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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 27, 1998
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Salomon Smith Barney Holdings Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-4346 22-166-0266
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
388 Greenwich Street, New York, NY 10013
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(Address of principal executive offices) (Zip Code)
(212) 816-6000
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(Registrant's telephone number, including area code)
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SALOMON SMITH BARNEY HOLDINGS INC.
CURRENT REPORT ON FORM 8-K
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
EXHIBITS:
Exhibit No. Description
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1.01 Terms Agreement, dated October 27, 1998, between
Salomon Smith Barney Holdings Inc. (the "Company")
and Salomon Smith Barney Inc., as Underwriter,
relating to the offer and sale of the Company's
Principal-Protected Equity Linked Notes based upon
the S&P(R) 500 Index Due December 30, 2005.
4.01 Form of Note for the Company's Principal-Protected
Equity Linked Notes based upon the S&P(R)500 Index
Due December 30, 2005.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: October 29, 1998 SALOMON SMITH BARNEY HOLDINGS INC.
By: /s/ Mark I. Kleinman
--------------------------------
Mark I. Kleinman
Executive Vice President and
Treasurer
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Exhibit 1.01
TERMS AGREEMENT
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October 27, 1998
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, NY 10013
Attention: Executive Vice President and Treasurer
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Dear Sirs:
We understand that Salomon Smith Barney Holdings Inc., a Delaware
corporation (the "Company"), proposes to issue and sell 2,700,000 Units
($27,000,000 aggregate principal amount) of its Principal-Protected Equity
Linked Notes based upon the S&P 500(R) Index Due December 30, 2005 (the
"Securities"). Subject to the terms and conditions set forth herein or
incorporated by reference herein, we, as underwriter (the "Underwriter"), offer
to purchase 2,700,000 Units ($27,000,000 aggregate principal amount) of the
Securities at a purchase price equal to 96.5% of the aggregate principal amount
thereof. The Closing Date shall be October 30, 1998 at 9:00 a.m. at the offices
of Salomon Smith Barney Holdings Inc., 388 Greenwich Street, New York, New York
10013.
The Securities shall have the following terms:
Title: Principal-Protected Equity Linked Notes based upon
the S&P 500(R) Index Due December 30, 2005.
Maturity: December 30, 2005.
Interest Rate: The Securities will bear no periodic payments of
interest. Holders of the Securities will be
entitled to receive the principal amount thereof
plus a payment, if any, equal to the Supplemental
Redemption Amount (as defined in the Prospectus
Supplement, dated October 27, 1998, relating to
the Securities).
Interest Payment Date: Not applicable.
Regular Record Dates: Not applicable.
Initial Price To Public: 100% of the principal amount thereof.
Redemption Provisions: The Securities are not redeemable by the Company
prior to maturity.
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Indenture: Senior Debt Indenture, dated as of October 27,
1993, between the Company and The Bank of New
York, as supplemented by the First Supplemental
Indenture, dated as of November 28, 1997.
Trustee: The Bank of New York.
All the provisions contained in the document entitled "Salomon Smith
Barney Holdings Inc. - Debt Securities - Underwriting Agreement Basic
Provisions" and dated December 1, 1997 (the "Basic Provisions"), a copy of which
you have previously received, are, except as indicated below, herein
incorporated by reference in their entirety and shall be deemed to be a part of
this Terms Agreement to the same extent as if the Basic Provisions had been set
forth in full herein. Terms defined in the Basic Provisions are used herein as
therein defined.
Basic Provisions varied with respect to this Terms Agreement:
(A) Notwithstanding the provisions set forth in Section 3 of the Basic
Provisions, the Company and the Underwriter hereby agree that the
Securities will be in the form of Book-Entry Notes and shall be delivered
on October 30, 1998 against payment of the purchase price to the Company
by wire transfer in immediately available funds to such accounts with such
financial institutions as the Company may direct;
(B) Section 4(j) of the Basic Provisions shall be amended and restated as
follows: "The Company will not, without the consent of Salomon Smith
Barney Inc., offer or sell, or publicly announce its intention to offer
or sell, any debt securities denominated in the currency in which the
Securities are denominated having a maturity of more than one year
(except under prior contractual commitments or pursuant to bank credit
agreements) during the period beginning the date of the Terms Agreement
and ending the business day following the Closing Date;"
(C) A new Section 5(i) shall be added to the Basic Provisions and read as
follows: "Cleary, Gottlieb, Steen & Hamilton, special tax counsel to the
Company, shall have furnished to you an opinion, dated the Closing Date,
as to certain tax matters relating to the Securities, in a form reasonably
acceptable to the Underwriter;" and
(D) Joan Guggenheimer, Deputy General Counsel of the Company, shall have
furnished to the Underwriter an opinion, dated the Closing Date, as to the
matters referenced in Sections 5(c) and 5(d) of the Basic Provisions.
The Underwriter hereby agrees in connection with the underwriting of
the Securities to comply with the requirements set forth in any applicable
sections of Section 2720 to the By-Laws of the National Association of
Securities Dealers, Inc.
Joan Guggenheimer, Esq. is counsel to the Company. Cleary,
Gottlieb, Steen & Hamilton is special tax counsel to the Company and counsel
to the Underwriter.
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Please accept this offer no later than 9:00 p.m. on October 27,
1998, by signing a copy of this Terms Agreement in the space set forth below and
returning the signed copy to us, or by sending us a written acceptance in the
following form:
"We hereby accept your offer, set forth in the Terms Agreement,
dated October 27, 1998, to purchase the Securities on the Terms set forth
therein."
Very truly yours,
SALOMON SMITH BARNEY INC.
By: /s/Ramesh Menon
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Name: Ramesh Menon
Title: Vice President
ACCEPTED:
SALOMON SMITH BARNEY HOLDINGS INC.
By: /s/Mark I. Kleinman
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Name: Mark I. Kleinman
Title: Executive Vice President and
Treasurer
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Exhibit 4.01
(FORM OF NOTE)
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THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO A NOMINEE OF DTC OR BY DTC OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
TO SALOMON SMITH BARNEY HOLDINGS INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), 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.
No. PRINCIPAL AMOUNT
CUSIP 79549B 74 3 REPRESENTED $
representing Units
($10 per Unit)
SALOMON SMITH BARNEY HOLDINGS INC.
Principal-Protected Equity Linked Notes based upon the S&P 500(R) Index
due December 30, 2005
Salomon Smith Barney Holdings Inc., a Delaware corporation (hereinafter
referred to as the "Company" which term includes any successor corporation under
the Indenture herein referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of Dollars
($ ) (the "Principal Amount") plus the Supplemental Redemption Amount,
as defined below, if any, on December 30, 2005 (the "Stated Maturity"). This
Note will not bear periodic payments of interest, is not subject to any sinking
fund, is not subject to redemption by the Company or at the option of the Holder
prior to the Stated Maturity, and is not subject to the defeasance provisions of
the Indenture.
Payment of the Principal Amount and the Supplemental Redemption Amount
with respect to this Note shall be made upon presentation and surrender of this
Note at the corporate trust office of the Trustee in the Borough of Manhattan,
The City and State of New York, in such coin or currency of the United States as
at the time of payment is legal tender for payment of public and private debts.
This Note is one of the series of Principal-Protected Equity Linked Notes
based upon the S&P 500(R) Index (the "Index") due December 30, 2005 (the
"Notes").
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SUPPLEMENTAL REDEMPTION AMOUNT
The "Supplemental Redemption Amount" with respect to this Note equals:
Adjusted Ending Value - Starting Value
Principal Amount x --------------------------------------
Starting Value
provided, however, that in no event will the Supplemental Redemption Amount be
less than zero.
The "Adjusted Ending Value" will be determined by Salomon Smith Barney
Inc. (the "Calculation Agent", which term includes any successor thereto) and
will equal the average (arithmetic mean) of the closing values of the Index on
each of the 42 Calculation Days during the Calculation Period, multiplied by the
Adjustment Factor. If the 28th of any month during the Calculation Period is not
a Calculation Day because it is not an Index Business Day or due to the
occurrence of one or more Market Disruption Events, then the Index value for
that month of the Calculation Period will equal the closing value of the Index
determined on the next Index Business Day on which no Market Disruption Event
exists, except that if December 28, 2005 is not a Calculation Day for any
reason, then the Index value for December 2005 will equal the closing value of
the Index determined on the immediately preceding Index Business Day on which no
Market Disruption Event exists.
The "Adjustment Factor" equals 1.45% per annum, and will be applied pro
rata on a daily basis to reduce the value of the Index during the term of the
Notes. If the Adjusted Ending Value is calculated with respect to a date earlier
than the Stated Maturity of the Notes, the Adjustment Factor will be reduced pro
rata to reflect the number of days elapsed between October 27, 1998 and such
date.
The "Starting Value" equals 1065.34, which was the closing value of the
Index on October 27, 1998.
The "Calculation Period" means the period from and including the date 42
months prior to the maturity date to but excluding the maturity date. A
"Calculation Day" means the 28th of each month during the Calculation Period,
provided that such day is an Index Business Day and no Market Disruption Event
has occurred on such day.
For purposes of determining the Adjusted Ending Value, an "Index Business
Day" is a day on which the New York Stock Exchange (the "NYSE") and the Chicago
Board Options Exchange are open for trading and the Index or any Successor
Index, as defined below, is calculated and published. The Calculation Agent may,
in its discretion, add to (or delete from) the definition of Index Business Day
any other major U.S. exchange which commences to serve (or ceases to serve) as
the primary exchange upon which a stock underlying the Index trades or as an
exchange upon which a futures contract, an option on a futures contract or an
option contract relating to the Index trades. All determinations made by the
Calculation Agent shall be at the sole discretion of the Calculation Agent and
shall be conclusive for all purposes and binding on the Company and Holders of
the Notes, absent manifest error.
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MARKET DISRUPTION EVENTS
"Market Disruption Event" means any of the following events, as
determined by the Calculation Agent:
(a) The suspension or material limitation of trading in 20% or more
of the underlying stocks which then comprise the Index or any Successor
Index, in each case, for more than two hours of trading or during the
one-half hour period preceding the close of trading on the NYSE or any
other applicable organized U.S. exchange. For purposes of this definition,
limitations on trading during significant market fluctuations imposed
pursuant to NYSE Rule 80B (or any applicable rule or regulation enacted or
promulgated by the NYSE, any other self regulatory organization or the
Securities and Exchange Commission (the "SEC") of similar scope or as a
replacement for Rule 80B, as determined by the Calculation Agent) shall be
considered "material".
(b) The suspension or material limitation, in each case, for more
than two hours of trading or during the one-half hour period preceding the
close of trading (whether by reason of movements in price exceeding levels
permitted by the relevant exchange or otherwise) in (A) futures contracts
related to the Index or any Successor Index or options on such futures
contracts which are traded on the Chicago Mercantile Exchange or any other
major U.S. exchange or (B) options contracts related to the Index or any
Successor Index which are traded on any major U.S. exchange.
(c) The unavailability, through a recognized system of public
dissemination of transaction information, for more than two hours of
trading or during the one-half hour period preceding the close of trading,
of accurate price, volume or related information in respect of 20% or more
of the underlying stocks which then comprise the Index or any Successor
Index or in respect of futures contracts related to the Index or any
Successor Index, options on such futures contracts or options contracts
related to the Index or any Successor Index, in each case traded on any
major U.S. exchange.
For purposes of determining whether a Market Disruption Event has
occurred: (1) a limitation on the hours or number of days of trading will not
constitute a Market Disruption Event if it results from an announced change in
the regular business hours of the relevant exchange or market, (2) a decision to
discontinue permanently trading in the relevant futures or options contract will
not constitute a Market Disruption Event, (3) any suspension in trading in a
futures or options contract on the Index or any Successor Index by a major
securities market by reason of (x) a price change violating limits set by such
securities market, (y) an imbalance of orders relating to such contracts or (z)
a disparity in bid and ask quotes relating to such contracts, will constitute a
Market Disruption Event, notwithstanding that such suspension or material
limitation is less than two hours, and (4) a "suspension or material limitation"
on an exchange or in a market will include a suspension or material limitation
of trading by one class of investors provided that such suspension continues for
more than two hours of trading or during the last one-half hour period preceding
the close of trading on the relevant exchange or market (but will not include
limitations imposed on certain types of trading under NYSE Rule 80A or any
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applicable rule or regulation enacted or promulgated by the NYSE, any other
self-regulatory organization or the SEC of a similar scope or as a replacement
for Rule 80A, as determined by the Calculation Agent) and will not include any
time when such exchange or market is closed for trading as part of such
exchange's or market's regularly scheduled business hours.
DISCONTINUANCE OF THE INDEX
If Standard & Poor's, a Division of the McGraw-Hill Companies, Inc.
("S&P"), discontinues publication of the Index and S&P or another entity
publishes a successor or substitute index that the Calculation Agent determines,
in its sole discretion, to be comparable to such Index (any such index being
referred to herein as a "Successor Index"), then the Adjusted Ending Value shall
be determined by reference to the value of such Successor Index using the
methodology described above under "Supplemental Redemption Amount".
Upon any selection by the Calculation Agent of a Successor Index, the
Company shall cause notice thereof to be furnished to the Trustee, who shall
provide notice thereof to the Holders of the Notes.
If S&P discontinues publication of the Index and a Successor Index is not
selected by the Calculation Agent or is no longer published on any Calculation
Day, the value to be substituted for the Index for any such Calculation Day used
to calculate the Supplemental Redemption Amount at maturity will be a value
computed by the Calculation Agent for such Calculation Day in accordance with
the procedures last used to calculate the Index prior to any such
discontinuance.
If S&P discontinues publication of the Index prior to the period during
which the Supplemental Redemption Amount is to be determined and the Calculation
Agent determines that no Successor Index is available at such time, then on each
Index Business Day until the earlier to occur of (a) the determination of the
Adjusted Ending Value and (b) a determination by the Calculation Agent that a
Successor Index is available, the Calculation Agent shall determine the value
that would be used in computing the Supplemental Redemption Amount as described
in the preceding paragraph as if such day were a Calculation Day. The
Calculation Agent will cause notice of each such value to be published not less
often than once each month in The Wall Street Journal (or another newspaper of
general circulation), and arrange for information with respect to such values to
be made available by telephone.
If a Successor Index is selected or the Calculation Agent calculates a
value as a substitute for the Index as described above, such Successor Index or
value shall be substituted for the Index for all purposes, including for
purposes of determining whether an Index Business Day occurs or a Market
Disruption Event exists.
ALTERATION OF METHOD OF CALCULATION
If at any time the method of calculating the Index or a Successor Index,
or the value thereof, is changed in any material respect, or if the Index or a
Successor Index is in any other way modified so that such Index does not, in the
opinion of the Calculation Agent, fairly
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represent the value of the Index or such Successor Index had such changes or
modifications not been made, then, from and after such time, the Calculation
Agent shall, at the close of business in New York, New York, on each date that
the closing value with respect to the Adjusted Ending Value is to be calculated,
make such adjustments as, in the good faith judgment of the Calculation Agent,
may be necessary in order to arrive at a calculation of a value of a stock index
comparable to the Index or such Successor Index as if changes or modifications
had not been made, and calculate such closing value with reference to the Index,
as adjusted. Accordingly, if the method of calculating the Index or such
Successor Index is modified so that the value of such Index or such Successor
Index is a fraction or a multiple of what it would have been if it had not been
modified (e.g., due to a split in such Index), then the Calculation Agent shall
adjust such Index in order to arrive at a value of such Index as if it had not
been modified (e.g., as if such split had not occurred).
The Trustee shall not at any time be under any duty or responsibility to
any Holder of this Note to determine whether any facts exist which may require
any adjustment to the Adjusted Ending Value or with respect to the nature or
extent of any such adjustment when made or with respect to the method employed
in making the same.
GENERAL
This Note is one of a duly authorized issue of Debt Securities of the
Company, issued and to be issued in one or more series under a Senior Debt
Indenture, dated as of October 27, 1993, as supplemented by a First Supplemental
Indenture, dated as of November 28, 1997, and as further supplemented from time
to time (the "Indenture"), between the Company and The Bank of New York, as
Trustee (the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture 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 Notes, and the terms upon which
the Notes are, and are to be, authenticated and delivered.
If an Event of Default with respect to the Notes shall have occurred and
be continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture. In such case, the amount
declared due and payable upon any acceleration permitted by the Indenture will
be determined by the Calculation Agent and will be equal to, with respect to
this Note: (i) the Principal Amount plus (ii) the Supplemental Redemption
Amount, if any, calculated as though the Stated Maturity of this Note were the
date of early repayment.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series affected thereby. The Indenture also contains provisions permitting
the Holders of specified percentages in aggregate principal amount of the Debt
Securities of any series at the time Outstanding, on behalf of the Holders of
all Debt Securities of such series, to
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waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note 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
Note.
The Holder of this Note may not enforce such Holder's rights pursuant to
the Indenture or the Notes except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the Principal Amount plus the Supplemental Redemption
Amount with respect to this Note and any interest on any overdue amount thereof
at the time, place, and rate, and in the coin or currency, herein prescribed.
Upon issuance, all Notes will be represented by one or more
fully-registered global securities (the "Global Notes"). Each such Global Note
will be deposited with, or on behalf of, DTC, and registered in the name of DTC
or a nominee thereof.
Unless and until it is exchanged in whole or in part for Notes in
definitive form, no Global Note may be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC
or any such nominee to a successor of DTC or a nominee of such successor.
Accountholders in the Euroclear or Cedel Bank clearance systems may hold
beneficial interests in the Notes through the accounts each such system
maintains as a participant in DTC.
All terms used in this Note which are defined in the Indenture but not in
this Note shall have the meanings assigned to them in the Indenture.
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Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purposes.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SALOMON SMITH BARNEY HOLDINGS INC.
By:
-------------------------------
Name:
Title:
Corporate Seal
Attest:
By:
--------------------------
Name:
Title:
Dated: October 30, 1998
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in
the within-mentioned Indenture.
The Bank of New York,
as Trustee
By:
--------------------------
Authorized Signatory
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