subordinated Debt Securities and the Indenture, when executed, will
be executed in substantially the form reviewed by us and that the terms of the
Junior Subordinated Debt Securities when established in conformity with the
Indenture will not violate any applicable law. As to any facts material to the
opinions expressed herein which were not independently established or verified,
we have relied upon oral or written statements and representations of officers,
trustees and other representatives of the Company, the SSBH Trusts and others.
Members of our firm are admitted to the bar in the States of New York
and Delaware and we do not express any opinion as to the laws of any other
jurisdiction.
Based on and subject to the foregoing and to the other qualifications
and limitations set forth herein, we are of the opinion that:
1. With respect to the Trust Preferred Securities of each SSBH
Trust (the "Offered Trust Preferred Securities"), when (i) the Registration
Statement, as finally amended (including all necessary post-effective
amendments), has become effective under the Securities Act; (ii) the Prospectus
has been prepared, delivered and filed in compliance with the Securities Act and
the applicable rules and regulations thereunder; (iii) the Declaration of such
SSBH Trust is duly executed and delivered by the parties thereto; (iv) the terms
of the Offered Trust Preferred Securities have been established in accordance
with the Declaration; (v) the Offered Trust Preferred Securities have been
issued and executed in accordance with the Declaration and paid for as set forth
in the Prospectus; and (vi) if the Offered Trust Preferred Securities are to be
sold pursuant to a firm
<PAGE> 5
Salomon Smith Barney Holdings Inc.
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
December 1, 1997
Page 5
commitment underwritten offering, the underwriting agreement with respect to the
Offered Trust Preferred Securities has been duly authorized, executed and
delivered by the Company and the other parties thereto, (1) the Offered Trust
Preferred Securities will be duly authorized for issuance and will be validly
issued, fully paid and nonassessable, representing undivided beneficial
interests in the assets of such SSBH Trust and (2) the holders of the Offered
Trust Preferred Securities will 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. We bring to your
attention, however, that the holders of the Offered Trust Preferred Securities
may be obligated, pursuant to the Declaration of such SSBH Trust, to (i) provide
indemnity and/or security in connection with and pay taxes or governmental
charges arising from transfers of Trust Preferred Securities and (ii) provide
security and indemnity in connection with the requests of or directions to the
Property Trustee of such SSBH Trust to exercise its rights and powers under the
Declaration of such SSBH Trust.
2. The Preferred Securities Guarantee, when duly executed and
delivered by the parties thereto, will be a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that (a) enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
3. With respect to any series of the Junior Subordinated Debt
Securities (the "Offered Debt Securities"), when (i) the Registration Statement,
as finally amended (including all necessary post-effective amendments), has
become effective under the Securities Act;
<PAGE> 6
Salomon Smith Barney Holdings Inc.
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
December 1, 1997
Page 6
(ii) the Prospectus has been prepared, delivered and filed in compliance with
the Securities Act and the applicable rules and regulations thereunder; (iii)
the Board of Directors, including any appropriate committee appointed thereby,
and appropriate officers of the Company have taken all necessary corporate
action to approve the issuance and terms of the Offered Debt Securities and
related matters; (iv) the terms of the Offered Debt Securities have been
established in conformity with the Indenture; (v) the Indenture has been duly
authorized, executed and delivered; and (vi) the Offered Debt Securities are
duly executed, delivered, authenticated and issued in accordance with the
Indenture and delivered and paid for as set forth in the Prospectus, the Offered
Debt Securities will be valid and binding obligations of the Company, entitled
to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
In rendering the opinions set forth in paragraphs 2 and 3 above, we
have assumed that the execution and delivery by the Company of the Indenture,
the Preferred Securities Guarantee and the Junior Subordinated Debt Securities
and the performance of its obligations thereunder do not and will not violate,
conflict with or constitute a default under (i) any agreement or instrument to
which the Company or any of its properties is subject (except that we do not
make the assumption set forth in this clause (i) with respect to the Company's
Certificate of Incorporation or By-laws), (ii) any law, rule, or regulation to
which the Company or any of its properties is subject (except that we do not
make the assumption set forth in this clause (ii) with respect to the Delaware
General Corporation Law and those laws,
<PAGE> 7
Salomon Smith Barney Holdings Inc.
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
December 1, 1997
Page 7
rules and regulations (other than securities and antifraud laws) of the States
of Delaware and New York which, in our experience, are normally applicable to
transactions of the type contemplated by the Indenture, the Preferred Securities
Guarantee and the Junior Subordinated Debt Securities, but without our having
made any special investigation concerning any other laws, rules or regulations),
(iii) any judicial or regulatory order or decree of any governmental authority
or (iv) any consent, approval, license, authorization or validation of, or
filing, recording or registration with any governmental authority.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also hereby consent to the use of
our name under the heading "Legal Matters" in the prospectuses which form a part
of the Registration Statement. In giving this consent, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Commission
promulgated thereunder. This opinion is expressed as of the date hereof unless
otherwise expressly stated and we disclaim any undertaking to advise you of the
facts stated or assumed herein or any subsequent changes in applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher
& Flom LLP
<PAGE> 1
Exhibit 8(a)
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
December 1, 1997
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
c/o Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Re: Salomon Smith Barney Holdings Inc.
Trust Preferred Securities
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as tax counsel to (1) Salomon Smith Barney Holdings Inc.,
a corporation organized under the laws of the State of Delaware (the "Company"),
and (2) SSBH Capital I, SSBH Capital II, SSBH Capital III and SSBH Capital IV
(each, an "SSBH Trust" and, together, the "SSBH Trusts"), each a statutory
business trust formed under the laws of the State of Delaware in connection with
the preparation of the registration statement on Form S-3 (the "Registration
Statement") to be filed with the Securities and Exchange Commission (the
"Commission") for the purpose of registering, among other things, (i) preferred
securities (the "Trust Preferred Securities") of each of the SSBH Trusts
representing undivided beneficial interests in the assets of each of the SSBH
Trusts and (ii) Junior Subordinated Deferrable Interest Debentures of the
Company which are to be issued pursuant to an indenture (the "Indenture")
between the
<PAGE> 2
Salomon Smith Barney Holdings Inc.
SSBH Capital I
SSBH Capital II
SSBH Capital III
SSBH Capital IV
December 1, 1997
Page 2
Company and Chase Manhattan Bank, as debt trustee (the "Debt Trustee") to each
of the SSBH Trusts in connection with the sale of the Trust Preferred
Securities.
We hereby confirm that, although the discussion set forth under the
heading "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS" in the form of
Prospectus Supplement for an offering of Trust Preferred Securities filed as
part of the Registration Statement (the "Form of Prospectus Supplement") does
not purport to discuss all possible United States federal income tax
consequences of the purchase, ownership and disposition of Trust Preferred
Securities to holders who purchase the Preferred Securities upon original
issuance, in our opinion, such discussion constitutes, in all material respects,
a fair and accurate summary of the United States federal income tax consequences
of the purchase, ownership and disposition of Trust Preferred Securities, based
upon current law, to such holders. It is possible that contrary positions may be
taken by the Internal Revenue Service and that a court may agree with such
contrary positions.
We hereby consent to the use of our name under the heading "Legal
Matters" in the prospectuses which form a part of the Registration Statement. We
also consent to the filing of this opinion with the Commission as Exhibit 8(a)
to the Registration Statement. In giving this consent, we do not thereby admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Commission promulgated thereunder. This opinion is expressed
as of the date hereof unless otherwise expressly stated and applies only to the
disclosure under the heading "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS" set forth in the Form of Prospectus Supplement filed as of the
date hereof. We disclaim any undertaking to advise you of any subsequent changes
of the facts stated or assumed herein or any subsequent changes in applicable
law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher
& Flom LLP
2
<PAGE> 1
Exhibit 23(a)
[ARTHUR ANDERSEN LLP LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in Amendment No. 2 to Form S-3 (Registration No. 333-38931) of Salomon
Smith Barney Holdings Inc., SSBH Capital I, SSBH Capital II, SSBH Capital III,
and SSBH Capital IV (the "Registration Statement"), 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
December 1, 1997
<PAGE> 1
Exhibit 23(b)
Coopers & Lybrand L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Amendment No. 2 to the
Registration Statement of Salomon Smith Barney Holdings Inc. (the "Company"),
SSBH Capital I, SSBH Capital II, SSBH Capital III and SSBH Capital IV on Form
S-3, filed with the Securities and Exchange Commission on or about December 1,
1997, of our report dated January 15, 1997 on our audits of the consolidated
financial statements and financial statement schedule of Smith Barney Holdings
Inc. and Subsidiaries ("SBHI") 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 SBHI for the fiscal year ended December 31,
1996 and which appears in the Form 8-K of the Company (formerly known as Salomon
Inc) dated September 29, 1997, and of our report dated November 28, 1997 on our
audits of the supplemental consolidated financial statements of the Company and
Subsidiaries 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 Form 8-K of the
Company dated November 28, 1997. We also consent to the reference to our firm
under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
New York, New York
December 1, 1997
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as Co-Chairman, Co-Chief Executive
Officer, Principal Executive Officer and a director of Salomon Smith Barney
Holdings Inc., hereby appoint Charles W. Scharf and Robert H. Mundheim and each
of them severally, my true and lawful attorney or attorneys with power to act
with or without the other and with full power of substitution and
resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ James Dimon
----------------
James Dimon
<PAGE> 2
Exhibit 24
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as Co-Chairman, Co-Chief Executive
Officer, Principal Executive Officer and a director of Salomon Smith Barney
Holdings Inc., hereby appoint James Dimon, Charles W. Scharf and Robert H.
Mundheim and each of them severally, my true and lawful attorney or attorneys
with power to act with or without the other and with full power of substitution
and resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ Deryck C. Maughan
----------------------
Deryck C. Maughan
<PAGE> 3
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Smith Barney
Holdings Inc., hereby appoint James Dimon, Charles W. Scharf and Robert H.
Mundheim and each of them severally, my true and lawful attorney or attorneys
with power to act with or without the other and with full power of substitution
and resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ Steven D. Black
--------------------
Steven D. Black
<PAGE> 4
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Smith Barney
Holdings Inc., hereby appoint James Dimon, Charles W. Scharf and Robert H.
Mundheim and each of them severally, my true and lawful attorney or attorneys
with power to act with or without the other and with full power of substitution
and resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 20th day of
November, 1997.
/s/ James Boshart III
---------------------
James Boshart III
<PAGE> 5
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Smith Barney
Holdings Inc., hereby appoint James Dimon, Charles W. Scharf and Robert H.
Mundheim and each of them severally, my true and lawful attorney or attorneys
with power to act with or without the other and with full power of substitution
and resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ Thomas G. Maheras
---------------------
Thomas G. Maheras
<PAGE> 6
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Smith Barney
Holdings Inc., hereby appoint James Dimon, Charles W. Scharf and Robert H.
Mundheim and each of them severally, my true and lawful attorney or attorneys
with power to act with or without the other and with full power of substitution
and resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
November, 1997.
/s/ Jay Mandelbaum
------------------
Jay Mandelbaum
<PAGE> 7
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Smith Barney
Holdings Inc., hereby appoint James Dimon, Charles W. Scharf and Robert H.
Mundheim and each of them severally, my true and lawful attorney or attorneys
with power to act with or without the other and with full power of substitution
and resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ Eduardo G. Mestre
---------------------
Eduardo G. Mestre
<PAGE> 8
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Smith Barney
Holdings Inc., hereby appoint James Dimon, Charles W. Scharf and Robert H.
Mundheim and each of them severally, my true and lawful attorney or attorneys
with power to act with or without the other and with full power of substitution
and resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ Shigeru Myojin
-------------------
Shigeru Myojin
<PAGE> 9
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Smith Barney
Holdings Inc., hereby appoint James Dimon, Charles W. Scharf and Robert H.
Mundheim and each of them severally, my true and lawful attorney or attorneys
with power to act with or without the other and with full power of substitution
and resubstitution, to execute in my name, place and stead, in my capacity as a
director of Salomon Smith Barney Holdings Inc., said Registration Statement and
any amendments thereto and all instruments necessary or incidental in connection
therewith, and to file same with the Securities and Exchange Commission, all as
fully to all intents and purposes at I might or could do in person, and I hereby
ratify and approve the acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ Michael B. Panitch
-----------------------
Michael B. Panitch
<PAGE> 10
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as Controller and Principal Accounting
Officer of Salomon Smith Barney Holdings Inc., hereby appoint James Dimon,
Charles W. Scharf and Robert H. Mundheim and each of them severally, my true and
lawful attorney or attorneys with power to act with or without the other and
with full power of substitution and resubstitution, to execute in my name, place
and stead, in my capacity as a director of Salomon Smith Barney Holdings Inc.,
said Registration Statement and any amendments thereto and all instruments
necessary or incidental in connection therewith, and to file same with the
Securities and Exchange Commission, all as fully to all intents and purposes at
I might or could do in person, and I hereby ratify and approve the acts of said
attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ Michael J. Day
-------------------
Michael J. Day
<PAGE> 11
POWER OF ATTORNEY
WHEREAS, Salomon Smith Barney Holdings Inc. proposes to file with the
Securities and Exchange Commission, under the Securities Act of 1933, a
Registration Statement to register certain securities, including, without
limitation, debt securities, index warrants, preferred stock, depositary shares,
junior subordinated debt securities and guarantees of Trust Preferred
Securities.
NOW, THEREFORE, I, in my capacity as Chief Financial Officer and Principal
Financial Officer of Salomon Smith Barney Holdings Inc., hereby appoint James
Dimon and Robert H. Mundheim and each of them severally, my true and lawful
attorney or attorneys with power to act with or without the other and with full
power of substitution and resubstitution, to execute in my name, place and
stead, in my capacity as a director of Salomon Smith Barney Holdings Inc., said
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file same with the Securities and
Exchange Commission, all as fully to all intents and purposes at I might or
could do in person, and I hereby ratify and approve the acts of said attorneys
and each of them.
IN WITNESS WHEREOF, I have executed this instrument this 1st day of
December, 1997.
/s/ Charles W. Scharf
---------------------
Charles W. Scharf
