<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 1998
REGISTRATION NO. 333-45529
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
SALOMON SMITH BARNEY HOLDINGS INC. TARGETS TRUST I
(EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS
SPECIFIED IN CHARTER) SPECIFIED IN CERTIFICATE OF TRUST)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
22-166-0266 TO BE APPLIED FOR
(I.R.S. EMPLOYER IDENTIFICATION NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
</TABLE>
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(212) 816-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' 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)
WITH COPIES TO:
<TABLE>
<S> <C> <C>
STEPHANIE B. MUDICK, ESQ. ALAN L. BELLER, ESQ. GREGORY A. FERNICOLA, 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 TO PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c)under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
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 MARCH 26, 1998
PROSPECTUS
TARGETS TRUST I
TARGETED GROWTH ENHANCED TERMS SECURITIES ("TARGETSSM")
WITH RESPECT TO THE COMMON STOCK OF CORPORATION
DUE ON
FULLY AND UNCONDITIONALLY GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
SALOMON SMITH BARNEY HOLDINGS INC.
------------------------
The Targeted Growth Enhanced Terms Securities ("TARGETS") offered hereby
represent preferred undivided beneficial ownership interests in the assets of
TARGETS Trust I, a statutory business trust formed under the laws of the State
of Delaware (the "Trust"or "TARGETS Trust I"). Salomon Smith Barney Holdings
Inc., a Delaware corporation ("Salomon Smith Barney"), will own all the common
securities (the "Common Securities" and, together with the TARGETS, the "Trust
Securities") representing undivided beneficial ownership interests in the assets
of the Trust. The Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds as described below and engaging in
activities incident thereto. Approximately 85% of the proceeds from the sale of
the Trust Securities will be used by the Trust to purchase from Salomon Smith
Barney a forward contract (the "Forward Contract") with respect to the common
stock (the "Common Stock") of the Corporation, a
corporation (the "Corporation"), as more fully described
herein. In addition, approximately 15% of the proceeds from the sale of the
Trust Securities will be used by the Trust to purchase a portfolio of stripped
U.S. Treasury securities (the "Treasury Securities"). See "Description of the
TARGETS", "TARGETS Trust I" and "Description of the Treasury Securities".
The TARGETS will mature on (the "Maturity Date"), subject
to acceleration to an earlier maturity date (the "Accelerated Maturity Date")
upon an Acceleration Event as described herein under "Description of the
TARGETS -- Acceleration of Maturity Date; Enforcement of Rights". On the
Maturity Date, holders of the TARGETS will be entitled to receive, to the extent
the Trust has funds available therefor, a cash maturity payment (the "Maturity
Payment") with respect to each TARGET in an amount equal to the sum of (A) the
product of (i) the then Current Market Price (as defined herein) of the Common
Stock, multiplied by (ii) an exchange rate (the "Exchange Rate") as described in
the following paragraph, and (B) any accrued and unpaid Yield Enhancement
Payments (as defined herein) with respect to such TARGET. On the Maturity Date,
holders of TARGETS will also receive a final quarterly Periodic Distribution (as
defined herein) with respect to each TARGET. See "Description of the
TARGETS -- Maturity Payment", "-- Acceleration of Maturity Date; Enforcement of
Rights", "-- Periodic Distributions" and "-- Dilution Adjustments".
(CONTINUED ON NEXT PAGE)
The Common Stock is listed on the Exchange (the " ")
under the symbol " ". The last reported sales price of the Common Stock
on the on , 1998 was $ per share.
SEE "RISK FACTORS" BEGINNING ON PAGE FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE TARGETS OFFERED
HEREBY.
Application will be made to list the TARGETS on the Chicago Board Options
Exchange (the "CBOE") under the symbol " ".
------------------------
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.
<TABLE>
<CAPTION>
==============================================================================================================================
PRICE TO UNDERWRITING(2) PROCEEDS TO
PUBLIC(1) COMMISSIONS THE TRUST(3)
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C>
Per TARGET...................... $ $ $
- ------------------------------------------------------------------------------------------------------------------------------
Total(4)........................ $ $ $
==============================================================================================================================
</TABLE>
(1) Plus accrued distributions, if any, from , 1998.
(2) The Trust and Salomon Smith Barney have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting".
(3) In view of the fact that a portion of the proceeds of the sale of the
TARGETS will be used by the Trust to purchase the Forward Contract from
Salomon Smith Barney, Salomon Smith Barney has agreed to pay to the
Underwriters as compensation (the "Underwriters Compensation") $
per TARGET (or $ in the aggregate). See "Underwriting". Expenses
of the offering which are payable by Salomon Smith Barney are estimated
to be $ .
(4) The Trust and Salomon Smith Barney have granted to the several
Underwriters the option to purchase up to an additional TARGETS,
exercisable within 30 days of the date hereof, solely to cover
overallotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Commissions and Proceeds to the Trust will
be $ , $ and $ , respectively. See "Underwriting".
------------------------
The TARGETS offered hereby are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that delivery of the TARGETS will
be made only in book-entry form through the facilities of The Depository Trust
Company ("DTC") on or about , 1998.
SALOMON SMITH BARNEY
, 1998
"TARGETSSM" is a service mark of Salomon Smith Barney Holdings Inc.
<PAGE> 3
(continued from cover page)
If the Current Market Price of the Common Stock (which is determined by
reference to an average stock price over the 10 preceding Trading Days (as
defined herein)) as of the Maturity Date or the Accelerated Maturity Date, as
the case may be, is less than or equal to % of the Current Market Price on the
date of the issuance of the TARGETS (the "Appreciation Threshold Price"), then
the Exchange Rate shall be one (1), and if the Current Market Price of the
Common Stock as of the Maturity Date or the Accelerated Maturity Date, as the
case may be, is greater than the Appreciation Threshold Price, then the Exchange
Rate shall be a fraction, the numerator of which is the Appreciation Threshold
Price, and the denominator of which is the Current Market Price of the Common
Stock as of the Maturity Date or the Accelerated Maturity Date, as the case may
be.
Upon acceleration of maturity to an Accelerated Maturity Date, the
Institutional Trustee (as defined herein) will sell the Treasury Securities and,
holders of the TARGETS will be entitled to receive an accelerated maturity
amount (the "Accelerated Maturity Payment") and a pro rata (as defined herein)
portion of the net proceeds received from the sale of the Treasury Securities
(the "Treasury Proceeds"). The Accelerated Maturity Payment with respect to each
TARGET will be an amount equal to the sum of (A) the product of (i) the Current
Market Price of the Common Stock as of the Accelerated Maturity Date multiplied
by (ii) the Exchange Rate as of the Accelerated Maturity Date and (B) any
accrued and unpaid Yield Enhancement Payments with respect to such TARGET.
Accordingly, the amount of the Maturity Payment or Accelerated Maturity Payment,
as the case may be, with respect to each TARGET to be received by holders of the
TARGETS at maturity will not necessary equal to the amount originally invested
by such holders in the TARGETS and may be less than the amount of such initial
investment. Under no circumstances will the Forward Contract or the Treasury
Securities held by the Trust or any Common Stock be distributed in-kind to the
holders of the TARGETS. See "Description of the TARGETS -- Maturity Payment",
"-- Acceleration of Maturity Date; Enforcement of Rights", "-- Periodic
Distributions" and "-- Dilution Adjustments".
Holders of the TARGETS will be entitled to receive cash distributions (the
"Periodic Distributions") of $ per TARGET per quarter from the date of
original issuance and payable quarterly in arrears on each ,
, and , commencing , 1998, if, as and
when the Trust has funds available for payment. See "Description of the
TARGETS -- Periodic Distributions". The aggregate amount of and the payment
dates for the Periodic Distributions will correspond to the aggregate amount of
and payment dates for distributions of (a) payments to be received by the Trust
with respect to the Treasury Securities held by the Trust and (b) certain yield
enhancement payments (the "Yield Enhancement Payments") payable to the Trust by
Salomon Smith Barney pursuant to the Forward Contract. Of each quarterly
Periodic Distribution payable per TARGET to holders of the TARGETS, $
will be paid out of payments received by the Trust with respect to the Treasury
Securities and $ will be paid out of Yield Enhancement Payments. The
Treasury Securities and the Forward Contract will be the sole assets of the
Trust. See "Description of the TARGETS -- Periodic Distributions".
The Maturity Payment or the Accelerated Maturity Payment, as the case may
be, with respect to each TARGET will be paid by the Trust out of funds received
by the Trust from Salomon Smith Barney with respect to the Forward Contract. The
Treasury Proceeds will be paid by the Trust out of funds received by the Trust
from the sale of the Treasury Securities upon an Acceleration Event.
This Prospectus sets forth information about the Trust that a prospective
investor should consider before investing. Potential investors are advised to
read this Prospectus and to retain it for future reference.
TARGETS may be a suitable investment for those investors who are capable of
evaluating the risks regarding the Common Stock of the Corporation and the
advantages and disadvantages of making an indirect investment in the Common
Stock of the Corporation in a manner which will give investors in the TARGETS
potentially higher yield but a lesser opportunity for equity appreciation than
would be afforded by a direct investment in the Common Stock. There is no
assurance that the yield on the TARGETS will be higher than the dividend yield
on the Common Stock over the term of the TARGETS.
2
<PAGE> 4
The obligations of the Trust with respect to the TARGETS are, as described
more fully herein, guaranteed by Salomon Smith Barney (the "Guarantee") to the
extent the Trust has funds available to meet such obligations. See "Description
of the Guarantee". The Guarantee, when taken together with the Forward Contract
and Salomon Smith Barney's obligations to pay all fees and expenses of the
Trust, constitutes a full and unconditional guarantee by Salomon Smith Barney of
all payments to be made to the holders of the TARGETS.
Upon the occurrence of either an Acceleration Event or the failure by
Salomon Smith Barney to satisfy any of its obligations under the Guarantee, the
holders of the TARGETS will have a preference over the holders of the Common
Securities with respect to payments of any amounts owed by the Trust in respect
of the Trust Securities. See "Description of the TARGETS -- Acceleration of
Maturity Date; Enforcement of Rights".
This Prospectus may be used by Smith Barney Inc. ("Smith Barney") and/or
Salomon Brothers Inc ("Salomon Brothers") or any of their respective successors
(collectively, the "SSBH Subsidiaries") in connection with offers and sales
related to market-making transactions in the TARGETS. The SSBH Subsidiaries may
act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale. Application will
be made to list the TARGETS on the CBOE, subject to official notice of issuance.
Trading of the TARGETS on the CBOE is expected to commence within a 30-day
period after the date of this Prospectus.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE TARGETS OFFERED
HEREBY, INCLUDING PURCHASES OF SUCH TARGETS TO STABILIZE THEIR MARKET PRICE,
PURCHASES OF SUCH TARGETS TO COVER ALL OR SOME OF A SHORT POSITION IN THE
TARGETS MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
AVAILABLE INFORMATION
Salomon Smith Barney and the Trust have filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement on Form S-3 (the
"Registration Statement", which term shall include all amendments, exhibits and
schedules thereto), pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations promulgated thereunder, with
respect to the TARGETS offered hereby as well as the Forward Contract and the
Guarantee. 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.
Salomon Smith Barney is subject to the informational and reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (File No. 1-4346), and in accordance therewith files reports and other
information with the Commission. Except for the listing of TARGETS that is
expected to be made on the CBOE, the Trust does not have any securities that are
listed on any national securities exchange. The Registration Statement, as well
as reports, proxy and information statements and other information filed by
Salomon Smith Barney 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 60661-2551 and Seven World Trade Center, New York, New York
10048. Copies of such material can 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 concerning issuers, such as Salomon
Smith Barney, that file electronically with the Commission. Such reports and
other information may also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005 and the American Stock
Exchange, 86 Trinity Place, New York, New York 10006.
3
<PAGE> 5
No separate financial statements of the Trust have been included or
incorporated by reference herein. Salomon Smith Barney does not consider that
such financial statements would be material to holders of the TARGETS because
(i) all of the voting securities of the Trust will be owned, directly or
indirectly, by Salomon Smith Barney, a reporting company under the Exchange Act,
(ii) the Trust has no independent operations but exists for the sole purpose of
issuing securities representing undivided beneficial interests in its respective
assets and investing the proceeds thereof in the Forward Contract issued by
Salomon Smith Barney and the Treasury Securities, and (iii) the obligations of
the Trusts under the TARGETS are fully and unconditionally guaranteed by Salomon
Smith Barney to the extent that the Trust has funds available to meet such
obligations. See "Description of the TARGETS" and "Description of the
Guarantee".
In future filings under the Exchange Act, a footnote to Salomon Smith
Barney's annual financial statements will state that the Trust is consolidated
with Salomon Smith Barney, that the sole assets of the Trust are the Forward
Contract and the Treasury Securities and that the Guarantee when taken together
with the Forward Contract and Salomon Smith Barney's obligations to pay all fees
and expenses of the Trust constitutes a full and unconditional guarantee by
Salomon Smith Barney of the distribution, liquidation and other payments payable
to the holders of the TARGETS.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Salomon Smith Barney incorporates by reference the following documents
heretofore filed by Salomon Smith Barney with the Commission pursuant to the
Exchange Act: (i) the Annual Report on Form 10-K for the year ended December 31,
1997 and (ii) the Current Reports on Form 8-K dated January 7, 1998, January 26,
1998, January 29, 1998 and February 26, 1998.
All documents filed by Salomon Smith Barney 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 TARGETS 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.
Salomon Smith Barney will provide without charge to each person, including
any beneficial owner of TARGETS, 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.
4
<PAGE> 6
SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the more detailed information appearing elsewhere in this
Prospectus.
The Trust.................. TARGETS Trust I, a Delaware statutory business
trust. The sole assets of the Trust will be the
Forward Contract and the Treasury Securities. See
"TARGETS Trust I".
Securities Offered......... Targeted Growth Enhanced Terms Securities.
The TARGETS represent preferred undivided
beneficial ownership interests in the assets of the
Trust. Of the proceeds to the Trust from the sale
of the TARGETS, approximately 85% will be invested
by the Trust in the Forward Contract with respect
to the Common Stock and approximately 15% will be
invested by the Trust in the Treasury Securities.
The Forward Contract and the Treasury Securities
will be the sole assets of the Trust.
The TARGETS are designed to provide holders with a
higher yield than the current dividend yield paid
on the Common Stock, while also providing the
opportunity for holders to share in the
appreciation, if any, of the Common Stock up to the
Appreciation Threshold Price. The annual calendar
year distribution on the TARGETS is $ per
TARGET. The annual fiscal year dividend currently
paid per share of Common Stock is $ .
However, there is no assurance that the yield on
the TARGETS will be higher than the dividend yield
on the Common Stock over the term of the TARGETS.
The Maturity Payment or Accelerated Maturity
Payment, as the case may be, payable to holders of
each TARGET at maturity is dependent upon the
Current Market Price of the Common Stock at such
time. If the Current Market Price as of the
Maturity Date or Accelerated Maturity Date is less
than $ , then the value of the Maturity
Payment or Accelerated Maturity Payment with
respect to each TARGET to be received by holders of
TARGETS at maturity will be less than the amount
originally invested by such holders in the TARGETS.
In addition, the opportunity for equity
appreciation afforded by an investment in the
TARGETS is less than the opportunity for equity
appreciation afforded by a direct investment in the
Common Stock because the Maturity Payment or
Accelerated Maturity Payment with respect to each
TARGET to be received by holders of TARGETS at
maturity will generally be limited to % of the
amount originally invested by such holders in the
TARGETS. See "Description of the
TARGETS -- Maturity Payment", " -- Acceleration of
Maturity Date; Enforcement of Rights" and "Risk
Factors -- Relationship to the Common
Stock, -- Potential Losses and -- Limitation on
Opportunity For Equity Appreciation".
Offering Price............. The TARGETS are being offered hereby for
$ each.
Maturity................... The TARGETS will mature on , subject to
acceleration to an Accelerated Maturity Date, as
described herein.
Maturity Payment........... On the Maturity Date, holders of the TARGETS will
be entitled to receive, with respect to each TARGET
and to the extent the Trust has funds available
therefor, the Maturity Payment. The Maturity
Payment
5
<PAGE> 7
with respect to each TARGET will be an amount equal
to the sum of (A) the product of (i) the Current
Market Price of the Common Stock as of the Maturity
Date multiplied by (ii) the Exchange Rate and (B)
any accrued and unpaid Yield Enhancement Payments
with respect to such TARGET. On the Maturity Date,
holders of TARGETS will also receive the final
quarterly Periodic Distribution with respect to
each TARGET.
If the Current Market Price of the Common Stock as
of the Maturity Date is less than or equal to the
Appreciation Threshold Price, then the Exchange
Rate shall be one (1), and if the Current Market
Price of the Common Stock as of the Maturity Date
is greater than the Appreciation Threshold Price,
then the Exchange Rate shall be a fraction, the
numerator of which is the Appreciation Threshold
Price, and the denominator of which is the Current
Market Price of the Common Stock as of the Maturity
Date. The Exchange Rate and the Appreciation
Threshold Price are subject to certain dilution
adjustments upon the occurrence of certain events
involving the Corporation and its capital
structure, as described herein.
The Maturity Payment with respect to each TARGET
will be paid by the Trust out of the funds received
by the Trust from Salomon Smith Barney in respect
of the Forward Contract. The ability of the Trust
to make any Maturity Payment is therefore entirely
dependent upon the receipt by the Trust from
Salomon Smith Barney of such payment with respect
to the Forward Contract. See "Description of the
TARGETS -- Maturity Payment" and "-- Dilution
Adjustments".
Acceleration of Maturity
Date....................... Upon an Acceleration Event, the Institutional
Trustee will sell the Treasury Securities,
liquidate the Trust and cause the Accelerated
Maturity Payment with respect to each TARGET and a
pro rata portion of the Treasury Proceeds to be
distributed to the holders of the TARGETS. The
Accelerated Maturity Payment with respect to each
TARGET will be an amount equal to the sum of (A)
the product of (i) the Current Market Price of the
Common Stock as of the Accelerated Maturity Date
multiplied by (ii) the Exchange Rate as of the
Accelerated Maturity Date and (B) any accrued and
unpaid Yield Enhancement Payments with respect to
each TARGET. If any Accelerated Maturity Payment
can be paid only in part because the Trust has
insufficient assets available to pay the
Accelerated Maturity Payment with respect to each
TARGET in full, then the amounts payable directly
by the Trust to holders of the TARGETS will 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
TARGETS, except that upon (i) default by the Trust
on any of its obligations under the TARGETS or (ii)
default by Salomon Smith Barney on any of its
obligations under the Guarantee, the holders of the
TARGETS will have a preference over the holders of
the Common Securities with respect to payments upon
liquidation of the Trust. An "Acceleration Event"
will occur with respect to the TARGETS upon any of
(i) a Tax Event (as defined herein), which will
generally be considered to be the occurrence of
certain adverse tax consequences to the Trust, (ii)
an Investment Company Event (as defined herein),
which will generally be considered to be
classification of the Trust as an
6
<PAGE> 8
"investment company" under the Investment Company
Act of 1940, as amended or (iii) a Bankruptcy Event
(as defined herein), which will generally be
considered to be the initiation of bankruptcy
proceedings regarding Salomon Smith Barney. See
"Description of the TARGETS -- Acceleration of
Maturity Date; Enforcement of Rights" and "Risk
Factors -- Acceleration of Maturity Date".
Periodic Distributions..... Holders of TARGETS will be entitled to receive
Periodic Distributions at the rate per TARGET of
$ per quarter, payable on each ,
, and , commencing .
The Periodic Distributions will be paid by the
Trust out of (i) payments to be received by the
Trust in respect of the Treasury Securities held by
the Trust and (ii) the Yield Enhancement Payments
to be received by the Trust from Salomon Smith
Barney under the Forward Contract. Of each Periodic
Distribution payable to holders of the TARGETS,
$ will be paid out of payments received by
the Trust with respect to the Treasury Securities
and $ will be paid out of Yield
Enhancement Payments received by the Trust.
Pursuant to the terms of the Forward Contract,
Salomon Smith Barney will pay quarterly Yield
Enhancement Payments to the Trust in the amount of
approximately $ , accruing from the date
of issuance of the TARGETS, computed on the basis
of a 360-day year of twelve 30-day months and, for
any period less than a full calendar month, the
number of days elapsed in such month. See
"Description of TARGETS -- Periodic Distributions"
and "Description of the Forward Contract."
The Treasury Securities will bear quarterly
payments corresponding to the payment dates of the
Periodic Distributions payable on the TARGETS. See
"Description of the Treasury Securities."
The Treasury Securities and the Forward Contract
will be the sole assets of the Trust. The ability
of the Trust to make Periodic Distributions on the
TARGETS is therefore entirely dependent on receipt
by the Trust of both payments with respect to the
Treasury Securities held by the Trust and the Yield
Enhancement Payments payable by Salomon Smith
Barney under the Forward Contract. See "Description
of the TARGETS -- Periodic Distributions".
Rights Upon Certain
Events..................... If, at any time, (i) the Trust has not satisfied
any of its obligations under the TARGETS or (ii)
Salomon Smith Barney has not satisfied any of its
obligations under the Guarantee, then (a) the
Institutional Trustee, as the holder of the Forward
Contract and the Treasury Securities, will have the
right to enforce the terms of the Forward Contract
and the Treasury Securities and (b) the Guarantee
Trustee (as defined herein), as the holder of the
Guarantee, will have the right to enforce the terms
of the Guarantee. See "Risk Factors -- Enforcement
of Certain Rights by Holders of TARGETS".
Guarantee.................. Salomon Smith Barney will irrevocably guarantee the
payment in full to the holders of the TARGETS of
(i) any Maturity Payment that is required to be
made in respect of the TARGETS, to the extent the
Trust has funds available therefor, (ii) any
Accelerated Maturity Payment that is required to be
made in respect of the TARGETS, to the extent the
Trust has funds available therefor, (iii) any
Periodic Distributions that
7
<PAGE> 9
are required to be made in respect of the TARGETS,
to the extent the Trust has funds available
therefor, (iv) the Treasury Proceeds that are
required to be distributed in respect of the
TARGETS, to the extent the Trust has funds
available therefor and (v) any other remaining
assets of the Trust upon liquidation of the Trust.
See "Description of the Guarantee" and "Risk
Factors -- Rights Under the Guarantee".
Voting Rights.............. Generally, holders of the TARGETS will not have any
voting rights. The holders of the TARGETS, however,
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 (as
defined herein), including the right to direct the
Institutional Trustee, as holder of the Forward
Contract and the Treasury Securities, to exercise
its rights in the manner described above under
"Rights Upon Certain Events". See "Description of
the TARGETS -- Acceleration of Maturity Date;
Enforcement of Rights" and " -- Voting Rights" and
"Risk Factors -- Enforcement of Certain Rights by
Holders of TARGETS" and "-- Limited Voting Rights;
No Stockholders Rights".
Book-Entry Form............ The TARGETS will be represented by a global
certificate or certificates registered in the name
of Cede & Co., as nominee for DTC. Beneficial
interests in the TARGETS will be evidenced by, and
transfers thereof will be effected only through,
records maintained by the participants in DTC.
Except as described herein, TARGETS in certificated
form will not be issued in exchange for the global
certificate or certificates. See "Description of
the TARGETS -- Book-Entry Only Issuance".
Obligations of the Trust... The TARGETS are obligations of the Trust and, to
the extent of the Guarantee, of Salomon Smith
Barney. Neither the TARGETS nor the Guarantee are
obligations of the Corporation or any other
company. See "Risk Factors -- No Obligation on the
Part of the Corporation With Respect to the
TARGETS".
Listing.................... Application will be made to list the TARGETS on the
CBOE under the symbol " ".
Use of Proceeds............ Of the total proceeds from the sale of the Trust
Securities, the Trust will use $ to
purchase the Forward Contract from Salomon Smith
Barney and $ to purchase the Treasury
Securities. See "TARGETS Trust I", "Use of Proceeds
and Hedging Activities" and "Risk Factors -- Use of
Proceeds and Hedging Activities".
Forward Contract........... Pursuant to the terms of the Forward Contract,
Salomon Smith Barney will be obligated to pay to
the Trust the aggregate Maturity Payments or the
aggregate Accelerated Maturity Payments, as the
case may be, and the Yield Enhancement Payments.
The proceeds from the sale of the Forward Contract
will be used by Salomon Smith Barney for general
corporate purposes. See "Use of Proceeds and
Hedging Activities", "Description of the Forward
Contract" and "Risk Factors -- Use of Proceeds and
Hedging Activities".
8
<PAGE> 10
RISK FACTORS
As described in more detail below, the trading price of the TARGETS may
vary considerably prior to maturity, due to, among other things, fluctuations in
the market price of the Common Stock and other events that are difficult to
predict and beyond the control of Salomon Smith Barney and the Trust.
Prospective purchasers of the TARGETS should consider carefully the risk factors
set forth below, as well as all other information contained or incorporated by
reference in this Prospectus, in evaluating an investment in the TARGETS.
POTENTIAL LOSSES
The amount of cash that holders of TARGETS are entitled to receive at
maturity is not fixed, but is based on the Current Market Price of the Common
Stock at the time of maturity. There can be no assurance that the amount of such
payment will be equal to or greater than the amount an investor initially paid
for its TARGETS (except to the extent of any Periodic Distributions). For
example, if at maturity, the Current Market Price of the Common Stock is less
than $ per share, the Maturity Payment or Accelerated Maturity Payment,
as the case may be, with respect to each TARGET will be less than the initial
offering price of each TARGET, in which case an investment in TARGETS will
result in a loss (again, except to the extent of any Periodic Distributions)
and, if the Corporation is insolvent or bankrupt, could result in a total loss
of the amount invested in the TARGETS (again, except to the extent of any
Periodic Distributions). Investors in the TARGETS therefore bear the full risk
of a decline in the value of the Common Stock prior to maturity of the TARGETS.
LIMITATION ON OPPORTUNITY FOR EQUITY APPRECIATION
In addition, the opportunity for equity appreciation afforded by an
investment in the TARGETS is less than the opportunity for equity appreciation
afforded by a direct investment in the Common Stock. Holders of the TARGETS will
only be entitled to receive at maturity an amount representing a maximum of %
of any appreciation of the value of the Common Stock. Because the price of the
Common Stock is subject to market fluctuations, the Maturity Payment or
Accelerated Maturity Payment, as the case may be, with respect to each TARGET
may be more or less than the amount initially invested in each TARGET. In
addition, because the Current Market Price is determined by reference to an
average stock price over 10 Trading Days, the value of a share of the Common
Stock on the date of maturity may be more or less than the Current Market Price
used to determine the amount holders of TARGETS are entitled to receive at
maturity. See "Description of the TARGETS" for an illustration of the Maturity
Payment with respect to each TARGET that a TARGETS holder would receive at
various Current Market Prices for the Common Stock at maturity.
RELATIONSHIP TO THE COMMON STOCK
The market price of the TARGETS at any time will be affected primarily by
changes in the price of the Common Stock. It is impossible to predict whether
the price of the Common Stock will rise or fall. Trading prices of the Common
Stock will be influenced by the Corporation's results of operations and by
complex and interrelated political, economic, financial and other factors that
can affect the capital markets generally, the stock exchange on which the Common
Stock is traded and the market segment of which the Corporation is a part.
Trading prices of the Common Stock also may be influenced if Salomon Smith
Barney, another market participant or others hereafter issue securities with
terms similar to those of the TARGETS or sell or otherwise transfer shares of
the Common Stock.
The yield on the TARGETS is higher than the current dividend yield on the
Common Stock. However, there is no assurance that the yield on the TARGETS will
be higher than the dividend yield on the Common Stock through the term of the
TARGETS. In addition, holders of the TARGETS will not be entitled to any rights
with respect to the Common Stock, including, without limitation, voting rights
and the rights to receive any dividends or other distributions in respect
thereof.
ACCELERATION OF MATURITY DATE
Upon the occurrence of an Acceleration Event as described herein, the
maturity of the Trust Securities will be accelerated. An Acceleration Event will
generally occur upon the occurrence of (i) certain adverse tax consequences to
the Trust, (ii) the Trust being considered an "investment company" under the
Investment Company Act of 1940 (the "1940 Act") or (iii) the bankruptcy of
Salomon Smith Barney. As a result, the
9
<PAGE> 11
Accelerated Maturity Payment with respect to each TARGET and a pro rata portion
of the Treasury Proceeds would be distributed to the holders of the TARGETS on
the Accelerated Maturity Date. See "Description of the TARGETS -- Acceleration
of Maturity Date; Enforcement of Rights".
There can be no assurance as to the amount of either the Accelerated
Maturity Payments or the Treasury Proceeds that may be distributed to holders of
the TARGETS on the Accelerated Maturity Date. Accordingly, the TARGETS may trade
at a discount to the price that the investor paid to purchase the TARGETS
offered hereby.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TARGETS
If Salomon Smith Barney were to default on its obligation to pay amounts
due in respect of the Forward Contract, the Trust would lack available funds for
the payment of any Maturity Payment, any Accelerated Maturity Payment and any
portion of a Periodic Distribution that would be paid from Yield Enhancement
Payments received by the Trust and, in such event, the remedy of a holder of the
TARGETS is to (i) vote to direct the Institutional Trustee to enforce the
Institutional Trustee's rights under the Forward Contract and Treasury
Securities or (ii) institute a proceeding directly against Salomon Smith Barney
for enforcement of payment to such holder of the amounts owed on such holder's
pro rata interest in the Forward Contract (a "Direct Action") on or after the
respective due date specified in the Forward Contract. The holders of TARGETS
will not be able to exercise directly any other remedy available to the holders
of the Forward Contract. See "Description of the Guarantee" and "Description of
Forward Contract". The Declaration provides that each holder of TARGETS, by
acceptance thereof, agrees to the provisions of the Guarantee and the Indenture
governing the terms of the Forward Contract.
IMPACT OF THE TARGETS ON THE MARKET FOR THE COMMON STOCK
It is not possible to predict accurately how or whether the TARGETS will
trade in the secondary market or whether such market will be liquid. Any market
that develops for the TARGETS may influence and is likely to be influenced by
the market for the Common Stock. For example, the price of the Common Stock
could be affected by (i) possible sales of the Common Stock by investors who
view the TARGETS as a more attractive means of equity participation in the
Corporation and (ii) hedging or arbitrage trading activity that may develop
involving the TARGETS and the Common Stock.
USE OF PROCEEDS AND HEDGING ACTIVITIES
A portion of the net proceeds to be received by Salomon Smith Barney from
the sale of the Forward Contract will be used, in part, by Salomon Smith Barney
or one or more of its subsidiaries for hedging activities related to Salomon
Smith Barney's obligations under the Forward Contract. On or prior to the
Closing Date (as defined herein), Salomon Smith Barney, directly or through its
subsidiaries, will hedge its anticipated exposure under the Forward Contract by
the purchase or sale of Common Stock or options, futures contracts, forward
contracts or swaps or options on the foregoing, or other derivative or synthetic
instruments related to, the Common Stock. From time to time after the initial
sale of the TARGETS and prior to the Maturity Date or Accelerated Maturity Date,
depending on market conditions (including the price of the Common Stock),
Salomon Smith Barney expects that it or its subsidiaries will increase or
decrease their initial hedge positions through various transactions and may
purchase or sell Common Stock or options, swaps, futures contracts, forward
contracts or other derivative or synthetic instruments related to, the Common
Stock. In addition, Salomon Smith Barney and its subsidiaries may purchase or
sell TARGETS from time to time. Salomon Smith Barney or its subsidiaries may
also take positions in other types of appropriate financial instruments that may
become available in the future. To the extent that Salomon Smith Barney or its
subsidiaries have a long or short hedge position in the Common Stock or options,
swaps, futures contracts, forward contracts or other derivative or synthetic
instruments related to, the Common Stock, Salomon Smith Barney or one or more of
its subsidiaries may liquidate all or a portion of their holdings close to
maturity of the Forward Contract and the TARGETS. 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 Salomon Smith Barney has
no reason to believe that such hedging activity will
10
<PAGE> 12
have a material effect on the price of TARGETS, such options, swaps, futures
contracts, forward contracts or other derivative or synthetic instruments or on
the value of the Common Stock, there can be no assurance that the hedging
activities of Salomon Smith Barney and its subsidiaries will not affect such
prices or value.
Salomon Smith Barney or an affiliate may enter into a swap agreement with
one of Salomon Smith Barney's affiliates in connection with the sale of the
TARGETS and may earn additional income as a result of payments pursuant to such
swap or related hedge transactions.
DILUTION OF THE COMMON STOCK
Maturity Payments or Accelerated Maturity Payments, as the case may be, are
subject to adjustment for certain events arising from stock splits and
combinations, stock dividends, certain other actions of the Corporation that
modify its capital structure and certain other transactions involving the
Corporation as well as for a liquidation, dissolution or winding up of the
Corporation. See "Description of the TARGETS -- Dilution Adjustments". Payments
upon maturity will not be adjusted for other events, such as offerings of the
Common Stock for cash or in connection with acquisitions, that may adversely
affect the price of the Common Stock and, because of the relationship of each
such Maturity Payment or Accelerated Maturity Payment to the price of the Common
Stock, such other events may adversely affect the trading price of the TARGETS.
There can be no assurance that the Corporation will not take any of the
foregoing actions, or that it will not make offerings of, or that major
shareholders will not sell any, Common Stock in the future or as to the amount
of such offerings or sales, if any.
In addition, holders of the TARGETS will not be entitled to any rights with
respect to the Common Stock, including, without limitation, voting rights and
the rights to receive any dividends or other distributions in respect thereof.
NO OBLIGATION ON THE PART OF THE CORPORATION WITH RESPECT TO THE TARGETS
The Corporation is not in any way involved with the offering contemplated
hereby and has no obligations with respect to the TARGETS, including any
obligation to take the needs of Salomon Smith Barney, the Trust or holders of
the TARGETS into consideration for any reason. The Corporation will not receive
any of the proceeds of the offering of the TARGETS made hereby and is not
responsible for, and has not participated in, the determination of the time of,
prices for or quantities of TARGETS to be issued. The Corporation is not
involved with the administration of the Trust or the TARGETS.
There can be no assurance that the Corporation will continue to be subject
to the reporting requirements of the Exchange Act, and distribute reports, proxy
statements and other information required thereby to its stockholders. In the
event that the Corporation ceases to be subject to such reporting requirements
and the TARGETS continue to be outstanding, pricing information for the TARGETS
may be more difficult to obtain and the value and liquidity of the TARGETS may
be adversely affected.
LIMITED VOTING RIGHTS; NO STOCKHOLDERS RIGHTS
Holders of the TARGETS will have limited voting rights with respect to the
Trust and will not be entitled to vote to appoint, remove or replace, or
increase or decrease the number of, the Trustees, which voting rights are vested
exclusively in the holders of the Common Securities. See "Description of the
TARGETS -- Voting Rights". In addition, holders of TARGETS will not be entitled
to any rights with respect to the Common Stock (including, without limitation,
voting rights and the rights to receive any dividends or other distributions in
respect thereto.)
UNCERTAINTY OF FEDERAL INCOME TAX CONSEQUENCES
No statutory, judicial or administrative authority directly addresses the
characterization of the TARGETS or instruments similar to the TARGETS for U.S.
federal income tax purposes. As a result, significant aspects of the U.S.
federal income tax consequences of an investment in the TARGETS are not certain.
No ruling is being requested from the Internal Revenue Service with respect to
the TARGETS and no
11
<PAGE> 13
assurance can be given that the Internal Revenue Service will agree with the
conclusions expressed under "Certain Federal Income Tax Considerations".
SECONDARY TRADING VALUE; LISTING ON CBOE
The Trust is a newly created business trust with no previous operating
history and the TARGETS are innovative securities. It is not possible to predict
how the TARGETS will trade in the secondary market. The trading price of the
TARGETS may vary considerably prior to maturity due to, among other things,
fluctuations in the price of the Common Stock (which may occur due to changes in
the Corporation's financial condition, results of operations or prospects, or
because of complex and interrelated political, economic, financial and other
factors that can affect the capital markets generally, the stock exchanges or
quotation systems on which the Common Stock is traded and the market segment of
which the Corporation is a part) and fluctuations in interest rates, the
volatility of the Common Stock, the length of time to maturity and other factors
that are difficult to predict and beyond the Trust's control.
The Underwriters have advised the Trust that they currently intend to make
a market in the TARGETS; however, they are not obligated to do so. There can be
no assurance that a secondary market will develop or, if a secondary market does
develop, that it will provide the holders with liquidity of investment or that
it will continue for the life of the TARGETS. The Underwriters may cease to make
a market in the TARGETS at any time without notice. Application has been made to
list the TARGETS on the CBOE, subject to official notice of issuance, but there
can be no assurance that the TARGETS will not later be delisted or that trading
in the TARGETS on the CBOE will not be suspended. In the event of a delisting or
suspension of trading on such exchange, the Trust intends to apply for listing
of the TARGETS on another national securities exchange or for quotation on
another trading market. If the TARGETS are not listed or traded on any
securities exchange or trading market, or if trading of the TARGETS is
suspended, pricing information for the TARGETS may be more difficult to obtain,
and the price and liquidity of the TARGETS may be adversely affected.
RISK RELATING TO BANKRUPTCY OF SALOMON SMITH BARNEY
Although the TARGETS are to be issued by the Trust, the ability of the
Trust to meet its obligations under the TARGETS is primarily contingent upon
receipt by the Trust from Salomon Smith Barney of (i) the aggregate Maturity
Payments or the aggregate Accelerated Maturity Payments, as the case may be, and
(ii) the Yield Enhancement Payments under the Forward Contract. The ability of
Salomon Smith Barney to meet its obligations thereunder and, in turn, the
ability of the Trust to meet its obligations under the TARGETS, is therefore
dependent on the solvency and creditworthiness of Salomon Smith Barney.
The TARGETS are a new form of security, and as such, there is no direct
precedent regarding the effect on the TARGETS of a bankruptcy of Salomon Smith
Barney. Accordingly, there can be no assurance of how the TARGETS, the Forward
Contract or the Trust would be treated in such a bankruptcy and whether or to
what extent the holders of TARGETS would be able to recover all or any portion
of their investment in the TARGETS.
In the event of a bankruptcy of Salomon Smith Barney filed before final
payment of the aggregate Maturity Payments or aggregate Accelerated Maturity
Payments in respect of the Forward Contract, the Trust believes the Forward
Contract will be treated as a general unsecured claim against Salomon Smith
Barney in the amount of the aggregate Maturity Payments or the aggregate
Accelerated Maturity Payments, as the case may be, calculated as of either the
date of bankruptcy or the date of any earlier Acceleration Event, but there is a
risk that the claim could be allowed in a lesser amount. In either event, final
payment of amounts owed under the Forward Contract may be delayed beyond the
Maturity Date. Moreover, if a bankruptcy of Salomon Smith Barney were to be
filed within 90 days after the payment of the aggregate Maturity Payments or the
aggregate Accelerated Maturity Payments, the payment might be deemed to be a
preference and thus recoverable from the holders of TARGETS. Thus, in the event
of a bankruptcy of Salomon Smith Barney, any recovery to the holders of TARGETS
will likely be substantially delayed and recovery according to the terms of the
Forward Contract and the TARGETS would be uncertain.
12
<PAGE> 14
SALOMON SMITH BARNEY
Salomon Smith Barney (formerly Salomon Inc) provides investment banking,
securities and commodities trading, brokerage, asset management and other
financial services through its subsidiaries. As used in this section, unless the
context otherwise requires, "Salomon Smith Barney" refers to Salomon Smith
Barney Holdings Inc. and its subsidiaries.
Salomon Smith Barney is a global investment bank and broker-dealer that
operates through over 450 offices throughout the United States and 45 offices in
26 foreign countries. Salomon Smith Barney's global investment banking services
encompass a full range of capital market activities, including the underwriting
and distribution of debt and equity securities for United States and foreign
corporations and for state, local and other governmental and government
sponsored authorities. It also provides financial advice to investment banking
clients on a wide variety of transactions including mergers and acquisitions,
divestitures, leveraged buyouts, financial restructurings and a variety of
cross-border transactions.
Salomon Smith Barney executes securities and commodity futures brokerage
transactions on all major United States and international securities and futures
exchanges on behalf of customers and for its own account. Salomon Smith Barney
also trades for its own account in various markets throughout the world, and
uses many different strategies involving a broad spectrum of financial
instruments and derivative products.
Salomon Smith Barney's retail brokerage services include providing
investment advice and financial planning and brokerage services. Salomon Smith
Barney's financial consultants also sell proprietary and non-proprietary mutual
funds, and many offer individual insurance products, primarily variable
annuities. With approximately 10,300 financial consultants and approximately 875
institutional brokers, Salomon Smith Barney believes that it is currently the
second largest brokerage firm in the United States.
Salomon Smith Barney's asset management services include providing
discretionary and non-discretionary asset management services to a wide array of
mutual funds and institutional and individual investors, sponsoring and acting
as advisor to mutual funds and sponsoring and overseeing the portfolios of unit
investment trusts. Client relationships may be introduced either through Salomon
Smith Barney's network of financial consultants or independently of that
network.
On November 28, 1997, a newly formed wholly owned subsidiary of Travelers
Group Inc. ("Travelers Group") was merged into Salomon Inc ("Salomon"). Pursuant
to the merger agreement, stockholders of Salomon received shares of stock of
Travelers Group and Salomon became a wholly owned subsidiary of Travelers Group.
Also on November 28, Salomon and Smith Barney Holdings Inc. ("Smith Barney
Holdings") were merged (the "Merger"), with Salomon Smith Barney continuing as
the surviving corporation. The consolidated financial statements of Salomon
Smith Barney incorporated by reference herein give retroactive effect to the
Merger as a combination of entities under common control in a transaction
accounted for in a manner similar to a pooling of interests. The pooling of
interests method of accounting requires the restatement of all periods presented
as if Salomon and Smith Barney Holdings had always been combined.
The principal offices of Salomon Smith Barney are located at 388 Greenwich
Street, New York, New York 10013 (telephone number: (212) 816-6000). Salomon
Smith Barney was incorporated in Delaware in 1960.
13
<PAGE> 15
USE OF PROCEEDS AND HEDGING ACTIVITIES
Of the total proceeds to be received by the Trust from the sale of the
Trust Securities, approximately $ will be used by the Trust to purchase
the Forward Contract from Salomon Smith Barney and approximately $ will
be used by the Trust to purchase the Treasury Securities. A portion of the net
proceeds to be received by Salomon Smith Barney from the sale of the Forward
Contract will be used for general corporate purposes, which may include capital
contributions to subsidiaries of Salomon Smith Barney and/or the reduction or
refinancing of borrowings of Salomon Smith Barney or its subsidiaries. In order
to fund its investment brokerage business, Salomon Smith Barney expects to incur
additional indebtedness in the future. To the extent that TARGETS being
purchased for resale by the Underwriters are not sold, the aggregate proceeds to
Salomon Smith Barney and its subsidiaries would be reduced. Salomon Smith Barney
or an affiliate may enter into a swap agreement with one of Salomon Smith
Barney's affiliates in connection with the sale of the TARGETS and may earn
additional income as a result of payments pursuant to such swap or related hedge
transactions.
The remainder of the net proceeds to be received by Salomon Smith Barney
from the sale of the Forward Contract will be used, in part, by Salomon Smith
Barney or one or more of its subsidiaries for hedging activities related to
Salomon Smith Barney's obligations under the Forward Contract. On or prior to
the Closing Date (as defined herein), Salomon Smith Barney, directly or through
its subsidiaries, will hedge its anticipated exposure under the Forward Contract
by the purchase or sale of Common Stock or options, futures contracts, forward
contracts or swaps or options on the foregoing, or other derivative or synthetic
instruments related to, the Common Stock. From time to time after the initial
sale of the TARGETS and prior to the Maturity Date or Accelerated Maturity Date,
depending on market conditions (including the price of the Common Stock),
Salomon Smith Barney expects that it or its subsidiaries will increase or
decrease their initial hedge positions through various transactions and may
purchase or sell Common Stock or options, swaps, futures contracts, forward
contracts or other derivative or synthetic instruments related to, the Common
Stock. In addition, Salomon Smith Barney and its subsidiaries may purchase or
sell TARGETS from time to time. Salomon Smith Barney or its subsidiaries may
also take positions in other types of appropriate financial instruments that may
become available in the future. To the extent that Salomon Smith Barney or its
subsidiaries have a long or short hedge position in the Common Stock or options,
swaps, futures contracts, forward contracts or other derivative or synthetic
instruments related to, the Common Stock, Salomon Smith Barney or one or more of
its subsidiaries may liquidate all or a portion of their holdings close to
maturity of the Forward Contract and the TARGETS. 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 Salomon Smith Barney has
no reason to believe that such hedging activity will have a material effect on
the price of TARGETS, such options, swaps, futures contracts, forward contracts
or other derivative or synthetic instruments or on the value of the Common
Stock, there can be no assurance that the hedging activities of Salomon Smith
Barney and its subsidiaries will not affect such prices or value.
14
<PAGE> 16
CAPITALIZATION
The following table sets forth the consolidated capitalization of Salomon
Smith Barney at December 31, 1997, as adjusted to give effect to the issuance of
the TARGETS, the issuance of $400,000,000 of Preferred Securities, the issuance
and sale of additional long-term debt of Salomon Smith Barney after December 31,
1997 through the date hereof, and the application of the proceeds from each of
these transactions to the repayment of short-term borrowings, as if such
transactions had occurred on December 31, 1997.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
--------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
(UNAUDITED)
<S> <C> <C>
Short-term borrowings....................................... $11,464 $
Notes payable............................................... 10 10
Long-term debt.............................................. 19,064
------- -------
Total debt........................................ $30,538 $
======= =======
Salomon Smith Barney -- Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trust holding solely
Subordinated Debt Securities of Salomon Smith Barney(1)... 345 345
Salomon Smith Barney -- Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trust holding solely
junior subordinated deferrable interest debentures of
Salomon Smith Barney(2)................................... -- 400
Salomon Smith Barney -- Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trust holding solely a
Forward Contract of Salomon Smith Barney and treasury
securities................................................
Stockholder's equity:
Common Stock(3) and additional paid-in capital......... 1,574 1,574
Retained earnings...................................... 6,943 6,943
Cumulative translation adjustment...................... 1 1
------- -------
Total stockholder's equity........................ 8,518 8,518
------- -------
Total capitalization........................................ $39,401 $
======= =======
</TABLE>
- ---------------
(1) The sole asset of SI Financing Trust I is $355,700,000 aggregate principal
amount of 9.25% Subordinated Debt Securities issued by Salomon Smith Barney
due June 30, 2026.
(2) The sole asset of SSBH Capital I is $412,372,000 aggregate principal amount
of 7.200% junior subordinated deferrable interest debentures issued by
Salomon Smith Barney due January 28, 2038.
(3) Par value $.01 per share; 1,000 shares authorized; 1,000 shares issued and
outstanding.
15
<PAGE> 17
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.......................... 1.17 1.37 1.20 0.98* 1.32
</TABLE>
- ---------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges. The amount by which fixed charges exceeded earnings as
defined for the year was $173 million.
The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed by dividing earnings from continuing operations
before income taxes and fixed charges by the combined fixed charges and
preferred stock dividends. For purposes of these ratios, fixed charges consist
of interest expense and that portion of rentals deemed representative of the
appropriate interest factor. The ratio of earnings to combined fixed charges and
preferred stock dividends has been computed excluding dividends relating to
Salomon Smith Barney's Series A Cumulative Convertible Preferred Stock, 8.08%
Cumulative Preferred Stock, Series D and 8.40% Cumulative Preferred Stock,
Series E, each of which was exchanged on November 28, 1997 into shares of
preferred stock of Travelers Group in connection with the merger of the Company
with a wholly owned subsidiary of Travelers Group.
THE CORPORATION
According to publicly available documents, the Corporation is engaged in
the business of . The Corporation is currently subject to the
informational requirements of the Exchange Act. Accordingly, the Corporation
files reports (including its Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and its Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 30, 1997, June 30, 1997 and September 30, 1997), proxy
statements and other information with the Commission. Copies of the
Corporation's registration statements, reports, proxy statements and other
information may be inspected and copied at offices of the Commission at the
addresses listed under "Available Information".
The Corporation is not affiliated with the Trust, will not receive any of
the proceeds from the sale of the TARGETS and will have no obligations with
respect to the TARGETS, the Treasury Securities or the Forward Contract. This
Prospectus relates only to the TARGETS offered hereby and does not relate to the
Corporation or the Common Stock.
16
<PAGE> 18
PRICE RANGE OF THE COMMON STOCK AND DIVIDENDS
The Common Stock is traded on the under the symbol " ".
The following table sets forth, for each of the quarterly periods indicated, the
high and low sales price for the Common Stock, as reported on the
and the cash dividends per share of Common Stock.
<TABLE>
<CAPTION>
DIVIDEND
DECLARED
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
1995
Quarter
First.................................................. $ $ $
Second.................................................
Third..................................................
Fourth.................................................
1996
Quarter
First..................................................
Second.................................................
Third..................................................
Fourth.................................................
1997
Quarter
First..................................................
Second.................................................
Third..................................................
Fourth.................................................
1998
Quarter
First (through , 1998)..........................
</TABLE>
According to the Corporation's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1997, as of 1997, there were
holders of record of shares of the Common Stock and
shares of the Common Stock outstanding.
Holders of TARGETS will not be entitled to any rights with respect to the
Common Stock (including, without limitation, voting rights or rights to receive
dividends or other distributions in respect thereof).
TARGETS TRUST I
TARGETS Trust I is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust executed by Salomon Smith Barney, as
sponsor (in such capacity, the "Sponsor"), and the trustees of TARGETS Trust I
(as described below) and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware. 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 forms 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 TARGETS, the purchasers thereof will own
all the TARGETS. See "Description of the TARGETS -- Book-Entry Only Issuance".
Salomon Smith Barney will directly or indirectly acquire all of the Common
Securities in an aggregate amount equal to 3% or more of the total capital of
TARGETS Trust I. The Trust will use all the proceeds derived from the issuance
of the TARGETS and the Common Securities to purchase the Forward Contract and
Treasury Securities and, accordingly, the assets of the Trust will consist
solely of the Forward Contract and Treasury Securities. Of the total proceeds
from the sale of the Trust Securities, $ will be invested by the Trust
in the Forward Contract and $ will be invested by the Trust in the
Treasury Securities. The Trust 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
17
<PAGE> 19
in the Forward Contract and the Treasury Securities, and (iii) engaging in only
those other activities necessary or incidental thereto.
TARGETS Trust I's business and affairs are conducted by its Trustees, each
appointed by Salomon Smith Barney as holder of the Common Securities. Pursuant
to the Declaration, the number of trustees of TARGETS Trust I will be four: The
Chase Manhattan Bank, a New York banking corporation that is unaffiliated with
Salomon Smith Barney, as the Institutional Trustee (the "Institutional
Trustee"), Chase Manhattan Bank Delaware, a Delaware state banking corporation
with its principal place of business in the State of Delaware, as the Delaware
trustee (the "Delaware Trustee"), and two individual trustees (the "Regular
Trustees" and, together with the Institutional Trustee and the Delaware Trustee,
the "Trustees") who will be persons who are employees or officers of, or who are
affiliated with Salomon Smith Barney. Initially the Regular Trustees will be
Michael J. Day and Charles W. Scharf, each of whom is an officer of Salomon
Smith Barney. The Institutional Trustee will act as the sole indenture trustee
under the Declaration for purposes of compliance with the Trust Indenture Act
until removed or replaced by the holder of the Common Securities. The Chase
Manhattan Bank will also act as indenture trustee (the "Guarantee Trustee")
under the Guarantee. See "Description of the Guarantee" and "Description of the
Forward Contract".
The Institutional Trustee will hold title to the Forward Contract for the
benefit of the holders of the Trust Securities and, in its capacity as the
holder, the Institutional Trustee will have the power to exercise all rights,
powers and privileges under the Indenture pursuant to which the Forward Contract
are issued. In addition, the Institutional Trustee will maintain exclusive
control of a segregated non-interest bearing bank account (the "Property
Account") to hold all payments made in respect of the Forward Contract for the
benefit of the holders of the Trust Securities. The Institutional Trustee will
make payments of distributions and payments on liquidation and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
TARGETS. Salomon Smith Barney, as direct or indirect holder of all the Common
Securities, will have the right, subject to certain restrictions contained in
the Declaration, to appoint, remove or replace any Trustees and to increase or
decrease the number of Trustees. Salomon Smith Barney will pay all fees and
expenses related to TARGETS Trust I and the offering of the Trust Securities.
See "Description of the TARGETS -- Miscellaneous".
The rights of the holders of the TARGETS, including economic rights, rights
to information and voting rights, are set forth in the Declaration, the Delaware
Business Trust Act, (the "Trust Act") and the Trust Indenture Act. See
"Description of the TARGETS".
The location of the principal executive office of the Trust is c/o Salomon
Smith Barney Holdings Inc., 388 Greenwich Street, New York, New York 10013 and
its telephone number is (212) 816-6000.
DESCRIPTION OF THE TARGETS
The TARGETS 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 the institutional
trustee for the TARGETS under the Declaration for purposes of compliance with
the provisions of the Trust Indenture Act. The terms of the TARGETS will include
those stated in the Declaration and those made part of the Declaration by the
Trust Indenture Act. Pursuant to the Declaration, every holder of TARGETS will
be deemed to have expressly assented and agreed to the terms of, and shall be
bound by, the Declaration. The following summary of the material terms and
provisions of the TARGETS does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration (a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part), the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of
TARGETS Trust I the Trust Securities, which represent undivided beneficial
interests in the assets of TARGETS Trust I. All of the Common Securities will be
owned, directly or indirectly, by Salomon Smith Barney. The Common Securities
rank pari passu with, and payments will be made thereon on a pro rata basis
with, the TARGETS, except that upon the occurrence of an Acceleration Event, the
rights of the holders of the Common Securities to receive payments will be
subordinated to the rights of the holders of the TARGETS. The Declaration does
not permit
18
<PAGE> 20
the issuance by TARGETS Trust I of any securities other than the Trust
Securities or the incurrence of any indebtedness by TARGETS Trust I. Pursuant to
the Declaration, the Institutional Trustee will hold title to the Forward
Contract and the Treasury Securities for the benefit of the holders of the Trust
Securities. The payment of distributions out of money held by the Trust and
payments upon maturity of the TARGETS out of money held by the Trust are
guaranteed by Salomon Smith Barney to the extent described under "Description of
the Guarantee". The Guarantee will be held by The Chase Manhattan Bank, the
Guarantee Trustee, for the benefit of the holders of the TARGETS. The Guarantee
does not cover payment of distributions when the Trust does not have sufficient
available funds to pay such distributions. In such event, the remedy of a holder
of the TARGETS is to (i) vote to direct the Institutional Trustee to enforce the
Institutional Trustee's rights under the Forward Contract and Treasury
Securities or (ii) if the failure by TARGETS Trust I to pay distributions is
attributable to the failure of Salomon Smith Barney to pay amounts in respect of
the Forward Contract, institute a proceeding directly against Salomon Smith
Barney for enforcement of payment to such holder of the amounts owed on such
holder's pro rata interest in the Forward Contract. See "-- Acceleration of
Maturity Date; Enforcement of Rights" and "-- Voting Rights".
The aggregate number of TARGETS to be issued will be plus such
additional number of TARGETS that may be issued pursuant to the over-allotment
option granted by the Trust to the Underwriters (see "Underwriting"). The
TARGETS will be issued in fully registered form. TARGETS will not be issued in
bearer form. See "-- Book-Entry Only Issuance".
MATURITY PAYMENT
The TARGETS will mature on the Maturity Date, subject to acceleration to
the Accelerated Maturity Date upon an Acceleration Event. See "-- Acceleration
of Maturity Date; Enforcement of Rights". On the Maturity Date, holders of the
TARGETS will be entitled to receive, to the extent the Trust has assets
available therefor, the Maturity Payment with respect to each TARGET. On the
Maturity Date, holders of TARGETS will also receive a final quarterly Periodic
Distribution with respect to each TARGET.
The Maturity Payment with respect to each TARGET will be an amount equal to
the sum of (A) the product of (i) the Current Market Price of the Common Stock
as of the Maturity Date multiplied by (ii) the Exchange Rate as of the Maturity
Date and (B) any accrued and unpaid Yield Enhancement Payments with respect to
such TARGET.
The "Current Market Price" shall be the average daily closing sale price
(or, if no closing sale price is reported, the last reported sale price) of the
Common Stock as reported on for the 10 Trading Days (as defined
herein) immediately prior to but not including any Date of Determination (as
defined herein) or, if the Common Stock is not traded on on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed, or if the
Common Stock is not so listed on a United States national or regional securities
exchange, the last quoted bid price for the Common Stock in the over-the-counter
market as reported by the National Quotation Bureau or similar organization.
"Date of Determination" shall be the date that is one Business Day prior to the
Maturity Date or Accelerated Maturity Date.
If the Current Market Price of the Common Stock as of the Maturity Date is
less than or equal to the Appreciation Threshold Price, then the Exchange Rate
shall be one (1), and if the Current Market Price of the Common Stock as of the
Maturity Date is greater than the Appreciation Threshold Price, then the
Exchange Rate shall be a fraction (rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th), the numerator of which is the Appreciation Threshold Price and the
denominator of which is the Current Market Price of the Common Stock as of the
Maturity Date. The Exchange Rate and the Appreciation Threshold Price are
subject to certain dilution adjustments as described below. See "-- Dilution
Adjustments".
For illustrative purposes only, the following chart shows the Maturity
Payment that a holder would receive for each TARGET at various Current Market
Prices. The chart assumes that there would be no adjustments to the aggregate
Maturity Payments deliverable by Salomon Smith Barney to the Trust under the
Forward Contract by reason of the occurrence of any of the events described
under "-- Dilution Adjustments" and that there would be no acceleration of the
maturity of the Forward Contract to an Accelerated Maturity
19
<PAGE> 21
Date upon an Acceleration Event. There can be no assurance that the Current
Market Price at maturity will be within the range set forth below. Assuming an
offering price of $ per TARGET and an Appreciation Threshold Price of
$ , a holder of TARGETS would receive the following Maturity Payment
with respect to each TARGET at maturity:
<TABLE>
<CAPTION>
CURRENT MARKET PRICE MATURITY
OF THE COMMON STOCK PAYMENT
-------------------- --------
<S> <C>
</TABLE>
ACCELERATION OF MATURITY DATE; ENFORCEMENT OF RIGHTS
If at any time an Acceleration Event shall occur and be continuing, the
Institutional Trustee shall sell the Treasury Securities, dissolve the Trust
and, after satisfaction of creditors of the Trust, cause to be distributed, as
soon as is practicable following the occurrence of such Acceleration Event, to
the holders of the TARGETS in liquidation of such holders' interests in the
Trust, the Accelerated Maturity Payment with respect to each TARGET and a pro
rata portion of the Treasury Proceeds.
The Accelerated Maturity Payment with respect to each TARGET will be paid
out of amounts received by the Trust from Salomon Smith Barney in respect of the
Forward Contract and will be equal to the sum of (A) the product of (i) the
Current Market Price of the Common Stock as of the Accelerated Maturity Date,
multiplied by (ii) the Exchange Rate as of the Accelerated Maturity Date and (B)
any accrued and unpaid Yield Enhancement Payments with respect to such TARGET.
The Accelerated Maturity Date will be the date of the occurrence of the event or
events constituting such Acceleration Event.
The Treasury Proceeds shall be the amount received by the Trust as proceeds
from the sale of the Treasury Securities upon the occurrence of an Acceleration
Event. Salomon Smith Barney shall send the Trustee written notice and
instructions to liquidate the Treasury Securities on an Accelerated Maturity
Date. Upon receiving such notice, the Trustee shall solicit at least three bids
and sell and transfer the Treasury Securities to the highest of the three
bidders.
There can be no assurance as to the amount of either any Accelerated
Maturity Payment or the Treasury Proceeds which, in either case, may be
distributed to holders of the TARGETS upon a dissolution and liquidation of the
Trust. Accordingly, there can be no assurance as to the amount that a holder of
TARGETS may receive on the Accelerated Maturity Date.
"Acceleration Event" means any one of the following events (whatever the
reason for such Acceleration Event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body): (i) a Tax Event, (ii) an Investment
Company Event or (iii) a Bankruptcy Event.
"Tax Event" means that Salomon Smith Barney shall have requested and
received and shall have delivered to the Regular Trustees an opinion of
nationally recognized independent tax counsel experienced in such matters (a
"Trust Dissolution Tax Opinion") to the effect that there has been (a) an
amendment to, change in or announced proposed change in the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) a judicial decision interpreting,
applying, or clarifying such laws or regulations, (c) an administrative
pronouncement or action that represents an official position (including a
clarification of an official position) of the governmental authority or
regulatory body making such administrative pronouncement or taking such action,
or (d) a threatened challenge asserted in connection with an audit of Salomon
Smith Barney or any of its subsidiaries or the Trust, or a threatened challenge
asserted in writing against any other taxpayer that has raised capital through
the issuance of securities that are substantially similar to the Forward
Contract or the TARGETS, which amendment or change is adopted or which proposed
change, decision or pronouncement is announced or which action, clarification or
challenge occurs on or after the date of this Prospectus (collectively a "Tax
Action"), which
20
<PAGE> 22
Tax Action relates to any of the items described in (i) and (ii) below, and that
there is more than an insubstantial risk that (i) the Trust is, or will be
subject to, United States federal income tax with respect to income accrued or
received on the Forward Contract and the Treasury Securities, or (ii) the Trust
is, or will be, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.
"Investment Company Event" means that Salomon Smith Barney shall have
requested and received and shall have delivered to the Regular Trustees an
opinion of nationally recognized independent legal counsel experienced in such
matters to the effect that as a result of the occurrence on or after the date
hereof of a change in law or regulation or a 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"), the Trust is or
will be considered an "investment company" which is required to be registered
under the 1940 Act.
"Bankruptcy Event" means either of the following shall have occurred: (i)
the entry of a decree or order (a) for relief in respect of Salomon Smith Barney
by a court having jurisdiction in the premises in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or (b)
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of Salomon Smith Barney or of any substantial part
of its property, or (c) ordering the winding up or liquidation of its affairs,
and, in each case, the continuance of any such decree or order unstayed and in
effect for a period of 90 consecutive days; or (ii) the commencement by Salomon
Smith Barney of a voluntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or State bankruptcy,
insolvency or other similar law, or the consent by it to the entry of an order
for relief in an involuntary case under any such law or to the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of Salomon Smith Barney or of any substantial part of its
property, or the making by it of an assignment for the benefit of its creditors,
or the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by Salomon Smith Barney in
furtherance of any action.
"Pro rata" means, with respect to any payment, distribution, interest in
any assets of the Trust or treatment, and a holder of Trust Securities,
proportionately according to the aggregate beneficial interests in the assets of
the Trust represented by the Trust Securities held by the relevant holder in
relation to the aggregate beneficial interests in the assets of the Trust
represented by all Trust Securities outstanding unless, in relation to a
payment, an Acceleration Event has occurred and is continuing, in which case any
funds available to make such payment will be paid first to each holder of the
TARGETS proportionately according to the aggregate beneficial interests in the
assets of the Trust represented by the TARGETS held by the relevant holder
relative to the aggregate beneficial interests in the assets of the Trust
represented by all TARGETS outstanding, and only after satisfaction of all
amounts owed to the holders of the TARGETS, to each holder of Common Securities
proportionately according to the aggregate beneficial interests in the assets of
the Trust represented by the Common Securities held by the relevant holder
relative to the aggregate beneficial interests in the assets of the Trust
represented by all Common Securities outstanding.
On the date fixed for any payment of the Accelerated Maturity Payment or
the Treasury Proceeds, (i) the TARGETS and the Common Securities will no longer
be deemed to be outstanding and (ii) each TARGET and Common Security will be
deemed to represent the right to receive an Accelerated Maturity Payment and a
pro rata portion of the Treasury Proceeds. If the Accelerated Maturity Payments
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Accelerated Maturity Payments, then the amounts
payable directly by the Trust in respect of the TARGETS will 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
TARGETS, except that in the case of a default by Salomon Smith Barney on its
obligations under the Guarantee, the holders of the TARGETS will have a
preference over the holders of the Common Securities with respect to amounts
owed on the Trust Securities.
Subject to the requirements 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 of the TARGETS 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 Forward Contract and
the
21
<PAGE> 23
Treasury 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 Forward
Contract, (ii) direct the time, method and place of conducting any proceeding
for any remedy available to the Institutional Trustee or exercise any trust or
power conferred on the Institutional Trustee with respect to the Treasury
Securities, (iii) waive the consequences of any Acceleration Event under the
Indenture that is waivable under Section 514 of the Indenture, (iv) exercise any
right to rescind or annul a declaration that any Accelerated Maturity Payment
shall be due and payable or (v) consent to any amendment, modification or
termination of the Indenture or the Forward Contract 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 of the
beneficial interests in the Forward Contract (a "Super Majority") affected
thereby, only the holders of at least a Super Majority of the TARGETS may direct
the Institutional Trustee to give such consent or take such action. If the
Institutional Trustee fails to enforce its rights under the Forward Contract,
any record holder of TARGETS may directly institute a legal proceeding against
Salomon Smith Barney to enforce the Institutional Trustee's rights under the
TARGETS without first instituting any legal proceeding against the Institutional
Trustee or any other person or entity. The Institutional Trustee shall notify
all holders of TARGETS of any notice of default received from the Indenture
Trustee with respect to the Forward Contract. 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 Forward
Contract and the Treasury Securities, shall not take any of the actions
described in clauses (i), (ii), (iii), (iv) or (v) 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, TARGETS Trust I will not fail to be classified as a
grantor trust for United States federal income tax purposes.
If the Institutional Trustee fails to enforce its rights under the Forward
Contract, any holder of TARGETS may directly institute a legal proceeding
against Salomon Smith Barney to enforce the Institutional Trustee's rights under
the Forward Contract, without first instituting a legal proceeding against the
Institutional Trustee or any other person or entity. If Salomon Smith Barney
fails to pay amounts owed on the Forward Contract on the date such amounts are
otherwise payable, then a holder of TARGETS may also directly institute a Direct
Action, in respect of the amounts owed on such holder's pro rata interest in the
Forward Contract, on or after the due date specified in the Forward Contract,
without first (i) directing the Institutional Trustee to enforce the terms of
the Forward Contract or (ii) instituting a legal proceeding directly against
Salomon Smith Barney to enforce the Institutional Trustee's rights under the
Forward Contract. Except as provided in the preceding sentence, the holders of
TARGETS will not be able to exercise directly any other remedy available to the
holder of the Forward Contract. In connection with such Direct Action, Salomon
Smith Barney will be subrogated to the rights of such holder of TARGETS under
the Declaration to the extent of any payment made by Salomon Smith Barney to
such holder of TARGETS in such Direct Action.
A waiver of an Acceleration Event under the Indenture by the Institutional
Trustee at the direction of the holders of the TARGETS will constitute a waiver
of the corresponding Acceleration Event under the Declaration.
Any required approval or direction of holders of TARGETS may be given at a
separate meeting of holders of TARGETS convened for such purpose, at a meeting
of holders of Trust Securities or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at which holders of TARGETS 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 TARGETS. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of TARGETS will be required for TARGETS Trust I to cancel TARGETS
in accordance with the Declaration. It is anticipated that the only holder of
TARGETS issued in book-entry form will be Cede & Co., as nominee of DTC, and
each Beneficial Owner (as defined herein) of TARGETS will be permitted to
exercise the rights of holders of TARGETS only indirectly through DTC and its
Participants (as defined herein).
22
<PAGE> 24
Notwithstanding that holders of TARGETS are entitled to vote or consent
under any of the circumstances described above, any of the TARGETS that are
owned at such time by Salomon Smith Barney or any entity directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
Salomon Smith Barney, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
PERIODIC DISTRIBUTIONS
Holders of TARGETS will be entitled to receive Periodic Distributions at
the rate per TARGET of $ per quarter, payable on each ,
, and , commencing .
The Periodic Distributions will be paid by the Trust out of payments to be
received by the Trust with respect to (i) the Treasury Securities held by the
Trust and (ii) the Yield Enhancement Payments payable to the Trust by Salomon
Smith Barney under the Forward Contract. Of each Periodic Distribution payable
to holders of the TARGETS, $ will be paid out of payments received by
the Trust with respect to the Treasury Securities and $ will be paid
from the Yield Enhancement Payments received by the Trust.
The Treasury Securities and the Forward Contract will be the sole assets of
the Trust. The ability of the Trust to make Periodic Distributions on the
TARGETS is therefore entirely dependent on receipt by the Trust of payments with
respect to both the Treasury Securities held by the Trust and the Forward
Contract. The Treasury Securities and the Forward Contract are held by the
Institutional Trustee on behalf of the Trust. A portion of each Periodic
Distribution should represent a return to the holder of a TARGET of that
holder's initial investment in the TARGETS for tax purposes. See "Certain
Federal Income Tax Considerations".
The following table sets forth information regarding the distributions to
be received on the Treasury Securities to be acquired by the Trust with a
portion of the proceeds received by the Trust from the sale of the Trust
Securities (assuming no exercise of the Underwriters' over-allotment option),
the portion of each year's distributions that should constitute a return of
capital for U.S. federal income tax purposes and the amount of original issue
discount that should accrue on such Treasury Securities with respect to a holder
who acquires its Trust Securities at the issue price from the Underwriters
pursuant to the original offering. See "Certain Federal Income Tax
Considerations".
<TABLE>
<CAPTION>
ANNUAL GROSS ANNUAL INCLUSION OF
ANNUAL GROSS DISTRIBUTIONS FROM ANNUAL RETURN OF ORIGINAL ISSUE
DISTRIBUTIONS FROM TREASURY SECURITIES CAPITAL PER DISCOUNT IN INCOME
YEAR TREASURY SECURITIES PER TARGET TARGET PER TARGET
- ---- ------------------- ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
1997.................
1998.................
1999.................
2000.................
</TABLE>
DILUTION ADJUSTMENTS
The Exchange Rate and the Appreciation Threshold Price will be subject to
adjustment from time to time in certain situations. Any such adjustments could
have an impact on the aggregate Maturity Payments or Accelerated Maturity
Payments to be paid by Salomon Smith Barney to the Trust upon maturity of the
Forward Contract and, therefore, on the Maturity Payment or Accelerated Maturity
Payment to be paid by the Trust with respect to each TARGET to the holders of
TARGETS.
If the Corporation shall, after the date of the closing of the offering
contemplated hereby (the "Closing Date"), (i) pay a stock dividend or make a
distribution with respect to the Common Stock in shares of such stock; (ii)
subdivide or split the outstanding shares of the Common Stock into a greater
number of shares of the Common Stock; (iii) combine the outstanding shares of
the Common Stock into a smaller number of shares; or (iv) issue by
reclassification of shares of the Common Stock any shares of other common stock
of the Corporation; then, in each such case, the Exchange Rate shall be
multiplied by a dilution adjustment equal to the number of shares of the Common
Stock (or in the case of a reclassification referred to in clause (iv) above,
the number of shares of other common stock of the Corporation issued pursuant
thereto), or the fraction thereof, that a holder who held one share of the
Common Stock immediately prior to such event
23
<PAGE> 25
would be entitled solely by reason of such event to hold immediately after such
event. The Appreciation Threshold Price shall also be adjusted in such case in
the manner described below.
If the Corporation shall, after the Closing Date, issue, or declare a
record date in respect of an issuance of, rights or warrants to all holders of
the Common Stock entitling them to subscribe for or purchase shares of the
Common Stock at a price per share less than the Then-Current Market Price of the
Common Stock (other than rights to purchase the Common Stock pursuant to a plan
for the reinvestment of dividends or interest), then, in each such case, the
Exchange Rate shall be multiplied by a dilution adjustment equal to a fraction
the numerator of which shall be the number of shares of the Common Stock
outstanding immediately prior to the time the adjustment is effected by reason
of the issuance of such rights or warrants, plus the number of additional shares
of the Common Stock offered for subscription or purchase pursuant to such rights
or warrants, and the denominator of which shall be the number of shares of the
Common Stock outstanding immediately prior to the time the adjustment is
effected, plus the number of additional shares of the Common Stock which the
aggregate offering price of the total number of shares of the Common Stock so
offered for subscription or purchase pursuant to such rights or warrants would
purchase at the Then-Current Market Price of the Common Stock, which shall be
determined by multiplying the total number of shares so offered for subscription
or purchase by the exercise price of such rights or warrants and dividing the
product so obtained by such Then-Current Market Price. To the extent that, after
the expiration of such rights or warrants, the shares of the Common Stock
offered thereby shall not have been delivered, the Exchange Rate shall be
further adjusted to equal the Exchange Rate which would have been in effect had
such adjustment for the issuance of such rights or warrants been made upon the
basis of delivery of only the number of shares of the Common Stock actually
delivered. The Appreciation Threshold Price shall also be adjusted in the manner
described below.
If the Corporation shall, after the Closing Date, declare or pay a dividend
or make a distribution to all holders of the Common Stock, in either case, of
evidences of its indebtedness or other non-cash assets (excluding any dividends
or distributions referred to above) or shall issue to all holders of the Common
Stock rights or warrants to subscribe for or purchase any of its securities
(other than rights or warrants referred to above), then, in each such case, the
Exchange Rate shall be multiplied by a dilution adjustment equal to a fraction,
the numerator of which shall be the Then-Current Market Price per share of the
Common Stock, and the denominator of which shall be such Then-Current Market
Price per share less the fair market value (as determined by a nationally
recognized independent investment banking firm retained for this purpose by
Salomon Smith Barney) as of the time the adjustment is effected of the portion
of the assets or evidences of indebtedness so distributed or of such
subscription rights or warrants applicable to one share of the Common Stock. The
Appreciation Threshold Price shall also be adjusted in the manner described
below. Notwithstanding the foregoing, in the event that, with respect to any
dividend or distribution to which this paragraph would otherwise apply, the
denominator in the fraction referred to in the above formula is less than $1.00
(or is a negative number), then Salomon Smith Barney may, at its option, elect
to have the adjustment provided by this paragraph not be made and in lieu of
such adjustment, on the Maturity Date, the holders of the Trust Securities shall
be entitled to receive an additional amount of cash equal to the product of the
number of Trust Securities held by such holder multiplied by the fair market
value of such indebtedness, assets, rights or warrants (determined, as of the
date such dividend or distribution is made, by a nationally recognized
independent investment banking firm retained for this purpose by Salomon Smith
Barney) so distributed or issued applicable to one share of the Common Stock.
If, after the Closing Date, the Corporation declares a record date in
respect of a distribution of cash (other than any Permitted Dividends (as
defined herein), any cash distributed in consideration of fractional shares of
the Common Stock and any cash distributed in a Reorganization Event (as defined
herein)), by dividend or otherwise, to all holders of the Common Stock, or makes
an Excess Purchase Payment (as defined herein), then the Exchange Rate will be
multiplied by a dilution adjustment equal to a fraction, the numerator of which
shall be the Then-Current Market Price of the Common Stock on such record date,
and the denominator of which shall be such Then-Current Market Price less the
amount of such distribution applicable to one share of the Common Stock which
would not be a Permitted Dividend (or in the case of an Excess Purchase Payment,
less the aggregate amount of such Excess Purchase Payment for which adjustment
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is being made at such time divided by the number of shares of the Common Stock
outstanding on such record date).
For purposes of these adjustments, (A) "Permitted Dividend" means any
quarterly cash dividend in respect of the Common Stock, other than a quarterly
cash dividend that exceeds the immediately preceding quarterly cash dividend,
and then only to the extent that the per share amount of such dividend results
in an annualized dividend yield on the Common Stock in excess of 10.0% and (B)
"Excess Purchase Payment" means the excess, if any, of (x) the cash and the
value (as determined by a nationally recognized independent investment banking
firm retained for this purpose by Salomon Smith Barney, whose determination
shall be final) of all other consideration paid by the Corporation with respect
to one share of the Common Stock acquired in a tender offer or exchange offer by
the Corporation, over (y) the Then-Current Market Price of the Common Stock. The
Appreciation Threshold Price shall also be adjusted in the manner described in
the following paragraph. Notwithstanding the foregoing, in the event that, with
respect to any dividend or distribution or Excess Purchase Payment to which this
paragraph would otherwise apply, the denominator in the fraction referred to in
the above formula is less than $1.00 (or is a negative number), then Salomon
Smith Barney may, at its option, elect to have the adjustment provided by this
paragraph not be made and in lieu of such adjustment, on the Maturity Date, the
holders of the Trust Securities shall be entitled to receive an additional
amount of cash equal to the product of the number of Trust Securities held by
such holder multiplied by the sum of the amount of cash plus the fair market
value of such other consideration (determined, as of the date such dividend or
distribution is made, by a nationally recognized independent investment banking
firm retained for this purpose by Salomon Smith Barney) so distributed (or
applied to the acquisition of the Common Stock in such a tender offer or
exchange offer) applicable to one share of the Common Stock.
If any adjustment is made to the Exchange Rate pursuant to the preceding
four paragraphs, an adjustment shall also be made to the Appreciation Threshold
Price. The required adjustment shall be made by dividing the Appreciation
Threshold Price by the relevant dilution adjustment. If, during any Calculation
Period used in calculating the Current Market Price, the Then-Current Market
Price or the Transaction Value (as defined herein), there shall occur any event
requiring an adjustment to be effected as described herein, then the Closing
Price for each trading day in the calculation period occurring prior to the day
on which such adjustment is effected shall be adjusted by being divided by the
relevant dilution adjustment.
Each dilution adjustment shall be effected as follows: (i) in the case of
any dividend, distribution or issuance, at the opening of business on the
Business Day next following the record date for determination of holders of the
Common Stock entitled to receive such dividend, distribution or issuance or, if
the announcement of any such dividend, distribution, or issuance is after such
record date, at the time such dividend, distribution or issuance shall be
announced by the Corporation; (ii) in the case of any subdivision, split,
combination or reclassification, on the effective date of such transaction;
(iii) in the case of any Excess Purchase Payment for which the Corporation shall
announce, at or prior to the time it commences the relevant share repurchase,
the repurchase price per share for shares proposed to be repurchased, on the
date of such announcement; and (iv) in the case of any other Excess Purchase
Payment on the date that the holders of the repurchased shares become entitled
to payment in respect thereof.
All dilution adjustments shall be rounded upward or downward to the nearest
1/10,000th (or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th). No adjustment in the Exchange Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent
therein; provided, however, that any adjustments which by reason of this
sentence are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. If any announcement or declaration of a
record date in respect of a dividend, distribution, issuance or repurchase
requiring an adjustment as described herein shall subsequently be cancelled by
the Corporation, or such dividend, distribution, issuance or repurchase shall
fail to receive requisite approvals or shall fail to occur for any other reason,
then, upon such cancellation, failure of approval or failure to occur, the
Exchange Rate shall be further adjusted to the Exchange Rate which would then
have been in effect had adjustment for such event not been made. If a
Reorganization Event shall occur after the occurrence of one or more events
requiring an adjustment as
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described herein, the dilution adjustments previously applied to the Exchange
Rate in respect of such events shall not be rescinded but shall be applied to
the new Exchange Rate provided for below.
"Then-Current Market Price" of the Common Stock, for the purpose of
applying any dilution adjustment, means the average Closing Price per share of
the Common Stock for the Calculation Period of 10 Trading Days (as defined
below) immediately prior to the time such adjustment is effected (or, in the
case of an adjustment effected at the opening of business on the Business Day
next following a record date, immediately prior to the earlier of the time such
adjustment is effected and the related ex-date); provided that if no Closing
Price for the Common Stock is determined for one or more (but not all) of such
Trading Days, such Trading Day shall be disregarded in the calculation of the
Then-Current Market Price (but no additional trading days shall be added to the
Calculation Period). If no Closing Price for the Common Stock may be determined
for any of such Trading Days, the Then-Current Market Price shall be the Closing
Price for the Common Stock for the most recent Trading Day prior to such 10
Trading Days for which a Closing Price for the Common Stock may be determined
pursuant to the "Closing Price" definition. The "ex-date" with respect to any
dividend, distribution or issuance shall mean the first date on which the shares
of the Common Stock trade regular way on their principal market without the
right to receive such dividend, distribution or issuance.
"Trading Day" means a day on which the Common Stock (A) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security. "Calculation Period" means any period of Trading Days for which an
average security price must be determined pursuant to the Indenture. "Closing
Price" of the Common Stock or any marketable security on any such day in the
Calculation Period means the daily closing sale price (or, if no closing sale
price is reported, the last reported sale price) of such security as reported on
the (" ") on any such day in the Calculation Period or,
if such security is not traded on on any such date, as reported in the
composite transactions for the principal United States securities exchange on
which if such security is so listed, or if such security is not so listed on a
United States national or regional securities exchange, the last quoted bid
price for the Common Stock in the over-the-counter market as reported by the
National Quotation Bureau or similar organization.
In the event of (i) any consolidation or merger of the Corporation, or any
surviving entity or subsequent surviving entity of the Corporation (a
"Corporation Successor"), with or into another entity (other than a merger or
consolidation in which the Corporation is the continuing corporation and in
which the Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of the
Corporation or another issuer), (ii) any sale, transfer, lease or conveyance to
another corporation of the property of the Corporation or any Corporation
Successor as an entirety or substantially as an entirety, (iii) any statutory
exchange of securities of the Corporation or any Corporation Successor with
another issuer (other than in connection with a merger or consolidation) or (iv)
any liquidation, dissolution or winding up of the Corporation or any Corporation
Successor (any such event described in clause (i), (ii), (iii) or (iv), a
"Reorganization Event"), the Exchange Rate shall be adjusted so that, on the
Maturity Date, the holders of the TARGETS shall receive cash in an amount equal
to the product of the number of TARGETS held by such holder multiplied by (i) if
the Transaction Value (as defined herein) is less than or equal to the
Appreciation Threshold Price, the Transaction Value, and (ii) if the Transaction
Value is greater than the Appreciation Threshold Price, the Appreciation
Threshold Price.
"Transaction Value" means the sum of: (a) for any cash received in any such
Reorganization Event, the amount of cash received per share of the Common Stock;
(b) for any property other than cash or Marketable Securities (as defined
herein) received in any such Reorganization Event, an amount equal to the market
value on the date the Reorganization Event is consummated of such property
received per share of the Common Stock (as determined by a nationally recognized
independent investment banking firm retained for this purpose by Salomon Smith
Barney) and (c) for any Marketable Securities received in any such
Reorganization Event, an amount equal to the average Closing Price per share of
such Marketable Securities for the Calculation Period of 10 Trading Days
immediately prior to the Maturity Date multiplied by the number of such
Marketable Securities received for each share of the Common Stock; provided that
if no Closing Price for such Marketable Securities may be determined for one or
more (but not all) of such Trading
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Days such Trading Day shall be disregarded in the calculation of such average
Closing Price (but no additional Trading Days shall be added to the Calculation
Period). If no Closing Price for the Marketable Securities may be determined for
all such Trading Days, the calculation in the preceding clause (c) shall be
based on the most recently available Closing Price for the Marketable Securities
prior to such 10 Trading Days.
"Marketable Securities" means any perpetual equity securities or debt
securities with a stated maturity after the Maturity Date, in each case that are
listed on a U.S. national securities exchange or reported by The Nasdaq National
Market. The number of shares of any equity securities constituting Marketable
Securities included in the calculation of Transaction Value pursuant to the
preceding paragraph shall be subject to adjustment if any event that would, had
it occurred with respect to the Common Stock or the Corporation, have required
an adjustment as described above shall occur with respect to such Marketable
Securities or the issuer thereof between the time of the Reorganization Event
and the Maturity Date. Adjustment for such subsequent events shall be as nearly
equivalent as practicable to the adjustments described above.
Salomon Smith Barney shall be responsible for the effectuation and
calculation of any adjustment described herein and shall furnish the Indenture
Trustee with notice of any such adjustment and shall provide the Indenture
Trustee with a reasonable opportunity to review the calculations pertaining to
any such adjustments.
PAYMENT PROCEDURES
Distributions on the TARGETS will be payable to the holders thereof as they
appear on the books and records of the Trust at the close of business on the
relevant record dates. While the TARGETS remain in book-entry form, the relevant
record dates for distributions of any Maturity Payment or Accelerated Maturity
Payment with respect to the TARGETS shall be one Business Day prior to the
relevant payment date, which payment date shall be the date the aggregate of
such Maturity Payments or Accelerated Maturity Payments, as the case may be, is
received by the Trust with respect to the Forward Contract. While the TARGETS
remain in book-entry form, the relevant record date for distribution of the
Treasury Proceeds to holders of TARGETS shall be one Business Day prior to the
relevant payment date, which payment date shall be the date such Treasury
Proceeds are received by the Trust upon liquidation of the Treasury Securities.
While the TARGETS remain in book-entry only form, the relevant record dates for
any Periodic Distributions shall be one Business Day prior to the relevant
payment dates, which payment dates shall correspond to the dates on which
payments are received by the Trust in respect of, and in accordance with the
terms of, the Treasury Securities and the Forward Contract. The relevant record
dates for the Common Securities shall be the same record dates as for the
TARGETS. If the TARGETS shall not continue to remain in book-entry only form,
the relevant record dates shall conform to the rules of any securities exchange
on which they are listed and, if none, shall be selected by the Regular
Trustees, which dates shall be at least 10 Business Days but no more than 15
days before the relevant payment dates, which payment dates shall correspond to
the dates on which payments are made in respect of, and in accordance with the
terms of, the Treasury Securities and the Forward Contract. Distributions
payable on any TARGETS that are not punctually paid on any payment date, as a
result of either Salomon Smith Barney having failed to make a payment under the
Forward Contract or the issuer of the Treasury Securities having failed to make
a payment in respect of the Treasury Securities, will cease to be payable to the
person in whose name such TARGETS are registered on the relevant record date,
and such defaulted distribution will instead be payable to the person in whose
name such TARGETS are registered on a special record date which shall be one
Business Day prior to the date on which the amount of the defaulted
distributions are actually received by the Trust. If any date on which
distributions are payable on the TARGETS is not a Business Day, then payment of
the distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date. A
"Business Day" shall mean any day other than a day on which banking institutions
in The City of New York are authorized or required by law to close.
Payments in respect of the TARGETS represented by the Global Certificates
(as defined below under "Book-Entry Only Issuance") shall be made to DTC, which
will credit the relevant accounts at DTC on the
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scheduled payment dates or, in the case of TARGETS in the form of certificated
securities, if any, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register.
VOTING RIGHTS
Except as described in this Prospectus under "Description of the
TARGETS -- Acceleration of Maturity Date; Enforcement of Rights" and
"Description of the Guarantee -- Modification of the Guarantee; 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 TARGETS will have no
voting rights.
In the event the consent of the Institutional Trustee, as the holder of the
Forward Contract, 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
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 number
of the Trust Securities which the relevant Super Majority represents of the
aggregate beneficial interests in the Forward Contract. 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 TARGETS Trust I will not be classified as other than a
grantor trust.
The procedures by which holders of TARGETS may exercise their voting rights
are described below. See "-- Book-Entry Only Issuance".
Holders of the TARGETS will have no rights to appoint or remove the
Trustees, who may be appointed, removed or replaced solely by Salomon Smith
Barney 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 to the Declaration
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise, or (ii) the dissolution, winding-up or termination of TARGETS Trust I
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 the holders of at least a majority of the Trust
Securities affected thereby, provided that if any amendment or proposal referred
to in clause (i) above would adversely affect only the TARGETS 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 a majority 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 TARGETS Trust
I to fail to be classified as a grantor trust for United States federal income
tax purposes, (ii) reduce or otherwise adversely affect the powers of the
Institutional Trustee or (iii) cause TARGETS Trust I to be deemed an "investment
company" which is required to be registered under the 1940 Act.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
TARGETS Trust I 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 entity, except as
described below. TARGETS Trust I 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
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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 TARGETS
Trust I under the Trust Securities or (y) substitutes for the TARGETS 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 with respect to distributions and payments upon
liquidation, maturity and otherwise, (ii) Salomon Smith Barney 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 Forward
Contract and the Treasury Securities, (iii) the TARGETS 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 TARGETS are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the TARGETS (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holder's
interest in the new entity), (vi) such successor entity has a purpose identical
to that of TARGETS Trust I, (vii) prior to such merger, consolidation,
amalgamation or replacement, TARGETS Trust I has received an opinion of a
nationally recognized independent counsel to TARGETS Trust I experienced in such
matters to the effect that: (A) such merger, consolidation, amalgamation or
replacement will 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 TARGETS Trust I nor such successor entity
will be required to register as an investment company under the 1940 Act and
(viii) Salomon Smith Barney guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, TARGETS Trust I shall not, except with the
consent of holders of 100% 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 such consolidation,
amalgamation, merger or replacement would cause the Trust 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 TARGETS are outstanding and are
not held entirely by Salomon Smith Barney, TARGETS Trust I may not voluntarily
liquidate, dissolve, wind-up or terminate except as described above under
" -- Acceleration of Maturity Date; Enforcement of Rights".
BOOK-ENTRY ONLY ISSUANCE
DTC will act as securities depositary for the TARGETS. The TARGETS will be
issued only as fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global TARGETS certificates,
representing the total aggregate number of TARGETS, 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 TARGETS 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 Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC, which
Participants include Cedel Bank, societe anonyme and The Euroclear System. 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
in DTC 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
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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 through or maintain a 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 Commission.
Purchases of TARGETS within the DTC system must be made by or through
Direct Participants, which will receive a credit for the TARGETS on DTC's
records. The ownership interest of each actual purchaser of TARGETS ("Beneficial
Owner") is in turn to be recorded on the Direct Participants' and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased TARGETS. Transfers of ownership interests
in the TARGETS are to be accomplished by entries made on the books of
Participants and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in TARGETS, except in the event that use of the book-entry system for
the TARGETS is discontinued.
To facilitate subsequent transfers, all the TARGETS deposited by
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of TARGETS 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 TARGETS. DTC's records reflect only the identity of the
Direct Participants to whose accounts such TARGETS 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 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.
Although voting with respect to the TARGETS is limited, in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or vote
with respect to TARGETS. Under its usual procedures, DTC would mail an Omnibus
Proxy to TARGETS Trust I 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 TARGETS are credited on the record date
(identified in a listing attached to the Omnibus Proxy). Salomon Smith Barney
and TARGETS Trust I 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 TARGETS Trust I.
Distribution payments on the TARGETS 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, TARGETS
Trust I or Salomon Smith Barney, 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 TARGETS Trust I, 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 in the next paragraph, a Beneficial Owner in a global
TARGET will not be entitled to receive physical delivery of TARGETS.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the TARGETS.
DTC may discontinue providing its services as securities depositary with
respect to the TARGETS at any time by giving reasonable notice to TARGETS Trust
I. Under such circumstances, in the event that a successor securities depositary
is not obtained, TARGETS certificates are required to be printed and delivered.
Additionally, the Regular Trustees (with the consent of Salomon Smith Barney)
may decide to discontinue use of the system of book-entry transfers through DTC
(or any successor depositary) with respect to the TARGETS. In that event,
certificates for the TARGETS will be printed and delivered.
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Salomon Smith Barney and TARGETS Trust I
believe to be reliable, but neither Salomon Smith Barney nor TARGETS Trust I
takes responsibility for the accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such a default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of TARGETS, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. Notwithstanding the foregoing, the holders of TARGETS 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 an Acceleration Event.
PAYING AGENT
In the event that the TARGETS do not remain in book-entry only form, the
following provisions will apply:
The Institutional Trustee will act as paying agent for the TARGETS and
may designate an additional or substitute paying agent at any time.
Registration of transfers of TARGETS will be effected without charge
by or on behalf of the TARGETS Trust I, but upon payment (with the giving
of such indemnity as TARGETS Trust I or Salomon Smith Barney may require)
in respect of any tax or other government charges which may be imposed in
relation to it.
GOVERNING LAW
The Declaration and the TARGETS 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 TARGETS Trust I
in such a way so that TARGETS Trust I 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. In this connection,
Salomon Smith Barney and the Regular Trustees are authorized to take any action,
not inconsistent with applicable law, the certificate of trust or the amended
and restated certificate of incorporation of Salomon Smith Barney, that each of
Salomon Smith Barney and the Regular Trustees determine in their 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 TARGETS or vary the terms
thereof.
Holders of the TARGETS have no preemptive rights.
DESCRIPTION OF THE FORWARD CONTRACT
The terms of the Forward Contract will be set forth in an Indenture (the
"Indenture") between Salomon Smith Barney and The Chase Manhattan Bank (in such
capacity, the "Indenture Trustee"). The Indenture will be qualified under the
Trust Indenture Act. The Indenture Trustee, The Chase Manhattan Bank, will act
as trustee for the Forward Contract under the Indenture for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Forward Contract will include those stated in the Indenture and those made part
of the Indenture by the Trust Indenture Act.
Subject to certain anti-dilution adjustments, the Forward Contract relates
to an aggregate of shares of the Common Stock. Pursuant to the terms
of the Forward Contract, Salomon Smith Barney will pay an amount equal to the
aggregate Maturity Payments or the aggregate Accelerated Maturity Payments, as
the
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case may be, to the Trust at maturity of the Forward Contract as described
above. See "Description of the TARGETS".
Pursuant to the terms of the Forward Contract, Salomon Smith Barney will
pay quarterly Yield Enhancement Payments to the Trust in the amount of
approximately $ , accruing from the date of issuance of the TARGETS,
computed on the basis of a 360-day year of twelve 30-day months and, for any
period less than a full calendar month, the number of days elapsed in such
month. The Yield Enhancement Payments, together with distributions received by
the Trust with respect to the Treasury Securities, will be used by the Trust to
pay the Periodic Distributions to the holders of the TARGETS. See "Description
of TARGETS -- Periodic Distributions".
The Indenture will provide that Salomon Smith Barney will pay all fees and
expenses related to (i) the offering of the Trust Securities and the Forward
Contract, (ii) the organization, maintenance and dissolution of TARGETS Trust I,
(iii) the retention of the Trustees and (iv) the enforcement by the
Institutional Trustee of the rights of the holders of the TARGETS.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by Salomon Smith Barney for the benefit of the
holders of TARGETS. 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 (in such capacity, 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. 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. The Guarantee will be held by the Guarantee Trustee for
the benefit of the holders of the TARGETS.
GENERAL
Pursuant to and to the extent set forth in the Guarantee, Salomon Smith
Barney will irrevocably and unconditionally agree to pay in full to the holders
of the TARGETS (except to the extent paid by TARGETS Trust I), as and when due,
regardless of any defense, right of set off or counterclaim which TARGETS Trust
I may have or assert, the following payments (the "Guarantee Payments"), without
duplication: (i) any Maturity Payment that is required to be made in respect of
the TARGETS, to the extent the Trust has funds available therefor, (ii) any
Accelerated Maturity Payment that is required to be made in respect of the
TARGETS, to the extent the Trust has funds available therefor, (iii) any
Treasury Proceeds that are required to be distributed in respect of the TARGETS,
to the extent that the Trust has funds available therefor, (iv) any Periodic
Distributions that are required to be made in respect of the TARGETS, to the
extent the Trust has funds available therefor, and (v) any other remaining
assets of the Trust upon liquidation of the Trust. Salomon Smith Barney's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by Salomon Smith Barney to the holders of TARGETS or by causing
TARGETS Trust I to pay such amounts to such holders.
The Guarantee will be a guarantee with respect to the TARGETS from the time
of issuance of the TARGETS but will not apply to any payment of Periodic
Distributions, Maturity Payments, Accelerated Maturity Payments, Treasury
Proceeds or to payments upon the dissolution, winding-up or termination of the
Trust, except to the extent TARGETS Trust I shall have funds available therefor.
If Salomon Smith Barney does not pay the aggregate Maturity Payments or the
aggregate Accelerated Maturity Payments to the Trust upon maturity of the
Forward Contract, including maturity as a result of acceleration or otherwise,
the Trust will not pay any Maturity Payment or Accelerated Maturity Payment to
holders of the TARGETS and will not have funds available therefor. If either the
U.S. federal government, as the issuer of the Treasury Securities, does not make
periodic payments to the Trust with respect to the Treasury Securities or
Salomon Smith Barney does not pay the Yield Enhancement Payments to the Trust
with respect to the Forward Contract then, in either event, the Trust will not
pay the full amount of the Periodic Distributions to holders of
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<PAGE> 34
the TARGETS and will not have funds available therefor. See "Description of the
TARGETS" and "Description of the Forward Contract". The Guarantee, when taken
together with Salomon Smith Barney's obligations under the Forward Contract, the
Indenture and the Declaration, including its obligations to pay costs, expenses,
debts and liabilities of TARGETS Trust I (other than with respect to Trust
Securities), will provide a full and unconditional guarantee by Salomon Smith
Barney of payments due by the Trust on the TARGETS.
MODIFICATIONS OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of TARGETS (in which case no vote will be required), the Guarantee
may be amended only with the prior approval of the holders of a majority of the
outstanding TARGETS. All guarantees and agreements contained in the Guarantee
shall bind the successors, assignees, receivers, trustees and representatives of
Salomon Smith Barney and shall inure to the benefit of the holders of the
TARGETS then outstanding.
GUARANTEE ENFORCEMENT EVENTS
An enforcement event under the Guarantee will occur upon the failure of
Salomon Smith Barney to perform any of its payment or other obligations
thereunder. The holders of a majority of the TARGETS 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 TARGETS may directly institute a legal proceeding
against Salomon Smith Barney to enforce the Guarantee Trustee's rights under the
Guarantee, without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity. A holder of TARGETS may also
directly institute a legal proceeding against Salomon Smith Barney 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 TARGETS Trust I or any other person or
entity.
Salomon Smith Barney will be required to provide annually to the Guarantee
Trustee a statement as to the performance by Salomon Smith Barney 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 TARGETS unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the TARGETS upon full payment to the
holders of the TARGETS of (i) the Maturity Payments, (ii) the Accelerated
Maturity Payments and the Treasury Proceeds or (iii) the amounts payable in
accordance with the Declaration upon liquidation of TARGETS Trust I. The
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of TARGETS must restore payment of any sum paid
under such TARGETS or such Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may directly institute a legal proceeding against
Salomon Smith Barney to enforce its rights under the Guarantee without
instituting a legal proceeding against any other person or entity).
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GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
DESCRIPTION OF THE TREASURY SECURITIES
The Treasury Securities will consist of a portfolio of stripped U.S.
Treasury securities maturing on a quarterly basis through the Maturity Date. The
Treasury Securities will bear quarterly payments corresponding to the payment
dates of the Periodic Distributions payable on the TARGETS. Upon acceleration of
maturity to an Accelerated Maturity Date, any Treasury Securities then held by
the Institutional Trustee on behalf of the Trust will be sold and the Treasury
Proceeds will be distributed to holders of the Trust Securities. See
"Description of the TARGETS -- Acceleration of Maturity".
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax consequences
of the purchase, ownership and disposition of TARGETS. Unless otherwise
specifically indicated herein, this summary only addresses a holder of TARGETS
that is a citizen or resident of the United States, a corporation, partnership
or other entity created or organized under the laws of the United States, an
estate the income of which is subject to U.S. federal income taxation regardless
of its source, 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,
or a holder that is otherwise subject to U.S. federal income taxation on net
income basis in respect of its TARGETS (a "U.S. Holder"). The discussion below
is based on the advice of Skadden, Arps, Slate, Meagher & Flom LLP.
The summary is based on U.S. federal income tax laws, regulations, rulings
and decisions now in effect, all of which are subject to change, possibly on a
retroactive basis. It deals only with holders that will hold TARGETS as capital
assets and does not address tax considerations that may be relevant to a
particular holder in light of such holder's individual circumstances or that are
applicable to certain types of holders subject to special tax rules, such as
banks, insurance companies, dealers in securities, persons that will hold the
TARGETS as a position in a "straddle" for tax purposes or as part of a
"synthetic security" or a "conversion transaction" or other integrated
investment comprised of a TARGETS and one or more other investments, or persons
that have a functional currency other than the U.S. dollar. It does not include
any description of the tax laws of any state, local or foreign government that
may be applicable to the TARGETS or to the holders thereof. Prospective
purchasers of TARGETS should consult their tax advisors in determining the tax
consequences to them of purchasing, owning or disposing TARGETS, including the
application to their particular situation of the U.S. federal income tax
considerations discussed below, as well as the application of state, local,
foreign income or other tax laws.
There are no regulations, published rulings or judicial decisions
addressing the characterization for U.S. federal income tax purposes of TARGETS
or instruments with terms substantially similar to TARGETS. The Trust intends to
treat a TARGETS for U.S. federal income tax purposes as a beneficial interest in
a trust that holds the Treasury Securities and the Forward Contract, under the
terms of which Salomon Smith Barney is obligated to pay the Maturity Payments
(or Accelerated Maturity Payments) and the Yield Enhancement Payments to the
Trust. The Trust intends to report holders' income to the Internal Revenue
Service in accordance with this treatment. Under this approach, the tax
consequences of holding a TARGETS should be as described below. Prospective
investors in the TARGETS should be aware, however, that no ruling is being
requested from the Internal Revenue Service with respect to the TARGETS and the
Internal Revenue Service might take a different view as to the proper
characterization of the TARGETS and of the U.S. federal income tax consequences
to a holder thereof.
A bill recently introduced in Congress by a member of the House of
Representatives (H.R. 3170) would treat some or all of the net long-term capital
gain arising from "constructive ownership" transactions involving certain
derivative financial instruments as short-term capital gain, and would impose an
interest charge on
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such short-term capital gain. The proposed legislation would be effective with
respect to gain recognized after the date the legislation is enacted into law,
without regard to when the constructive ownership transaction was entered into.
If enacted in its current form, the legislation would not apply to the TARGETS
transaction (and, even if the legislation in its current form were extended to
cover the TARGETS transaction, would have no material effect on the TARGETS
transaction). It is not possible to predict whether legislation addressing
constructive ownership transactions will be enacted, or what form any such
legislation might take (including with respect to effective dates).
TAX STATUS OF THE TRUST
The Trust will be treated as a grantor trust owned solely by the present
and future holders of Trust Securities for U.S. federal income tax purposes, and
accordingly, income received by the Trust will be treated as income of the
holders of the TARGETS in the manner set forth below.
TAX BASIS IN THE TREASURY SECURITIES AND THE FORWARD CONTRACT
Each holder should be considered the owner of its pro rata portion of the
Treasury Securities and the Forward Contract in the Trust. The cost to the
holder of its TARGETS should be allocated between the holder's pro rata portion
of the Treasury Securities and the Forward Contract in the Trust (in proportion
to the fair market values thereof on the date on which the holder acquires its
TARGETS) in order to determine the holder's tax bases in such assets. It is
currently anticipated that approximately 15% and 85% of the net proceeds of the
offering will be used by the Trust to purchase the Treasury Securities and the
Forward Contract, respectively.
RECOGNITION OF ORIGINAL ISSUE DISCOUNT ON THE TREASURY SECURITIES
The Treasury Securities in the Trust will consist of stripped U.S. Treasury
securities. A holder should be required to treat its pro rata portion of each
Treasury Security in the Trust as a bond that was originally issued on the date
the holder purchased its TARGETS and at an original issue discount equal to the
excess of the holder's pro rata portion of the amounts payable on such Treasury
Security over the holder's tax basis therein, as discussed above. The amount of
such excess, however, should constitute only a portion of the total amounts
payable with respect to the Treasury Securities held by the Trust and,
accordingly, a substantial portion of the quarterly cash distributions from the
Trust to holders should be treated as a tax-free return of the holder's
investment in the Treasury Securities and should reduce the holder's tax basis
in its pro rata portion of the Treasury Securities. A holder (whether using the
cash or accrual method of tax accounting) should be required to include original
issue discount (other than original issue discount on short-term Treasury
Securities as described below) in gross income for U.S. federal income tax
purposes as it accrues, in accordance with a constant yield method, prior to the
receipt of cash attributable to such income.
With respect to any short-term Treasury Security (i.e., any Treasury
Security with a maturity of one year or less from the date it is purchased) held
by the Trust, holders using the cash method of tax accounting should (except as
provided below) generally be required to include interest payments on such
Treasury Securities in gross income as such payments are received. In addition,
such cash method holders may be denied a deduction for any related interest
expense until such payments are received.
Notwithstanding the above general rule for cash method holders, if in any
taxable year 20 percent or more of the value of the TARGETS is held for 90 days
or more by persons using the accrual method of tax accounting (and generally
with respect to subsequent taxable years), holders using the cash method of tax
accounting should be required to include original issue discount on any
short-term Treasury Security held by the Trust in gross income as such original
issue discount accrues. In all events, holders using the accrual method of tax
accounting should be required to include original issue discount on any
short-term Treasury Security held by the Trust in gross income as such original
issue discount accrues. Unless a holder elects to accrue the original issue
discount on a short-term Treasury Security according to a constant yield method
based on daily compounding, such original issue discount should be accrued on a
straight-line basis. A holder's
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tax basis in a Treasury Security held by the Trust should be increased by the
amount of any original issue discount included in gross income by the holder
with respect to such Treasury Security.
TREATMENT OF THE FORWARD CONTRACT
Each holder should be treated as having entered into a pro rata portion of
the Forward Contract and, at the Maturity Date or Accelerated Maturity Date, as
having received a pro rata portion of the Maturity Payment or Accelerated
Maturity Payment, as the case may be, received by the Trust. A holder should not
recognize income, gain or loss upon entry into the Forward Contract and should
not be required to include in gross income additional amounts over the term of
the Forward Contract (except with respect to the Yield Enhancement Payments, as
described below).
TREATMENT OF THE YIELD ENHANCEMENT PAYMENTS
There is no authority for the treatment of the Yield Enhancement Payments
under current law, but Salomon Smith Barney intends to file information returns
on the basis that the Yield Enhancement Payments are ordinary income to holders
when received or accrued in accordance with their respective methods of tax
accounting. The treatment of amounts received in respect of accrued but unpaid
Yield Enhancement Payments upon a sale or other disposition of some or all of a
holder's TARGETS is also unclear under current law. Holders should consult their
tax advisors concerning the treatment of the Yield Enhancement Payments.
SALE OR OTHER DISPOSITION OF THE TARGETS
Upon a sale or other disposition of all or some of a holder's TARGETS, a
holder should be treated as having sold its pro rata portions of the Treasury
Securities and the Forward Contract underlying the TARGETS. The selling holder
should recognize capital gain or loss equal to the difference between the amount
realized from such sale or other disposition and the holder's aggregate tax
bases in its pro rata portions of the Treasury Securities and the Forward
Contract (except to the extent of any (i) accrued interest with respect to the
holder's pro rata portion of the Treasury Securities includible in gross income
as ordinary income and (ii) possibly any accrued but unpaid Yield Enhancement
Payments, as described above). Any such gain or loss will be long-term capital
gain or loss if the holder's holding period for the TARGETS was more than one
year. The distinction between capital gain or loss and ordinary income or loss
is important for purposes of the limitations on a holder's ability to offset
capital losses against ordinary income. In addition, certain individuals are
subject to taxation at a reduced rate on long-term capital gains. The Taxpayer
Relief Act of 1997 further provides that in the case of holders who are
individuals, any such capital gain will be subject to a maximum U.S. federal
income tax rate of (i) 20% if the holder's holding period in the TARGETS was
more than 18 months at the time of such sale or other disposition and (ii) 28%
if the holder's holding period in the TARGETS was more than 12 months but not
more than 18 months at such time. Holders should consult their tax advisers as
to the consequences of the Taxpayer Relief Act of 1997 in their particular
circumstances.
DISTRIBUTIONS OF CASH AT THE MATURITY DATE OR ACCELERATED MATURITY DATE
On the receipt of cash by the Trust with respect to the Forward Contract on
the Maturity Date or Accelerated Maturity Date, a holder should recognize
capital gain or loss equal to the difference between the holder's pro rata
portion of the amount of cash received by the Trust and the holder's tax basis
in its pro rata portion of the Forward Contract at that time (except to the
extent such cash is attributable the Yield Enhancement Payments, as described
above). Under certain circumstances, on or following the Accelerated Maturity
Date, the Trust may sell all or a portion of the Treasury Securities and
distribute the Treasury Proceeds to holders. Upon such a sale by the Trust, a
holder should recognize capital gain or loss equal to the difference between the
amount of cash received by the holder (except to the extent of any accrued
interest with respect to the holder's pro rata portion of the Treasury
Securities includible in gross income as ordinary income) and the holder's tax
basis in its pro rata portion of the Treasury Securities sold by the Trust. Any
such capital gain or loss described in this paragraph will be long-term capital
gain or loss if the holder's
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holding period for the TARGETS was more than one year and will be subject to the
same maximum U.S. federal income tax rates discussed above under "Sale or Other
Disposition of the TARGETS".
ALTERNATIVE CHARACTERIZATIONS
The Internal Revenue Service may contend that TARGETS should be
characterized for U.S. federal income tax purposes in a manner different than
the approach described above. For example, the Internal Revenue Service might
assert that the Forward Contract should be treated as a contingent debt
obligation of Salomon Smith Barney that is subject to Treasury regulations
governing contingent payment debt instruments. If the Internal Revenue Service
were to prevail in making such an assertion, original issue discount would
accrue with respect to the Forward Contract at a "comparable yield" for Salomon
Smith Barney under the Forward Contract, determined at the time the Forward
Contract is entered into. A holder's pro rata portion of original issue discount
with respect to the Forward Contract and the Treasury Securities might exceed
the aggregate amount of the Periodic Distributions received by the holder. In
addition, under this treatment, a holder would be required to treat any gain
realized on the sale or other disposition of the TARGETS as ordinary income to
the extent that such gain is allocable to the holder's pro rata portion of the
Forward Contract. Any loss realized on such sale or other disposition that is
allocable to the holder's pro rata portion of the Forward Contract would be
treated as an ordinary loss to the extent of the holder's original issue
discount inclusions with respect to the Forward Contract and as capital loss to
the extent of loss in excess of such inclusions. It is also possible that the
Internal Revenue Service could take the view that a holder should include in
gross income the amount of cash actually received each year in respect of the
TARGETS or that the TARGETS as a whole constitute a contingent payment debt
instrument subject to the rules described above.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
In the case of a holder of TARGETS that is not a U.S. Holder: (a) Periodic
Distributions (other than Yield Enhancement Payments) made with respect to the
TARGETS should not be subject to U.S. withholding tax, provided that such holder
complies with applicable certification requirements (including in general the
furnishing of an Internal Revenue Service Form W-8 or a substitute form); (b)
Yield Enhancement Payments should be subject to U.S. withholding tax at a rate
of 30 percent (or a lower rate under an applicable income tax treaty); and (c)
any capital gain realized upon the sale or other disposition of the TARGETS
should not be subject to U.S. federal income tax if (i) such gain is not
effectively connected with a U.S. trade or business of such holder and (ii) in
the case of an individual, such individual is not present in the United States
for 183 days or more in the taxable year of the sale or other disposition or the
gain is not attributable to a fixed place of business maintained by such
individual in the United States.
Recently issued Treasury regulations may change the certification
procedures relating to withholding on certain amounts paid to Non-U.S. Holders
after December 31, 1998. Prospective investors should consult their tax advisors
regarding the effect, if any, of such new Treasury regulations on an investment
in the TARGETS.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A holder of TARGETS (including a holder that is not a U.S. holder) may be
subject to information reporting and to backup withholding at a rate of 31
percent of certain amounts paid to the holder unless such holder (a) is a
corporation or comes within certain other exempt categories and, when required,
provides proof of such exemption or (b) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. Any amounts withheld under the backup withholding rules are
not an additional tax and may be credited against the holder's U.S. federal
income tax liability, provided that the required information is furnished to the
Internal Revenue Service.
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UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated , 1998 (the "Underwriting Agreement"), each Underwriter
named below (the "Underwriters") has severally agreed to purchase from TARGETS
Trust I, and TARGETS Trust I has agreed to sell to such Underwriter, the number
of TARGETS set forth opposite the name of such Underwriter below.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF TARGETS
------------ -----------------
<S> <C>
-------
Total....................................
=======
</TABLE>
The Underwriters are obligated to take and pay for the total number of
TARGETS offered hereby if any such TARGETS 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.
TARGETS Trust I has granted to the Underwriters an option, exercisable for
30 days from the date of this Prospectus, to purchase up to an aggregate of
additional TARGETS at the initial public offering price set
forth on the cover page of this Prospectus. Salomon Smith Barney will pay
Underwriters' Compensation in the amounts per TARGET set forth on the cover page
hereof with respect to such additional TARGETS. The Underwriters may exercise
such option to purchase additional TARGETS solely for the purpose of covering
over-allotments, if any, incurred in connection with the sale of the TARGETS
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 TARGETS as the number of TARGETS set forth
opposite such Underwriter's name in the preceding table bears to the total
number of TARGETS in such table.
The Underwriting Agreement provides that TARGETS Trust I and Salomon Smith
Barney will indemnify the several Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, and will
make certain contributions in respect thereof, or will 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.
TARGETS Trust I and Salomon Smith Barney 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 TARGETS, not to offer, sell, contract to sell or otherwise dispose of any
securities (including any backup undertakings of such securities) of Salomon
Smith Barney or of TARGETS Trust I, in each case that are substantially similar
to the TARGETS, or any securities convertible into or exchangeable for the
TARGETS or such substantially similar securities of either TARGETS Trust I or
Salomon Smith Barney.
In view of the fact that the proceeds of the sale of the TARGETS will
ultimately be used by the Trust to purchase the Forward Contract, the
Underwriting Agreement provides that Salomon Smith Barney will pay as
compensation to the Underwriters $ per TARGET for the accounts of the
several Underwriters.
The Underwriters propose to offer the TARGETS, in part, directly to the
public at the price to public set forth on the cover page of this Prospectus,
and to certain dealers at a price that represents a concession not in excess of
$ per TARGET. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $ per TARGET to certain brokers and
dealers. After the TARGETS are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
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In connection with the offering of TARGETS, 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 TARGETS.
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 TARGETS for the purposes of stabilizing their
market price. The Underwriters also may create a short position for their
respective accounts by selling more TARGETS in connection with this offering
than they are committed to purchase from TARGETS Trust I, and in such case may
purchase TARGETS 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 TARGETS, by exercising the Underwriters' over-allotment
option. In addition, the managing Underwriter, 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 TARGETS that are distributed in the 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 TARGETS 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.
Application will be made to list the TARGETS on the CBOE, subject to
official notice of issuance. Trading of the TARGETS on the CBOE is expected to
commence within a 30-day period after the date of this Prospectus.
The participation of any affiliate of Salomon Smith Barney in the offer and
sale of TARGETS 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 may be used by Salomon Smith Barney or any Underwriter that
is an affiliate or other affiliates of Salomon Smith Barney, including the SSBH
Subsidiaries, in connection with offers and sales of the TARGETS (subject to
obtaining any necessary approval of the CBOE for any such offers and sales) 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 TARGETS
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 TARGETS.
LEGAL MATTERS
The validity of the TARGETS, the Forward Contract, the Guarantee and
certain matters relating thereto and certain United States federal income tax
matters will be passed upon for Salomon Smith Barney and TARGETS Trust I 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 and
Hamilton, New York, New York. As to matters governed by Delaware law (other than
the Delaware General Corporation Law), Cleary, Gottlieb, Steen and Hamilton will
rely upon the opinion of Skadden, Arps, Slate, Meagher & Flom LLP. Kenneth J.
Bialkin, a partner of Skadden, Arps, Slate, Meagher & Flom LLP, is a director of
Travelers Group Inc., the parent of Salomon Smith Barney and he and other
attorneys in such firm beneficially own an aggregate of less than one percent of
the common stock of the Travelers Group Inc. Each of Cleary, Gottlieb, Steen and
Hamilton and Skadden, Arps, Slate, Meagher & Flom LLP has from time to time
acted as counsel for Salomon Smith Barney and certain of its affiliates and may
do so in the future.
EXPERTS
The consolidated financial statements of Salomon Smith Barney and its
subsidiaries for the fiscal years ended December 31, 1997 and 1996 and for each
of the three years in the period ended December 31, 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 consolidated
financial statements 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 (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 are incorporated by reference herein in reliance upon such
report given upon the authority of said firm as experts in accounting and
auditing.
39
<PAGE> 41
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS 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 SALOMON SMITH BARNEY OR ANY
OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY
SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT RELATES IN ANY STATE OR TO
ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 3
Incorporation of Certain Documents by
Reference............................ 4
Prospectus Summary..................... 5
Risk Factors........................... 9
Salomon Smith Barney................... 13
Use of Proceeds and Hedging
Activities........................... 14
Capitalization......................... 15
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends............ 16
The Corporation........................ 16
Price Range of the Common Stock and
Dividends............................ 17
TARGETS Trust I........................ 17
Description of the TARGETS............. 18
Description of the Forward Contract.... 31
Description of the Guarantee........... 32
Description of the Treasury
Securities........................... 34
Certain Federal Income Tax
Considerations....................... 34
Underwriting........................... 38
Legal Matters.......................... 39
Experts................................ 39
</TABLE>
======================================================
======================================================
TARGETS TRUST I
TARGETED GROWTH
ENHANCED
TERMS SECURITIES
("TARGETS(SM)")
WITH RESPECT TO THE COMMON STOCK
OF CORPORATION
DUE ON
FULLY AND UNCONDITIONALLY
GUARANTEED TO THE
EXTENT SET
FORTH HEREIN BY
SALOMON SMITH BARNEY
HOLDINGS INC.
------------
PROSPECTUS
, 1998
------------
SALOMON SMITH BARNEY
======================================================
<PAGE> 42
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Commission Registration Fee................................. $36,875
Accounting Fees............................................. *
Trustees' Fees and Expenses................................. *
Blue Sky Fees and Expenses.................................. *
Printing and Engraving Fees................................. *
Rating Agency Fees.......................................... *
NASD Fee.................................................... *
Legal Fees and Expenses..................................... *
Miscellaneous............................................... *
-------
Total............................................. $ *
=======
</TABLE>
- ---------------
* To be completed by amendment.
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> 43
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 Eight of
Salomon Smith Barney's By-Laws provides for indemnification of directors and
officers of Salomon Smith Barney against certain liabilities incurred as a
result of their duties as such and Article Fifth of Salomon Smith Barney's
Amended and Restated Certificate of Incorporation provides that no directors of
Salomon Smith Barney shall be liable for monetary damages for breach of
fiduciary duty as a director.
The Declaration of the 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 the Trust or its affiliates (each a "Company Indemnified Person") shall
be liable, responsible or accountable in damages or otherwise to the Trust, any
Affiliate of the Trust or any holder of securities issued by the Trust, or to
any officer, director, shareholder, partner, member, representative, employee or
agent of the 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 the 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 the Trust
also provides that, to the full extent permitted by law, Salomon Smith Barney
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 the Trust) by reason of the fact that he
is or was a Company Indemnified Person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
Declaration of the Trust also provides that to the full extent permitted by law,
Salomon Smith Barney 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 the Trust to procure a judgment in
its favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the Court of Chancery of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem proper. The
Declaration of the 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 Salomon Smith Barney in
advance of the final disposition of such action, suit or
II-2
<PAGE> 44
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 Salomon Smith Barney as authorized
in the Declaration. The directors and officers of Salomon Smith Barney 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 Salomon Smith Barney or the Trust. Any agents, dealers
or underwriters who execute any of the agreements filed as Exhibit 1(a) to this
Registration Statement will agree to indemnify Salomon Smith Barney's directors
and their officers and the Trustees who signed the Registration Statement
against certain liabilities that may arise under the Securities Act with respect
to information furnished to Salomon Smith Barney or the Trust 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, filed or to be filed as
Exhibit 1, for certain indemnification provisions.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
1+ -- Form of Underwriting Agreement for the offering of the
TARGETS being registered under this Registration Statement.
4(a) -- Certificate of Trust of TARGETS Trust I.
*4(b) -- Form of Amended and Restated Declaration of Trust of TARGETS
Trust I.
*4(c) -- Form of TARGETS Guarantee Agreement between Salomon Smith
Barney and The Chase Manhattan Bank, as Guarantee Trustee.
*4(d) -- Indenture between Salomon Smith Barney and The Chase
Manhattan Bank, as Trustee.
*4(e) -- Form of TARGETS (included in Exhibit 4(b)).
*4(f) -- Form of Common Securities (included in Exhibit 4(b)).
*4(g) -- Form of Forward Contract (included in Exhibit 4(d)).
*5 -- Opinion of counsel as to certain corporate law matters.
*8 -- Opinion of counsel as to certain federal income tax matters.
12 -- Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends of Salomon Smith Barney
(incorporated by reference to Exhibit 12.01 to Salomon Smith
Barney's Annual Report on Form 10-K for the year ended
December 31, 1997).
*23(a) -- Consent of Coopers and Lybrand L.L.P., independent certified
public accountants.
*23(b) -- Consent of Arthur Andersen LLP, independent public
accountants.
*23(c) -- Consent of counsel (to be contained in Exhibits No. 5 and
8).
24 -- Powers of Attorney.
*25(a) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the Declaration of Trust.
*25(b) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement.
*25(c) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the Indenture (contained in Exhibit 4(d)).
</TABLE>
- ---------------
+ To be filed by amendment.
* Filed herewith.
ITEM 17. UNDERTAKINGS.
Each of Salomon Smith Barney and TARGETS Trust I hereby undertakes:
(1) 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
II-3
<PAGE> 45
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, 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
the time shall be deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act
of 1933, each filing of Salomon Smith Barney'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.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended may be permitted to directors, officers
and controlling persons of a registrant pursuant to the foregoing
provisions 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 the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted against a
registrant by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
II-4
<PAGE> 46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust I
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, on the 26th day of March, 1998.
TARGETS TRUST I
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ CHARLES W. SCHARF
------------------------------------
Name: Charles W. Scharf
Title: Regular Trustee
II-5
<PAGE> 47
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, ON THE 26TH DAY OF MARCH, 1998.
SALOMON SMITH BARNEY HOLDINGS INC.
By: /s/ CHARLES W. SCHARF
------------------------------------
Name: Charles W. Scharf
Title: Chief Financial Officer,
and Principal
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 26TH DAY OF MARCH, 1998.
<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)
/s/ MICHAEL J. DAY Controller and Principal Accounting Officer
- ---------------------------------------------------
(MICHAEL J. DAY)
Director
- ---------------------------------------------------
(STEVEN D. BLACK)
* Director
- ---------------------------------------------------
(JAMES BOSHART III)
* Director
- ---------------------------------------------------
(THOMAS G. MAHERAS)
* Director
- ---------------------------------------------------
(JAY MANDELBAUM)
* Director
- ---------------------------------------------------
(EDUARDO G. MESTRE)
* Director
- ---------------------------------------------------
(SHIGERU MYOJIN)
</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
----------------------------------
Attorney-in-Fact
II-6
<PAGE> 48
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<S> <C> <C>
1+ -- Form of Underwriting Agreement for the offering of the
TARGETS being registered under this Registration
Statement...................................................
4(a) -- Certificate of Trust of TARGETS Trust I.....................
*4(b) -- Form of Amended and Restated Declaration of Trust of TARGETS
Trust I.....................................................
*4(c) -- Form of TARGETS Guarantee Agreement between Salomon Smith
Barney and The Chase Manhattan Bank, as Guarantee Trustee...
*4(d) -- Indenture between Salomon Smith Barney and The Chase
Manhattan Bank, as Trustee..................................
*4(e) -- Form of TARGETS (included in Exhibit 4(b))..................
*4(f) -- Form of Common Securities (included in Exhibit 4(b))........
*4(g) -- Form of Forward Contract (included in Exhibit 4(d)).........
*5 -- Opinion of counsel as to certain corporate law matters......
*8 -- Opinion of counsel as to certain federal income tax
matters.....................................................
12 -- Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends of Salomon Smith Barney
(incorporated by reference to Exhibit 12.01 to Salomon Smith
Barney's Annual Report on Form 10-K for the year ended
December 31, 1997)..........................................
*23(a) -- Consent of Coopers and Lybrand L.L.P., independent certified
public accountants..........................................
*23(b) -- Consent of Arthur Andersen LLP, independent public
accountants.................................................
*23(c) -- Consent of counsel (to be contained in Exhibits No. 5 and
8)..........................................................
24 -- Powers of Attorney..........................................
*25(a) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the Declaration of Trust....................................
*25(b) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement.............................
*25(c) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the Indenture (contained in Exhibit 4(d))...................
</TABLE>
- ---------------
+ To be filed by amendment.
* Filed herewith.
<PAGE> 1
Exhibit 4 (b)
================================
AMENDED AND RESTATED DECLARATION
OF TRUST
TARGETS TRUST I
Dated as of ____________, 1998
================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions................................................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application...........................8
SECTION 2.2 Lists of Holders of Securities.............................8
SECTION 2.3 Reports by the Institutional Trustee.......................9
SECTION 2.4 Periodic Reports to Institutional Trustee..................9
SECTION 2.5 Evidence of Compliance with Conditions Precedent...........9
SECTION 2.6 Acceleration Events; Waiver................................9
SECTION 2.7 Acceleration Event; Notice................................11
ARTICLE III
ORGANIZATION
SECTION 3.1 Name......................................................11
SECTION 3.2 Office....................................................12
SECTION 3.3 Purpose...................................................12
SECTION 3.4 Authority.................................................12
SECTION 3.5 Title to Property of the Trust............................12
SECTION 3.6 Powers and Duties of the Regular Trustees.................12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees......15
SECTION 3.8 Powers and Duties of the Institutional Trustee............16
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee...................................................18
SECTION 3.10Certain Rights of Institutional Trustee...................20
SECTION 3.11Delaware Trustee..........................................23
SECTION 3.12Execution of Documents....................................23
SECTION 3.13Not Responsible for Recitals or Issuance of Securities....23
SECTION 3.14Duration of Trust.........................................23
SECTION 3.15Mergers...................................................23
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities...................25
i
<PAGE> 3
Page
----
SECTION 4.2 Responsibilities of the Sponsor...........................25
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees........................................26
SECTION 5.2 Delaware Trustee..........................................26
SECTION 5.3 Institutional Trustee; Eligibility........................27
SECTION 5.4 Qualifications of Regular Trustees and
Delaware Trustee Generally..............28
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees...28
SECTION 5.6 Appointment, Removal and Resignation of Trustees..........29
SECTION 5.7 Vacancies among Trustees..................................30
SECTION 5.8 Effect of Vacancies.......................................30
SECTION 5.9 Meetings..................................................31
SECTION 5.10Delegation of Power.......................................31
SECTION 5.11Merger, Conversion, Consolidation or Succession to
Business..................................................31
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.............................................32
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities...................32
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust......................................33
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities....................................34
SECTION 9.2 Transfer of Trust Certificates............................35
SECTION 9.3 Deemed Security Holders...................................35
ii
<PAGE> 4
Page
----
SECTION 9.4 Book Entry Interests......................................35
SECTION 9.5 Notices to Clearing Agency................................36
SECTION 9.6 Appointment of Successor Clearing Agency..................36
SECTION 9.7 Definitive TARGETS Certificates...........................36
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Trust Certificates...37
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................38
SECTION 10.2 Exculpation..............................................38
SECTION 10.3 Fiduciary Duty...........................................39
SECTION 10.4 Indemnification..........................................40
SECTION 10.5 Outside Businesses.......................................42
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year..............................................43
SECTION 11.2 Certain Accounting Matters...............................43
SECTION 11.3 Banking..................................................44
SECTION 11.4 Withholding..............................................44
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments...............................................44
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent..................................................46
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices..................................................48
SECTION 13.2 Governing Law............................................49
SECTION 13.3 Intention of the Parties.................................49
SECTION 13.4 Headings.................................................49
iii
<PAGE> 5
Page
----
SECTION 13.5 Successors and Assigns...................................49
SECTION 13.6 Partial Enforceability...................................50
SECTION 13.7 Counterparts.............................................50
ANNEX I TERMS OF SECURITIES......................................I-1
EXHIBIT A-1 FORM OF TARGETS CERTIFICATE.............................A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE.....................A2-1
EXHIBIT B SPECIMEN OF FORWARD CONTRACT.............................B-1
EXHIBIT C UNDERWRITING AGREEMENT...................................C-1
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a)................................................ 5.3(a)
310(c)................................................ Inapplicable
311(c)................................................ Inapplicable
312(a)................................................ 2.2(a)
312(b)................................................ 2.2(b)
313................................................... 2.3
314(a)................................................ 2.4
314(b)................................................ Inapplicable
314(c)................................................ 2.5
314(d)................................................ Inapplicable
314(f)................................................ Inapplicable
315(a)................................................ 3.9(b)
315(c)................................................ 3.9(a)
315(d)................................................ 3.9(a)
316(a)................................................ Annex I
316(c)................................................ 3.6(e)
- ----------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
TARGETS TRUST I
__________, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of ________, 1998, by the Trustees (as defined herein), the Sponsor
(as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration.
WHEREAS, the Trustees and the Sponsor established TARGETS TRUST I
(the "Trust"), under the Business Trust Act (as defined herein) pursuant to a
Declaration of Trust dated as of _________ __, 1998 (the "Original Declaration")
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on ______ __, 1998, for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in the Forward Contract represented by
the Forward Contract Certificates and the Treasury Securities (each as defined
herein);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
<PAGE> 8
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Accelerated Maturity Date" has the meaning specified in the
Indenture.
"Accelerated Maturity Payment" has the meaning specified in the
Indenture.
"Acceleration Event" has the meaning specified in Annex I hereto.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Bankruptcy Event" has the meaning specified in Annex I.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the TARGETS and
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<PAGE> 9
in whose name or in the name of a nominee of that organization shall be
registered a Global Certificate and which shall undertake to effect book entry
transfers and pledges of the TARGETS. The initial Clearing Agency shall be DTC.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means _______________ __, 1998.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A2.
The "Company" means SSBH in its capacity as issuer of the Forward
Contract under the Indenture.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at 450 West 33rd Street 15th
Floor, New York, New York 10001.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Definitive TARGETS Certificates" has the meaning specified in
Section 9.4.
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<PAGE> 10
"Delaware Trustee" has the meaning specified in Section 5.1.
"Distribution" has the meaning specified in Section 6.1.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning specified in Section
10.4(b).
"Forward Contract" means the Forward Contract with respect to XYZ
Corporation Common Stock to be issued by the Company under the Indenture.
"Forward Contract Certificates" means the certificates (defined in
the Indenture as the "Securities") evidencing interests in the Forward Contract,
a specimen of which is attached hereto as Exhibit B.
"Global Certificate" has the meaning specified in Section 9.4.
"Holder" means a Person in whose name a Trust Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of __________, 1998,
between the Company and the Indenture Trustee with respect to the Forward
Contract.
"Indenture Trustee" means The Chase Manhattan Bank, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements specified in Section 5.3.
"Institutional Trustee Account" has the meaning specified in Section
3.8(c).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
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<PAGE> 11
"Investment Company Event" has the meaning specified in Annex I.
"Legal Action" has the meaning specified in Section 3.6(g).
"Majority of the Securities", "Majority of the TARGETS" or "Majority
of the Common Securities" means, as the context may require, except as provided
in the terms of the Securities, or by the Trust Indenture Act, Holder(s) of
outstanding Securities voting together as a single class, Holders of outstanding
TARGETS or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of an aggregate amount of such securities
representing more than 50% of all outstanding beneficial interests in the assets
of the Trust by all Holders of Securities or Holders of the relevant class of
Securities, as the case may be.
"Maturity Date" has the meaning specified in the Indenture.
"Maturity Payment" has the meaning specified in the Indenture.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(i).
"Payment Amount" has the meaning specified in Section 6.1.
"Periodic Distributions" has the meaning specified in Annex I.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust,
5
<PAGE> 12
unincorporated association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Pro Rata" has the meaning specified in Annex I.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Regular Trustee" has the meaning specified in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer, trust officer or
other officer of the Corporate Trust Office of the Institutional Trustee
customarily performing functions similar to those performed by any of the above
designated officers and who, in any case, has direct responsibility for the
administration of this Declaration and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the TARGETS.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Sponsor" means SSBH or any successor entity in a merger,
consolidation or amalgamation, in its capacity as sponsor of the Trust.
"SSBH" means Salomon Smith Barney Holdings Inc., a Delaware
corporation, together with any successor entity in a merger, consolidation or
amalgamation.
"Successor Delaware Trustee" has the meaning specified in Section
5.6.
"Successor Entity" has the meaning specified in Section 3.15(b).
"Successor Institutional Trustee" has the meaning specified in
Section 5.6.
"Successor Securities" has the meaning specified in Section 3.15(b).
6
<PAGE> 13
"Super Majority" has the meaning specified in Section 2.6(a)(ii).
"TARGETS" has the meaning specified in Section 7.1.
"TARGETS Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"TARGETS Certificate" means a definitive certificate in fully
registered form representing one or more TARGETS substantially in the form of
Exhibit A1.
"TARGETS Guarantee" means the guarantee agreement dated as of
_________ __, 1998, of the Sponsor in respect of the TARGETS.
"Tax Event" has the meaning specified in Annex I.
"10% of the Securities" means, as the context may require, except as
provided in the terms of the Securities or by the Trust Indenture Act, Holder(s)
of outstanding Securities voting together as a single class, Holders of
outstanding TARGETS or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of an aggregate amount of such
Securities representing 10% or more of the beneficial interests in the assets of
the Trust by all Holders of Securities or Holders of the relevant class of
Securities, as the case may be.
"Treasury Proceeds" has the meaning specified in Section 3.6(d).
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Treasury Securities" means the securities having the terms
specified in Schedule I hereto, provided, however, that any payments thereunder
shall be made to the Trust by 10:00 a.m. on the relevant date for Periodic
Distributions is respect of the TARGETS.
"Trust Certificate" means a Common Security Certificate or a TARGETS
Certificate.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
7
<PAGE> 14
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Yield Enhancement Payments" has the meaning specified in the
Indenture.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Institutional Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the
Institutional Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall
be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Institutional
Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and (ii)
at any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Institutional Trustee. The Institutional Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the capacity
as Paying Agent (if acting in such capacity) pro-
8
<PAGE> 15
vided that the Institutional Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Institutional Trustee.
Within 60 days after April 15 of each year, the Institutional
Trustee shall provide to the Holders of the TARGETS such reports as are required
by ss. 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by ss. 313 of the Trust Indenture Act. The Institutional Trustee shall
also comply with the requirements of ss. 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such documents, reports and
information, if any, as required by ss. 314 of the Trust Indenture Act and the
compliance certificate required by ss. 314 of the Trust Indenture Act in the
form, in the manner and at the times required by ss. 314 of the Trust Indenture
Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters specified in ss. 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to ss.
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Acceleration Events; Waiver.
(a) The Holders of a Majority of TARGETS may, by vote, on behalf of
the Holders of all of the TARGETS, waive any past Acceleration Event in respect
of the TARGETS and its consequences, provided that, if the underlying
Acceleration Event under the Indenture:
(i) is not waivable under the Indenture, the Acceleration Event
under this Declaration shall also not be waivable; or
(ii) is waivable only with the consent of holders of more than a
majority (determined in accordance with the Indenture) of the outstanding
Forward Contract Certificates (a "Super Majority") affected thereby, only
the Holders of at least the same pro-
9
<PAGE> 16
portion of the TARGETS that the relevant Super Majority represents of the
aggregate outstanding beneficial interests in the Forward Contract
represented by all the TARGETS outstanding may waive such Acceleration
Event in respect of the TARGETS under this Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Acceleration Event with respect to the
TARGETS arising therefrom shall be deemed to have been cured, for every purpose
of this Declaration, but no such waiver shall extend to any subsequent or other
default or an Acceleration Event with respect to the TARGETS or impair any right
consequent thereon. Any waiver by the Holders of the TARGETS of an Acceleration
Event with respect to the TARGETS shall also be deemed to constitute a waiver by
the Holders of the Common Securities of any such Acceleration Event with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority of the Common Securities may, by vote,
on behalf of the Holders of all of the Common Securities, waive any past
Acceleration Event with respect to the Common Securities and its consequences,
provided that, if the underlying Acceleration Event:
(i) is not waivable under the Indenture except where the Holders of
the Common Securities are deemed to have waived such Acceleration Event
under the Declaration as provided in this Section 2.6(b), the Acceleration
Event under the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of a Super Majority of the
Securities, except where the Holders of the Common Securities are deemed
to have waived such Acceleration Event under the Declaration as provided
in this Section 2.6(b), only the Holders of at least the proportion of the
Common Securities that the relevant Super Majority represents of the
aggregate outstanding beneficial interests in the Forward Contract
represented by all the Common Securities outstanding may waive such
Acceleration Event in respect of the Common Securities under the
Declaration;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Acceleration Event and all Acceleration Events with respect to
the Common Securities and their consequences until all Acceleration Events with
respect to the TARGETS have been cured, waived or otherwise eliminated, and
until such Acceleration Events with respect to the TARGETS 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 TARGETS and only the Holders of
the TARGETS will have the right to direct the Institutional Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of
10
<PAGE> 17
ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
the waiver of an Acceleration Event by the Holders of a Majority of the Common
Securities, any such default shall cease to exist and any Acceleration Event
with respect to the Common Securities arising therefrom shall be deemed to have
been cured for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other default or Acceleration Event with respect to
the Common Securities or impair any right consequent thereon.
(c) A waiver of an Acceleration Event under the Indenture by the
Institutional Trustee at the direction of the Holders of the TARGETS,
constitutes a waiver of the corresponding Acceleration Event under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Acceleration Event; Notice.
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Acceleration Event, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of (i) all defaults with
respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of
such notice (the term "defaults" for the purposes of this Section 2.7(a) being
hereby defined to be an Acceleration Event as defined in the Indenture not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein) and (ii) any notice of default received
from the Indenture Trustee with respect to any Forward Contract Certificate
which notice from the Institutional Trustee to the Holders shall state that an
Acceleration Event under the Indenture also constitutes an Acceleration Event
with respect to the Securities; provided that, except for a default in the
payment of amounts due at maturity of any of the Trust Certificates, the
Institutional Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge
of any default except any default as to which the Institutional Trustee shall
have received written notice or of which a Responsible Officer of the
Institutional Trustee charged with the administration of the Declaration shall
have actual knowledge.
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<PAGE> 18
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "TARGETS TRUST I," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Delaware Trustee, the Institutional Trustee and the Holders of Securities. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is 388 Greenwich
Street, New York, New York 10013. On ten Business Days written notice to the
Holders of Securities, the Delaware Trustee and the Institutional Trustee, the
Regular Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue
and sell the Securities and use at least 85% of the proceeds from such sale to
purchase the Forward Contract Certificates and to use not more than 15% of such
proceeds to acquire the Treasury Securities, and (b) except as otherwise limited
herein, to engage in only those other activities necessary, or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as
specified in this Declaration.
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<PAGE> 19
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Forward
Contract Certificates, the Treasury Securities and the Institutional Trustee
Account or as otherwise provided in this Declaration, legal title to all assets
of the Trust shall be vested in the Trust. The Holders shall not have legal
title to any part of the assets of the Trust, but shall have an undivided
beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that the Trust may issue no more than one
series of TARGETS and no more than one series of Common Securities, and,
provided further, that there shall be no interests in the Trust other than
the Securities, and the issuance of Securities shall be limited to a
simultaneous issuance of the TARGETS and the Common Securities on the
Closing Date and any other date TARGETS are sold pursuant to any
overallotment option granted to any underwriters in accordance with the
terms of an underwriting agreement;
(b) in connection with the issue and sale of the TARGETS, at the
direction of the Sponsor, to:
(i) execute and file with the Commission on behalf of the
Trust a registration statement on Form S3 or on another appropriate
form, or a registration statement under Rule 462(b) of the
Securities Act, in each case prepared by the Sponsor, including any
preeffective or posteffective amendments thereto, relating to the
registration under the Securities Act of the TARGETS;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in
order to qualify or register all or part of the TARGETS in any
jurisdiction in which the Sponsor has determined to qualify or
register such TARGETS for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the Chicago Board Options Exchange, any other national
stock exchange or national securities market for listing upon notice
of issuance of any TARGETS;
(iv) execute and file with the Commission on behalf of the
Trust a registration statement on Form 8A, prepared by the Sponsor,
including any
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<PAGE> 20
pre-effective or posteffective amendments thereto, relating to the
registration of the TARGETS under Section 12(b) of the Exchange Act;
and
(v) deliver an underwriting agreement providing for the sale
of the TARGETS;
(c) to enter into the Forward Contract and acquire the Forward
Contract Certificates and the Treasury Securities with the proceeds of the
sale of the TARGETS and the Common Securities and to take all actions and
perform such duties as may be required pursuant to the terms of the
Forward Contract Certificates and the Treasury Securities; provided,
however, that the Regular Trustees shall cause legal title to the Forward
Contract Certificates and the Treasury Securities to be held of record in
the name of the Institutional Trustee for the benefit of the Holders of
the Securities;
(d) upon an Acceleration Event, to (i) give the Sponsor and the
Institutional Trustee prompt written notice of the occurrence of such
Acceleration Event; and (ii) give written instructions to the
Institutional Trustee to (a) liquidate the Treasury Securities by
soliciting at least three all-cash bids (one of which may be from an
affiliate of the Sponsor) and selling and transferring the Treasury
Securities to the highest of the three bidders, and (b) distribute the net
proceeds therefrom (the "Treasury Proceeds") and the Accelerated Maturity
Payment to holders of the Trust Securities, provided that the Regular
Trustees shall consult with the Sponsor and the Institutional Trustee
before taking or refraining from taking any ministerial action in relation
to an Acceleration Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of ss.316(c) of the Trust Indenture Act,
Distributions, voting rights, and to issue relevant notices to the Holders
of Securities;
(f) to take all actions and perform such duties as may be required
pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Institutional Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
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(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be
executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the TARGETS or to enable the Trust to effect the purposes for which the
Trust was created;
(n) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
and
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust;
provided that such action does not adversely affect the
interests of Holders;
(o) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust; and
(p) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers specified in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3,
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and the Regular Trustees shall not take any action that is inconsistent with the
purposes and functions of the Trust specified in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Institutional Trustee specified in Section
3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Company.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee in its role as Institutional Trustee) shall not, engage in
any activity other than as required or authorized by this Declaration. In
particular, the Trust shall not and the Trustees (including the Institutional
Trustee in its role as Institutional Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from the Forward
Contract Certificates and the Treasury Securities, but shall promptly
distribute all such proceeds to Holders of Securities pursuant to the
terms of this Declaration and of the Securities;
(ii) dispose of the Forward Contract Certificates prior to earlier
of the Maturity Date or an Accelerated Maturity Date or dispose of any of
the Treasury Securities prior to an Accelerated Maturity Date;
(iii) acquire any assets other than as expressly provided herein;
(iv) possess Trust property for other than a Trust purpose;
(v) make any loans or incur any indebtedness;
(vi) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vii) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(viii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of exercising any trust or power
conferred upon the Institutional Trustee with respect to the Forward
Contract, the Forward Contract Certificates or the Treasury Securities,
(B) waive any past default that is waivable under the Forward Contract,
the Forward Contract Certificates or the Treasury Securities, (C) exercise
any right to rescind or annul any declaration that the Maturity Payment or
Accelerated Maturity Payment shall be due and payable in regard to the
Forward Contract Cer-
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tificates or (D) consent to any amendment, modification or termination of
the Indenture or the Forward Contract Certificates where such consent
shall be required unless the Trust shall have obtained an opinion of
nationally recognized independent tax counsel experienced in such matters
to the effect that as a result of such action, the Trust will not fail to
be classified as a grantor trust for United States federal income tax
purposes.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Forward Contract Certificates and the
Treasury Securities shall be owned by and held of record in the name of the
Institutional Trustee in trust for the benefit of the Holders of the Securities.
The right, title and interest of the Institutional Trustee to the Forward
Contract Certificates and the Treasury Securities shall vest automatically in
each Person who may hereafter be appointed as Institutional Trustee in
accordance with Section 5.6. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Forward
Contract Certificates or the Treasury Securities have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Forward Contract Certificates or the Treasury Securities to
the Regular Trustees or to the Delaware Trustee (if the Institutional Trustee
does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Institutional Trustee Account") in the name of and under the
exclusive control of the Institutional Trustee on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in respect
of the Forward Contract Certificates and the Treasury Securities held by
the Institutional Trustee, deposit such funds into the Institutional
Trustee Account and make payments to the Holders of the Securities from
the Institutional Trustee Account in accordance with Section 6.1. Funds in
the Institutional Trustee Account shall be held uninvested until disbursed
in accordance with this Declaration. The Institutional Trustee Account
shall be an account that is maintained with a banking institution the
rating on whose long-term unsecured indebtedness assigned by a "nationally
recognized statistical rating organization," as that term is defined for
purposes of Rule 436(g)(2) under the Securities Act, is at least equal to
the rating assigned to unsubordinated indebtedness of SSBH by a nationally
recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to carry out the functions described in clause (i) above;
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall
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be necessary or appropriate to effect the distribution of the Accelerated
Maturity Payment and the Treasury Proceeds to Holders of Securities upon
the occurrence of an Acceleration Event or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any
Legal Action which arises out of or in connection with an Acceleration Event of
which a Responsible Officer of the Institutional Trustee has actual knowledge or
the Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Forward Contract under
the Indenture and, if an Acceleration Event actually known to a Responsible
Officer of the Institutional Trustee occurs and is continuing, the Institutional
Trustee shall, for the benefit of Holders of the Securities, enforce its rights
as holder of Forward Contract Certificates subject to the rights of the Holders
pursuant to the terms of such Securities, this Declaration, the Business Trust
Act and the Trust Indenture Act.
(h) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of the Treasury Securities
and the Institutional Trustee shall, for the benefit of the Holders of the
Securities, enforce its rights as a holder of the Treasury Securities subject to
the rights of the Holders pursuant to the terms of such Securities, this
Declaration, the Business Trust Act and the Trust Indenture Act.
(i) The Institutional Trustee may authorize one or more Persons
(each, a "Paying Agent") to pay Distributions on behalf of the Trust with
respect to all Securities and any such Paying Agent shall comply with ss. 317(b)
of the Trust Indenture Act. Any Paying Agent may be removed by the Institutional
Trustee at any time and a successor Paying Agent or additional Paying Agents may
be appointed at any time by the Institutional Trustee.
(j) Subject to this Section 3.8, the Institutional Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
Trustees specified in Section 3.6.
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The Institutional Trustee must exercise the powers specified in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee.
(a) The Institutional Trustee, before the occurrence of any
Acceleration Event and after the curing of all Acceleration Events that may have
occurred, shall undertake to perform only such duties as are specifically
specified in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Acceleration Event has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Acceleration Event and after the
curing or waiving of all such Acceleration Events that may have occurred:
(A) the duties and obligations of the Institutional Trustee
shall be determined solely by the express provisions of this
Declaration and the Institutional Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically specified in this Declaration, and no implied covenants
or obligations shall be read into this Declaration against the
Institutional Trustee; and
(B) in the absence of bad faith on the part of the
Institutional Trustee, the Institutional Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Institutional Trustee,
the Institutional Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Declaration;
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(ii) the Institutional Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Institutional
Trustee, unless it shall be proved that the Institutional Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority of the
Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee, or
exercising any trust or power conferred upon the Institutional Trustee
under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Institutional Trustee against such risk or
liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Forward Contract
Certificates, the Treasury Securities and the Institutional Trustee
Account shall be to deal with such property in a similar manner as the
Institutional Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Institutional Trustee under this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of the
Forward Contract, the Forward Contract Certificates, the Treasury
Securities or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Sponsor. Money held by the Institutional Trustee need not be segregated
from other funds held by it except in relation to the Institutional
Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law;
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor;
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(ix) the granting of any right to the Institutional Trustee
hereunder shall not be deemed to impose on the Institutional Trustee an
obligation to exercise such rights subject to Section 3.09(b)(x);
(x) the Institutional Trustee shall not be obligated to exercise any
remedy or take any action hereunder unless directed to do so by the Holders of a
Majority of the Securities and shall have no liability for its failure to act
pending receipt of any such direction.
This Section 3.09 is in furtherance of and subject to Sections 315
and 316 of the Trust Indenture Act.
SECTION 3.10 Certain Rights of Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction, request, certification, order or act of the
Sponsor or the Regular Trustees contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate and any Resolution of
the Board of Directors shall be sufficiently evidenced by a Board
Resolution;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other
experts and the advice or opinion of such counsel and experts with respect
to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion, such counsel may
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be counsel to the Sponsor or any of its Affiliates, and may include any of
its employees. The Institutional Trustee shall have the right at any time
to seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Institutional Trustee security and indemnity, reasonably
satisfactory to the Institutional Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Institutional Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Institutional Trustee provided, that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Institutional Trustee, upon the
occurrence of an Acceleration Event, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit;
(viii) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Institutional
Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Institutional
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Institutional Trustee's or its agent's taking such
action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Institutional Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion of Securities as would be entitled to
direct the Institutional Trustee under the terms of the Securities in
respect of such remedy,
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right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii)
shall be protected in conclusively relying on or acting in or accordance
with such instructions; and
(xi) except as otherwise expressly provided by this Declaration, the
Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Institutional Trustee described in this Declaration.
Except as specified in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration statement referred to in Section 3.6(b)(i),
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
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SECTION 3.14 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for five (5) years from the Closing Date.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the
Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the TARGETS and the Common
Securities (together, the "Successor Securities") so long as such
series of Successor Securities rank the same as the series of
Securities for which it is substituted ranks with respect to
Distributions and payments upon liquidation and otherwise;
(ii) the Company expressly acknowledges a trustee of the Successor
Entity that possesses the same powers and duties as the Institutional
Trustee as the Holder of the Forward Contract Certificates and the
Treasury Securities;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with any other organization on which the TARGETS
are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does
not cause the TARGETS (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of
the Securities (including any Successor Securities) in any material
respect (other than with respect to any
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dilution of such Holders' interests in the new entity as a result of such
merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation or replacement
will not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities)
in any material respect (other than with respect to any dilution of
the Holders' interest in the new entity);
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the TARGETS Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, without
the consent of Holders of all of the Securities, consolidate, amalgamate, merge
with or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if in the opinion of
a nationally recognized independent tax counsel experienced in such matters,
such consolidation, amalgamation, merger or replacement would cause the Trust or
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date, the Sponsor will purchase all of the Common
Securities issued by the Trust in an amount equal to at least 3% of the capital
of the Trust, at the same time as the TARGETS are sold.
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SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the TARGETS, the Sponsor
shall have the exclusive right and responsibility to engage in the following
activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S3 or on another appropriate form, or a
registration statement under Rule 462(b) of the Securities Act, including
any pre-effective or posteffective amendments thereto, relating to the
registration under the Securities Act of the TARGETS;
(b) to determine the jurisdictions in which to take appropriate
action to qualify or register for sale all or part of the TARGETS and to
do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such jurisdictions;
(c) to prepare for filing by the Trust an application to the Chicago
Board Options Exchange, any other national stock exchange or national
securities exchange for listing upon notice of issuance of any TARGETS;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8A, including any preeffective or
posteffective amendments thereto, relating to the registration of the
TARGETS under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of an underwriting agreement or
agreements providing for the sale of the TARGETS.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees initially shall be four (4), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority of the
Common Securities
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voting as a class at a meeting of the Holders of the Common Securities or
by written consent of such holders in lieu of a meeting,
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, shall be an entity which has its principal place of business in
the State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
"Regular Trustee"); and (3) one Trustee shall be the Institutional Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, the Delaware Trustee shall
be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable law,
then the Institutional Trustee shall also be the Delaware Trustee and Section
3.11 shall have no application.
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee that shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 5.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as specified in its most recent report of condition so
published; and
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(iii) if the Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-5 and to the extent Rule 3a-5 requires
a trustee having certain qualifications to hold title to the "eligible
assets" of the Trust, the Institutional Trustee shall possess those
qualifications.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 5.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect specified in Section
5.6(c).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee and the Holders of the Common Securities (as if
such Holders were the obligor referred to in ss. 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of ss. 310(b) of the Trust
Indenture Act.
(d) The TARGETS Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first provision
contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be as specified in
Section 5.5 hereof.
SECTION 5.4 Qualifications of Regular Trustees and
Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Institutional Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees.
(a) The initial Regular Trustees shall be:
Michael J. Day
Charles W. Scharf
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
The initial Institutional Trustee shall be:
The Chase Manhattan Bank
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(b) Except as expressly specified in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(c) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall be signed by all of the
Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority of the Common Securities voting as a class at a meeting of the
Holders of the Common Securities or by written consent of such holders in
lieu of a meeting.
(b)(i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Institutional Trustee under Section 5.3 (a
"Successor Institutional Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Institutional
Trustee and delivered to the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
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(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Institutional Trustee and delivered to the Trust, the
Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of
the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor
Institutional Trustee as the case may be if the Institutional Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust of an
instrument of resignation, the resigning Institutional Trustee or Delaware
Trustee, as applicable, may petition any court of competent jurisdiction for
appointment of a Successor Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
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SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
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SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as specified herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities. Distributions shall be
made on the TARGETS and the Common Securities in accordance with the preferences
specified in their respective terms. If and to the extent that (i) the Company
makes a payment in respect of the Forward Contract Certificates held by the
Institutional Trustee or (ii) the issuer of the Treasury Securities makes a
payment in respect of the Treasury Securities held by the Institutional Trustee
(the amount of any such payments described in the foregoing clauses (i) and (ii)
is referred to herein as a "Payment Amount"), the Institutional Trustee shall
and is directed to make a distribution (a "Distribution") of the Payment Amount
to the Holders on a Pro Rata basis.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall, on behalf of the Trust, issue (i)
one class of securities, known as the Targeted Growth Enhanced Terms
Securities(SM) ("TARGETS") representing undivided beneficial interests in the
assets of the Trust having such terms as are specified in Annex I and (ii) one
class of common securities (the "Common Securities") representing undivided
beneficial interests in the assets of the Trust having such terms as are
specified in Annex I. The Trust shall issue no securities or other interests in
the assets of the Trust other than the TARGETS and the Common Securities.
(b) The Trust Certificates shall be signed on behalf of the Trust by
a Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Securities shall cease to be such Regular
Trustee before the Trust Certificates so signed shall be delivered by the Trust,
such Trust Certificates nevertheless may be delivered as though the person who
signed such Trust Certificates had not ceased to be such Regular Trustee; and
any Trust Certificate may be signed on behalf of the Trust by such persons who,
at the actual date of execution of such Security, shall be the Regular Trustees
of the Trust, although at the date of the execution and delivery of the
Declaration any such person was not such a Regular Trustee. Trust Certificates
shall be printed, lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Regular Trustees, as evidenced by
their execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation of any stock exchange on which Securities may be
listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a TARGETS
Beneficial Owner in accordance with the terms of this Declaration, shall be
deemed to have expressly assented and agreed to the terms of, and shall be bound
by, this Declaration.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to any Holder of the Common Securities or the
Sponsor; the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of any
Holder of the Common Securities, the Sponsor or the Trust;
(iv) upon the occurrence and continuation of an Acceleration Event
pursuant to which the Trust is dissolved in accordance with the terms of
the Securities and the Accelerated Maturity Payment and the Treasury
Proceeds shall have been distributed to the Holders of Securities in
exchange for all of the Securities;
(v) upon distribution to the Holders of the Maturity Payment and the
final payment due in respect of the Treasury Securities;
(vi) before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust specified in
Section 3.14; provided, that so long as any TARGETS are outstanding and
are not held entirely by SSBH or an affiliate or related party, the Trust
may not voluntarily liquidate, dissolve, windup or terminate except in
connection with the occurrence of an Acceleration Event.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
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ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions specified in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, TARGETS shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party
may only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided that, any such transfer is subject to the condition precedent
that the transferor obtain the written opinion of nationally recognized
independent counsel experienced in such matters that such transfer would not
cause more than an insubstantial risk that:
(i) the Trust would fail to be classified for United States federal
income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee
would become an Investment Company.
SECTION 9.2 Transfer of Trust Certificates.
The Regular Trustees shall provide for the registration of Trust
Certificates and of transfers of Trust Certificates, which will be effected
without charge but only upon payment (with such indemnity as the Regular
Trustees may require) in respect of any tax or other government charges that may
be imposed in relation to it. Upon surrender for registration of transfer of any
Trust Certificate, the Regular Trustees shall cause one or more new Trust
Certificates to be issued in the name of the designated transferee or
transferees. Every Trust Certificate surrendered for registration of transfer
shall be accompanied by a written instrument of transfer in form satisfactory to
the Regular Trustees duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Trust Certificate surrendered for registration of
transfer shall be canceled by the Regular Trustees. A transferee of a Trust
Certificate shall be entitled to the rights and subject to the obligations of a
Holder hereunder upon the receipt by such transferee of a Trust Certificate. By
acceptance of a Trust Certificate, each transferee shall be deemed to have
agreed to be bound by this Declaration.
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SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Trust
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Trust Certificate and of the Securities represented by such
Trust Certificate for purposes of receiving Distributions and for all other
purposes whatsoever and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such Trust Certificate or in the
Securities represented by such Trust Certificate on the part of any Person,
whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Unless otherwise specified in the terms of the TARGETS, the TARGETS
Certificates, on original issuance, will be issued in the form of one or more,
fully registered, global certificates (each a "Global Certificate"), to be
delivered to DTC, the initial Clearing Agency, by, or on behalf of, the Trust.
Such Global Certificates shall initially be registered on the books and records
of the Trust in the name of Cede & Co., the nominee of DTC, and no TARGETS
Beneficial Owner will receive a definitive TARGETS Certificate representing such
TARGETS Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.7. Unless and until definitive, fully registered TARGETS
Certificates (the "Definitive TARGETS Certificates") have been issued to the
TARGETS Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the TARGETS and
the sole holder of the Global Certificates and shall have no obligation to
the TARGETS Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the TARGETS Beneficial Owners shall be exercised
only through the Clearing Agency and shall be limited to those established
by law and agreements between such TARGETS Beneficial Owners and the
Clearing Agency and/or the Clearing Agency Participants and the Clearing
Agency shall receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants. The Clearing Agency
will make book entry transfers among the Clearing Agency Participants.
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SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the TARGETS Holders is
required under this Declaration, unless and until Definitive TARGETS
Certificates shall have been issued to the TARGETS Beneficial Owners pursuant to
Section 9.7, the Regular Trustees shall give all such notices and communications
specified herein to be given to the TARGETS Holders to the Clearing Agency, and
upon doing so shall have no obligations to give any additional notice to the
TARGETS Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the TARGETS, the Regular Trustees may, in
their sole discretion, appoint a successor Clearing Agency with respect to such
TARGETS.
SECTION 9.7 Definitive TARGETS Certificates.
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the TARGETS and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant
to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with
respect to the TARGETS.
then:
(c) Definitive TARGETS Certificates shall be prepared by the Regular
Trustees on behalf of the Trust with respect to such TARGETS; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive TARGETS Certificates to be delivered to TARGETS
Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any delay
in delivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, said instructions of the Clearing
Agency. The Definitive TARGETS Certificates shall be printed, lithographed
or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the
Regular Trustees may deem appropriate, or as may be required to comply
with
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any law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which TARGETS may be listed,
or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Trust Certificates.
If:
(a) any mutilated Trust Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive evidence to
their satisfaction of the destruction, loss or theft of any Trust
Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Trust Certificate shall have been
acquired by a bona fide purchaser, any Regular Trustee on behalf of the Trust
shall execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
denomination. In connection with the issuance of any new Trust Certificate under
this Section 9.8, the Regular Trustees may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Trust Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly specified in this Declaration, the TARGETS
Guarantee and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which return shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
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(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the TARGETS shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
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(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Company shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust,
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and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(ii) The Company shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason of the fact that
he is or was a Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a), or in defense of any claim, issue or matter therein, he
shall be indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Company only as
authorized in the specific case upon a determination that indemnification of the
Company Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct specified in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority vote of a
quorum consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the 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 this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Company if a determination is reasonably and
promptly made (i) by the Regular Trustees by a ma-
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jority vote of a quorum of disinterested Regular Trustees, (ii) if such a quorum
is not obtainable, or, even if obtainable, if a quorum of disinterested Regular
Trustees so directs, by independent legal counsel in a written opinion or (iii)
the Common Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time such
determination is made, such Company Indemnified Person acted in bad faith or in
a manner that such person did not believe to be in or not opposed to the best
interests of the Trust, or, with respect to any criminal proceeding, that such
Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or TARGETS Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Company or TARGETS Holders of the
Trust or otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. All rights to indemnification
under this Section 10.4(a) shall be deemed to be provided by a contract between
the Company and each Company Indemnified Person who serves in such capacity at
any time while this Section 10.4(a) is in effect. Any repeal or modification of
this Section 10.4(a) shall not affect any rights or obligations then existing.
(vii) The Company may purchase and maintain insurance on behalf of
any person who is or was a Company Indemnified Person against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Company would have the power to indemnify
him against such liability under the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
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(b) The Company agrees to indemnify the (i) Institutional Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Institutional Trustee and
the Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Institutional Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to
hold each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration or the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as specified in this Section 10.4(b)
shall survive the satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
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SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with United States generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the holders of Securities, to the extent, if any, required by the Trust
Indenture Act, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the Trust
as of the end of such Fiscal Year, and the related statements of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Forward Contract Certificates or the Treasury Securities held
by the Institutional Trustee shall be made directly to the Institutional Trustee
Account and no other funds of the Trust shall be deposited in the Institutional
Trustee Account. The sole signatories for such accounts shall be designated by
the Regular Trustees; provided, however, that the Institutional Trustee shall
designate the signatories for the Institutional Trustee Account.
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SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made to any Holder, the Trust may reduce subsequent
Distributions to such Holder by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the Institutional
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Institutional
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor
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that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Institutional
Trustee, the Institutional Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust and which opinion shall be prepared at the expense of
the Sponsor) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be specified in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article
V to increase or decrease the number of, and appoint and remove Trustees shall
not be amended without the consent of the Holders of a Majority of the Common
Securities; and
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(g) subject to Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body, court,
government agency or regulatory authority which amendment does not have a
material adverse effect on the right, preferences or privileges of the
Holders; and
(v) to modify, eliminate and add to any provision of the Declaration
to such extent as may be reasonably necessary to effectuate any of the
foregoing or to otherwise comply with applicable law.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the TARGETS are
listed or admitted for trading. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of Securities
representing at least 10% of such class of Securities. Such direction shall be
given by delivering to the Regular Trustees one or more notices in a writing
stating that the signing Holders of Securities wish to call a meeting and
indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Security Certificates held by the Holders of Securities exercising the right to
call a meeting and only those Securities specified shall be counted for purposes
of determining whether the required percentage specified in the second sentence
of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange or national securities
market on which the TARGETS are listed or admitted for trading, such
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vote, consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning
not less than the minimum amount of Securities that would be necessary to
authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation
and the Holders of the Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange or national securities market on which the TARGETS are then
listed or trading, otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of
any such right to vote.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail postage prepaid, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address specified below (or such other address as the
Trust may give notice of to the Holders of the Securities):
388 Greenwich Street
New York, New York 10013
(b) if given to the Delaware Trustee, at the mailing address
specified below (or such other address as Delaware Trustee may give notice
of to the Holders of the Securities):
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Department
(c) if given to the Institutional Trustee, at the mailing address
specified below (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities):
450 West 33rd Street 15th Floor
New York, New York 10001
Attention: Structured Finance Services
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor specified below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
388 Greenwich Street
New York, New York 10013
(e) if given to any other Holder, at the address specified on the
books and records of the Trust.
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All notices provided for in this Declaration shall be deemed to have
been given when received in person, telecopied with receipt confirmed, or mailed
by first class mail, postage prepaid except that if a notice or other document
is refused delivery or cannot be delivered because of a changed address of which
no notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION 13.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 13.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 13.4 Headings.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 13.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 13.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 13.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read
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as though one, and they shall have the same force and effect as though all of
the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
--------------------------------------
Michael J. Day, as Regular Trustee
--------------------------------------
Charles W. Scharf, as Regular Trustee
CHASE MANHATTAN BANK DELAWARE
as Delaware Trustee
By:
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Institutional Trustee
By:
-----------------------------------
Name: Cynthia Kerpen
Title: Trust Officer
SALOMON SMITH BARNEY HOLDINGS INC.
as Sponsor
By:
-----------------------------------
Name:
Title:
<PAGE> 59
SCHEDULE I
TREASURY SECURITIES
All forms specified are for stripped principal or interest components of
U.S. Treasury debt obligations.
Par Zero-Coupon Strip Rate Price Cost
- --- ----------------- ---- ----- ----
<PAGE> 60
ANNEX I
TERMS OF
THE TARGETS
AND
COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of _______ __, 1998 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the TARGETS and the Common Securities are set
out below (each capitalized term used but not defined herein has the meaning
specified in the Declaration or, if not defined in such Declaration, as defined
in the Prospectus referred to below):
1. Designation and Number.
(a) TARGETS. Securities of the Trust are hereby designated for the
purposes of identification only as "Targeted Growth Enhanced Terms Securities"
(the "TARGETS"). The certificates evidencing the TARGETS shall be substantially
in the form of Exhibit A1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice or to conform to the rules of any stock exchange or national securities
market on which the TARGETS are listed.
(b) Common Securities. _______ Securities of the Trust are hereby
designated for the purposes of identification only as "Trust Common Securities"
(the "Common Securities" and, together with the TARGETS, the "Securities"). The
certificates evidencing the Common Securities shall be substantially in the form
of Exhibit A2 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be a Pro Rata
portion of (i) all monies received by the Trust (a) as quarterly distributions
in respect of the Treasury Securities and (b) as Yield Enhancement Payments with
respect to the Forward Contract (together, the "Periodic Distributions"), (ii)
the Maturity Payment or the Accelerated Maturity Payment, as the case may be,
with respect to the Forward Contract and (iii) upon the sale of the Treasury
Securities by the Institutional Trustee following an Acceleration Event, the net
proceeds received by the Trust (the "Treasury Proceeds") from the sale of the
Treasury Securities upon an Acceleration Event. A Distribution is payable only
to the extent that monies are received in respect of the Forward Contract
Certificates or Treasury Securities held by the Institutional Trustee on behalf
of the Trust and to the extent the Trust has funds available therefor.
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(b) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust at the close of
business on the relevant record dates. While the TARGETS remain in book-entry
only form, the relevant record dates for Distributions of the Maturity Payment
or Accelerated Maturity Payment shall be one Business Day prior to the date such
Maturity Payment or Accelerated Maturity Payment, as the case may be, is
received by the Trust with respect to the Forward Contract Certificates. While
the TARGETS remain in book-entry only form, the relevant record dates for
Periodic Distributions shall be one Business Day prior to the relevant payment
dates, which payment dates shall correspond to the dates on which payments are
made in respect of, and in accordance with the terms of, the Treasury Securities
and the Forward Contract Certificates. While the TARGETS remain in book-entry
only form, the relevant record date for Distributions of the Treasury Proceeds
shall be the date that is one Business Day prior to the date such Treasury
Proceeds are received by the Trust upon liquidation of the Treasury Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment in respect of the TARGETS will be made as
described under the heading "Description of the TARGETS -- book-entry Only
Issuance" in the Prospectus dated _________ ___, 1998 (the "Prospectus"), of the
Trust included in the Registration Statement on Form S3 of the Sponsor and the
Trust with respect to the TARGETS. The relevant record dates for the Common
Securities shall be the same record dates as for the TARGETS. If the TARGETS
shall not continue to remain in book-entry only form, the relevant record dates
for any Distributions shall conform to the rules of any securities exchange or
national securities market on which they are listed and, if none, shall be
selected by the Regular Trustees, which dates shall be at least 10 Business Days
but no more than 15 days before the relevant payment dates, which payment dates
shall correspond to the dates on which payments are made in respect of, and in
accordance with the terms of, the Treasury Securities and the Forward Contract
Certificates and which record date shall be confirmed by the Regular Trustees in
writing to the Institutional Trustee. Distributions payable on any Securities
that are not punctually paid on any Distribution payment date, as a result of
either the Company having failed to make a payment under the Forward Contract or
the issuer of the Treasury Securities having failed to make a payment in respect
of the Treasury Securities, will cease to be payable to the Person in whose name
such Securities are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such Securities
are registered on a special record date which shall be the date on which the
amount of the defaulted Distributions are actually received by the Trust. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(c) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
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3. Liquidation Distribution Upon Dissolution.
Except as otherwise provided herein, in the event of any voluntary
or involuntary dissolution, winding-up or termination of the Trust, the Holders
of the Securities on the date of the dissolution, winding-up or termination, as
the case may be, will be entitled to receive distributions out of the assets of
the Trust available for distribution to Holders of Securities after satisfaction
of liabilities of creditors of the Trust, on a Pro Rata basis.
4. Distribution Upon an Acceleration Event.
(a) If, at any time, a Tax Event, an Investment Company Event or a
Bankruptcy Event (each as defined herein and each an "Acceleration Event") shall
occur and be continuing, the Regular Trustees shall give written instructions to
the Institutional Trustee to (a) dissolve the Trust, liquidate the Treasury
Securities by soliciting at least three all cash bids (one of which may be from
an affiliate of the Sponsor) an and selling and transferring the Treasury
Securities to the highest of the three bidders and, (b) after satisfaction of
creditors, cause to be distributed as soon as is practicable following the
occurrence of such Acceleration Event, to the Holders of the Securities in
liquidation of such Holders' interests in the Trust on a Pro Rata basis, of (i)
the Accelerated Maturity Payment and (ii) the Treasury Proceeds.
"Tax Event" means that SSBH shall have requested and received and
shall have delivered to the Regular Trustees an opinion of nationally recognized
independent tax counsel experienced in such matters to the effect that there has
been (a) an amendment to, change in or announced proposed change in the laws (or
any regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) a judicial decision interpreting,
applying, or clarifying such laws or regulations, (c) an administrative
pronouncement or action that represents an official position (including a
clarification of an official position) of the governmental authority or
regulatory body making such administrative pronouncement or taking such action,
or (d) a threatened challenge asserted in connection with an audit of SSBH or
any of its subsidiaries, or the Trust, or a threatened challenge asserted in
writing against any other taxpayer that has raised capital through the issuance
of securities that are substantially similar to the Forward Contract
Certificates or the TARGETS, which amendment or change is adopted or which
proposed change, decision or pronouncement is announced or which action,
clarification or challenge occurs on or after the date of the Prospectus
relating to the original issuance of the TARGETS (collectively a "Tax Action"),
which Tax Action relates to any of the items described in (i) and (ii) below,
and that there is more than an insubstantial risk that (i) the Trust is, or will
be subject to United States federal income tax with respect to income accrued or
received in respect of the Forward Contract or the Treasury Securities, or (ii)
the Trust is, or will be subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Investment Company Event" means that SSBH shall have requested and
received and shall have delivered to the Regular Trustees an opinion of
nationally recognized in-
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dependent legal counsel experienced in such matters to the effect that as a
result of the occurrence on or after the date hereof of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority, the
Trust is or will be considered an "investment company" which is required to be
registered under the 1940 Act.
"Bankruptcy Event" means either of the following shall have
occurred: (i) the entry of a decree or order for relief in respect of the
Company by a court having jurisdiction in the premises in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
90 consecutive days; or (ii) the commencement by the Company of a voluntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law, or the
consent by it to the entry of an order for relief in an involuntary case under
any such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Company or
of any substantial part of its property, or the making by it of an assignment
for the benefit of its creditors, or the admission by it is in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any action.
On and from the date fixed by the Regular Trustees for any
dissolution and distribution pursuant to this paragraph 4: (i) the Securities
will no longer be deemed to be outstanding, (ii) DTC or its nominee (or any
successor Clearing Agency or its nominee), as the record Holder of the TARGETS,
will receive its Pro Rata portion of (a) the Accelerated Maturity Payment and
(b) the Treasury Proceeds, in each case to be delivered upon such distribution
and (iii) any certificates representing Securities, except for certificates
representing TARGETS held by DTC or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent the right to receive a Pro
Rata portion of (a) the Accelerated Maturity Payment and (b) the Treasury
Proceeds.
(b) Acceleration Event Distribution procedures will be as follows:
(i) Notice of any Acceleration Event (each, an "Acceleration
Notice") will be given by the Regular Trustees on behalf of the Trust by
mail to each Holder of Securities as promptly as practicable following the
occurrence of such Acceleration Event. Each Acceleration Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust.
(ii) If an Acceleration Event occurs, then (A) while the TARGETS are
in book-entry only form, with respect to the TARGETS, by 12:00 noon, New
York City
I-4
<PAGE> 64
time, on the Accelerated Maturity Date, provided, that the Company has
paid the Institutional Trustee by 10:00 a.m. on such date an amount of
cash equal to the Accelerated Maturity Payment, the Institutional Trustee
will deposit irrevocably with DTC or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the Pro Rata portion of the
sum of the Accelerated Maturity Payment and the Treasury Proceeds
applicable to the TARGETS and will give DTC (or any successor Clearing
Agency) irrevocable instructions and authority to pay such Pro Rata
portion of the sum of the Accelerated Maturity Payment and the Treasury
Proceeds to the Holders of the TARGETS, and (B) with respect to TARGETS
issued in definitive form and Common Securities, provided that the Company
has paid the Institutional Trustee by 10:00 a.m. on such date an amount of
cash equal to the Pro Rata amount of the Accelerated Maturity Payment
applicable to such TARGETS issued in definitive form and Common
Securities, the Institutional Trustee will pay such Pro Rata portion of
the Accelerated Maturity Payment and a Pro Rata portion of the Treasury
Proceeds to the Holders of such Securities by check mailed to the address
of the relevant Holder appearing on the books and records of the Trust on
the relevant record date. If any Accelerated Maturity Date is not a
Business Day, then payment of the sum of the Accelerated Maturity Payment
and the Treasury Proceeds payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such Accelerated Maturity Date.
(iii) Acceleration Notices shall be sent by the Regular Trustees on
behalf of the Trust to (A) in respect of the TARGETS, DTC or its nominee
(or any successor Clearing Agency or its nominee) if the Global TARGETS
Certificates have been issued or, if Definitive TARGETS Certificates have
been issued, to the Holder thereof, and (B) in respect of the Common
Securities to the Holder thereof.
(iv) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may at any time and from time to time purchase outstanding
TARGETS by tender, in the open market or by private agreement.
5. Voting Rights TARGETS.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the TARGETS will have no
voting rights.
(b) Subject to the requirements specified in this paragraph, the
Holders of a Majority of the TARGETS, voting separately as a class, may direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or direct the exercise of any trust or
power conferred upon the Institutional Trustee under the Declaration,
I-5
<PAGE> 65
including the right to direct the Institutional Trustee, as holder of the
Forward Contract Certificates and the Treasury Securities, to (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee, or exercise any trust or power conferred on the Indenture
Trustee with respect to the Forward Contract Certificates, (ii) direct the time,
method and place of conducting any proceeding for any remedy available to the
Institutional Trustee or exercise any trust or power conferred on the
Institutional Trustee with respect to the Treasury Securities, (iii) waive the
consequences of any Acceleration Event under the Indenture that are waivable
under the Indenture, (iv) exercise any right to rescind or annul a declaration
that the Accelerated Maturity Payment shall be due and payable, or (v) consent
to any amendment, modification or termination of the Indenture or the Forward
Contract where such consent shall be required provided, however, that, where a
consent or action would require the consent or act of Holders of more than a
majority (determined in accordance with the Indenture) of the outstanding
Forward Contract Certificates (a "Super Majority"), such consent or action shall
not be effective until Holders of at least the proportion of the TARGETS that
the relevant Super Majority represents of the aggregate beneficial interests in
the Forward Contract represented by all the TARGETS outstanding shall have
consented to such action or provided such consent. The Institutional Trustee
shall not revoke any action previously authorized or approved by a vote of the
Holders of the TARGETS. 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 Forward Contract
Certificates and the Treasury Securities, shall not take any of the actions
described in clauses (i), (ii), (iii), (iv) or (v) 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, the Trust will not fail to be classified as a grantor
trust for United States federal income tax purposes.
If the Institutional Trustee fails to enforce its rights under the
Forward Contract, any Holder of TARGETS may directly institute a legal
proceeding against the Company to enforce the Institutional Trustee's rights
under the Forward Contract without first instituting a legal proceeding against
the Institutional Trustee or any other Person or entity. If the Company fails to
pay amounts owed on the Forward Contract on the date such amounts are otherwise
payable, then a holder of TARGETS may also directly institute a proceeding for
enforcement of payment to such holder (a "Direct Action") of the amounts owed in
respect of such Holder's Pro Rata interest in the Forward Contract on or after
the due date specified in the Forward Contract without first (i) directing the
Institutional Trustee to enforce the terms of the Forward Contract or (ii)
instituting a legal proceeding directly against the Company to enforce the
Institutional Trustee's rights under the Forward Contract. Except as provided in
the preceding sentence, the Holders of TARGETS will not be able to exercise
directly any other remedy available to the holders of the Forward Contract
Certificates. In connection with such Direct Action, SSBH will be subrogated to
the rights of such holder of TARGETS under the Declaration to the extent of any
payment made by SSBH to such holder of TARGETS in such Direct Action.
I-6
<PAGE> 66
Any required approval or direction of Holders of TARGETS may be
given at a separate meeting of Holders of TARGETS convened for such purpose, at
a meeting of all of the Holders of Securities or pursuant to written consent.
The Regular Trustees will cause a notice of any meeting at which Holders of
TARGETS 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
TARGETS. Each such notice will include a statement setting forth (i) the date of
such meeting or the date by which such action is to be taken, (ii) a description
of any resolution proposed for adoption at such meeting on which such Holders
are entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the TARGETS will be required
for the Trust to (i) cancel TARGETS Certificates, (ii) to make Distributions or
(iii) to distribute any Periodic Distributions, the Maturity Payment, the
Accelerated Maturity Payment and the Treasury Proceeds held by the Institutional
Trustee, in each case in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of TARGETS are entitled to vote or
consent under any of the circumstances described above, any of the TARGETS that
are owned by the Sponsor or any of its Affiliates shall not be entitled to vote
or consent and shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
6. Voting Rights Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the
Acceleration Event with respect to the TARGETS has been cured, waived, or
otherwise eliminated and subject to the requirements of the second to last
sentence of this paragraph, the Holders of a Majority of the Common Securities,
voting separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Forward Contract Certificates and the Treasury
Securities, to (i) direct the time, method, place of conducting any proceeding
for any remedy available to the Institutional Trustee, or exercising any trust
or power conferred on the Institutional Trustee with respect to the Forward
Contract, (ii) direct the time, method, place of conducting any proceeding for
any remedy available to the Institutional Trustee with respect to the Treasury
Securities, (iii) waive the consequences of any Ac-
I-7
<PAGE> 67
celeration Event under the Indenture that are waivable under the Indenture, (iv)
exercise any right to rescind or annul a declaration that the Accelerated
Maturity Payment shall be due and payable or (v) consent to any amendment,
modification or termination of the Indenture or Forward Contract Certificates
where such consent shall be required, provided that, where a consent or action
under the Indenture would require the consent or act of the Holders of a Super
Majority of the Forward Contract Certificates, the Institutional Trustee may
only give such consent or take such action at the written direction of the
Holders of at least the proportion of the Common Securities that the relevant
Super Majority represents of the aggregate beneficial interests in the Forward
Contract represented by all the Common Securities outstanding. Pursuant to this
Section 6(c), the Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the TARGETS. Other than with
respect to directing the time, method and place of conducting any proceeding for
any remedy available to the Institutional Trustee or the Indenture Trustee as
specified above, the Institutional Trustee shall not take any action in
accordance with the directions of the Holders of the Common Securities under
this paragraph unless the Institutional Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action. If the Institutional Trustee fails to enforce its rights under the
Declaration, any Holder of Common Securities may institute a legal proceeding
directly against any Person to enforce the Institutional Trustee's rights under
the Declaration, without first instituting a legal proceeding against the
Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common 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 Common Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to (i) cancel Common Securities, (ii) to make
Distributions, (iii) to liquidate the Treasury Securities or (iv) to distribute
any Periodic Distribution, the Maturity Payment, the Accelerated Maturity
Payment or the Treasury Proceeds to holders of the Securities, in each case in
accordance with the Declaration and the terms of the Securities.
I-8
<PAGE> 68
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority of the
Securities, voting together as a single class; provided, however, if any
amendment or proposal referred to in clause (i) above would adversely affect
only the TARGETS or only the Common Securities, then only the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of a Majority of such
class of Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Forward Contract Certificates is required under the Indenture with
respect to any amendment, modification or termination of the Indenture or the
Forward Contract Certificates, the Institutional Trustee shall request the
written direction of the Holders of the Securities with respect to such
amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority of the
Securities voting together as a single class; provided, however, that where a
consent under the Indenture would require the consent of the holders of a Super
Majority of the Forward Contract Certificates, the Institutional Trustee may
only give such consent at the direction of the Holders of a Super Majority of
the Securities outstanding; provided, further, that the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of
the Securities under this Section 7(b) unless the Institutional Trustee has
obtained an opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean proportionately to each
Holder of Securities according to the aggregate beneficial interests in the
assets of the Trust represented by the Securities held by the relevant Holder in
relation to the aggregate beneficial interests in the assets of the Trust
represented by all Securities outstanding unless, in relation to a payment, an
Acceleration Event under the Declaration has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the TARGETS proportionately according to the aggregate beneficial
interests in the assets of the Trust represented by the TARGETS held by the
relevant Holder relative to the aggregate beneficial interests in the assets of
the Trust represented by all TARGETS outstanding, and only after satisfaction of
all amounts owed
I-9
<PAGE> 69
to the Holders of the TARGETS, to each Holder of Common Securities
proportionately according to the aggregate beneficial interests in the assets of
the Trust represented by the Common Securities held by the relevant Holder
relative to the aggregate beneficial interests in the assets of the Trust
represented by all Common Securities outstanding.
9. Ranking.
The TARGETS rank pari passu and payment thereon shall be made Pro
Rata with the Common Securities except that, where an Acceleration Event occurs
and is continuing in respect of the Forward Contract Certificates held by the
Institutional Trustee, no payments in respect of Distributions on, or payments
upon liquidation or otherwise with respect to, the Common Securities shall be
made until the Holders of TARGETS shall be paid in full the Distributions and
payments upon liquidation or otherwise to which they are entitled at the time.
10. Listing.
The Regular Trustees shall use their best efforts to cause the
TARGETS to be listed on the Chicago Board Options Exchange.
11. Acceptance of Securities Guarantee, the Indenture and the
Treasury Securities.
Each Holder of TARGETS and Common Securities, by the acceptance
thereof, agrees to the provisions of the TARGETS Guarantee, and to the
provisions of the Indenture and the Treasury Securities.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration or the TARGETS
Guarantee, and the Indenture to a Holder without charge on written request to
the Sponsor at its principal place of business.
I-10
<PAGE> 70
EXHIBIT A1
FORM OF TARGETS CERTIFICATE
THIS SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE DECLARATION AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUST
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
Certificate Number Number of Securities
CUSIP NO. _____________
Certificate Evidencing Securities
of
TARGETS TRUST I
Targeted Growth Enhanced Terms Securities
TARGETS TRUST I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that ___________ (the
"Holder") is the registered owner of ________ (____) securities of the Trust
representing undivided beneficial inter-
A1-1
<PAGE> 71
ests in the assets of the Trust designated the Targeted Growth Enhanced Terms
Securities(SM) (the "TARGETS"). The TARGETS are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon surrender
of this certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the TARGETS are specified in, and this certificate and the TARGETS
represented hereby are issued and shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of ___________, 1998, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the TARGETS as
specified in Annex I thereto. Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled to
the benefits of the TARGETS Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the TARGETS Guarantee and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
The Holder of this certificate, by accepting this certificate, is
deemed to have (i) agreed to the terms of the Indenture and the Forward
Contract, (ii) agreed to the terms of the Treasury Securities and (iii) agreed
to the terms of the TARGETS Guarantee.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees, for United States federal income
tax purposes, to characterize the TARGETS as an investment in (i) a pro-rata
portion of the Treasury Securities and (ii) a cash settled prepaid forward
contract.
A1-2
<PAGE> 72
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of _______, 1998.
-----------------------------------
Michael J. Day, as Trustee
-----------------------------------
Charles W. Scharf, as Trustee
A1-3
<PAGE> 73
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this TARGETS
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
__________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
__________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this TARGETS Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this TARGETS
Certificate)
A1-4
<PAGE> 74
EXHIBIT A2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SPECIFIED IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Securities
Certificate Evidencing Securities
of
TARGETS TRUST I
Trust Common Securities
TARGETS TRUST I, a statutory business trust formed under the laws of
the State of Delaware (the "Trust"), hereby certifies that Salomon Smith Barney
Holdings, Inc., a Delaware corporation, (the "Holder") is the registered owner
of __________ (________) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the Trust Common
Securities (the "Common Securities"). The Common Securities are transferable on
the books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
and satisfaction of the other conditions specified in the Declaration (as
defined below), including, without limitation, Section 9.1 thereof. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of __________, 1998, as the same may
be amended from time to time (the "Declaration"), including the designation of
the terms of the Common Securities as specified in Annex I thereto. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Sponsor will provide a copy of the Declaration and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A2-1
<PAGE> 75
The Holder of this certificate, by accepting this certificate, is
deemed to have agreed to the terms of (a) the Indenture and the Forward Contract
and (b) the Treasury Securities.
By acceptance, the Holder agrees, for United States federal income
tax purposes, to characterize the TARGETS as an investment in (i) a pro-rata
portion of the Treasury Securities and (ii) a cash settled prepaid forward
contract.
A2-2
<PAGE> 76
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of _________, 1998
-----------------------------------
Michael J. Day, as Trustee
-----------------------------------
Charles W. Scharf, as Trustee
A2-3
<PAGE> 77
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
__________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
__________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
________________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-4
<PAGE> 78
EXHIBIT B
SPECIMEN OF FORWARD CONTRACT CERTIFICATE
B-1
<PAGE> 79
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
Exhibit 4 (c)
=========================================
TARGETED GROWTH ENHANCED TERMS SECURITIES
GUARANTEE AGREEMENT
TARGETS TRUST I
Dated as of ______, 1998
=========================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation....................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application..................6
SECTION 2.2 Lists of Holders of Securities....................6
SECTION 2.3 Reports by the TARGETS Guarantee
Trustee...........................................6
SECTION 2.4 Periodic Reports to TARGETS
Guarantee Trustee...........................7
SECTION 2.5 Evidence of Compliance with
Conditions Precedent..............................7
SECTION 2.6 Events of Default; Waiver.........................7
SECTION 2.7 Event of Default; Notice..........................7
SECTION 2.8 Conflicting Interests.............................8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TARGETS Guarantee Trustee
SECTION 3.1 Powers and Duties of the TARGETS
Guarantee Trustee.................................8
SECTION 3.2 Certain Rights of TARGETS Guarantee
Trustee..........................................11
SECTION 3.3 Not Responsible for Recitals or
Issuance of Guarantee............................14
ARTICLE IV
TARGETS Guarantee Trustee
SECTION 4.1 TARGETS Guarantee Trustee;
Eligibility......................................14
SECTION 4.2 Appointment, Removal and
Resignation of TARGETS Guarantee
Trustees...................................15
<PAGE> 3
Page
----
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee........................................16
SECTION 5.2 Waiver of Notice and Demand......................16
SECTION 5.3 Obligations Not Affected.........................16
SECTION 5.4 Rights of Holders................................18
SECTION 5.5 Guarantee of Payment.............................18
SECTION 5.6 Subrogation......................................18
SECTION 5.7 Independent Obligations..........................19
ARTICLE VI
TERMINATION
SECTION 6.1 Termination......................................19
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Exculpation......................................19
SECTION 7.2 Indemnification..................................20
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Successors and Assigns...........................21
SECTION 8.2 Amendments.......................................21
SECTION 8.3 Notices..........................................21
SECTION 8.4 Benefit..........................................22
SECTION 8.5 Governing Law....................................22
ii
<PAGE> 4
This GUARANTEE AGREEMENT (the "TARGETS Guarantee"), dated as of
______, 1998, is executed and delivered by Salomon Smith Barney Holdings Inc., a
Delaware corporation (together with any successors by way of merger the
"Guarantor"), and The Chase Manhattan Bank, as trustee (the "TARGETS Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the TARGETS (as defined herein) of TARGETS Trust I, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of _____, 1998, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof ______ preferred securities designated the Targeted
Growth Enhanced Terms Securities(sm) (the "TARGETS");
WHEREAS, as incentive for the Holders to purchase the TARGETS, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth in this TARGETS Guarantee, to pay to the Holders the Guarantee Payments
(as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
TARGETS, which purchase the Guarantor hereby agrees shall benefit the Guarantor,
the Guarantor executes and delivers this TARGETS Guarantee for the benefit of
the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this TARGETS Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this TARGETS Guarantee but not
defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
<PAGE> 5
(b) A term defined anywhere in this TARGETS Guarantee has the same
meaning throughout;
(c) all references to "the TARGETS Guarantee" or "this TARGETS
Guarantee" are to this TARGETS Guarantee as modified,
supplemented or amended from time to time;
(d) all references in this TARGETS Guarantee to Articles and
Sections are to Articles and Sections of this TARGETS
Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this TARGETS Guarantee, unless otherwise defined
in this TARGETS Guarantee or unless the context otherwise
requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Accelerated Maturity Date" has the meaning specified in the
Declaration.
"Accelerated Maturity Payment" has the meaning specified in the
Declaration.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions in the City of New York, New York are permitted or
required by any applicable law to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the TARGETS Guarantee
Trustee at which the corporate trust business of the TARGETS Guarantee Trustee
shall, at
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any particular time, be principally administered, which office at the date of
execution of this Agreement is located at 450 West 33rd Street 15th Floor, New
York, New York 10001.
"Covered Person" means any Holder or beneficial owner of TARGETS.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this TARGETS Guarantee.
"Forward Contract" means the Forward Contract of the Guarantor
issuable under the Indenture, held by the Institutional Trustee (as defined in
the Declaration) of the Issuer.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the TARGETS, to the extent not paid or made
by the Issuer: (i) any Maturity Payment that is required to be made in respect
of the TARGETS, to the extent the Issuer has funds available therefor, (ii) any
Accelerated Maturity Payment that is required to be made in respect of the
TARGETS, to the extent the Issuer has funds available therefor, (iii) any
Periodic Distribution that is required to be made in respect of the TARGETS, to
the extent the Issuer has funds available therefor, (iv) any distribution of
Treasury Proceeds that is required to be made in respect of the TARGETS, to the
extent the Issuer has funds available therefor, and (v) any other remaining
assets of the Issuer payable to the Holders of the TARGETS upon liquidation of
the Issuer.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any TARGETS; provided, however, that, in determining
whether the holders of the requisite percentage of TARGETS have given any
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the TARGETS Guarantee Trustee, any
Affiliate of the TARGETS Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the TARGETS Guarantee Trustee.
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"Indenture" means the Indenture dated as of ________, 1998, between
the Guarantor and The Chase Manhattan Bank, as trustee, and any indenture
supplemental thereto pursuant to which the Forward Contract Certificates (as
defined therein) are to be issued to the Institutional Trustee of the Issuer.
"Majority of the TARGETS" means, except as provided by the Trust
Indenture Act, a vote by Holder(s), voting separately as a class, holding
TARGETS representing more than 50% of the aggregate beneficial interests
represented by all outstanding TARGETS.
"Maturity Date" has the meaning specified in the Declaration.
"Maturity Payment" has the meaning specified in the Declaration.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this TARGETS Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Periodic Distribution" has the meaning specified in the
Declaration.
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"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the TARGETS Guarantee
Trustee, any officer within the Corporate Trust Office of the TARGETS Guarantee
Trustee, including any vice president, any assistant vice president, any
assistant secretary, the treasurer, any assistant treasurer, trust officer or
other officer of the Corporate Trust Office of the TARGETS Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and, in any case, that has direct responsibility for the
administration of this TARGETS Guarantee and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor TARGETS Guarantee Trustee" means a successor TARGETS
Guarantee Trustee possessing the qualifications to act as TARGETS Guarantee
Trustee under Section 4.1.
"TARGETS Guarantee Trustee" means The Chase Manhattan Bank, until a
Successor TARGETS Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this TARGETS Guarantee and thereafter
means each such Successor TARGETS Guarantee
Trustee.
"Treasury Proceeds" has the meaning specified in the Indenture.
"Treasury Securities" has the meaning specified in the Declaration.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application
(a) This TARGETS Guarantee is subject to the provisions of the Trust
Indenture Act that are required to be part of this TARGETS Guarantee and shall,
to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this TARGETS
Guarantee limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the TARGETS Guarantee Trustee with a
list, in such form as the TAR GETS Guarantee Trustee may reasonably require, of
the names and addresses of the Holders ("List of Holders") as of such date, (i)
within one Business Day after January l and June 30 of each year, and (ii) at
any other time within 30 days of receipt by the Guarantor of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the TARGETS Guarantee Trustee; provided, that the Guarantor
shall not be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
TARGETS Guarantee Trustee by the Guarantor. The TARGETS Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The TARGETS Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the TARGETS Guarantee Trustee
Within 60 days after April 15 of each year, the TARGETS Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The
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TARGETS Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to TARGETS Guarantee Trustee
The Guarantor shall provide to the TARGETS Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the TARGETS Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this TAR GETS Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 3l4(c)(l) may be given in the form of an
Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority of TARGETS may, by vote, on behalf of the
Holders of all of the TARGETS, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this TARGETS Guarantee, but no such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The TARGETS Guarantee Trustee shall, within 90 days after the
occurrence of an Event of De fault, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to a
Responsible Officer of the TARGETS Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, provided, that, the TARGETS
Guarantee Trustee shall be protected in withholding such
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notice if and so long as a Responsible Officer of the TARGETS Guarantee Trustee
in good faith determines that the withholding of such notice is in the interests
of the Holders.
(b) The TARGETS Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the TARGETS Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the TARGETS
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in
this TARGETS Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TARGETS Guarantee Trustee
SECTION 3.1 Powers and Duties of the TARGETS Guarantee Trustee
(a) This TARGETS Guarantee shall be held by the TARGETS Guarantee
Trustee for the benefit of the Holders, and the TARGETS Guarantee Trustee shall
not transfer its right, title and interest in this TARGETS Guarantee to any
Person except a Holder exercising his or her rights pursuant to Section 5.4(b)
or to a Successor TARGETS Guarantee Trustee on acceptance by such Successor
TARGETS Guarantee Trustee of its appointment to act as Successor TARGETS
Guarantee Trustee. The right, title and interest of the TARGETS Guarantee
Trustee shall automatically vest in any Successor TARGETS Guarantee Trustee, and
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor TARGETS Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the TARGETS Guarantee Trustee has occurred and is continuing, the TARGETS
Guarantee Trustee
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shall enforce this TARGETS Guarantee for the benefit of the Holders of the
TARGETS.
(c) The TARGETS Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this TARGETS Guarantee, and no implied covenants shall be read into
this TARGETS Guarantee against the TARGETS Guarantee Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6) and is actually known to a Responsible Officer of the TARGETS Guarantee
Trustee, the TARGETS Guarantee Trustee shall exercise such of the rights and
powers vested in it by this TARGETS Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this TARGETS Guarantee shall be construed to
relieve the TARGETS Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the TARGETS Guarantee
Trustee shall be deter mined solely by the express provisions of
this TARGETS Guarantee, and the TARGETS Guarantee Trustee shall not
be liable except for the performance of such duties and obligations
as are specifically set forth in this TARGETS Guarantee, and no
implied covenants or obligations shall be read into this TARGETS
Guarantee against the TARGETS Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
TARGETS Guarantee Trustee, the TARGETS Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to
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the TARGETS Guarantee Trustee and conforming to the requirements of
this TARGETS Guarantee; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to
be furnished to the TARGETS Guarantee Trustee, the TARGETS Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this TARGETS
Guarantee;
(ii) the TARGETS Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
TARGETS Guarantee Trustee, unless it shall be proved that the TARGETS
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the TARGETS Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
of the TARGETS relating to the time, method and place of conducting any
proceeding for any remedy available to the TARGETS Guarantee Trustee, or
exercising any trust or power conferred upon the TARGETS Guarantee Trustee
under this TARGETS Guarantee;
(iv) no provision of this TARGETS Guarantee shall require the
TARGETS Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the TARGETS
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under
the terms of this TARGETS Guarantee or indemnity, reasonably satisfactory
to the TARGETS Guarantee Trustee, against such risk or liability is not
reasonably assured to it;
(v) The granting of any right to the TARGETS Guarantee Trustee
hereunder shall not, subject to the following, be deemed to impose on the
TARGETS Guarantor Trustee an obligation to exercise such rights subject to
3.1(d)(vi); and
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(vi) the TARGETS Guarantee Trustee shall not be obligated to
exercise any remedy or take any action hereunder unless directed to do so
by the holders of a Majority of the TARGETS and shall have no liability
for its failure to act pending receipt by it of any such direction.
This Section 3.1 is in furtherance of and subject to Sections 315
and 316 of the Trust Indenture Act.
SECTION 3.2 Certain Rights of TARGETS Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The TARGETS Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this TARGETS Guarantee shall be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this TARGETS
Guarantee, the TARGETS Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the TARGETS Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The TARGETS Guarantee Trustee shall have no duty to see
to any recording, filing or
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registration of any instrument (or any rerecording, refiling or
registration thereof).
(v) The TARGETS Guarantee Trustee may consult with counsel,
and the advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its employees.
The TARGETS Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this TARGETS Guarantee from
any court of competent jurisdiction.
(vi) The TARGETS Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
TARGETS Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the TARGETS Guarantee Trustee such security
and indemnity, reasonably satisfactory to the TARGETS Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses and
the expenses of the TARGETS Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances as may be
requested by the TARGETS Guarantee Trustee; provided that, nothing
contained in this Section 3.2(a)(vi) shall be taken to relieve the TARGETS
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this TARGETS
Guarantee.
(vii) The TARGETS Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the TARGETS Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
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(viii) The TARGETS Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the
TARGETS Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the TARGETS Guarantee Trustee or its
agents hereunder shall bind the Holders of the TARGETS, and the signature
of the TARGETS Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action. No third party shall be required
to inquire as to the authority of the TARGETS Guarantee Trustee to so act
or as to its compliance with any of the terms and provisions of this
TARGETS Guarantee, both of which shall be conclusively evidenced by the
TARGETS Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this TARGETS Guarantee
the TARGETS Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the TARGETS Guarantee Trustee (i) may request
instructions from the Holders of a Majority of the TARGETS, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.
(b) No provision of this TARGETS Guarantee shall be deemed to impose
any duty or obligation on the TARGETS Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the TARGETS
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
TARGETS Guarantee Trustee shall be construed to be a duty.
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the TARGETS Guarantee Trustee does not assume
any responsibility for their correctness. The TARGETS Guarantee Trustee makes no
representation as to the validity or sufficiency of this TARGETS Guarantee.
ARTICLE IV
TARGETS Guarantee Trustee
SECTION 4.1 TARGETS Guarantee Trustee; Eligibility
(a) There shall at all times be a TARGETS Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the TARGETS Guarantee Trustee shall cease to be
eligible to so act under Section 4.l(a), the TARGETS Guarantee Trustee shall
imme-
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diately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the TARGETS Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the TARGETS Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of TARGETS Guarantee Trustees
(a) Subject to Section 4.2(b), the TARGETS Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The TARGETS Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor TARGETS Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor TARGETS Guarantee Trustee and delivered to the Guarantor.
(c) The TARGETS Guarantee Trustee appointed to office shall hold
office until a Successor TARGETS Guarantee Trustee shall have been appointed or
until its removal or resignation. The TARGETS Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the TARGETS Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor TARGETS
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor TARGETS Guarantee Trustee and
delivered to the Guarantor and the resigning TARGETS Guarantee Trustee.
(d) If no Successor TARGETS Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning TARGETS Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor TARGETS Guarantee Trustee. Such
court may
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thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor TARGETS Guarantee Trustee.
(e) No TARGETS Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor TARGETS Guarantee Trustee.
(f) Upon termination of this TARGETS Guarantee or removal or
resignation of the TARGETS Guarantee Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the TARGETS Guarantee Trustee all amounts accrued and
owing to such TARGETS Guarantee Trustee to the date of such termination, removal
or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this TARGETS
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor
under this TARGETS Guarantee
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shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the TARGETS to be performed or observed
by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Maturity Payment, Accelerated Maturity Payment, Periodic
Distributions, Treasury Proceeds or any other sums payable under the terms of
the TARGETS or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the TARGETS;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the TAR GETS, or any action
on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the TARGETS;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
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SECTION 5.4 Rights of Holders
(a) The Holders of a Majority of the TARGETS have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the TARGETS Guarantee Trustee in respect of this TARGETS Guarantee
or exercising any trust or power conferred upon the TARGETS Guarantee Trustee
under this TARGETS Guarantee.
(b) If the TARGETS Guarantee Trustee fails to enforce its rights
under this TARGETS Guarantee, any Holder may directly institute a legal
proceeding against the Guarantor to enforce the TARGETS Guarantee Trustee's
rights under this TARGETS Guarantee, without first instituting a legal
proceeding against the Issuer, the TARGETS Guarantee Trustee or any other Person
or entity.
(c) A Holder of TARGETS may also directly institute a legal
proceeding against the Guarantor to enforce such Holder's right to receive
payment under this TARGETS Guarantee without first (i) directing the TARGETS
Guarantee Trustee to enforce the terms of this TARGETS Guarantee or (ii)
instituting a legal proceeding directly against the Issuer or any other Person
or entity.
SECTION 5.5 Guarantee of Payment
This TARGETS Guarantee creates a guarantee of payment and not of
collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of TARGETS against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this TARGETS Guarantee; provided, how ever, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this TARGETS Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this TARGETS Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees
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to hold such amount in trust for the Holders and to pay over such amount to the
Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the TARGETS, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this TARGETS Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
TERMINATION
SECTION 6.1 Termination
This TARGETS Guarantee shall terminate upon the earliest to occur of
(i) full payment of the Maturity Payment (ii) full payment of the Accelerated
Maturity Payment and the distribution of the Treasury Proceeds on an Accelerated
Maturity Date to the Holders of the TAR GETS and the Common Securities on such
date and (iii) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
TARGETS Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
under the TARGETS or under this TARGETS Guarantee.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this TARGETS
Guarantee and in a manner that such Indemnified Person reasonably believed to be
19
<PAGE> 23
within the scope of the authority conferred on such Indemnified Person by this
TARGETS Guarantee or by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, re ports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with reason
able care by or on behalf of the Guarantor, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders might properly be paid.
SECTION 7.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 7.2 shall
survive the termination of this TARGETS Guarantee.
20
<PAGE> 24
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Successors and Assigns
All guarantees and agreements contained in this TARGETS Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the TARGETS then
outstanding.
SECTION 8.2 Amendments
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
TARGETS Guarantee may be amended only with the prior approval of the Holders of
not less than a Majority of the TARGETS. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders apply to the giving of such
approval.
SECTION 8.3 Notices
All notices provided for in this TARGETS Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail postage prepaid as follows:
(a) If given to the TARGETS Guarantee Trustee, at the TARGETS
Guarantee Trustee's mailing address set forth below (or such other address as
the TARGETS Guarantee Trustee may give notice of to the Holders):
450 West 33rd Street 15th Floor
New York, New York 10001
Attention: Structured Finance Services
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders):
388 Greenwich Street
New York, New York 10013
21
<PAGE> 25
(c) If given to any Holder, at the address set forth on the books
and records of the Issuer.
All notices provided for in this TARGETS Guarantee shall be deemed
to have been given when received in person, telecopied with receipt confirmed,
or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other document shall be
deemed to have been delivered on the date of such refusal or in ability to
deliver.
SECTION 8.4 Benefit
This TARGETS Guarantee is solely for the benefit of the Holders of
the TARGETS and, subject to Section 3.1(a), is not separately transferable from
the TARGETS.
SECTION 8.5 Governing Law
THIS TARGETS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ALL
RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD FOR THE
PRINCIPLES OF ITS CONFLICTS OF LAWS.
THIS TARGETS GUARANTEE is executed as of the day and year first above
written.
SALOMON SMITH BARNEY HOLDINGS INC.
as Guarantor
By:
----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
TARGETS Guarantee Trustee
By:
----------------------------------
Name: Cynthia Kerpen
22
<PAGE> 26
Title: Trust Officer
23
`
<PAGE> 1
Exhibit 4 (d)
SALOMON SMITH BARNEY HOLDINGS INC.
to
THE CHASE MANHATTAN BANK,
Trustee
===============
FORWARD CONTRACT WITH RESPECT TO
XYZ COMMON STOCK
===============
INDENTURE
Dated as of _______, 1998
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101 Definitions...............................................1
SECTION 102 Compliance Certificates and Opinions......................9
SECTION 103 Form of Documents Delivered to Trustee...................10
SECTION 104 Acts of Holders..........................................11
SECTION 105 Notices, Etc., to Trustee and Company....................12
SECTION 106 Notice to Holders; Waiver................................12
SECTION 107 Conflict with Trust Indenture Act........................13
SECTION 108 Effect of Headings and Table of Contents.................13
SECTION 109 Successors and Assigns...................................13
SECTION 110 Separability Clause......................................13
SECTION 111 Benefits of Indenture....................................13
SECTION 112 Governing Law............................................13
SECTION 113 Legal Holidays...........................................13
ARTICLE II
SECURITY FORMS
SECTION 201 Forms Generally..........................................14
SECTION 202 Definitive Securities....................................14
SECTION 203 Form of Trustee's Certificate of Authentication..........14
SECTION 204 Securities in Global Form................................14
ARTICLE III
THE SECURITIES
SECTION 301 Amount to be Issued......................................15
SECTION 302 Execution, Authentication, Delivery and Dating...........16
SECTION 303 Global Securities; Temporary ............................17
SECTION 304 Registration, Registration of Transfer and Exchange......19
SECTION 305 Mutilated, Destroyed, Lost and Stolen Securities.........20
SECTION 306 Persons Deemed Owners....................................21
SECTION 307 Cancellation.............................................21
SECTION 308 Yield Enhancement Payments...............................22
i
<PAGE> 3
PAGE
ARTICLE IV
PAYMENT AT MATURITY, ETC.
SECTION 401 Satisfaction and Discharge of Indenture..................23
SECTION 402 Maturity.................................................24
SECTION 403 Dilution Adjustments.....................................25
SECTION 404 Adjustment for Consolidation, Merger or Other Reorganiza
tion Event...............................................28
SECTION 405 Adjustments of Exchange Rate.............................29
ARTICLE V
REMEDIES
SECTION 501 Acceleration Events......................................30
SECTION 502 Acceleration of Maturity.................................31
SECTION 503 Taxes....................................................32
SECTION 504 Treatment of Forward Contract............................32
SECTION 505 Notices..................................................32
SECTION 506 Collection of Amounts Owed and Suits for Enforcement
by Trustee...............................................33
SECTION 507 Trustee May Enforce Claims Without Possession of
Securities...............................................33
SECTION 508 Application of Money Collected...........................33
SECTION 509 Limitation on Suits......................................34
SECTION 510 Restoration of Rights and Remedies.......................35
SECTION 511 Rights and Remedies Cumulative...........................35
SECTION 512 Delay or Omission Not Waiver.............................35
SECTION 513 Control by Holder........................................35
SECTION 514 Waiver of Past Defaults..................................36
SECTION 515 Waiver of Stay or Extension Laws.........................36
SECTION 516 Filing Proofs of Claim...................................36
SECTION 517 Unconditional Right of Holders to Receive Payments.......37
SECTION 518 Restoration of Rights and Remedies.......................37
SECTION 519 Undertaking for Costs....................................38
ARTICLE VI
THE TRUSTEE
SECTION 601 Certain Rights of Trustee................................38
SECTION 602 Certain Duties and Responsibilities of Trustee...........40
SECTION 603 Not Responsible for Recitals or Issuance of Securities...41
ii
<PAGE> 4
PAGE
SECTION 604 May Hold Securities......................................41
SECTION 605 Money Held in Trust......................................41
SECTION 606 Compensation and Reimbursement...........................41
SECTION 607 Corporate Trustee Required; Eligibility..................42
SECTION 608 Resignation and Removal; Appointment of Successor........42
SECTION 609 Acceptance of Appointment by Successor...................44
SECTION 610 Merger, Conversion, Consolidation or Succession to
Business........................................45
SECTION 611 Disclosure of Names and Addresses of Holders.............45
SECTION 612 Reports by Trustee.......................................45
ARTICLE VII
CONSOLIDATION, MERGER OR SALE
SECTION 701 Consolidation, Merger or Sale............................46
SECTION 702 Successor Corporation Substituted........................46
ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 801 Supplemental Indentures Without Consent of Holders.......47
SECTION 802 Supplemental Indentures with Consent of Holders..........48
SECTION 803 Execution of Supplemental Indentures.....................49
SECTION 804 Effect of Supplemental Indentures........................49
SECTION 805 Conformity with Trust Indenture Act......................49
SECTION 806 Reference in Securities to Supplemental Indentures.......49
ARTICLE IX
COVENANTS
SECTION 901 Payment..................................................50
SECTION 902 Maintenance of Office or Agency..........................50
SECTION 903 Money for Securities Payments to Be Held in Trust........50
SECTION 904 Limitation on Liens......................................52
SECTION 905 Waiver of Certain Covenants..............................52
SECTION 906 Officers' Certificate as to Default......................52
SECTION 907 Payment of Expenses......................................53
EXHIBIT A-1................................................................A-1
iii
<PAGE> 5
Salomon Smith Barney Holdings Inc.
Reconciliation and tie between Trust Indenture Act of
1939 and Indenture, dated as of _________ ___, 1998
Trust Indenture Indenture Section
Act Section
ss. 310 (a)(1).............................................. 607
(a)(2)............................................. 607
(a)(3).....................................Not Applicable
(a)(4).....................................Not Applicable
(b)...................................................608
ss. 311 (a)........................................Not Applicable
(b)........................................Not Applicable
(b)(2)................................................612
......................................................612
ss. 312 (a).................................................. 611
(b)........................................Not Applicable
(c)........................................Not Applicable
ss. 313 (a)................................................. 612
(b)................................................. 612
(c)...................................................612
(d)................................................. 612
ss. 314 (a)........................................Not Applicable
(b)........................................Not Applicable
(c)(1).............................................. 102
(c)(2)............................................. 102
(c)(3).....................................Not Applicable
(d)........................................Not Applicable
(e)................................................ 102
ss. 315 (a)................................................602(a)
(b)................................................. 505
......................................................612
(c)................................................602(b)
(d)............................................... 602(c)
(d)(1)..........................................602(a)(i)
(d)(2)..........................................602(c)(2)
(d)(3)......................................... 602(c)(3)
(e)................................................. 519
ss. 316 (a)...................................................103
(a)(1)(A).............................................502
<PAGE> 6
......................................................513
(a)(1)(B).............................................514
(a)(2).....................................Not Applicable
(b)................................................. 517
ss. 317 (a)(1).............................................. 506
(a)(2)................................................507
(b)...................................................903
ss. 318 (a)...................................................107
- ----------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
2
<PAGE> 7
INDENTURE, dated as of _______, 1998, between SALOMON SMITH BARNEY
HOLDINGS INC., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company") with principal executive offices
at 388 Greenwich Street, New York, New York 10013, and THE CHASE MANHATTAN BANK,
a New York banking corporation (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of certain securities (the "Securities")
representing interests in a Forward Contract (the "Forward Contract") to be
issued as in this Indenture provided. This Indenture is subject to the
provisions of the Trust Indenture Act (as hereinafter defined) that are required
to be part of this Indenture and, to the extent applicable, shall be governed by
such provisions.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101 Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) terms defined in this Article have the meanings as signed
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
<PAGE> 8
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States; and, except as otherwise herein or in any
indenture supplemental hereto expressly provided, the term "generally
accepted accounting principles" with respect to any computation required
or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and
(4) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Accelerated Maturity Date" has the meaning specified in Section
502.
"Accelerated Maturity Payment" has the meaning specified in Section
502.
"Acceleration Event" has the meaning specified in Section 501.
"Acceleration Notice" has the meaning specified in Section 502.
"Act," when used with respect to any Holder, has the meaning
specified in Section 103.
"Affiliate" of any specified Person means any other person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" has the meaning specified in Section 204.
"Appreciation Threshold Price" has the meaning specified in Section
402.
"Authorized Newspaper" means a newspaper of general circulation in
the place of publication, printed in the official language of the country of
publication and customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays. Whenever successive weekly
publications in an Authorized News paper are authorized or required hereunder,
they may be made (unless otherwise expressly provided herein) on the same or
different days of the week and in the same or different Authorized Newspapers.
2
<PAGE> 9
"Board of Directors" means either the Board of Directors of the
Company, or the Executive Committee or any other duly authorized committee of
that Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Security" means a security evidencing all or part of the
Securities, issued to the Depositary of Securities in accordance with Section
303, and bearing the legend prescribed in Section 303.
"Business Day" means any day on which commercial banks are open for
business in New York City and the New York Stock Exchange is not closed;
provided that, when used with respect to any Place of Payment, "Business Day"
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment are authorized or obligated
by law to close.
"Calculation Period" means any period of Trading Days for which an
average security price must be determined pursuant to the Securities.
"Closing Price" of the Common Stock or any marketable security on
any date of determination means the daily closing sale price (or, if no closing
sale price is reported, the last reported sale price) of such security as
reported on the New York Stock Exchange ("NYSE") on such date of determination
or, if such security is not traded on NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange on
which if such security is so listed, or if such security is not so listed on a
United States national or regional securities exchange, the last quoted bid
price for the Common Stock in the over-the-counter market as reported by the
National Quotation Bureau or similar organization.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Stock" means the common stock, par value $____ per share, of
the Designated Issuer.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to
3
<PAGE> 10
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company of either of the Co-Chairmen of the
Board or a Vice-Chairman, a Vice President, the Chief Financial Officer or the
Chief Accounting Officer and by the Treasurer, the Deputy Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Corporate Trust Office" means the principal office of the Trustee
in the Borough of Manhattan, The City of New York, at which at any particular
time its corporate trust business shall be administered, which office at the
date of initial execution of this Indenture is 450 West 33rd Street - 15th
Floor, New York, New York 10001.
"corporation" includes corporations, associations, companies and
business trusts.
"Current Market Price" per share of Common Stock as of a particular
date means the average of the Closing Prices of a share of Common Stock on each
of the 10 Trading Days immediately prior to but not including that particular
date.
"Defaulted Yield Enhancement Payments" has the meaning specified in
Section 308.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, including Book-Entry Securities, the
Person designated as Depositary by the Company until a successor Depositary
shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one such person
"Depositary" shall be a collective reference to such Persons.
"Designated Issuer" means ______, together with any successor entity
in a merger, consolidation or amalgamation.
"Dilution Adjustment" means any fraction or number by which the
Exchange Rate shall be multiplied pursuant to Section 403(a), (b), (c) or (d).
"Dollar" means the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
"Excess Purchase Payment" has the meaning providing in Section
403(d).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
4
<PAGE> 11
"Exchange Rate" has the meaning provided in Section 402.
"Global Security" has the meaning specified in Section 204.
"Holder" means, with respect to a Security, the person in whose name
such Security is registered in the Security Register.
"Indenture" means this instrument originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"majority" of the Outstanding Securities means, except as otherwise
provided by the Trust Indenture Act, Outstanding Securities representing an
aggregate of more than 50% of all outstanding interests in the Forward Contract.
"Marketable Securities" has the meaning specified in Section 404.
"Maturity," when used with respect to the Forward Contract, means
the date on which the Maturity Payment or Accelerated Maturity Payment becomes
due and payable as the case may be and as therein or herein provided, whether on
the Maturity Date or an Accelerated Maturity Date.
"Maturity Date" means __________________.
"Maturity Payment" has the meaning specified in Section 402.
"New York Business Day" means each weekday which is not a day on
which banking institutions in New York City are authorized or obligated by law
to close.
"Officers' Certificate" means a written certificate containing the
information specified in Section 102 signed by either of the Co-Chairmen or a
Vice Chairman of the Board, a Vice President, the Chief Financial Officer or the
Chief Accounting Officer and by the Controller, the Treasurer, the Deputy
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company, which certificate complies with the applicable requirements of
Section 314(e) of the Trust Indenture Act, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be reasonably acceptable to the Trustee.
"Outstanding," when used with respect to any Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
5
<PAGE> 12
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; and
(iii) Securities that have been paid pursuant to Sections 402
or 502 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are held by a bona
fide purchaser in whose hands such Securities are valid obligations of the
Company;
provided, however, that in determining whether the Holder of the requisite
amount or percentage of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting for quorum purposes, and for the purpose of making the calculations
required by Section 313 of the Trust Indenture Act, any Securities owned by the
Company or any other obligor upon such Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities that the Trustee knows to be so owned shall
be so disregarded. Any Securities so owned that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor. In determining whether
the requisite percentage of Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, such
percentage refers to Outstanding Securities representing an aggregate interest
in the Forward Contract equalling at least such percentage.
"Paying Agent" means any Person authorized by the Company to pay
amounts owed on Securities on behalf of the Company.
"Payment Date" means________, ________, ________ and ________ of
each year, or, in the case of Defaulted Yield Enhancement Payments, the date
established for payment pursuant to Section 308.
"Permitted Dividend" has the meaning specified in Section 403(d).
6
<PAGE> 13
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities means
the place or places where any amounts owed in respect of the Securities are
payable.
"Record Date" means, with respect to any Payment Date, either (i)
the day that is one Business Day prior to such Payment Date so long as the
Securities are in book-entry only form, or (ii) if the Securities are not in
book-entry only form, the day that is 10 Business Days prior to such Payment
Date.
"Reorganization Event" has the meaning specified in Section 404.
"Responsible Officer," when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any senior trust officer, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and, in any
case, that has direct responsibility for the administration of this Indenture
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Subsidiary" mean each of [_________________________] 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.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 304.
7
<PAGE> 14
"Special Record Date" means, for the payment of any Defaulted Yield
Enhancement Payments, a date fixed by the Trustee pursuant to Section 308.
"Stated Amount" means $__________ [insert dollar value of the
aggregate number of shares underlying the Forward Contract].
"Subsidiary" means a corporation, a majority of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries.
"Then-Current Market Price" of the Common Stock, for the purpose of
applying any adjustment pursuant to Section 403, means the average Closing Price
per share of the Common Stock for the Calculation Period of 10 Trading Days
immediately prior to the time such adjustment is effected (or, in the case of an
adjustment effected at the opening of business on the Business Day next
following a record date as described in Section 403(f)(i), immediately prior to
the earlier of the time such adjustment is effected and the related ex-date);
provided that if no Closing Price for the Common Stock is determined for one or
more (but not all) of such Trading Days, such Trading Day shall be disregarded
in the calculation of the Then-Current Market Price (but no additional trading
days shall be added to the Calculation Period). If no Closing Price for the
Common Stock may be determined for any of such Trading Days, the Then-Current
Market Price shall be the Closing Price for the Common Stock for the most recent
Trading Day prior to such 10 Trading Days for which a Closing Price for the
Common Stock may be determined pursuant to the "Closing Price" definition. The
"ex-date" with respect to any dividend, distribution or issuance shall mean the
first date on which the shares of Common Stock trade regular way on their
principal market without the right to receive such dividend, distribution or
issuance.
"Trading Day" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of such security.
"Transaction Value" has the meaning specified in Section 404.
"Trust" has the meaning specified in Section 501.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this instrument was executed,
except as provided in Section 805.
"Trust Securities" has the meaning specified in Section 907.
8
<PAGE> 15
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder.
"Vice President," when used with respect to the Company, means any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president."
"Yield Enhancement Payment" means _____% per annum of the Stated
Amount, accruing from ____________, 1998 [insert date of original issue of
TARGETS], computed on the basis of a 360-day year of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month.
SECTION 102 Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of any such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture (other than pursuant to
Section 907) shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
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(4) a statement as to whether, in the opinion of each such
individual, such covenant or condition has been complied with.
SECTION 103 Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Any certificate or opinion delivered by the Company to the Trustee
may evidence a signature by facsimile; provided that the Company shall deliver
to the Trustee such certificate or opinion with an original signature within a
reasonable period of time.
(a) Any request, demand, authorization, direction, notice,
consent,\waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
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(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
SECTION 104 Acts of Holders.
(a) The ownership of Securities shall be proved by the
Security Register, and the Depositary, or its nominee, shall be deemed the owner
of the Global Securities, and owners of beneficial interests in a Global
Security will not be considered the owners of any Securities.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(c) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the Holders of record at
the close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
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SECTION 105 Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, by first-class mail, postage prepaid,
to the Company addressed to it at the address of its principal office
specified in the first paragraph of this Indenture or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 106 Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice to the Holders thereof shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, by first-class mail,
postage prepaid, to each Holder affected by such event, at the address of such
Holder as it appears in the Security Register, within the time prescribed for
the giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice as
provided above, then such notification as shall be made with the approval of the
Trustee (which shall include, but not be limited to, hand-delivery or overnight
courier) shall constitute a sufficient notification for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
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SECTION 107 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with the
Trust Indenture Act, the Trust Indenture Act shall control.
SECTION 108 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109 Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110 Separability Clause.
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111 Benefits of Indenture.
Nothing in this Indenture or in the Securities, expressed or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112 Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 113 Legal Holidays.
In any case where any Maturity of any Security or any Payment Date
shall not be a Business Day at any Place of Payment, then (notwithstanding any
other provision of this Indenture or of the Securities) payment at such Maturity
or Payment Date need not be made at such Place of Payment on such date, but may
be made on the next succeeding Business Day at such Place of Payment with the
same force and effect as if made at such Maturity or Payment Date, as the case
may be, except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
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ARTICLE II
SECURITY FORMS
SECTION 201 Forms Generally.
The Securities shall be in substantially in the form of Exhibit A
hereto with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities as evidenced by their execution of the
Securities. If temporary Securities are issued in global form as permitted by
Section 303, the form thereof also shall be established as provided in the
preceding sentence.
SECTION 202 Definitive Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 203 Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in
substantially the form set forth below.
This is one of the Securities designated in the within-mentioned
Indenture.
THE CHASE MANHATTAN BANK
as Trustee
By
------------------------
Authorized Signatory
SECTION 204 Securities in Global Form.
Except as provided in Section 304 hereof, owners of beneficial
interests in Global Securities will not be entitled to receive physical delivery
of certificated Securities. If Securities are issuable in whole or in part in
global form, any such Security may provide that it shall represent the aggregate
or specified number of Outstanding Securities from time
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to time endorsed thereon and may also provide that the aggregate number of
Outstanding Securities represented thereby may from time to time be reduced or
increased to reflect exchanges. Any endorsement of a Security in global form to
reflect the amount, or any increase or decrease in the amount or changes in the
rights of Holders of Outstanding Securities represented thereby, shall be made
in such manner and by such Person or Persons as shall be specified therein.
This Section 204 shall apply only to Securities issued in global
form ("Global Securities") and deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 204, authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary for such
Global Security or Global Securities or the nominee of such Depositary and (b)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's written instructions or held by the Trustee as custodian for the
Depositary.
Members of, or participants in, a Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or under the Global Security, and the Depositary
may be treated by the Company, the Trustee, and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee, or any agent of the Company or the Trustee, from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
holder of any Security.
ARTICLE III
THE SECURITIES
SECTION 301 Amount to be Issued.
Securities evidencing an aggregate beneficial interest in the
Forward Contract of not more than 100% may be authenticated and delivered under
this Indenture. All Securities shall be substantially identical in form except
for the beneficial interest in the Forward Contract represented thereby.
SECTION 302 Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by either
of the Co-Chairmen or a Vice Chairman of the Board, a Vice President, the Chief
Financial Officer
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or the Chief Accounting Officer, under its corporate seal reproduced thereon
attested by the signature of its Secretary or one of its Assistant Secretaries
or its Treasurer, the Deputy Treasurer or one of its Assistant Treasurers. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities.
The Trustee shall have the right to decline to authenticate and
deliver such Securities if the Trustee, being advised by counsel, determines
that such action may not lawfully be taken or if the Trustee in good faith by
its board of directors or trustees, executive committee, or a trust committee of
directors or trustees and/or Responsible Officers shall determine that such
action would expose the Trustee to personal liability to existing Holders or
would adversely affect the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
If all of the Securities are not to be originally issued at the same
time, then the documents required to be delivered pursuant to this Section 302
must be delivered only once, prior to the authentication and delivery of the
first Security; provided, however, that any subsequent request by the Company to
the Trustee to authenticate Securities upon original issuance shall constitute a
representation and warranty by the Company that, as of the date of such request,
the statements made in any Opinion of Counsel delivered pursuant to this Section
302 shall be true and correct as if made on such date.
If Securities are to be issued in whole or in part in global form,
then the Company shall execute and the Trustee shall, in accordance with this
Section and the Company Order, authenticate and deliver one or more Securities
in global form that (i) shall represent the number of the Outstanding Securities
to be represented by such Global Securities, (ii) shall be registered, if in
registered form, in the name of the Depositary for such Book-Entry Security or
Securities or the nominee of such Depositary, (iii) shall be delivered by the
Trustee to such Depositary or pursuant to such Depositary's instruction and (iv)
shall bear a legend substantially to the following effect: "Unless and until it
is ex changed in whole or in part for Securities in certificated form, this
Security may not be transferred except as a whole by the Depositary to a nominee
of the Depositary or by a
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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" or to such other effect as the Depositary and the
Trustee may agree.
Each Depositary designated for a Book-Entry Security in registered
form must, at the time of its designation and at all times while it serves as
Depositary, be a clearing agency registered under the Exchange Act and any other
applicable statute or regulation. The Trustee shall have no responsibility to
determine if the Depositary is so registered. Each Depositary shall enter into
an agreement with the Trustee governing their respective duties and rights with
regard to Book-Entry Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of one of its authorized
signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled to the benefits of this Indenture.
The Trustee may appoint an authenticating agent (each, an
"Authentication Agent") to authenticate the Securities. Any Authenticating Agent
may authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by any
such Authenticating Agent.
SECTION 303 Global Securities; Temporary Securities.
(a) No definitive Security shall be issued in exchange for a
Global Security deposited with the Depositary pursuant to Section 302
representing any Securities unless such transfer complies with Section 304 of
this Indenture and (i) the Depositary notifies the Company that it is unwilling
or unable to continue as Depositary for such Global Security or, in the case of
a Depositary located in the United States, if at any time such Depositary ceases
to be a "clearing agency" registered under the Exchange Act and a successor
depositary is not appointed by the Issuer within 90 days of such notice or (ii)
the Company determines not to have the Securities represented by a Global
Security; provided, however, that the Company may not make such determination
during any period during which the Securities must be held in global form as may
be required by the Securities Act.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 303 shall be surrendered by the
Depositary to the Trustee located in the Borough of Manhattan, The City of New
York, to be so transferred, in whole or from time to time in part, without
charge, and the Trustee shall authenticate and deliver, upon such transfer of
each portion of such Global Security, an equal aggregate
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number of Securities. Any portion of a Global Security transferred pursuant to
this Section 303 shall be executed, authenticated and delivered as specified in
Section 304 and registered in such names as the Depositary shall direct.
(c) Subject to the provisions of Section 303(b) above, the
registered holder of a Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action that a holder is entitled to take under this
Indenture or such Securities.
(d) In the event of the occurrence of any of the events
specified in paragraph (a) of this Section 303 the Company will promptly make
available to the Trustee a reasonable supply of certificated Securities in
definitive, fully registered form.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which may be in global form, that are printed,
lithographed, typewritten, mimeographed or otherwise reproduced, substantially
of the tenor of the definitive Securities in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as conclusively
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. The definitive
Securities shall be printed, lithographed or engraved, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such definitive Securities. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of such temporary Securities at the office
or agency maintained by the Company for such purpose pursuant to Section 902,
without charge to the Holder in a Place of Payment. Upon surrender for
cancellation of any temporary Securities, the Company shall execute, and the
Trustee shall authenticate and deliver, in exchange therefor the same aggregate
number of definitive Securities. Until so exchanged, the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities.
SECTION 304 Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company maintained pursuant to Section 902 in a Place of
Payment being herein sometimes collectively referred to as the "Security
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities and of transfers of
Securities. The Trustee is hereby appointed "Security
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Registrar" for the purpose of registering Securities and transfers of Securities
as herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency maintained pursuant to Section 902 in a Place of Payment, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities,
evidencing a like aggregate beneficial interest in the Forward Contract.
At the option of the Holder, Securities (except a Global Security
representing all or a portion of the Securities which may be exchanged in
accordance with Section 304 hereof) may be exchanged for other Securities
evidencing a like aggregate interest in the Forward Contract, upon surrender of
the Securities to be exchanged at such office or agency.
If at any time the Depositary for the Securities notifies the
Company that it is unwilling or unable to continue as Depositary for the
Securities or if at any time the Depositary for the Securities shall no longer
be eligible under Section 302, the Company shall appoint a successor Depositary
with respect to the Securities.
The Depositary may surrender a Global Security in exchange in whole
or in part for Securities in certificated form on such terms as are acceptable
to the Company and such Depositary. Thereupon, the Company shall execute, and
the Trustee shall authenticate and deliver, without service charge, to each
Person specified by such Depositary a new certificated Security or Securities of
like tenor, in aggregate number equal to and in exchange for such Person's
beneficial interest in the Global Security; and to such Depositary a new Global
Security of like tenor representing an aggregate number of securities equal to
the difference, if any, between the aggregate beneficial interest in the Forward
Contract represented by the surrendered Global Security and the aggregate
beneficial interest in the Forward Contract represented by the certificated
Securities delivered to Holders thereof.
Upon the exchange in full of a Global Security for Securities in
certificated form, such Global Security shall be cancelled by the Trustee.
Except as provided in Section 303(a) and (b) hereof, Securities issued in
exchange for a Book-Entry Security, pursuant to this Section shall be registered
in such names as the Depositary for such Book-Entry Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall make available such Securities to the
Persons in whose names such Securities are so registered.
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
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All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
obligation, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange. The
Trustee shall have no liability for any transfers or exchanges of the Securities
in accordance with the provisions of this Indenture being in compliance with the
Securities Act or any other applicable law.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company or the Securities Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 303 or 806 not involving
any transfer.
SECTION 305 Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of like tenor and evidencing a like aggregate beneficial interest
in the Forward Contract.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Security
a new Security evidencing a like aggregate beneficial interest in the Forward
Contract.
Upon the issuance of any new Security under this Section, the Company or
the Securities Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforce able by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of any mutilated, destroyed, lost or stolen Securities.
SECTION 306 Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment in respect of amounts owed on such
Security and for all other purposes whatsoever, whether or not such payments
shall be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary; provided,
however, that the Depositary, or its nominee, shall be deemed the owner of any
Global Securities registered in its name, and owners of beneficial interests in
a Global Security will not be considered the owners of any Securities for
purposes of this Indenture.
SECTION 307 Cancellation.
All Securities surrendered for payment, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly cancelled
by the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities shall be destroyed by the
Trustee and a certificate evidencing such destruction shall be delivered to the
Company.
SECTION 308 Yield Enhancement Payments.
A pro rata portion (based on the beneficial interest in the Forward
Contract represented by each of the Securities) of the Yield Enhancement Payment
shall be remitted (a) by the Company to the Paying Agent prior to 10:00 am on
each Payment Date and (b) thereafter by the Paying Agent on each Payment Date to
the Persons in whose name such Securities are registered at the close of
business on the Record Date therefor. At least 5 Business Days prior to the
applicable Record Date, the Company shall notify the Trustee in writing of the
aggregate amount of the Yield Enhancement Payment to be paid on each Payment
Date.
In the event of acceleration of maturity of the Forward Contract to
an Accelerated Maturity Date occurring after any Record Date and on or prior to
the next succeeding Payment Date, Yield Enhancement Payments otherwise payable
on such Payment Date shall be payable on the Accelerated Maturity Date, and such
Yield Enhance-
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ment Payments (in the amounts determined as provided above) shall be paid to the
Persons in whose name the Securities are registered at the close of business on
such Record Date. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of acceleration of maturity of the Forward
Contract to an Accelerated Maturity Date, Yield Enhancement Payments that would
otherwise be payable after the Accelerated Maturity Payment with respect to the
Forward Contract shall not be payable.
Any Yield Enhancement Payments which are payable, but are not
punctually paid or duly provided for, on any Payment Date (herein called
"Defaulted Yield Enhancement Payments") shall forthwith cease to be payable to
the Holder on the relevant Record Date by virtue of having been such Holder, and
such Defaulted Yield Enhancement Payments may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Yield Enhancement Payments to the Persons in whose names the
Securities are registered at the close of business on a Special
Record Date for the payment of such Defaulted Yield Enhancement
Payments, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the aggregate amount of
Defaulted Yield Enhancement Payments proposed to be paid on the
Securities and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Yield Enhancement Payments or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of
the proposed payment; such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Yield
Enhancement Payments in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Yield Enhancement Payments which shall be not more than 15 days and
not less than 10 Business Days prior to the date of the proposed
payment and not less than 10 Business Days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Yield Enhancement Payments and
the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder of Securities at such Holder's address as it
appears in the Security Register, not less than 10 Business Days
prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Yield Enhancement Payments and the Special Record
Date therefor having been so mailed, such Defaulted Yield
Enhancement Payments shall be paid to the Person in whose name the
Securities are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
Clause (2),
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(2) The Company may make payment of any Defaulted Yield
Enhancement Payments in any other lawful manner not inconsistent
with the requirements of any stock exchange or national securities
market on which such Securities are listed, and upon such notice as
may be required by such exchange or market, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to
this Clause, such manner of payment shall be deemed practicable by
the Trustee.
At the option of the Company, Yield Enhancement Payments shall be
remitted by the Trustee (i) by mailing a check to the address of the persons
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer to an account maintained by the persons entitled thereto as
specified in the applicable Security Register if such person (a) shall have
provided wire instructions to the Paying Agent at least five (5) Business Days
prior to the relevant Record Date and (b) holds an aggregate Security
representing the right to receive, at maturity, at least $5,000,000.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to Yield Enhancement
Payments accrued and unpaid, and to accrue, which were carried by such other
Security.
ARTICLE IV
PAYMENT AT MATURITY, ETC.
SECTION 401 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect with respect to Securities (except as to any surviving rights of
registration of transfer or exchange of Securities and replacement of lost,
stolen or mutilated Securities herein expressly provided for), and the Trustee,
at the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when either
(A) all Securities theretofore authenticated and delivered
have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation have become due and payable and the Company
has deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge all amounts owed in respect of such Securities not
theretofore delivered to the Trustee for cancellation.
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Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of this
Section, the obligations of the Trustee under the last paragraph of Section 903,
shall survive.
SECTION 402 Maturity.
Subject to earlier acceleration of maturity in accordance with
Article V hereof, on the Maturity Date the Company shall be obligated to pay to
the Holders, in respect of the Securities held by them, an amount in cash (the
"Maturity Payment") equal to a pro rata portion (based on the beneficial
interest in the Forward Contract represented by such Securities) of the sum of
(A) the product of (i) _______________ [insert the aggregate number of shares
underlying the Forward Contract] multiplied by (ii) the Current Market Price of
the Common Stock as of the Maturity Date multiplied by (iii) the Exchange Rate
and (B) any accrued and unpaid Yield Enhancement Payments. [To be revised if
TARGETS are to be sold at a per unit price other than the Current Market Price
of the Common Stock] On the Maturity Date, the Maturity Payment shall become
immediately due and payable.
The "Exchange Rate" shall be determined in accordance with the
following formula, subject to adjustment as a result of certain events as
provided in Sections 403, 404 and 405: (i) if the Current Market Price of the
Common Stock as of the Maturity Date or the Accelerated Maturity Date, as the
case may be, is less than or equal to [insert 130% of the Current Market Price
on the date of issuance] (the "Appreciation Threshold Price"), then the Exchange
Rate shall be one (1), and (ii) if the Current Market Price of the Common Stock
as of the Maturity Date or the Accelerated Maturity Date, as the case may be, is
greater than the Appreciation Threshold Price, then the Exchange Rate shall be a
fraction (rounded upward or downward to the nearest 1/10,000th or, if there is
not a nearest 1/10,000th, to the next lower 1/10,000th), of which the numerator
is the Appreciation Threshold Price, and of which the denominator is the Current
Market Price of the Common Stock as of the Maturity Date or the Accelerated
Maturity Date, as the case may be. [To be revised if TARGETS are to be sold at a
per unit price other than the Current Market Price of the Common Stock]
SECTION 403 Dilution Adjustments.
The Exchange Rate and the Appreciation Threshold Price shall be
subject to adjustment from time to time as follows:
(a) Stock Dividends, Splits, Reclassifications, Etc. If the
Designated Issuer shall, after the date hereof,
(i) pay a stock dividend or make a distribution with respect to
Common Stock in shares of such stock;
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(ii) subdivide or split the outstanding shares of Common Stock into
a greater number of shares of Common Stock;
(iii) combine the outstanding shares of Common Stock into a smaller
number of shares; or
(iv) issue by reclassification of shares of its Common Stock any
shares of other common stock of the Designated Issuer;
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to the number of shares of Common Stock (or in the case of a
reclassification referred to in clause (iv) above, the number of shares of other
common stock of the Designated Issuer issued pursuant thereto), or the fraction
thereof, that a holder who held one share of Common Stock immediately prior to
such event would be entitled solely by reason of such event to hold immediately
after such event. The Appreciation Threshold Price shall also be adjusted in the
manner described in paragraph (e).
(b) Right or Warrant Issuances. If the Designated Issuer shall,
after the date hereof, issue, or declare a record date in respect of an issuance
of, rights or warrants to all holders of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less than
the Then-Current Market Price of the Common Stock (other than rights to purchase
Common Stock pursuant to a plan for the reinvestment of dividends or interest),
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the time the adjustment
is effected by reason of the issuance of such rights or warrants, plus the
number of additional shares of Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to the time the
adjustment is effected, plus the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
so offered for subscription or purchase pursuant to such rights or warrants
would purchase at the Then-Current Market Price of the Common Stock, which shall
be determined by multiplying the total number of shares so offered for
subscription or purchase by the exercise price of such rights or warrants and
dividing the product so obtained by such Then-Current Market Price. To the
extent that, after the expiration of such rights or warrants, the shares of
Common Stock offered thereby shall not have been delivered, the Exchange Rate
shall be further adjusted to equal the Exchange Rate which would have been in
effect had such adjustment for the issuance of such rights or warrants been made
upon the basis of delivery of only the number of shares of Common Stock actually
delivered. The Appreciation Threshold Price shall also be adjusted in the manner
described in paragraph (e).
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(c) Distributions of Other Assets. If the Designated Issuer shall,
after the date hereof, declare or pay a dividend or make a distribution to all
holders of Common Stock, in either case, of evidences of its indebtedness or
other non-cash assets (excluding any dividends or distributions referred to in
paragraph (a) above) or shall issue to all holders of Common Stock rights or
warrants to subscribe for or purchase any of its securities (other than rights
or warrants referred to in paragraph (b) above), then, in each such case, the
Exchange Rate shall be multiplied by a Dilution Adjustment equal to a fraction,
the numerator of which shall be the Then-Current Market Price per share of the
Common Stock, and the denominator of which shall be such Then-Current Market
Price per share less the fair market value as of the time the adjustment is
effected of the portion of the assets, evidences of indebtedness, rights or
warrants so distributed or issued applicable to one share of Common Stock. The
Appreciation Threshold Price shall also be adjusted in the manner described in
subparagraph (e). [Notwithstanding the foregoing, in the event that, with
respect to any dividend or distribution to which this paragraph (c) would
otherwise apply, the denominator in the fraction referred to above formula is
less than $1.00 (or is a negative number), then the Company may, at its option,
elect to have the adjustment provided by this paragraph (c) not be made and in
lieu of such adjustment, on the Maturity Date, the Company shall deliver to the
Holders of the Securities an additional amount of cash equal to the fair market
value of such indebtedness, assets, rights or warrants so distributed or
issued.]
(d) Cash Dividends; Excess Purchase Payments. If, after the date
hereof, the Designated Issuer declares a record date in respect of a
distribution of cash (other than any Permitted Dividends, any cash distributed
in consideration of fractional shares of Common Stock and any cash distributed
in a Reorganization Event), by dividend or other wise, to all holders of Common
Stock, or makes an Excess Purchase Payment, then the Exchange Rate will be
multiplied by a Dilution Adjustment equal to a fraction, the numerator of which
shall be the Then-Current Market Price of the Common Stock on such record date,
and the denominator of which shall be such Then-Current Market Price less the
amount of such distribution applicable to one share of Common Stock which would
not be a Permitted Dividend (or in the case of an Excess Purchase Payment, less
the aggregate amount of such Excess Purchase Payment for which adjustment is
being made at such time divided by the number of shares of Common Stock
outstanding on such record date). For purposes of these adjustments, (A)
"Permitted Dividend" means any quarterly cash dividend in respect of Common
Stock, other than a quarterly cash dividend that exceeds the immediately
preceding quarterly cash dividend, and then only to the extent that the per
share amount of such dividend results in an annualized dividend yield on the
Common Stock in excess of 10.0% and (B) "Excess Purchase Payment" means the
excess, if any, of (x) the cash and the value of all other consideration paid by
the Designated Issuer or any of its subsidiaries with respect to one share of
Common Stock acquired in a tender offer or exchange offer by the Designated
Issuer or any of its subsidiaries, over (y) the Then-Current Market Price of the
Common Stock. The Appreciation Threshold Price shall also be adjusted in the
manner described in subparagraph (e). [Notwithstanding the foregoing, in
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the event that, with respect to any dividend or distribution to which this
paragraph (c) would otherwise apply, the denominator in the fraction referred to
above formula is less than $1.00 (or is a negative number), then the Company
may, at its option, elect to have the adjustment provided by this paragraph (c)
not be made and in lieu of such adjustment, on the Maturity Date, the Company
shall deliver to the Holders of the Securities an additional amount of cash
equal to the fair market value of such indebtedness, assets, rights or warrants
so distributed or issued.]
(e) Adjustments to Appreciation Threshold Price and Closing Prices.
(i) If any adjustment is made to the Exchange Rate pursuant to paragraph (a),
(b), (c) or (d) of this Section 403, an adjustment shall also be made to the
Appreciation Threshold Price. The required adjustment shall be made by dividing
the Appreciation Threshold Price by the relevant Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating the
Current Market Price, the Then-Current Market Price or the Transaction Value,
there shall occur any event requiring an adjustment to be effected pursuant to
this Section 403, then the Closing Price for each Trading Day in the Calculation
Period occurring prior to the day on which such adjustment is effected shall be
adjusted by being divided by the relevant Dilution Adjustment.
(f) Timing of Dilution Adjustments. Each Dilution Adjustment shall
be effected:
(i) in the case of any dividend, distribution or issuance, at the
opening of business on the Business Day next following the record date for
determination of holders of Common Stock entitled to receive such
dividend, distribution or issuance or, if the announcement of any such
dividend, distribution, or issuance is after such record date, at the time
such dividend, distribution or issuance shall be announced by the
Designated Issuer;
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction;
(iii) in the case of any Excess Purchase Payment for which the
Designated Issuer shall announce, at or prior to the time it commences the
relevant share repurchase, the repurchase price per share for shares
proposed to be repurchased, on the date of such announcement; and
(iv) in the case of any other Excess Purchase Payment on the date
that the holders of the repurchased shares become entitled to payment in
respect thereof.
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(g) General; Failure of Dilution Event to Occur. All Dilution
Adjustments shall be rounded upward or downward to the nearest 1/10,000th (or if
there is not a nearest 1/10,000th to the next lower 1/10,000th). No adjustment
in the Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this sentence are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
any announcement or declaration of a record date in respect of a dividend,
distribution, issuance or repurchase requiring an adjustment pursuant to this
Section 403 shall subsequently be cancelled by the Designated Issuer, or such
dividend, distribution, issuance or repurchase shall fail to receive requisite
approvals or shall fail to occur for any other reason, then, upon such
cancellation, failure of approval or failure to occur, the Exchange Rate shall
be further adjusted to the Exchange Rate which would then have been in effect
had adjustment for such event not been made. If a Reorganization Event shall
occur after the occurrence of one or more events requiring an adjustment
pursuant to this Section 403, the Dilution Adjustments previously applied to the
Exchange Rate in respect of such events shall not be rescinded but shall be
applied to the new Exchange Rate provided for under Sections 404 and 405.
SECTION 404 Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of the Designated
Issuer, or any surviving entity or subsequent surviving entity of the Designated
Issuer (a "Designated Issuer Successor"), with or into another entity (other
than a merger or consolidation in which the Designated Issuer is the continuing
corporation and in which the Common Stock outstanding immediately prior to the
merger or consolidation is not exchanged for cash, securities or other property
of the Designated Issuer or another Person), (ii) any sale, transfer, lease or
conveyance to another Person of the property of the Designated Issuer or any
Designated Issuer Successor as an entirety or substantially as an entirety,
(iii) any statutory exchange of securities of the Designated Issuer or any
Designated Issuer Successor with another Person (other than in connection with a
merger or acquisition) or (iv) any liquidation, dissolution or winding up of the
Designated Issuer or any Designated Issuer Successor (any such event described
in clause (i), (ii), (iii) or (iv), a "Reorganization Event"), the Exchange Rate
shall be adjusted so that, on the Maturity Date, the Holders of the Securities
shall receive cash in an amount equal to the product of _______________ [insert
the aggregate number of shares underlying the Forward Contract] multiplied by
(i) if the Transaction Value is less than or equal to the Appreciation Threshold
Price, the Transaction Value, and (ii) if the Transaction Value is greater than
the Appreciation Threshold Price, the Appreciation Threshold Price. [To be
revised if TARGETS are to be sold at a per unit price other than the Current
Market Price of the Common Stock]
"Transaction Value" means the sum of: (a) for any cash received in
any such Reorganization Event, the amount of cash received per share of Common
Stock; (b) for
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any property other than cash or Marketable Securities received in any such
Reorganization Event, an amount equal to the market value on the date the
Reorganization Event is consummated of such property received per share of
Common Stock; and (c) for any Marketable Securities received in any such
Reorganization Event, an amount equal to the average Closing Price per share of
such Marketable Securities for the Calculation Period of 10 Trading Days
immediately prior to the Maturity Date multiplied by the number of such
Marketable Securities received for each share of Common Stock; provided that if
no Closing Price for such Marketable Securities may be determined for one or
more (but not all) of such Trading Days such Trading Day shall be disregarded in
the calculation of such average Closing Price (but no additional trading days
shall be added to the Calculation Period). If no Closing Price for the
Marketable Securities may be determined for all such Trading Days, the
calculation in the preceding clause (c) shall be based on the most recently
available Closing Price for the Marketable Securities prior to such 10 Trading
Days.
"Marketable Securities" means any perpetual equity securities or
debt securities with a stated maturity after the Maturity Date, in each case
that are listed on a U.S. national securities exchange or reported by The Nasdaq
National Market. The number of shares of any equity securities constituting
Marketable Securities included in the calculation of Transaction Value pursuant
to the preceding clause (c) shall be subject to adjustment if any event that
would, had it occurred with respect to the Common Stock or the Designated
Issuer, have required an adjustment pursuant to Section 403, shall occur with
respect to such Marketable Securities or the issuer thereof between the time of
the Reorganization Event and the Maturity Date. Adjustment for such subsequent
events shall be as nearly equivalent as practicable to the adjustments provided
for in Section 403.
SECTION 405 Adjustments of Exchange Rate.
The Company shall be responsible for the effectuation and
calculation of any adjustment pursuant this Article IV and shall furnish the
Trustee with notice of any such adjustment. The Trustee shall be under no duty
or obligation to review or determine any calculations, adjustments, dividend
calculations, determination of either the Maturity Payment or Accelerated
Maturity Payment payable hereunder, exchange rate determinations or any other
calculation set forth in this Article IV or in Section 502 hereof.
ARTICLE V
REMEDIES
SECTION 501 Acceleration Events.
"Acceleration Event," wherever used herein means any one of the
following events (whatever the reason for such Acceleration Event and whether it
shall be voluntary or
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involuntary or be effected by operation of law, pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) the entry of a decree or order for relief in respect of the
Company by a court having jurisdiction in the premises in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
90 consecutive days; or
(b) the commencement by the Company of a voluntary case under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law, or the
consent by it to the entry of an order for relief in an involuntary case under
any such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Company or
of any substantial part of its property, or the making by it of an assignment
for the benefit of its creditors, or the admission by it is in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any action; or
(c) The receipt by the Company of an opinion of a nationally
recognized independent tax counsel experienced in such matters 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),
in either case after, there is more than an insubstantial risk that (i) the
TARGETS TRUST I, a business trust established under the laws of the State of
Delaware (the "Trust") would be subject to United States federal income tax with
respect to interest accrued or received on any securities held by the Trust,
(ii) the Trust would be subject to more than a deminimis amount of other taxes,
duties or other governmental charges, or (iii) the Trust will no longer be
classified as a "grantor trust" for United States federal income tax purposes;
or
(d) The receipt by the Company of an opinion of a nationally
recognized independent counsel experienced in practice under the Investment
Company Act 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, there is a more than an insubstantial risk that the
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Trust is or will be considered an Investment Company which is required to be
registered under the Investment Company Act.
SECTION 502 Acceleration of Maturity.
(a) If an Acceleration Event described in Section 501 occurs then
the Company shall give written notice thereof to the Trustee, which notice shall
include a statement as to the amount of the Accelerated Maturity Payment. On the
Accelerated Maturity Date the Forward Contract shall be automatically
accelerated and the Company shall be obligated to remit to the Trustee prior to
10:00 am on any Payment Date and the Trustee shall thereafter remit to the
Holders, in respect of the Securities held by them, an amount in cash equal to a
pro rata portion (based on the beneficial interest in the Forward Contract
represented by such Securities) of the Accelerated Maturity Amount as calculated
by the Company.
(b) As used herein, the "Accelerated Maturity Date" means the date
of the occurrence of the event or events constituting such Acceleration Event.
As used herein, the "Accelerated Maturity Amount" means the sum of (A) the
product of (i) _______________ [insert the aggregate number of shares underlying
the Forward Contract] multiplied by (ii) the Current Market Price of the Common
Stock as of the Accelerated Maturity Date, multiplied by (iii) the Exchange Rate
and (B) any accrued and unpaid Yield Enhancement Payments through the
Accelerated Maturity Date.
(c) The Company agrees, and each Holder of Securities, by such
Holder's acceptance thereof, agrees that the Accelerated Maturity Amount is a
reasonable pre-estimate of loss to such Holder and is not a penalty. Such amount
is payable for the loss of bar gain and a Holder will not be entitled to recover
additional damage as a consequence of loss resulting from any Acceleration
Event.
SECTION 503 Taxes.
The Company shall pay any and all documentary, stamp, transfer or
similar taxes and charges that may be payable in respect of the entry into this
Indenture and the performance of its obligations hereunder.
SECTION 504 Treatment of Forward Contract.
The Company hereby agrees that: (i) it will not treat this
Indenture, any portion of the Securities, or any obligation hereunder (except in
regards to any Yield Enhancement Payments) as giving rise to any interest income
or other inclusion of ordinary income on the part of the Holders of the
Securities; (ii) it will not treat the delivery of any portion of the cash to be
delivered pursuant to this Indenture (except in regards to any Yield Enhancement
Payments) as the payment of interest or ordinary income; (iii) it will treat
this
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Indenture in its entirety as a forward contract for the delivery of such cash;
and (iv) it will not take any action (including filing any tax return or form or
taking any position in any tax proceeding) that is inconsistent with the
obligations contained in the foregoing clauses (i) through (iii).
Notwithstanding the preceding sentence, the Company may take any action or
position required by law, provided that the Company delivers to the Trustee an
opinion of counsel, nationally recognized as expert in Federal tax matters, to
the effect that such action or position is required by a statutory change,
Treasury regulation, or applicable court decision published after the date of
this Indenture.
SECTION 505 Notices.
The Company will or will cause to be delivered to the Trustee and to
each Holder:
(a) Immediately upon the occurrence of any Acceleration Event
hereunder, or upon the Company's obtaining knowledge that any of the conditions
or events described in Section 501(a) or (b) shall have occurred with respect to
the Designated Issuer, notice of such occurrence; and
(b) In case at any time prior to the Maturity Date the Company
receives notice, or otherwise obtains knowledge, that any event requiring that
an adjustment be effected pursuant to Sections 403, 404 and 405 hereof shall
have occurred or be pending, then the Company shall promptly cause to be
delivered to the Trustee and each Holder a notice identifying such event and
stating, if known to the Company, the date on which such event is to occur and,
if applicable, the record date relating to such event. The Company shall cause
further notices to be delivered to the Trustee and each Holder if the Company
shall subsequently receive notice, or otherwise obtain knowledge, of any further
or revised information regarding the terms or timing of such event or any record
date relating thereto.
SECTION 506 Collection of Amounts Owed and Suits for Enforcement by Trustee.
The Company covenants that if default is made in the payment of
amounts owed on any Security at Maturity, the Company will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such Securities the whole
amount then due and payable on such Securities and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amount forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may and shall
at the direction of the Holders of a majority of the Outstanding Securities,
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may and shall, at the direction of the
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Holders of a majority of the Outstanding Securities, prosecute such proceeding
to judgment or final decree, and may and shall, at the direction of the Holders
of a majority of the Outstanding Securities, enforce the same against the
Company or any other obligor upon such Securities, and collect the monies
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities wherever
situated.
If an Acceleration Event occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders of the Securities by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 507 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expense,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 508 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of the Securities, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section
606; and
Second: To the payment of the amounts then due and unpaid on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities.
Third: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 509 Limitation on Suits.
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No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has (i) previously given written notice to the
Trustee of a continuing Acceleration Event with respect to the Forward
Contract and (ii) the Holders of not less than 25% of the Outstanding
Securities shall have made written request to the Trustee to institute
proceedings in respect of such Acceleration Event in its own name as
Trustee hereunder;
(2) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(3) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(4) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Securities; it being understood and intended
that no one or more of such Holders shall have any right in any manner
whatever by virtue of, or by availing of, any provision of this Indenture
to affect, disturb or prejudice the rights of any other of such Holders,
or to obtain or to seek to obtain priority or preference over any other of
such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of
Holders. For the protection and enforcement of the provisions of this
Section 509, each and every Holder of Securities and the Trustee shall be
entitled to such relief as can be given at law or in equity.
SECTION 510 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 511 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of a mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 305, no right
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or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 512 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Acceleration Event
shall impair any such right or remedy or constitute a waiver of any such
Acceleration Event or an acquiescence therein. Every right and remedy given by
this Article V or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 513 Control by Holder.
The Holder of a majority of the Outstanding Securities shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee, with respect to the Securities, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) subject to the provisions of Section 601, the Trustee
shall have the right to decline to follow any such direction if the
Trustee in good faith shall, by a Responsible Officer or Responsible
Officers of the Trustee, determine that the proceeding so directed would
be unjustly prejudicial to the Holders of Securities not joining in any
such direction; and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 514 Waiver of Past Defaults.
The Holders of not less than a majority of the Outstanding
Securities may on behalf of the Holders of all the Securities waive any past
default hereunder and its consequences, except a default in the payment of
amounts owed in respect of any Security, or in respect of a covenant or
provision hereof which under Article Eight cannot be modified or amended without
the consent of the Holder of each Outstanding Security affected.
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Upon any such waiver, such default shall cease to exist, and any
Acceleration Event arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 515 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 516 Filing Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, competition or
other judicial proceedings, or any voluntary or involuntary case under the
Federal bankruptcy laws, as now or hereafter constituted, relative to the
Company or any other obligor upon the Securities or the property of the Company
or of such other obligor or their creditors, the Trustee (irrespective of
whether the amount owed on such Securities shall then be due and payable as
therein expressed or by declaration of acceleration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of amounts due on the Securities) shall be entitled and
empowered, any intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amounts owing and
unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders of
such Securities allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, custodian, liquidator, sequestrator (or
other similar official) in any such proceeding is hereby authorized by each such
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of
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such payments directly to such Holders, to pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 606 of this Indenture.
Nothing herein shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt, on behalf of any Holder any plan or
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in such proceeding.
SECTION 517 Unconditional Right of Holders to Receive Payments.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the amounts owed on such Security and to institute suit for
the enforcement of any such payment and interest thereon, and such right shall
not be impaired without the consent of the Holder.
SECTION 518 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 519 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by such Holder's acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant,
but the provisions of this Section 519 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder or group of Holders holding in
the aggregate more than 10% of the Outstanding Securities, or to any suit
instituted by any Holder of a Security for the enforcement of the payment of
amounts owed on such Security on or after the Maturity Date or Accelerated
Maturity Date.
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ARTICLE VI
THE TRUSTEE
SECTION 601 Certain Rights of Trustee.
Subject to the provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, certification, order, act or direction of the
Company mentioned herein shall be sufficiently evidenced by a Company Request or
Company Order and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may at any time (i) consult with counsel and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon and (ii) seek instructions
concerning the administration of this Indenture from any court of competent
jurisdiction;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have provided to the Trustee reasonable security or indemnity against the
costs, expenses (including attorney's fees and expenses and the expenses of the
Trustee's agents, nominees and custodians) and liabilities which might be
incurred by it in compliance with such request or direction including such
reasonable advances as may be requested by the Trustee;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
(including, without limitations, any certificates delivered pursuant to Section
304 hereof), but the Trustee, in its discretion, may make such
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further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be required to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it;
(i) the granting of any right to the Trustee hereunder shall
not be deemed to impose on the Trustee an obligation to exercise such rights,
subject to Section 601(j); and
(j) the Trustee shall not be obligated to take any action or
to exercise any remedy hereunder unless directed to do so by the Holders of a
majority of the Securities then Outstanding and shall have no liability for its
failure to act pending receipt by it of any such direction.
This Section 601 is in furtherance of and subject to Sections 315
and 316 of the Trust Indenture Act.
SECTION 602 Certain Duties and Responsibilities of Trustee.
(a) Except upon the occurrence of an Acceleration Event;
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions which
by any provision hereof are specifically required to be furnished to the
Trustee, the
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Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Acceleration Event with respect to the
Securities, of which a Responsible Officer of the Trustee has actual knowledge,
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that
(1) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority of the Outstanding Securities
determined as provided in Section 513, relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Securities; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or indemnity,
reasonably satisfactory to it, against such risk or liability is not
reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 603 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the
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Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Company of Securities or the proceeds thereof.
SECTION 604 May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with the Company with the
same rights it would have if it were not Trustee, Paying Agent, Security
Registrar or such other agent.
SECTION 605 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 606 Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust as set forth in a separate fee letter
between the Trustee and the Company);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise of performance of any of its powers or duties hereunder.
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SECTION 607 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that shall be
eligible to act as Trustee under an indenture qualified under the Trust
Indenture Act and that has a combined capital and surplus of at least
$50,000,000. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 608 Resignation and Removal; Appointment of Successor.
(a) The Trustee may resign at any time with respect to the
Securities upon giving written notice thereof to the Company. If the instrument
of acceptance by a successor Trustee required by Section 609 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities.
(b) The Trustee may be removed at any time with respect to the
Securities by Act of the Holders of a majority of the Outstanding Securities,
delivered to the Trustee and to the Company.
(c) If at any time:
(1) the Trustee shall fail to comply with Section 310(b)
of the Trust Indenture Act after written request therefor by the
Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section
310(a) of the Trust Indenture Act and shall fail to resign after
written request there for by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
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then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 315(c) of the
Trust Indenture Act, any Holder who has been a bona fide Holder of Security for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor Trustee or
Trustees.
(d) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Securities, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities (it being understood that any such successor Trustee may be appointed
with respect to the Securities and that at any time there shall be only one
Trustee with respect to the Securities and shall comply with the applicable
requirements of Section 609. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities shall be appointed by Act of the Holders of a majority
of the Outstanding Securities delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 609,
become the successor Trustee with respect to the Securities and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities shall have been so appointed by the
Company or the Holders and accepted appointment in the manner required by
Section 609, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities.
(e) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities and each appointment of a
successor Trustee with respect to the Securities in the manner provided in
Section 106. Each notice shall include the name of the successor Trustee with
respect to the Securities and the address of its Corporate Trust Office.
SECTION 609 Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to the Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer
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and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities, the Company, the retiring Trustee and
each successor Trustee with respect to the Securities shall execute and deliver
an indenture supplemental hereto wherein each successor Trustee shall accept
such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities, (2) if the retiring Trustee is not
retiring with respect to all Securities, shall contain such provisions as shall
be deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities but, on request of the
Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under the Trust Indenture Act.
SECTION 610 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any
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of the parties hereto. In case any Securities shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 611 Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that none of the Company or the Trustee
or any agent of either of them shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the Holders of
Securities in accordance with Section 312 of the Trust Indenture Act, regardless
of the source from which such information was derived, and that the Trustee
shall not be held accountable by reason of mailing any material pursuant to a
request made under Section 312(b) of the Trust Indenture Act.
SECTION 612 Reports by Trustee.
Within 60 days after April 15 of each year commencing with the first
May 15 after the first issuance of Securities pursuant to this Indenture, the
Trustee shall transmit by mail to all Holders of Securities as provided in Trust
Indenture Act Section 313(c) a brief report dated as of such April 15 if
required by Trust Indenture Act Section 313(a).
ARTICLE VII
CONSOLIDATION, MERGER OR SALE
SECTION 701 Consolidation, Merger or Sale.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, unless:
(1) the Person formed by such consolidation of into which Company is
merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of amounts owed on all Securities
and the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
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(2) immediately after giving effect to such transaction, no
Acceleration Event, and no event which, after notice or lapse of time or
both, would become an Acceleration Event, shall have happened and be
continuing; and
(3) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
SECTION 702 Successor Corporation Substituted.
Upon any consolidation by the Company with or merger by the Company
into any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
701, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter, except in the
case of a lease, the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 801 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of the
Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company; or
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(3) to add any additional Acceleration Events with respect to
the Forward Contract; or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate the
issuance of the Securities in bearer form, registrable or not registrable,
or to provide for an uncertificated (commonly known as "book entry")
Security on terms satisfactory in substance to the Trustee; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Outstanding Security which is entitled to
the benefit of such provision; or
(6) to secure the Securities; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities and to add
to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements of Section 609(b); or
(8) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
adversely affect the interests of the Holders of Securities in any
material respect.
SECTION 802 Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority of the
Outstanding Securities, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities under this Indenture; provided, however, that no
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Maturity of the Forward Contract, or reduce the
Maturity Payment payable on the Maturity Date, or reduce the Accelerated
Maturity Amount that would be due and payable on an Accelerated Maturity
Date pursuant to Section 502, or reduce the Yield Enhancement Payments
that would be due and payable pursuant to Section 308, or change the coin
or currency in which amounts
47
<PAGE> 54
owed in respect of the Forward Contract are payable, or impair the right
to institute suit for the enforcement of any such payment, on or after the
Maturity thereof, or reduce the percentage of the Outstanding Securities,
the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(2) change any obligation of the Company to maintain an office
or agency in the places and for the purposes specified in Section 902, or
(3) modify any of the provisions of this Section 802, Section
515, or Section 906, except to increase any such percentage to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby; provided, however, that this clause shall not be deemed
to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section, or
the deletion of this proviso, in accordance with the requirements of
Sections 608(b) and 801(7).
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 803 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel, the
preparation of which shall not be at the expense of the Trustee, stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 804 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
48
<PAGE> 55
SECTION 805 Conformity with Trust Indenture Act.
After this Indenture is qualified pursuant to the Trust Indenture
Act, every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 806 Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supple mental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
any new Securities so modified as to conform, in the opinion of the Trustee and
the Company, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE IX
COVENANTS
SECTION 901 Payment.
The Company covenants and agrees for the benefit of the Holders of
the Securities that it will duly and punctually pay all amounts owed on the
Securities in accordance with the terms of the Securities and this Indenture.
SECTION 902 Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for the
Securities an office or agency where the Securities may be presented or
surrendered for payment, where the Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no
49
<PAGE> 56
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for the
Securities for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 903 Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any Securities, it will, on or before each due date of amounts owed
on such Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the amounts owed so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents with
respect to the Securities, it will, prior to each due date of amounts owed in
respect of the Securities, deposit with any such Paying Agent a sum sufficient
to pay the amounts owed in respect of the Securities so becoming due, such sum
to be held in trust for the benefit of the Persons entitled thereto, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its action or failure so to act.
The Company will cause each Paying Agent of the Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of amounts owed
in respect to the Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities ) in the making of any payment of
amounts owed in respect to the Securities; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by
50
<PAGE> 57
any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the amounts owed in respect to
any Security and remaining unclaimed for two years after such amount has become
due and payable shall be paid to the Company on Company Request along with any
interest that has accumulated thereon as a result of such money being invested
at the direction of the Company, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment of such
amounts without interest thereon, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Company
as trustee thereof, shall thereupon cease; provided, however, that the Trustee
or such Paying Agent, before being required to make any such repayment, may at
the expense of the Company cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in The City of New York, or cause to be mailed to such
Holder, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining will
be repaid to the Company.
SECTION 904 Limitation on Liens.
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 (indebtedness for borrowed money being hereinafter in this
section called "debt") if such debt is secured by a pledge of, lien on, or
security interest in any shares of stock of any Restricted Subsidiary, whether
such stock is now owned or shall hereafter be acquired, without effectively
providing that the Securities shall be secured equally and ratably with such
debt.
SECTION 905 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant, set forth herein, if before the time for such compliance, the Holders
of at least a majority of the Outstanding Securities shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant, but no such waiver shall extend to or affect such
covenant except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant shall remain in full force and effect.
51
<PAGE> 58
SECTION 906 Officers' Certificate as to Default.
The Company will deliver to the Trustee, on or before a date not
more than four months after the end of each fiscal year of the Company (which on
the date hereof is the calendar year) ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observation of any of the
terms, provisions and conditions of this Indenture, and, if the Company shall be
in default, specifying all such defaults and the nature thereof of which they
may have knowledge.
The Company will deliver written notice to the Trustee promptly
after any officer of the Company has knowledge of the occurrence of any event
that with the giving of notice or the lapse of time or both would become an
Acceleration Event under Section 501.
SECTION 907 Payment of Expenses.
(a) In connection with the offering, sale and issuance of the
Securities and in connection with the sale of any securities by the Trust
(collectively, the "Trust Securities"), the Company, in its capacity as issuer
with respect to the Securities, shall:
(i) pay all costs and expenses relating to the offering, sale and
issuance of the Trust Securities, including commissions and
compensation to the underwriters payable pursuant to any
applicable underwriting agreement and compensation of the
Trustee under this Indenture in accordance with the provisions
of Section 606;
(ii) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of
the Trust, the offering, sale and issuance of the Trust
Securities of the Trust (including commissions and
compensation to the underwriters in connection therewith), the
fees and expenses of the Institutional Trustee, the Regular
Trustees and the Delaware Trustee of the Trust, the costs and
expenses relating to the operation, maintenance and
dissolution of the Trust and the enforcement by the
Institutional Trustee of the rights of the holders of the
Trust Securities, including without limitation, costs and
expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in
connection with the acquisition, financing, and disposition of
assets of the Trust);
52
<PAGE> 59
(iii) be primarily liable for any indemnification obligations
arising with respect to the Declaration of the Trust;
(iv) pay any and all taxes (other than United States withholding
taxes in respect of amounts paid on the Securities held by the
Trust) and all liabilities, costs and expenses with respect to
such taxes of the Trust.
(b) Upon termination of this Indenture or the Securities or the
removal or resignation of the Trustee pursuant to Section 608, the Company shall
pay to the Trustee all amounts accrued and owing to the Trustee to the date of
such termination, removal or resignation. Upon termination of the Amended and
Restated Declaration of the Trust or the removal or resignation of the Delaware
Trustee or the Institutional Trustee, as the case may be, pursuant to Section
5.6 of the Amended and Restated Declaration of the Trust, the Company shall pay
to such Delaware Trustee or such Institutional Trustee, as the case may be, all
amounts accrued and owing to such Delaware Trustee or such Institutional
Trustee, as the case may be, to the date of such termination, removal or
resignation.
53
<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
SALOMON SMITH BARNEY HOLDINGS INC.
[SEAL] By
----------------------------------
Name:
Title:
Attest:
- ----------------------
THE CHASE MANHATTAN BANK, Trustee
[SEAL] By
----------------------------------
Name: Cynthia Kerpen
Title: Trust Officer
Attest:
- ----------------------
54
<PAGE> 61
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of _____, 1998, before me personally appeared
___________, to be known, who, being by me duly sworn, did depose and say that
he is a ___________ of SALOMON SMITH BARNEY HOLDINGS INC., the corporation
described in and which executed the foregoing instrument; that he knows the seal
of the said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the board of directors of
said corporation; and that he signed his name thereto by like authority.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-----------------
Notary Public
[Notarial Seal]
55
<PAGE> 62
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the __ day of_____, 1998, before me personally appeared Cynthia
Kerpen, to me known, who, being by me duly sworn, did depose and say that she is
a trust officer of The Chase Manhattan Bank, the New York banking corporation
described in and which executed the foregoing instrument; that she knows the
seal of said New York banking corporation; that the seal affixed to said
instrument is such seal; that it was so affixed by authority of the Board of
Directors of said New York banking corporation, and that she signed her name
thereto by like authority.
-------------------------
Notary Public
[Notarial Seal]
56
<PAGE> 63
(Face of Security)
[Global Security Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO.), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO HEREIN.
THIS SECURITY WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER
EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE COMPANY THAT THE
RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH, ALL AS
PROVIDED HEREIN.
[Book Entry Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR ONE OR MORE
SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITORY TRUST COMPANY, 55 WATER STREET, NEW YORK, NEW YORK
(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. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH
A-1
<PAGE> 64
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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.
CUSIP NO.
NO.____
SALOMON SMITH BARNEY HOLDINGS INC.
Forward Contract
with respect to XYZ Common Stock
SALOMON SMITH BARNEY HOLDINGS INC., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company," which term
includes any successor Person) for value received, hereby certifies
that__________ * , or registered assigns, is the owner of a ** % interest in the
Forward Contract (as defined in the Indenture referred to below) and, as such,
is entitled to receive from the Company its pro rata share of (i) the Maturity
Payment on___________ , subject to acceleration to an Accelerated Maturity Date
and adjustment to the Accelerated Maturity Payment pursuant to the terms of the
Indenture and (ii) the Yield Enhancement Payments on each Payment Date.
Payment of (i) the Maturity Payment or Accelerated Maturity Payment
and (ii) the Yield Enhancement Payments with respect to this Security will be
made at the office or agency of the Company maintained for that purpose in the
Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
Reference is hereby made to the further provisions of this Security
set forth after the Trustee's certificate of authentication, which further
provisions shall for all purposes have the same effect as if set forth at this
place.
- --------
* Initially, TARGETS Trust I, a Delaware business trust.
** Initially, 100%.
A-2
<PAGE> 65
Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Security shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
A-3
<PAGE> 66
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: , 1998
SALOMON SMITH BARNEY HOLDINGS INC.
By:
-------------------------------
By:
-------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
The Chase Manhattan Bank, as Trustee
By:
-------------------------
Authorized Signatory
A-4
<PAGE> 67
SALOMON SMITH BARNEY HOLDINGS INC.
Forward Contract
with respect to XYZ Common Stock
This Security is one of a duly authorized issue of the Company
(herein called the "Securities"), issued and to be issued under an Indenture
dated as of, 1998 (herein called the "Indenture"), between the Company and The
Chase Manhattan Bank (herein called the "Trustee," which term includes any
successor trustee under the Indenture), relating to a Forward Contract with
respect to XYZ Common Stock, to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Securities are not subject to redemption at the option of the
Company or at the option of the Holder prior to maturity; however, if certain
Acceleration Events shall have occurred and be continuing, the maturity of the
Securities will be accelerated to the Accelerated Maturity Date pursuant to the
terms of the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities 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 of the Securities at the time Outstanding to
be affected. The Indenture also contains provisions permitting the Holders of
specified percentages of the Securities at the time Outstanding, on behalf of
the Holders of all Securities, 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 a Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay (i) the Maturity Payment or
Accelerated Maturity Payment, as the case may be, and (ii) the Yield Enhancement
Payments with respect to this Security at the time, place and rate, and in the
coin or currency, prescribed in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar, duly executed by
the
A-5
<PAGE> 68
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form. As provided in
the Indenture and subject to certain limitations therein set forth, the
Securities are exchangeable for one or more new Securities of like tenor and
representing an equal aggregate beneficial interest in the Forward Contract to
be surrendered for exchange. If (a) any 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 or (b) the Company executes and delivers to the
Trustee a Company Order to the effect that the Global Securities shall be
exchangeable for a certificated Securities, the Global Securities will be
exchangeable for a Security in definitive certificated form of like tenor. Such
a definitive Security shall be registered in such name or names as the
Depositary shall instruct the Trustee.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
-----------------
A-6
<PAGE> 69
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
[Please Insert Social Security Number or Other Identifying Number of Assignee:]
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE:]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The within Security of Salomon Smith Barney Holdings Inc. and does hereby
irrevocably constitute and appoint
- --------------------------------------------------------------------------------
Attorney to transfer said Security on the books of said Company, with full power
of substitution in the premises.
Dated:
-------------------------- ------------------------------------
NOTICE: The signature to this
assignment must correspond with
the name as written upon the
first page of the within
Security in every particular,
without alteration or
enlargement or any change
whatever, and be guaranteed by
the endorser's bank or broker.
A-7
<PAGE> 1
Exhibit 5
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
March 26, 1998
Salomon Smith Barney Holdings Inc.
TARGETS Trust I
c/o Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Re: Salomon Smith Barney Holdings Inc.
TARGETS Trust I
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to (1) TARGETS Trust I (the
"Trust"), 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.
333-45529) filed by the Company and the Trust with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act of 1933, as amended
(the "Securities Act") on February 3, 1998 and Amendment No. 1 thereto to be
filed with the Commission on the date hereof (such Registration Statement, as so
amended, the "Registration Statement"). The Registration Statement relates to
the issuance and sale of (i) Targeted Growth Enhanced Terms Securities ("TAR
GETS") of the Trust, (ii) certain securities (the "For ward Contract
Securities") representing interests in a forward contract (the "Forward
Contract") of the Company which are to be issued pursuant to an indenture (the
"Indenture"), between the Company and The Chase Manhattan Bank, as trustee (the
"Trustee") and (iii) a guarantee of the Company with respect to the TARGETS (the
"Guarantee"). The TARGETS, the Forward Contract Securities and the Guarantee are
collectively referred to herein as the "Securities."
<PAGE> 2
Salomon Smith Barney Holdings Inc.
TARGETS Trust I
March 26, 1998
Page 2
The TARGETS are to be issued pursuant to the Amended and Restated
Declaration of Trust of the Trust (the "Declaration"), among the Company, as
sponsor and as the issuer of the Forward Contract Securities, Chase Manhattan
Bank Delaware, as Delaware trustee, The Chase Manhattan Bank, as institutional
trustee (the "Institutional Trustee"), and Charles W. Scharf and Michael J.
Day, as regular trustees.
This opinion is being delivered in accordance with the requirements
of Item 601(b)(5) of Regulation S-K under the Securities 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 certificate of trust of the Trust (the
"Certificate of Trust") filed with the Secretary of State of the State of
Delaware on January 30, 1998; (iii) the form of the Declaration (including the
designation of terms of the TARGETS annexed thereto); (iv) the form of the
certificates evidencing the TARGETS; (v) the form of the Targeted Growth
Enhanced Terms Securities Guarantee Agreement (the "Guarantee Agreement"),
between the Company and The Chase Manhattan Bank, as guarantee trustee (the
"Guarantee Trustee"); (vi) the form of the certificates evidencing the Forward
Contract Securities; (vii) the form of the Indenture; (viii) the Amended and Re
stated Certificate of Incorporation of the Company, as amended to date; (ix) the
By-laws of the Company currently in effect; and (x) certain resolutions adopted
by the Board of Directors of the Company (the "Board of Directors") and the
Executive Committee thereof (the "Executive Committee"). 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.
<PAGE> 3
Salomon Smith Barney Holdings Inc.
TARGETS Trust I
March 26, 1998
Page 3
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 photo static 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
Trust, 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 such documents
constitute or will constitute valid and binding obligations of such parties. In
addition, we have assumed that the Declaration, the Guarantee Agreement, the
Forward Contract Securities and the Indenture, when executed, will be executed
in substantially the forms reviewed by us, and that the terms of the Forward
Contract 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 Trust 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 the foregoing and subject to the qualifications,
assumptions, exceptions and limitations set forth herein, we are of the opinion
that:
1. With respect to the TARGETS, when (i) the Registration Statement,
as finally amended (including all necessary post-effective amendments), has
become effec-
<PAGE> 4
Salomon Smith Barney Holdings Inc.
TARGETS Trust I
March 26, 1998
Page 4
tive under the Securities Act; (ii) the Declaration and an underwriting
agreement with respect to the TARGETS (the "Underwriting Agreement") are duly
executed and delivered by the parties thereto; (iii) the Declaration has been
qualified under the Trust Indenture Act of 1939, as amended (the "TIA"); (iv)
the terms of the TARGETS have been established in accordance with the
Declaration; and (v) the TARGETS have been issued, executed and authenticated
in the form of the certificate examined by us and in accordance with
the Declaration and delivered and paid for in accordance with the
Underwriting Agreement, (1) the TARGETS will be duly authorized, validly
issued, fully paid and nonassessable, representing undivided beneficial
interests in the assets of the Trust and (2) the holders of the TARGETS will be
entitled to the same limitation on 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 TARGETS may be obligated, pursuant to the Declaration, to (i) provide
indemnity and/or security in connection with and pay taxes or governmental
charges arising from transfers of TARGETS and (ii) provide security and
indemnity in connection with the requests of or directions to the Institutional
Trustee to exercise its rights and powers under the Declaration.
2. With respect to the Guarantee Agreement, when (i) the
Registration Statement, as finally amended (including all necessary
post-effective amendments), has become effective under the Securities Act; (ii)
the Declaration, the Guarantee Agreement and the Underwriting Agreement are duly
executed and delivered by the parties thereto; (iii) the Declaration has been
qualified under the TIA; (iv) the terms of the TARGETS have been established in
accordance with Declaration; and (v) the TARGETS have been issued, executed and
authenticated in accordance with the Declaration and delivered and paid for in
accordance with the Underwriting Agreement, the
<PAGE> 5
Salomon Smith Barney Holdings Inc.
TARGETS Trust I
March 26, 1998
Page 5
Guarantee will be a valid and binding agreement of the Company, enforceable
against the Company in accordance with its 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).
3. With respect to the Forward Contract Securities, when (i) the
Registration Statement, as finally amended (including all necessary
post-effective amendments), has become effective under the Securities Act; (ii)
the Executive Committee and the Notes Committee appointed by the Executive
Committee and appropriate officers of the Company have taken all necessary
corporate action to approve the issuance and terms of the Forward Contract
Securities and related matters; (iii) the Indenture has been duly executed and
delivered; and (iv) the Forward Contract Securities are duly executed,
delivered, authenticated and issued in the form examined by us and in accordance
with the Indenture, and delivered and paid for by the Trust, the Forward
Contract 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 Guarantee Agreement and the Forward Contract Securities, and
<PAGE> 6
Salomon Smith Barney Holdings Inc.
TARGETS Trust I
March 26, 1998
Page 6
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
Amended and Restated 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, 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 Guarantee and the Forward
Contract 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 govern mental 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
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
March 26, 1998
Salomon Smith Barney Holdings Inc.
TARGETS Trust I
c/o Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
We have acted as tax counsel to Salomon Smith Barney Holdings Inc.,
a Delaware corporation (the "Company"), and TARGETS Trust I, a statutory
business trust formed under the laws of the State of Delaware (the "Trust"), in
connection with the preparation of a Registration Statement on Form S-3
initially filed with the Securities and Exchange Commission (the "Commission")
on February 3, 1998 and Amendment No. 1 thereto to be filed with the Commission
on the date hereof (such Registration Statement, as so amended, the
"Registration Statement"), for the purpose of registering Targeted Growth
Enhanced Terms Securities ("TARGETS") of the Trust representing undivided
beneficial interests in the assets of the Trust.
We hereby confirm that, although the discussion set forth under the
heading "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" in the preliminary
prospectus relating to the offering of TARGETS contained in the Registration
Statement (the "Prospectus") does not purport to discuss all possible United
States federal income tax consequences of the purchase, ownership and
disposition of TARGETS, 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 TARGETS,
based upon current law. It is possible that contrary positions may be taken by
the Internal Revenue Service and that a court may agree with such contrary
positions.
<PAGE> 2
Salomon Smith Barney Holdings Inc.
TARGETS Trust I
March 26, 1998
Page 2
We hereby consent to the use of our name under the heading "Legal
Matters" in the Prospectus and the filing of this opinion with the Commission as
Exhibit 8 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 FEDERAL INCOME TAX
CONSIDERATIONS" set forth in the Prospectus. 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
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Amendment No. 1 to the
Registration Statement on Form S-3 (No. 333-45529) of Salomon Smith Barney
Holdings Inc. and TARGETS Trust I, filed with the Securities and Exchange
Commission on or about March 25, 1998, of our report dated January 26, 1998 on
our audits of the consolidated financial statements and financial statement
schedule of Salomon Smith Barney Holdings Inc. and Subsidiaries as of December
31, 1997 and 1996 and for each of the three years in the period ended December
31, 1997, which report is included in the Form 10-K of Salomon Smith Barney
Holdings Inc. for the year ended December 31, 1997. We also consent to the
reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
New York, New York
March 25, 1998
<PAGE> 1
EXHIBIT 23(B)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in the Amendment No. 1 to Form S-3 Registration
Statement of Salomon Smith Barney Holdings Inc. and TARGETS Trust I (the
"Registration Statement"), of our report dated March 13, 1997, relating 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 Smith Barney
Holdings Inc. for the year ended December 31, 1997.
/s/ ARTHUR ANDERSEN LLP
New York, New York
March 25, 1998
<PAGE> 1
Exhibit 25 (a)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
TARGETS Trust I
(Exact name of obligor as specified in its charter)
Delaware [To be applied for]
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 Greenwich Street
New York, New York 10013
(Address of principal executive offices) (Zip Code)
---------------------------------------------
Targeted Growth Enhanced Terms Securities of TARGETS Trust I
(Title of the indenture securities)
-------------------------------------------------------------------
1
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, Suite 2310, 5 Empire State Plaza,
Albany, New York 12223.
Board of Governors of the Federal Reserve System 20th and C Street NW,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y. 10045.
Federal Deposit Insurance Corporation, 550 Seventeenth Street NW
Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
2
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24th day of March, 1998.
THE CHASE MANHATTAN BANK
By /s/ Cynthia Kerpen
--------------------------------
Name: Cynthia Kerpen
Title: Trust Officer
3
<PAGE> 4
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24th day of March, 1998.
THE CHASE MANHATTAN BANK
By /s/ Cynthia Kerpen
--------------------------------
Name: Cynthia Kerpen
Title: Trust Officer
4
<PAGE> 5
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................................... $ 12,428
Interest-bearing balances ....................................... 3,428
Securities: ..........................................................
Held to maturity securities............................................ 2,561
Available for sale securities.......................................... 43,058
Federal funds sold and securities purchased under
agreements to resell ............................................ 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,260
Less: Allowance for loan and lease losses 2,783
Less: Allocated transfer risk reserve .... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .......................................... 126,477
Trading Assets ........................................................ 62,575
Premises and fixed assets (including capitalized
leases)........................................................... 2,943
Other real estate owned ............................................... 295
Investments in unconsolidated subsidiaries and
associated companies............................................. 231
Customers' liability to this bank on acceptances
outstanding ..................................................... 1,698
Intangible assets ..................................................... 1,466
Other assets .......................................................... 10,268
------
TOTAL ASSETS .......................................................... $297,061
=========
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices ................................................ $ 94,524
Noninterest-bearing ............................ $39,487
Interest-bearing ............................... 55,037
---------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ............................................. 71,162
Noninterest-bearing........................................ $ 3,205
Interest-bearing ................................................... 67,957
Federal funds purchased and securities sold under
agreements to repurchase ................................................. 43,181
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 48,903
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ...................... 3,599
With a remaining maturity of more than one year ....................
through three years ................................................ 253
With a remaining maturity of more than three years ................. 132
Bank's liability on acceptances executed and outstanding ................. 1,698
Subordinated notes and debentures ........................................ 5,715
Other liabilities ........................................................ 9,896
TOTAL LIABILITIES ........................................................ 280,063
---------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............................ 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock) ................ 10,291
Undivided profits and capital reserves ................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (22)
Cumulative foreign currency translation adjustments ...................... 16
TOTAL EQUITY CAPITAL ..................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ..................................... $ 297,061
=========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
6
<PAGE> 1
Exhibit 25 (b)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
Salomon Smith Barney Holdings Inc.
(Exact name of obligor as specified in its charter)
Delaware 22-1660266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 Greenwich Street
New York, New York 10013
(Address of principal executive offices) (Zip Code)
---------------------------------------------
Guarantee of Salomon Smith Barney Holdings Inc. with respect
to the Targeted Growth
Enhanced Terms Securities of the Trust
(Title of the indenture securities)
-------------------------------------------------------------------
1
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, Suite 2310, 5 Empire State Plaza,
Albany, New York 12223.
Board of Governors of the Federal Reserve System 20th and C Street NW,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y. 10045.
Federal Deposit Insurance Corporation, 550 Seventeenth Street NW
Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
2
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24th day of March, 1998.
THE CHASE MANHATTAN BANK
By /s/ Cynthia Kerpen
--------------------------------
Name: Cynthia Kerpen
Title: Trust Officer
3
<PAGE> 4
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24th day of March, 1998.
THE CHASE MANHATTAN BANK
By /s/ Cynthia Kerpen
--------------------------------
Name: Cynthia Kerpen
Title: Trust Officer
4
<PAGE> 5
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ......................................... $ 12,428
Interest-bearing balances ................................. 3,428
Securities:
Held to maturity securities ..................................... 2,561
Available for sale securities ................................... 43,058
Federal funds sold and securities purchased under
agreements to resell ...................................... 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income ...........$129,260
Less: Allowance for loan and lease losses .......... 2,783
Less: Allocated transfer risk reserve .............. 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .................................... 126,477
Trading Assets .................................................. 62,575
Premises and fixed assets (including capitalized
leases) ................................................... 2,943
Other real estate owned ......................................... 295
Investments in unconsolidated subsidiaries and
associated companies ...................................... 231
Customers' liability to this bank on acceptances
outstanding ............................................... 1,698
Intangible assets ............................................... 1,466
Other assets .................................................... 10,268
--------
TOTAL ASSETS .................................................... $297,061
========
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices ................................................... $ 94,524
Noninterest-bearing .....................................$39,487
Interest-bearing .........................................55,037
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ................................................ 71,162
Noninterest-bearing........................................ $ 3,205
Interest-bearing ...................................................... 67,957
Federal funds purchased and securities sold under agree-
ments to repurchase ......................................................... 43,181
Demand notes issued to the U.S. Treasury .................................... 1,000
Trading liabilities ......................................................... 48,903
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ......................... 3,599
With a remaining maturity of more than one year .......................
through three years ................................................ 253
With a remaining maturity of more than three years .................... 132
Bank's liability on acceptances executed and outstanding .................... 1,698
Subordinated notes and debentures ........................................... 5,715
Other liabilities ........................................................... 9,896
TOTAL LIABILITIES ........................................................... 280,063
---------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............................... 0
Common stock ................................................................ 1,211
Surplus (exclude all surplus related to preferred stock) ................... 10,291
Undivided profits and capital reserves ...................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ............................................ (22)
Cumulative foreign currency translation adjustments ......................... 16
TOTAL EQUITY CAPITAL ........................................................ 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ........................................ $ 297,061
=========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
6
<PAGE> 1
Exhibit 25 (c)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
Salomon Smith Barney Holdings Inc.
(Exact name of obligor as specified in its charter)
Delaware 22-1660266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
388 Greenwich Street
New York, New York 10013
(Address of principal executive offices) (Zip Code)
---------------------------------------------
Forward Contract of Salomon Smith Barney Holdings Inc.
(Title of the indenture securities)
-------------------------------------------------------------------
1
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, Suite 2310, 5 Empire State Plaza,
Albany, New York 12223.
Board of Governors of the Federal Reserve System 20th and C Street NW,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y. 10045.
Federal Deposit Insurance Corporation, 550 Seventeenth Street NW
Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
2
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24th day of March, 1998.
THE CHASE MANHATTAN BANK
By /s/ Cynthia Kerpen
--------------------------------
Name: Cynthia Kerpen
Title: Trust Officer
3
<PAGE> 4
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 24th day of March, 1998.
THE CHASE MANHATTAN BANK
By /s/ Cynthia Kerpen
--------------------------------
Name: Cynthia Kerpen
Title: Trust Officer
4
<PAGE> 5
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ......................................... $ 12,428
Interest-bearing balances ................................. 3,428
Securities:
Held to maturity securities ..................................... 2,561
Available for sale securities ................................... 43,058
Federal funds sold and securities purchased under
agreements to resell ...................................... 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income ........$129,260
Less: Allowance for loan and lease losses ....... 2,783
Less: Allocated transfer risk reserve ........... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .................................... 126,477
Trading Assets .................................................. 62,575
Premises and fixed assets (including capitalized
leases) ................................................... 2,943
Other real estate owned ......................................... 295
Investments in unconsolidated subsidiaries and
associated companies ...................................... 231
Customers' liability to this bank on acceptances
outstanding ............................................... 1,698
Intangible assets ............................................... 1,466
Other assets .................................................... 10,268
--------
TOTAL ASSETS .................................................... $297,061
========
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices ................................................ $ 94,524
Noninterest-bearing .....................................$39,487
Interest-bearing .........................................55,037
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's ............................................. 71,162
Noninterest-bearing...................................$ ............ 3,205
Interest-bearing ................................................... 67,957
Federal funds purchased and securities sold under agree-
ments to repurchase ...................................................... 43,181
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 48,903
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ...................... 3,599
With a remaining maturity of more than one year ....................
through three years ................................................ 253
With a remaining maturity of more than three years ................. 132
Bank's liability on acceptances executed and outstanding ................. 1,698
Subordinated notes and debentures ........................................ 5,715
Other liabilities ........................................................ 9,896
TOTAL LIABILITIES ........................................................ 280,063
---------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ............................ 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock) ................ 10,291
Undivided profits and capital reserves ................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (22)
Cumulative foreign currency translation adjustments ...................... 16
TOTAL EQUITY CAPITAL ..................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ..................................... $ 297,061
=========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
6
