FILED PURSUANT TO
RULE 424(b)(5)
REGISTRATION NO. 33-52281
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 2, 1994)
THE TRAVELERS INC.
3,749,466 WARRANTS TO PURCHASE SHARES OF COMMON STOCK
---------------------------
All of the 3,749,466 Warrants (the "Warrants") to purchase shares of Common
Stock, $.01 par value per share (the "Common Stock"), of The Travelers Inc., a
Delaware corporation (the "Company"), are being offered by American Express
Company (the "Selling Stockholder"). Each Warrant entitles its holder to
purchase from the Company, at any time on or prior to July 31, 1998, one share
of Common Stock at a purchase price of $39.00, subject to adjustment in certain
circumstances. The Selling Stockholder is offering all of the Warrants it owns
and upon completion of this offering will no longer be a holder of any Warrants.
This Prospectus Supplement also covers the offering from time to time of shares
of Common Stock that may be issued upon exercise of the Warrants. The Warrants
and the shares of Common Stock issuable upon the exercise of the Warrants are
collectively referred to as the "Securities."
The Company will not receive any proceeds from the sale of the Warrants. If
the Warrants are exercised, the Company will, however, receive $39.00 (subject
to adjustment in certain circumstances) for each share of Common Stock issued
upon exercise of the Warrants.
Prior to this offering, there has been no public market for the Warrants
and there can be no assurance that any active trading market will develop for
the Warrants subsequent to the completion of this offering. For information
relating to the factors considered in determining the initial public offering
price of the Warrants, see "Plan of Distribution" in the Prospectus. The
Warrants have been approved for listing on the New York Stock Exchange, Inc.
(the "NYSE"). The Common Stock is currently traded on the NYSE and The Pacific
Stock Exchange Incorporated under the symbol "TRV."
---------------------------
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>
PROCEEDS TO
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT(1) STOCKHOLDER
<S> <C> <C> <C>
Warrants, Per Warrant.................................... $8.25 $0.41 $7.84
Total.................................................... $30,933,094.50 $1,537,281.06 $29,395,813.44
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
The Company has agreed to pay certain expenses in connection with the
offering estimated at $90,000.
---------------------------
The Warrants offered by this Prospectus Supplement are offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of the Warrants
will be made at the offices of Lehman Brothers Inc., New York, New York on or
about March 9, 1994.
---------------------------
SMITH BARNEY SHEARSON INC. LEHMAN BROTHERS
March 2, 1994
<PAGE>
IN CONNECTION WITH THE OFFERING OF CERTAIN OF THE SECURITIES, THE
UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN
THE MARKET PRICES OF SUCH SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants offered hereby
(described in the Prospectus under the heading "Description of Offered
Securities--Warrants") supplements the description set forth in the Prospectus,
to which description reference is hereby made.
The First National Bank of Boston will act as warrant agent for the
Warrants.
UNDERWRITING
The underwriters named below (the "Underwriters"), Smith Barney Shearson
Inc. ("SBS") and Lehman Brothers Inc. ("Lehman"), have severally agreed, subject
to the terms and conditions of an Underwriting Agreement with the Selling
Stockholder and the Company (the "Underwriting Agreement"), to purchase from the
Selling Stockholder the aggregate number of Warrants set forth opposite their
names below:
<TABLE> <CAPTION>
NUMBER OF
UNDERWRITERS WARRANTS
- -------------------------------------------------------------------------------- -----------
<S> <C>
Smith Barney Shearson Inc. ..................................................... 1,874,733
Lehman Brothers Inc. ........................................................... 1,874,733
-----------
Total................................................................. 3,749,466
-----------
-----------
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase the Warrants are subject to certain conditions and
that, if any of the Warrants are purchased by the Underwriters pursuant to the
Underwriting Agreement, all such Warrants must be so purchased.
The Selling Stockholder has been advised that the Underwriters propose to
offer the Warrants offered hereby initially at the public offering price set
forth on the cover page of this Prospectus Supplement and to certain selected
dealers (who may include Underwriters) at such public offering price less a
concession not to exceed $0.25 per Warrant. After such initial offering, such
public offering price and concession to selected dealers may be changed.
The Company has agreed that it will not, subject to certain limited
exceptions, directly or indirectly, sell or otherwise dispose of any Common
Stock of the Company or any securities convertible into or exercisable or
exchangeable for Common Stock of the Company for a period of 60 days from the
date of this Prospectus Supplement without the prior written consent of the
Underwriters.
The Warrants have been approved for listing on the NYSE. In connection with
such listing, the Underwriters have undertaken to sell the Warrants to at least
400 beneficial holders.
The Company and the Selling Stockholder have agreed in the Underwriting
Agreement to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1993, as amended, or to contribute to
payments which the Underwriters may be required to make in respect thereof.
S-2
<PAGE>
LEGAL MATTERS
Certain legal matters are being passed upon for the Underwriters by Simpson
Thacher & Bartlett (a partnership which includes professional corporations), New
York, New York. Simpson Thacher & Bartlett has provided from time to time, and
may provide in the future, legal services to the Company and its affiliates.
S-3
<PAGE>
PROSPECTUS
THE TRAVELERS INC.
2,500,000 Shares of Series B Convertible Preferred Stock
3,749,466 Warrants to Purchase Shares of Common Stock
and 7,150,826 Shares of Common Stock
Issuable upon Conversion or Exercise Thereof
-------------------------------------
The 2,500,000 shares of 5.50% Convertible Preferred Stock, Series B,
$1.00 par value per share (the "Series B Preferred Stock"), of The Travelers
Inc., a Delaware corporation (the "Company") and 3,749,466 Warrants (the
"Warrants") to purchase shares of Common Stock, $.01 par value per share (the
"Common Stock"), of the Company may be offered from time to time by American
Express Company (the "Selling Stockholder"). The shares of Series B Preferred
Stock, the Warrants and the shares of Common Stock issuable upon the conversion
of the shares of Series B Preferred Stock or exercise of the Warrants are
collectively referred to as the "Offered Securities." When an offering of all
or part of the Offered Securities is made, a supplement to this Prospectus
(the "Prospectus Supplement") will be delivered with this Prospectus, setting
forth the specific Offered Securities being offered, the purchase price, any
listing on a securities exchange and any other variable terms.
Each share of Series B Preferred Stock has a liquidation preference of
$50.00 per share, plus accrued and unpaid dividends thereon. Cash dividends on
the Series B Preferred Stock are payable quarterly in arrears at an annual rate
of $2.75 per share. Shares of Series B Preferred Stock are convertible at
any time at the option of the holder into shares of Common Stock at a conversion
price of $36.75 per share of Common Stock, which is equivalent to a conversion
rate of approximately 1.36 shares of Common Stock for each share of Series B
Preferred Stock, subject to adjustment in certain circumstances. The Series B
Preferred Stock is not redeemable prior to July 30, 1996, but will be redeemable
on such date and thereafter for cash at the option of the Company, in whole or
in part, at $51.925 per share if redeemed prior to July 29, 1997 and at
decreasing prices thereafter to $50.00 from and after July 30, 2003, plus
accrued and unpaid dividends to the redemption date. The Series B Preferred
Stock will not be entitled to the benefit of any sinking fund. See
"Description of Offered Securities- Series B Preferred Stock."
Each Warrant entitles its holder to purchase from the Company, at any
time on or prior to July 31, 1998, one share of Common Stock at a purchase price
of $39.00, subject to adjustment in certain circumstances. Upon completion of
this offering the Selling Stockholder will no longer be a holder of any
Offered Securities.
In addition, this Prospectus, when delivered with an applicable
Prospectus Supplement, covers the issuance of the shares of Common Stock
underlying the shares of Series B Preferred Stock and the Warrants. The
Prospectus Supplement will specify the number of shares of Common Stock offered
thereby. Of the 7,150,826 shares of Common Stock that may be offered, 3,401,360
shares are issuable upon the conversion of shares of the Series B Preferred
Stock and 3,749,466 shares are issuable upon the exercise of the Warrants,
subject to adjustment in certain circumstances.
The Common Stock is currently traded on the New York Stock Exchange,
Inc. (the "NYSE") and The Pacific Stock Exchange Incorporated (the "Pacific
Stock Exchange") under the symbol "TRV."
-------------------------------------
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.
-------------------------------------
The Selling Stockholder may sell the Series B Preferred Stock and the
Warrants through agents designated from time to time, through underwriters or
through dealers. The names of such agents, underwriters or dealers and any
applicable fee, commission, purchase price or discount arrangements with them
will be set forth, or will be calculable from the information set forth, in a
Prospectus Supplement. The net proceeds to the Selling Stockholder from such
sale will be set forth in the Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement (i) such underwriters will include Smith Barney
Shearson Inc. ("SBS") and Lehman Brothers Inc. ("Lehman"), acting alone or as
representatives of a group of underwriters, and (ii) such agents or dealers will
include SBS and Lehman.
This Prospectus may also be used by SBS, a subsidiary of the Company,
in connection with offers and sales of the Offered Securities in market-making
transactions at negotiated prices related to prevailing market prices at the
time of sale. SBS may act as principal or agent in such transactions. See
"Plan of Distribution."
March 2, 1994
<PAGE>
For North Carolina purchasers: These securities have not been
approved or disapproved by the Commissioner of Insurance for the State of North
Carolina, nor has the Commissioner ruled upon the accuracy or adequacy of this
Prospectus.
-----------------------------------
AVAILABLE INFORMATION
The Company (formerly Primerica Corporation) is subject to the
informational requirements of the Securities Exchange Act of 1934 (the "Exchange
Act"), and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at: Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and Seven World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is
listed on the NYSE and the Pacific Stock Exchange, and such reports, proxy
statements and other information can also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005, and the Pacific Stock Exchange,
301 Pine Street, San Francisco, California 94104, and 233 South Beaudry Avenue,
Los Angeles, California 90012.
-------------------------------------
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Act") with respect
to the Offered Securities. For further information with respect to the Offered
Securities, reference is made to the Registration Statement and exhibits
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Company's Registration Statement, each such statement being qualified in
all respects by such reference.
-------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference the following documents
heretofore filed with the Commission pursuant to the Exchange Act:
1. Annual Report of the Company on Form 10-K for the fiscal year
ended December 31, 1992, as amended.
2. Quarterly Reports of the Company on Form 10-Q for the fiscal
quarters ended March 31, 1993, June 30, 1993 and September 30, 1993.
2
<PAGE>
3. Current Reports of the Company on Form 8-K dated December 23,
1992, as amended, March 1, 1993, March 12, 1993, April 8, 1993, April 19,
1993, April 28, 1993, June 10, 1993, July 19, 1993, September 23, 1993,
October 18, 1993, November 29, 1993, December 31, 1993, January 24, 1994
and March 1, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the later of (i) the termination of the offering of Offered Securities
hereby and (ii) the date on which SBS ceases offering and selling Offered
Securities pursuant to this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
in an accompanying Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this Prospectus except as
so modified or superseded.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference in the
Registration Statement of which this Prospectus forms a part other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into such documents. Requests should be directed to Corporate
Communications and Investor Relations, The Travelers Inc., 65 East 55th Street,
New York, New York 10022; telephone (212) 891-8900.
THE COMPANY
The Company is a financial services holding company engaged, through
its subsidiaries, principally in four business segments: Investment Services,
Insurance Services - Property and Casualty, Insurance Services - Life, and
Consumer Finance Services. The predecessor of the Company was founded in 1912.
In December 1988, the Company (then known as Commercial Credit Group, Inc.)
acquired Primerica Corporation, a New Jersey corporation ("old Primerica"). At
the time of the acquisition, the name of the Company was changed to Primerica
Corporation and old Primerica was merged into a newly formed, wholly owned
subsidiary of the Company, Primerica Holdings, Inc. ("Primerica Holdings"). The
acquisition of old Primerica was accounted for as a purchase, with an effective
accounting date of December 31, 1988. Accordingly, the Company's results of
operations for the year ended on December 31, 1988 incorporated by reference in
this Prospectus do not include the results of old Primerica and its
subsidiaries. On December 17, 1992, Primerica Holdings was merged into the
Company.
In December 1992 the Company acquired approximately 27% of the common
stock of The Travelers Corporation, a Connecticut corporation ("old Travelers"),
in a series of related transactions. The Company and certain of its
subsidiaries paid $550 million in cash and issued to old Travelers 50% of the
equity in Commercial Insurance Resources, Inc. (the parent of Gulf Insurance
Company) and transferred to old Travelers 100% of the preferred provider
organization and third party administrator network of Transport Life Insurance
Company. In September 1993 the Company and old Travelers announced a definitive
agreement for the Company to acquire the remaining approximately 73%
3
<PAGE>
of old Travelers common stock it did not already own. On December 31, 1993,
pursuant to such agreement, each share of old Travelers common stock (other
than shares held by the Company, old Travelers or shareholders who properly
exercised dissenters' rights) was exchanged for .80423 of a share of Common
Stock, old Travelers was merged into the Company (then known as Primerica
Corporation) and the Company, as the surviving corporation of the merger,
changed its name to The Travelers Inc.
The Company's Investment Services segment consists of investment
banking, brokerage, asset management and other financial services provided
through Smith Barney Shearson Holdings Inc. ("SBSHI"), a subsidiary of the
Company, and its subsidiaries, mutual fund management and distribution services
provided through American Capital Management & Research, Inc. and its
subsidiaries, and investment management services provided by RCM Capital
Management.
In July 1993 the Company and certain of its subsidiaries acquired
substantially all of the assets and assumed certain of the liabilities of the
domestic retail brokerage business and the asset management business of Shearson
Lehman Brothers Inc. (now known as Lehman) (the "Shearson Transaction"). As a
result of this acquisition, SBSHI became one of the largest retail brokerage
firms in the United States.
The Company's Insurance Services - Property and Casualty segment
provides insurance products including workers' compensation, liability,
automobile, property and multiple-peril to businesses and other institutions and
automobile and homeowners insurance to individuals. Property and casualty
insurance policies are issued primarily by The Travelers Indemnity Company and
its subsidiary and affiliated property-casualty insurance companies, which now
include Gulf Insurance Company.
The Company's Insurance Services - Life segment includes individual
life insurance, accident and health insurance, annuities and investment products
which are offered primarily through The Travelers Insurance Company and its
subsidiary and affiliated life insurance companies. Such affiliated companies
now include Primerica Financial Services and its affiliates, Primerica Life
Insurance Company and National Benefit Life Insurance Company, which primarily
issue individual term life insurance, and Transport Life Insurance Company.
Primerica Financial Services and its affiliates are also engaged in securities
brokerage consisting primarily of mutual fund sales.
The Company's Consumer Finance Services segment includes consumer
lending (including secured and unsecured personal loans, real estate-secured
loans and consumer goods financing), and credit card and credit-related
insurance services provided through Commercial Credit Company and its
subsidiaries.
In addition to its four business segments, the Company's Corporate and
Other segment consists of corporate staff and treasury operations, certain
corporate income and expenses that have not been allocated to the operating
subsidiaries and, through 1992, the Company's interest in Fingerhut Companies,
Inc. ("Fingerhut"), a direct marketing business. The Company has since sold its
remaining interest in Fingerhut. During 1993, this segment also included the
Company's approximately 27% interest in old Travelers common stock.
The principal offices of the Company are located at 65 East 55th
Street, New York, New York 10022, telephone (212) 891-8900. The Company was
incorporated in Delaware in 1988.
4
<PAGE>
RECENT OPERATING RESULTS
The net income of the Company for the year ended December 31, 1993,
was $915.6 million, or $3.74 per share, compared to $728.1 million, or $3.22
per share, for the year ended December 31, 1992. The Company's revenues for
the year ended December 31, 1993, were $6,796.9 million, compared to $5,125.0
million for the corresponding 1992 period. Net income for 1993 included
reported investment portfolio gains of $109.2 million and an $8.1 million gain
from the sale of subsidiaries and affiliates, and also reflected a charge of
$16.7 million related to the cumulative effect of FAS 106, a charge of $17.7
million related to the cumulative effect of FAS 112, and a $65.0 million
provision for one-time expenses related to the Shearson Transaction. Net
income for the comparable 1992 period included reported investment portfolio
gains and net gains from the sale of subsidiaries and affiliates of $163.2
million and a one-time charge of $28.1 million from the cumulative effect of
FAS 109. At year end 1993, the Company had assets of approximately $100 billion.
For the year ended December 31, 1993, operating earnings were $899.5
million or $3.67 per share, an increase of 41% over operating results for the
year ended December 31, 1992. Operating results for the year ended December 31,
1992 were $593.0 million and earnings per share during such period were $2.61.
Earnings per share were based on weighted average common shares outstanding and
common equivalent shares of 237.8 million in 1993 and 222.8 million in 1992.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
Year Ended December 31,(1)
Nine Months Ended --------------------------------
September 30, 1993 1992 1991 1990 1989 1988
------------------ ---- ---- ---- ---- ----
Ratio of earnings to
combined fixed charges
and preferred stock
dividends . . . . . . . . . 2.67x 2.57x 1.85x 1.56x 1.49x 1.95x
- --------------------------------
(1) The Company (formerly Primerica Corporation) is the successor to Commercial
Credit Group, Inc. Results of operations and dividends per common share
for 1988 reflect only those of Commercial Credit Group, Inc.
The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed by dividing earnings available for fixed charges by
fixed charges and preferred stock dividends. For the purpose of this ratio,
earnings available for fixed charges consist of pre-tax income from continuing
operations adjusted for undistributed equity earnings and minority interest and
fixed charges; and fixed charges consist of interest expense and that portion of
rentals deemed representative of the appropriate interest factor. Prior to July
1992 the Company had no preferred stock outstanding.
USE OF PROCEEDS
All of the shares of Series B Preferred Stock and the Warrants to be
offered will be sold by the Selling Stockholder. The Company will not receive
any of the proceeds from the sale of such
5
<PAGE>
Series B Preferred Stock or Warrants by the Selling Stockholder. The Common
Stock being offered is issuable only upon conversion of the Series B Preferred
Stock or the exercise of the Warrants. The Company will not receive any
proceeds from issuance of Common Stock in connection with the conversion of
the Series B Preferred Stock. However, the Company will receive $39.00
(subject to adjustment) for each share of Common Stock issued upon exercise of
a Warrant. The Company will receive such consideration only in the event of
the exercise of any Warrant. In the event that all of the Warrants are
exercised, the Company will receive an aggregate exercise price of
$146,229,174. Unless otherwise set forth in the applicable Prospectus
Supplement, the Company intends to apply the net proceeds from the exercise
of the Warrants for general corporate purposes, which may include capital
contributions to subsidiaries of the Company and/or the reduction or
refinancing of borrowings of the Company or its subsidiaries.
SELLING STOCKHOLDER
All of the Series B Preferred Stock and the Warrants being offered
will be offered by the Selling Stockholder. The Selling Stockholder acquired
the Series B Preferred Stock and the Warrants in connection with the Shearson
Transaction. In connection with such acquisition, the Company issued to the
Selling Stockholder 2,500,000 shares of Series B Preferred Stock and Warrants to
purchase 3,749,466 shares of Common Stock, as adjusted. The shares of Series
B Preferred Stock and the Warrants issued to the Selling Stockholder are the
only issued and outstanding shares of Series B Preferred Stock and Warrants.
Lehman is a majority-owned subsidiary of the Selling Stockholder.
In connection with the Shearson Transaction, Lehman and SBS have entered
into agreements with respect to various relationships between them
which continue for a period of time after consummation of the Shearson
Transaction, including a securities clearing agreement pursuant to which
SBS has agreed to carry and clear on a fully disclosed basis all customer
accounts introduced by Lehman and on a correspondent basis with respect to
Lehman's proprietary accounts. In connection with the clearing arrangement,
SBS has issued 100 shares of its Series A Cumulative Preferred Stock to Lehman
for $1 million. Subject to certain conditions, these shares are redeemable by
SBS after the termination of the clearing arrangement. SBS also agreed to
provide to Lehman certain data processing and other operational services. In
addition, SBS has agreed to pay future contingent amounts to Lehman based
upon the combined performance of SBS and the acquired businesses, consisting of
up to $50 million per year for three years based on net revenues, plus 10% of
after-tax consolidated net income in excess of $250 million per year over a
five-year period.
Following the offerings contemplated hereby, the Selling Stockholder
will no longer be a holder of any shares of Series B Preferred Stock or
Warrants. A subsidiary of the Selling Stockholder beneficially owns
approximately 4.5 million shares of the Company's Common Stock, which was
acquired in the ordinary course of such subsidiary's investment management
business. Subsidiaries of the Selling Stockholder may acquire additional shares
of the Company's Common Stock from time to time and may determine to sell such
shares in connection with their trading and investment management businesses.
6
<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
As of the date of this Prospectus, the Company's authorized capital
stock consists of 500,000,000 shares of Common Stock and 30,000,000 shares of
preferred stock, par value $1.00 per share (the "Preferred Stock"). Under the
Company's Certificate of Incorporation (as amended, the "Certificate of
Incorporation"), the Board of Directors of the Company is authorized to issue
shares of the Preferred Stock in one or more series, with or without voting
powers, and with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issuance thereof adopted by the Board of Directors
of the Company and as are not stated and expressed in the Certificate of
Incorporation. Prior to the issuance of each series of Preferred Stock, the
Board of Directors will adopt resolutions creating and designating such series
as a series of Preferred Stock. As used herein the term "Board of Directors of
the Company" means the Board of Directors of the Company and includes any duly
authorized committee thereof.
The rights of holders of the Series B Preferred Stock being offered,
or other equity securities of the Company, will be subject to, and may be
adversely affected by, the rights of holders of any Preferred Stock that may be
issued in the future. The Board of Dir!ectors of the Company may cause shares
of Preferred Stock to be issued in public or private transactions for any proper
corporate purposes, which may include issuance to obtain additional financing in
connection with acquisitions or otherwise, and issuance to officers, directors
and employees of the Company and its subsidiaries pursuant to benefit plans or
otherwise. Shares of Preferred Stock issued by the Company may have the effect,
under certain circumstances, alone or in combination with certain other
provisions of the Certificate of Incorporation described below, of rendering
more difficult or discouraging an acquisition of the Company deemed undesirable
by the Board of Directors of the Company.
Preferred Stock
As of the date of this Prospectus, the Company had outstanding
1,200,000 shares of its 8.125% Cumulative Preferred Stock, Series A (the "Series
A Preferred Stock"), 2,500,000 shares of its Series B Preferred Stock, 4,406,431
shares of its $4.53 ESOP Convertible Preferred Stock, Series C (the "Series C
Preferred Stock"), 7,500,000 shares of its 9.25% Preferred Stock, Series D (the
"Series D Preferred Stock") and 2,222 shares of its $45,000 Cumulative
Redeemable Preferred Stock, Series Z (the "Series Z Preferred Stock"), all of
which shares are fully paid and nonassessable.
Series A Preferred Stock. The Series A Preferred Stock is not
redeemable prior to July 28, 1997, and is redeemable on such date and thereafter
at the Company's option at a redemption price equal to $250 per share (the
liquidation preference), plus accrued and unpaid dividends. The Series A
Preferred Stock ranks on a parity as to dividends and upon liquidation with the
currently outstanding series of Preferred Stock. There are no preemptive or
other subscription rights with respect to the Series A Preferred Stock. The
Series A Preferred Stock provides for cumulative quarterly dividends at the rate
of 8.125% per annum, calculated as a percentage of the $250 per share stated
value. The holder of Series A Preferred Stock does not have voting rights
except as provided by law or if six quarterly dividends are in arrears and
except that a two-thirds vote of all shares of Preferred Stock voting as a class
is required for the Company to create any class of stock having a preference as
to dividends or
7
<PAGE>
distribution of assets over the Series A Preferred Stock. Depositary shares,
each representing one-tenth of a share of Series A Preferred Stock, are traded
on the NYSE.
Series C Preferred Stock. Shares of Series C Preferred Stock have a
stated value of $53.25 per share. The Series C Preferred Stock ranks on a
parity as to dividends and upon liquidation with the currently outstanding
series of Preferred Stock. There are no preemptive or other subscription rights
with respect to the Series C Preferred Stock. Shares of Series C Preferred
Stock are entitled to vote for the election of directors and on all other
matters submitted to a vote of stockholders of the Company. Each share of
Series C Preferred Stock is entitled to 1.3 votes per share, subject to
adjustment as the conversion price is adjusted as described below, and vote
jointly as a single class with shares of Common Stock and not as a separate
class except as otherwise expressly provided for in the Delaware General
Corporation Law, as amended (the "DGCL"). However, whether or not the DGCL so
provides, the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series C Preferred Stock and all other series of Preferred
Stock ranking on a parity with the Series C Preferred Stock as to dividends and
upon liquidation, voting together as a class, is required for the Company to
create a new class or increase an existing class of stock having rights in
respect of the payment of dividends or in liquidation prior to the Series C
Preferred Stock or any other series of Preferred Stock ranking on a parity with
the Series C Preferred Stock as to dividends and upon liquidation, to issue any
Preferred Stock of the Company ranking prior to the Series C Preferred Stock
either as to dividends or upon liquidation, or to change the terms, limitations
or relative rights or preferences of the Series C Preferred Stock or any other
series of Preferred Stock ranking on a parity with the Series C Preferred Stock
as to dividends and upon liquidation, either directly or by increasing the
relative rights of the shares of another class. If the Series C Preferred Stock
is entitled to vote together with any other series of Preferred Stock, it will
be entitled to one vote per share. The holder of shares of Series C Preferred
Stock is entitled to receive dividends in the amount of $4.53 per annum per
share. Generally, the shares of Series C Preferred Stock will be redeemable, in
whole or in part at the option of the Company, on or after January 1, 1998, at a
redemption price (payable in cash or shares of Common Stock) of $53.25 per share
plus accrued and unpaid dividends thereon to the date fixed for redemption.
Series D Preferred Stock. Shares of Series D Preferred Stock have a
stated value of $50.00 per share. The Series D Preferred Stock ranks on a
parity as to dividends, other distributions and upon liquidation with the
currently outstanding series of Preferred Stock. The Series D Preferred Stock
has no preemptive or other subscription rights. The holder of Series D
Preferred Stock does not have voting rights except as provided by law or if six
quarterly dividends are in arrears and except that a two-thirds vote of all
shares of Preferred Stock voting as a class is required for the Company to
create any class of stock having a preference as to dividends or distribution of
assets over the Series D Preferred Stock. The holder of shares of Series D
Preferred Stock is entitled to receive dividends at the rate of 9.25% per annum
per share applied to the stated value of such share. The shares of Series D
Preferred Stock are redeemable, in whole or in part, at the option of the
Company, on or after July 1, 1997 at a redemption price of $50.00 per share
plus accrued and unpaid dividends thereon to the date fixed for redemption.
Depositary shares, each representing one-half of a share of Series D Preferred
Stock, are traded on the NYSE.
Series Z Preferred Stock. The holder of the Series Z Preferred Stock
is entitled to a cumulative quarterly dividend at an annual rate of 85% of the
daily average of the Dealer Offer Rates for 30-day commercial paper placed by
dealers whose firm's bond ratings are AA or equivalent, multiplied by the
stock's $45,000 per share liquidation value. The Series Z Preferred Stock is
owned by a subsidiary of the Company, is redeemable without premium at the
Company's option at any time,
8
<PAGE>
and is subject to repurchase at the holder's request at its liquidation value
of $45,000 per share, plus accrued dividends, if not redeemed on or prior to
September 15, 1998. The holder of the Series Z Preferred Stock does not have
voting rights except as required by law or if six quarterly dividends are in
arrears and except that a two-thirds vote of all shares of Preferred Stock
voting as a class is required for the Company to create any class of stock
having a preference as to dividends or distribution of assets over the Series
Z Preferred Stock.
DESCRIPTION OF OFFERED SECURITIES
The following description of the Offered Securities sets forth certain
terms and provisions of the Offered Securities. The particular terms of each
offering will be more fully described in the applicable Prospectus Supplement.
Series B Preferred Stock
General. The following summary of the terms and provisions of the
Series B Preferred Stock does not purport to be complete and is qualified in its
entirety by reference to the Company's Certificate of Incorporation and the
Certificate of Designation of the Series B Preferred Stock (the "Certificate of
Designation").
The Series B Preferred Stock is convertible into shares of Common
Stock. Shares of Series B Preferred Stock have no preemptive rights. Any
shares of Series B Preferred Stock redeemed or otherwise acquired by the Company
will assume the status of authorized but unissued shares of Preferred Stock and
may thereafter be reissued in the same manner as other authorized but unissued
shares of Preferred Stock.
The registrar, transfer agent and dividend disbursing agent for the
shares of Series B Preferred Stock will be named in the applicable Prospectus
Supplement.
Voting Rights. Holders of Series B Preferred Stock will not have any
voting rights except as set forth below or as otherwise from time to time
required by law. If six quarterly dividends (whether or not consecutive)
payable on shares of Series B Preferred Stock are in arrears at the time of the
record date to determine stockholders for any annual meeting of stockholders of
the Company, the number of directors of the Company will be increased by two,
and the holders of shares of Series B Preferred Stock (voting separately as a
class with the holders of shares of any one or more other series of Preferred
Stock upon which like voting rights have been conferred and are exercisable)
will be entitled at such annual meeting of stockholders to elect two directors
of the Company, with the remaining directors of the Company to be elected by the
holders of shares of any other class or classes or series of stock entitled to
vote therefor. Any director who has been so elected may be removed at any time,
with or without cause, only by the affirmative vote of the holders of the shares
at the time entitled to cast a majority of the votes entitled to be cast for the
election of any such director at a special meeting of such holders called for
that purpose, and any vacancy thereby created may be filled by the vote of such
holders. If a vacancy occurs among the directors elected pursuant to such
special voting right, other than by removal from office, such vacancy may be
filled by the remaining director so elected, or his successor in office. Such
voting rights will continue until all dividend arrearages on the Series B
Preferred Stock have been paid or declared and set apart for payment. Upon the
termination of each such special voting right, the
9
<PAGE>
terms of office of all persons who may have been elected pursuant to such
special voting right shall immediately terminate, and the number of directors
of the Company will be decreased by two. Holders of shares of Series B
Preferred Stock will have one vote for each share held.
Without the consent of the holders of shares entitled to cast at least
two-thirds of the votes entitled to be cast by the holders of the total number
of shares of Preferred Stock then outstanding, voting separately as a class
without regard to series, with the holders of shares of Series B Preferred Stock
being entitled to cast one vote per share, the Company may not: (a) create any
class of stock that will have preference as to dividends or distributions of
assets over the Series B Preferred Stock or (b) alter or change the provisions
of the Certificate of Incorporation (including any Certificate of Amendment or
Certificate of Designation relating to the Series B Preferred Stock) so as to
adversely affect the powers, preferences or rights of the holders of shares of
Series B Preferred Stock; provided, however, that if such creation or such
alteration or change would adversely affect the powers, preferences or rights of
one or more, but not all, series of Preferred Stock at the time outstanding,
such alteration or change shall require the consent of the holders of shares
entitled to cast at least two-thirds of the votes entitled to be cast by the
holders of all of the shares of all such series so affected, voting as a class.
Dividends. Holders of shares of Series B Preferred Stock are entitled
to receive, when and as declared by the Board of Directors out of funds legally
available therefor, cash dividends payable quarterly at the rate of 5.5% per
annum of the Liquidation Preference (as defined below) for shares of the Series
B Preferred Stock. Dividends on shares of Series B Preferred Stock will be
payable quarterly on March 1, June 1, September 1 and December 1 of each year,
for each of the quarterly periods beginning on the preceding November 15,
February 15, May 15 and August 15, respectively, and ending on and including the
day next preceding the first day of the next such quarterly period. Dividends
on each share of the Series B Preferred Stock will be cumulative, and will be
payable to holders of record as they appear on the stock register of the Company
on the record date for each such payment which will be fixed in advance by the
Board of Directors and will be not more than 60 days nor less than 10 days
preceding the payment date thereof. Dividends payable on the Series B Preferred
Stock for any period less than a full dividend period shall be computed on the
basis of the actual number of days elapsed in the period. No interest will be
payable in respect of any dividend payment that is in arrears. If there are
outstanding shares of any other class or series of Preferred Stock ranking on a
parity as to dividends with the shares of Series B Preferred Stock, then in
making any dividend payment on account of arrears on the Series B Preferred
Stock or such other class or series of Preferred Stock, the Company will make
payments ratably upon all outstanding shares of Series B Preferred Stock and
such other class or series in proportion to the respective amounts of dividends
in arrears upon all such outstanding shares of Series B Preferred Stock and such
other class or series of Preferred Stock to the date of such dividend payment.
So long as any shares of Series B Preferred Stock are outstanding,
unless (i) full cumulative dividends have been paid or declared and set apart
for payment on all outstanding shares of Preferred Stock (other than Junior
Stock, as defined below) and (ii) the Company is not in default or in arrears
with respect to any sinking fund or other similar fund or agreement for the
purchase, redemption or other retirement of any shares of Preferred Stock (other
than Junior Stock), the Company may not declare any dividends on any shares of
Common Stock or any other stock of the Company ranking as to dividends or
distributions of assets junior to the Series B Preferred Stock (the Common Stock
and any such other stock being herein referred to as "Junior Stock"), or make
any payment on account of, or set apart money for, a sinking fund or other
similar fund or agreement for the purchase, redemption or other retirement of
any shares of Junior Stock, or make any distribution in respect thereof, other
than a distribution of Junior Stock. In the event that there are outstanding
shares of any other class or series
10
<PAGE>
of Preferred Stock ranking on a parity as to dividends with the Series B
Preferred Stock, and dividends on such shares are in arrears, the Company, in
making any dividend payment on account of such arrearage, is required to make
payments ratably on all outstanding shares of Series B Preferred Stock and
such other class or series of Preferred Stock in proportion to the respective
amounts of dividends in arrears on all such outstanding shares. Holders of
shares of Series B Preferred Stock shall not be entitled to any dividend,
whether payable in cash, property or stock, in excess of full cumulative
dividends on such shares. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment that is in arrears.
The ability of the Company, as a holding company, to pay dividends on
the Series B Preferred Stock will be dependent upon, among other factors, the
Company's earnings, financial condition and cash requirements at the time such
payment is considered, and payment to it of dividends or principal and interest
by, or the availability of other funds from, its subsidiaries. Dividends, loans
and advances from certain subsidiaries to the Company are subject to certain
restrictions, including limitations imposed by borrowing arrangements of certain
of such subsidiaries, applicable insurance holding company laws, the net capital
requirements under the Exchange Act, and the rules of certain securities
exchanges and various domestic and foreign regulatory bodies. Such
restrictions, as well as additional restrictions that the Company may become
subject to in the future, may limit the ability of the Company to pay dividends
on the Series B Preferred Stock.
Optional Redemption. The Series B Preferred Stock is not subject to
any mandatory redemption, pursuant to a sinking fund or otherwise. The Series B
Preferred Stock is not redeemable prior to July 30, 1996. On or after such date
the Series B Preferred Stock will be redeemable at the option of the Company, in
whole or in part, upon not less than 30 days' and no more than 90 days' notice,
at the following redemption prices per share (expressed as a percentage of the
Liquidation Preference (as defined below)), if redeemed during the 12-month
period beginning July 30 of the year indicated:
Year Redemption Price
---- ----------------
1996 103.85%
1997 103.30%
1998 102.75%
1999 102.20%
2000 101.65%
2001 101.10%
2002 100.55%
and thereafter at a price of $50.00 per share, plus, in each case, accrued and
accumulated but unpaid dividends thereon to but excluding the dated fixed for
redemption. Dividends will cease to accrue from and after the redemption date
on shares of Series B Preferred Stock so called for redemption, and all rights
of holders thereof as stockholders of the Company (except the right to receive
the redemption price) will cease as of such date. If full cumulative dividends
on all outstanding shares of the Series B Preferred Stock have not been paid or
declared and set apart for payment for all past dividend periods, or if any
matured obligations of the Company with respect to any sinking funds, retirement
funds or purchase funds for all series of Preferred Stock then outstanding have
not been met, the Series B Preferred Stock may not be redeemed in part and the
Company may not purchase or acquire any shares of Series B Preferred Stock
otherwise than pursuant to a purchase or exchange offer made on the same terms
to all holders of
11
<PAGE>
the Series B Preferred Stock. If fewer than all the outstanding shares of
Series B Preferred Stock are to be redeemed, the Company will select those
shares to be redeemed by lot or pro rata (as nearly as may be) or by any other
method as may be reasonably determined by the Board of Directors in good faith
to be equitable.
The right to convert shares of Series B Preferred Stock will terminate
at the close of business on the date fixed for redemption unless the Company
defaults in its payment of the Redemption Price.
Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of shares of
Series B Preferred Stock will be entitled to receive out of the assets of the
Company available for distribution to stockholders, after provision has been
made for payment of any liquidation preference of any other class of stock of
the Company ranking senior to the Series B Preferred Stock as to rights upon
liquidation, dissolution or winding up and before any distribution of assets is
made in respect of (i) any other shares of Preferred Stock that may be issued in
the future and that rank junior to the Series B Preferred Stock as to rights
upon liquidation, dissolution or winding up or (ii) shares of Common Stock,
liquidating distributions in the amount of $50.00 per share (the "Liquidation
Preference"), plus accrued and accumulated but unpaid dividends to the date of
final distribution. After payment of the full preferential amount to which they
are entitled, the holders of shares of Series B Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Company. If the assets available for distribution are insufficient to pay
holders of shares of Series B Preferred Stock and of any other shares of stock
of the Company ranking as to any such distribution on a parity with the Series B
Preferred Stock the full preferential amount to which they are entitled, then
such assets shall be distributed ratably among the shares of all Series B
Preferred Stock and of such other shares in accordance with the respective
preferential amounts (including unpaid cumulative dividends, if any) payable
with respect thereto.
Conversion Rights. Each share of Series B Preferred Stock is
convertible, in whole or in part, at the option of the holder thereof, into that
number of shares which is equal to $50.00 divided by the conversion price per
share applicable to Common Stock at the time of such conversion (the "Conversion
Price"). The Conversion Price is currently $36.75 but will be adjusted under
certain circumstances.
Shares of Series B Preferred Stock surrendered for conversion in
accordance with the requirements set forth below will be deemed converted
immediately prior to the close of business on the date of such surrender and the
holder of the shares of Common Stock issued upon such conversion will be treated
as a record holder of Common Stock at such time. However, the Company will not
make any payments or adjustments with respect to dividends accrued on shares of
Series B Preferred Stock surrendered for conversion or the shares of Common
Stock issued upon such conversion.
Conversion of shares of Series B Preferred Stock may be effected by
surrender of the certificate(s) evidencing such shares at the office of the
transfer agent for the Series B Preferred Stock, properly endorsed, together
with a written notice of election to convert such shares and the name(s) in
which certificates representing the shares of Common Stock issued upon
conversion are to be issued, and in the event certificates are to be issued in a
name other than that in which the shares of Series B Preferred Stock were
registered, payment to the Company or evidence that such payment has been made,
of any taxes payable in respect of such transfer.
12
<PAGE>
If the Company pays or makes a dividend or distribution on any class
of its capital stock in shares of Common Stock, the Conversion Price will be
reduced, effective at the opening of business on the date following the
Determination Date (as hereinafter defined), to an amount equal to the
Conversion Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock (not including treasury shares but including
shares issuable in respect of scrip certificates) outstanding on the
Determination Date (the "Outstanding Shares"), and the denominator of which
shall be the sum of the Outstanding Shares and the shares to be issued in
connection with the dividend or distribution. For the purposes of this
Prospectus, the "Determination Date" means any date fixed by the Company for
determining which stockholders are entitled to receive payments, dividends,
warrants or other distributions, as applicable. In the event that such dividend
or distribution is not so paid or made, the Conversion Price shall be
readjusted.
In the event that the Company issues rights or warrants entitling
holders of Common Stock to subscribe for or purchase shares of Common Stock (the
"Offered Shares") at a price per share (the "Offered Price") less than the
Average Market Price (as defined below) on the Determination Date, the
Conversion Price will be reduced, effective at the opening of business on the
day following the Determination Date, to an amount equal to the Conversion Price
multiplied by a fraction, the numerator of which shall be the sum of the number
of Outstanding Shares plus the number of shares of Common Stock which could be
purchased at the Average Market Price with the proceeds of the sale of the
Offered Shares at the Offered Price, and the denominator of which shall be the
sum of the number of Outstanding Shares plus the number of Offered Shares. To
the extent that shares of Common Stock are not delivered after the expiration of
such rights or warrants, or to the extent that such rights or warrants are not
so issued, the Conversion Price shall be readjusted. As used herein, the term
"Average Market Price" of the Common Stock means the average of the daily
reported closing sales prices, regular way, per share of the Common Stock on the
NYSE or, if the Common Stock is not principally traded on the NYSE, such other
market on which the Common Stock is listed or principally traded, for the 10
consecutive trading days prior to the Determination Date.
Effective at the opening of business on the date following any
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock, the Conversion Price shall be proportionately reduced.
Conversely, at the opening of business on the date following the combination of
the outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price shall be proportionately increased.
If the Company makes a distribution to all holders of its Common Stock
of evidences of indebtedness or assets (other than any dividend or distribution
paid in cash or other property out of the retained earnings of the Company and
other than any such distributions of Common Stock, warrants or rights described
above) then the Company may, at its option, either: (i) include the holders of
Series B Preferred Stock in such distribution, with such distribution being made
to such holders assuming the full conversion of their shares of Series B
Preferred Stock into shares of Common Stock at the current Conversion Price on
the Determination Date or, (ii) effective at the opening of business on the date
following the Determination Date, reduce the Conversion Price to an amount equal
to the Conversion Price on the Determination Date multiplied by a fraction, the
numerator of which shall be the Average Market Price on the Determination Date
less the then fair market value (as reasonably determined in good faith by the
Board of Directors of the Company) on such date of the assets or evidences of
indebtedness to be distributed on one share of Common Stock and the denominator
of which shall be the Average Market Price. In the event that such distribution
is not so paid or made, the Conversion Price shall be readjusted. If the
Company determines to make a distribution in accordance with (i) above, the
Company
13
<PAGE>
may elect to pay cash to such holders in an amount equal to the fair market
value (determined as provided above) of the distribution to which such holders
would otherwise have been entitled.
The Company may make such other reductions in the Conversion Price as
it deems advisable to prevent any event treated for Federal income tax purposes
as a dividend of stock or stock rights from being taxable to the recipients.
In the event of any merger or consolidation involving the Company
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock or any sale or transfer of
all or substantially all of the assets of the Company (an "Event"), then each
share of Series B Preferred Stock shall be convertible only into the kind and
amount of securities, cash or other property receivable upon such Event by a
holder of the number of shares of Common Stock into which such share of Series B
Preferred Stock was convertible immediately prior to such Event. A
reclassification of Common Stock into other securities shall be deemed to
involve both a distribution of such other securities to all holders of Common
Stock, and a subdivision or combination, as the case may be, of Common Stock.
No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Price, but any adjustments not made because of this limitation shall
be carried forward and taken into account in determining whether subsequent
adjustments shall be required. In no event shall the Conversion Price be
reduced below the then par value of the Common Stock and any such adjustment
which would cause the Conversion Price to be reduced below such par value shall
instead reduce the Conversion Price to such par value.
No fractional shares of Common Stock shall be issued upon conversion,
but, instead of any fraction of a share which would otherwise be issuable, the
Company shall pay a cash adjustment in an amount equal to the same fraction of
the market price per share of Common Stock (as determined in good faith by the
Board of Directors of the Company or in any manner prescribed by the Board of
Directors of the Company) at the close of business on the day of conversion.
Notices. Holders of Series B Preferred Stock will be entitled to
notice in the event of (a) the declaration of a dividend on Common Stock by the
Company payable otherwise than in cash out of its retained earnings, (b) the
granting to the holders of Common Stock of rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any other rights, (c)
any reclassification of Common Stock or, under certain circumstances, of a
consolidation or merger to which the Company is a party, or of the sale or
transfer of all or substantially all of the assets of the Company, or (d) the
voluntary or involuntary dissolution, liquidation or winding up of the Company.
Additional Provisions of the Company's Certificate of Incorporation and By-laws
Business Combinations. The Certificate of Incorporation requires the
affirmative vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the then outstanding shares of Voting Stock (as defined therein),
voting together as a single class, excluding from such number of outstanding
shares and from such required vote Voting Stock beneficially owned by any
Interested Stockholder (as defined therein, generally, as a 25% stockholder), to
approve any merger or other Business Combination (as defined therein, which term
includes a merger, sale of $25,000,000 of assets, and similar extraordinary
corporate transactions) between, or otherwise involving, the Company and any
Interested
14
<PAGE>
Stockholder, unless the transaction has been approved by a majority of the
Continuing Directors (as defined therein) in the manner described therein, or
under some circumstances, unless certain minimum price, form of consideration
and procedural requirements are satisfied.
Amendments to Certificate of Incorporation and By-laws. Under the
Certificate of Incorporation, the alteration, amendment or repeal of, or
adoption of any provision inconsistent with the provisions of the Certificate of
Incorporation relating to the issuance of Preferred Stock or Common Stock, the
classified board of directors and amendments to the By-laws will require the
affirmative vote of the holders of at least 75% of the voting power! of the
shares entitled to vote for the election of directors. Amendments of provisions
of the Certificate of Incorporation relating to Business Combinations require a
vote of the holders of 66 2/3% of the then outstanding shares of Voting Stock,
excluding Voting Stock held by Interested Stockholders, unless 75% of the Board
of Directors recommend such amendment and the directors comprising such 75%
would qualify as Continuing Directors.
Classified Board of Directors. The Certificate of Incorporation
provides for the Board of Directors to be divided into three classes, with the
term of one such class expiring each year. If holders of Preferred Stock shall
have the right, voting separately by class or series, to elect directors, the
directors so elected shall not be divided into classes unless expressly provided
in the Certificate of Incorporation or the applicable Certificate of
Designation. The Company's Board of Directors currently consists of 22 members.
Removal of Directors; Vacancies. Under the DGCL, unless the
certificate of incorporation provides otherwise, directors of a corporation with
a classified board, such as the Company, may be removed only for cause by the
holders of a majority of the shares then entitled to vote at an election of
directors. The Certificate of Incorporation does not provide for removal for
reasons other than cause. The term "cause" is not defined under the DGCL.
Consequently, any question concerning the legal standard for "cause" would have
to be judicially determined, and such a determination could be difficult,
expensive and time-consuming.
Vacancies on the Board of Directors resulting from an increase in the
number of directors may be filled by a majority of the Board of Directors then
in office, provided that a quorum is present, and any additional director
elected to fill such a vacancy shall hold office for a term coinciding with the
remaining term of the class to which he was elected. Any other vacancies on the
Board of Directors may be filled by a majority of the directors then in office,
even if less than a quorum, and the director so elected shall have the same
remaining term as that of his predecessor.
Warrants
General. The Company currently has issued and outstanding Warrants
for the purchase of 3,749,466 shares of Common Stock. All of such Warrants were
originally issued to the Selling Stockholder. The Warrants being offered are
being sold for the account of the Selling Stockholder.
Each Warrant represents the right to purchase one share of Common
Stock at an initial purchase price of $39.00. The purchase price and the number
of shares issuable upon exercise of the warrants are subject to adjustment in
certain events as more fully set forth below (the purchase price, as so
adjusted, is hereinafter referred to as the "Warrant Price").
15
<PAGE>
The Company has reserved from its authorized but unissued shares a
sufficient number of shares of Common Stock for issuance on exercise of the
Warrants. During the period in which a Warrant is exercisable, exercise of such
Warrant may be effected by presentation and surrender of such Warrant to the
warrant agent at the office or agency of the warrant agent maintained for that
purpose pursuant to the terms of the Warrant with the form of election to
purchase on the reverse thereof duly completed and signed by the registered
holder or holders thereof or by the duly appointed legal representative thereof
or by a duly authorized attorney, such signature to be guaranteed by a bank or
trust company, by a broker or dealer which is a member of the NASD or by a
member of a national securities exchange, and accompanied by payment to the
warrant agent for the account of the Company, of the Warrant Price for the
number of shares of Common Stock specified in such form. All shares of Common
Stock issued upon the exercise of a Warrant shall be duly authorized and validly
issued, fully paid and nonassessable. Until the exercise of their Warrants, the
holders thereof will have no rights as stockholders of the Company.
The warrant agent for the Warrants will be named in the applicable
Prospectus Supplement.
The Warrants are exercisable at any time on or prior to July 31, 1998.
The outstanding Warrants are not subject to redemption.
Anti-Dilution Provisions. If the Company pays or makes a dividend or
distribution on any class of its capital stock in shares of Common Stock, the
Warrant Price will be reduced, effective at the opening of business on the date
following the Determination Date, to an amount equal to the Warrant Price
multiplied by a fraction, the numerator of which shall be the number of
Outstanding Shares, and the denominator of which shall be the sum of the
Outstanding Shares and the shares to be issued in connection with the dividend
or distribution. In the event that such dividend or distribution is not so paid
or made, the Warrant Price shall be readjusted.
In the event that the Company issues rights or warrants entitling
holders of Common Stock to subscribe for or purchase Offered Shares at an
Offered Price less than the Average Market Price on the Determination Date, the
Warrant Price will be reduced, effective at the opening of business on the date
following the Determination Date, to an amount equal to the Warrant Price
multiplied by a fraction, the numerator of which shall be the sum of the number
of Outstanding Shares plus the number of shares of Common Stock which could be
purchased at the Average Market Price with the proceeds of the sale of the
Offered Shares at the Offered Price, and the denominator of which shall be the
sum of the Outstanding Shares plus the Offered Shares. To the extent that
shares of Common Stock are not delivered after the expiration of such rights or
warrants, or to the extent that such rights or warrants are not issued, the
Warrant Price shall be readjusted.
Effective at the opening of business on the date following any
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock, the Warrant Price shall be proportionately reduced.
Conversely, at the opening of business on the date following the combination of
the outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Warrant Price shall be proportionately increased.
If the Company makes a distribution to all holders of its Common Stock
of evidences of indebtedness or assets (other than any dividend or distribution
paid in cash or other property out of the retained earnings of the Company and
other than any such distributions described above) then the
16
<PAGE>
Company may, at its option, either: (i) include the holders of Warrants in
such distribution with such distribution being made to such holders assuming
the exercise of their Warrants into shares of Common Stock at the current
Warrant Price on the Determination Date or, (ii) effective on the opening of
business on the date following the Determination Date, reduce the Warrant
Price to an amount equal to the Warrant Price on the Determination Date
multiplied by a fraction, the numerator of which shall be the Average Market
Price on the Determination Date less the then fair market value (as reasonably
determined in good faith by the Board of Directors of the Company) on such
date of the assets or evidences of indebtedness to be distributed on one share
of Common Stock and the denominator of which shall be the Average Market Price.
In the event that such distribution is not so paid or made, the Warrant Price
shall be readjusted. If the Company determines to make a distribution in
accordance with (i) above, the Company may elect to pay cash to such holders
in an amount equal to the fair market value (determined as provided above) of
the distribution to which such holders would otherwise have been entitled.
The Company may make such other reductions in the Warrant Price as it
deems advisable to prevent any event treated for Federal income tax purposes as
a dividend of stock or stock rights from being taxable to the recipients.
In case of any Event, then each Warrant shall be convertible only into
the kind and amount of securities, cash or other property receivable upon such
Event by a holder of the number of shares of Common Stock for which such Warrant
was exercisable immediately prior to such Event. A reclassification of Common
Stock into other securities shall be deemed to involve both a distribution of
such other securities to all holders of Common Stock, and a subdivision or
combination, as the case may be, of Common Stock.
No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Warrant
Price, but any adjustments not made because of this limitation shall be carried
forward and taken into account in determining whether subsequent adjustments
shall be required. In no event shall the Warrant Price be reduced below the
then par value of the Common Stock and any such adjustment which would cause the
Warrant Price to be reduced below such par value shall instead reduce the
Warrant Price to such par value.
No fractions of Warrants shall be issued on any distribution of
Warrants to holders of Warrants, but, instead of any fraction of a Warrant which
would otherwise be issuable, the Company shall pay a cash adjustment in an
amount equal to the same fraction of the current market value per Warrant (as
determined in accordance with the terms of the Warrant Agreement) for the
trading day immediately prior to the date of such exercise.
No fractional shares of Common Stock shall be issued upon exercise of
a Warrant, but, instead of any fraction of a share which would otherwise be
issuable, the Company shall pay a cash adjustment in an amount equal to the same
fraction of the current market value per share of Common Stock (as determined in
accordance with the terms of the Warrant Agreement) for the trading day
immediately prior to the date of such exercise.
Notices. Holders of Warrants will be entitled to notice in the event
of (a) the declaration of a dividend on Common Stock by the Company payable
otherwise than in cash out of its retained earnings, (b) the granting to the
holders of Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock or any class or of any other rights, (c) any
reclassification of
17
<PAGE>
Common Stock or, under certain circumstances, of a consolidation or merger to
which the Company is a party, or of the sale or transfer of all or
substantially all of the assets of the Company, or (d) the voluntary or
involuntary dissolution, liquidation or winding up of the Company.
Common Stock
As of January 31, 1994 the Company had outstanding approximately
329 million shares of its Common Stock (assuming full conversion of the shares
issuable in the December 31, 1993 merger with old Travelers). Each holder of
Common Stock is entitled to one vote per share for the election of directors
and for all other matters to be voted on by stockholders. Except as otherwise
provided by law, the holders of shares of Common Stock vote as one class,
together with the shares of Series C Preferred Stock. Holders of Common Stock
may not cumulate their votes in the election of directors, and are entitled to
share equally in such dividends as may be declared by the Board of Directors
out of funds legally available therefor, but only after payment of dividends
required to be paid on outstanding shares of Preferred Stock. Upon voluntary
or involuntary liquidation, dissolution or winding up of the Company, the
holders of Common Stock share pro rata in the assets remaining after payments
to creditors and provision for the preference of any Preferred Stock. There
are no preemptive or other subscription rights, conversion rights or redemption
or sinking fund provisions with respect to shares of Common Stock. All of the
outstanding shares of Common Stock are fully paid and nonassessable. The
transfer agent and registrar for the Common Stock is The First National Bank
of Boston. The Common Stock is listed on the NYSE and the Pacific Stock
Exchange.
PLAN OF DISTRIBUTION
The Selling Stockholder may sell the Series B Preferred Stock and
Warrants on a negotiated or competitive bid basis to or through underwriters or
dealers, and also may sell the Series B Preferred Stock and Warrants through
agents. The Prospectus Supplement will describe the method of distribution of
the Series B Preferred Stock and Warrants.
The distribution of the Series B Preferred Stock and Warrants may be
effected from time to time in one or more transactions at a fixed price or
prices, which may be changed, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
If underwriters are used in the offering of the Series B Preferred
Stock and Warrants, the terms of the transaction, including compensation of the
underwriters and dealers, if any, will be set forth in the Prospectus Supplement
relating to such offering. Unless otherwise set forth in the Prospectus
Supplement, such underwriters will include SBS and Lehman. Only underwriters
named in a Prospectus Supplement will be deemed to be underwriters in connection
with the Series B Preferred Stock and Warrants described therein. Firms not so
named will have no direct or indirect participation in the underwriting of such
securities, although such a firm may participate in the distribution of such
securities under circumstances entitling it to a dealer's commission. It is
anticipated that any underwriting agreement pertaining to any offering of the
Series B Preferred Stock or the Warrants will (1) entitle the underwriters to
indemnification by the Company and the Selling Stockholder against certain civil
liabilities, including liabilities under the Act, or to contribution for
payments which the underwriters may be required to make in respect thereof, (2)
provide that the obligations of the underwriters will be subject
18
<PAGE>
to certain conditions precedent, and (3) provide that the underwriters
generally will be obligated to purchase all securities subject to such
agreement if any are purchased.
The Selling Stockholder also may sell the Series B Preferred Stock and
Warrants to a dealer as principal. In such event, the dealer may then resell
the Series B Preferred Stock and Warrants to the public at varying prices to be
determined by such dealer at the time of resale. Unless otherwise set forth in
the Prospectus Supplement, such dealers will include SBS and Lehman. The names
of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
The Series B Preferred Stock and the Warrants also may be offered
through agents designated by the Selling Stockholder from time to time. Unless
otherwise set forth in the Prospectus Supplement, such agents will include SBS
and Lehman. Any such agent will be named, and the terms of any such agency will
be set forth, in the Prospectus Supplement relating thereto. Unless otherwise
indicated in such Prospectus Supplement, any such agent will act on a best
efforts basis for the period of its appointment.
Dealers and agents named in a Prospectus Supplement may be deemed to
be underwriters (within the meaning of the Act) of the Series B Preferred Stock
and Warrants described therein and, under agreements which may be entered into
with the Company and the Selling Stockholder, may be entitled to indemnification
by the Company and the Selling Stockholder against certain civil liabilities,
including liabilities under the Act, or to contribution for payments which they
may be required to make in respect thereof.
Prior to the offering of the Series B Preferred Stock and Warrants
there has been no public market for the Series B Preferred Stock or the
Warrants. The initial offering prices for such securities will be determined by
the Selling Stockholder and the underwriters, dealers or agents, as the case may
be. Among the factors that will be considered in determining the initial
offering prices, in addition to prevailing market conditions, are the
Company's financial and operating history and condition, markets for similar
securities of comparable companies, the market price of the Common Stock, the
conversion price of the Series B Preferred Stock, the exercise price of the
Warrants, the dividend yield of the Series B Preferred Stock and similar
securities, of comparable companies, and the premium on warrants or similar
securities of comparable companies.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, the Company and the Selling Stockholder in the ordinary
course of business.
The anticipated place and time of delivery for the Series B Preferred
Stock and Warrants will be set forth in the Prospectus Supplement.
This Prospectus may be used by SBS in connection with offers and sales
of the Offered Securities in market-making transactions, subject to obtaining
any necessary approvals of the NYSE, at negotiated prices related to prevailing
market prices at the time of sale. SBS may act as principal or agent in such
transactions. SBS has no obligation to make a market in any of the Offered
Securities and may discontinue its market-making activities at any time
without notice, at its sole discretion.
SBS, a member of the National Association of Securities Dealers, Inc.
(the "NASD") and an affiliate of the Company, and Lehman, a member of the NASD
and a majority-owned subsidiary of the Selling Stockholder, may underwrite the
offerings of the Offered Securities covered by this Prospectus
19
<PAGE>
and participate in offers and sales of such Offered Securities. Accordingly,
the underwriting arrangements for the offering and such offers and sales will
conform with the requirements set forth in Schedule E to the By-Laws of the
NASD regarding an NASD member firm's participation in distributing its
affiliate's securities. In particular, the public offering price of the
Warrants can be no higher than that recommended by a "qualified independent
underwriter" meeting certain standards. In accordance with this requirement,
Lehman, unless otherwise set forth in a Prospectus Supplement, will serve in
such role and will recommend prices in compliance with the requirements of
Schedule E. Lehman, in its role as qualified independent underwriter, has
performed due diligence investigations and reviewed and participated in the
preparation of this Prospectus and the Registration Statement of which this
Prospectus forms a part. For a description of certain arrangements and
relationships among the Selling Stockholder, the Company, and the
Representatives, see "Selling Stockholder."
ERISA MATTERS
By virtue of the Company's affiliation with certain of its
subsidiaries, including SBS, that are involved in investment advisory and asset
management activities, the Company and any direct or indirect subsidiary of the
Company may each be considered a "party in interest" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and a
"disqualified person" under corresponding provisions of the Internal Revenue
Code of 1986 (the "Code"), with respect to many employee benefit plans.
"Prohibited transactions" within the meaning of ERISA and the Code may result if
the Offered Securities are acquired by an employee benefit plan with respect to
which the Company or any direct or indirect subsidiary of the Company is a party
in interest, unless such securities are acquired pursuant to an applicable
exemption. Any employee benefit plan or other entity subject to such provisions
of ERISA or the Code proposing to acquire the Offered Securities should consult
with its legal counsel.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the
Company by Charles O. Prince, III, Esq., General Counsel of the Company, The
Travelers Inc., 65 East 55th Street, New York, New York 10022 or by counsel to
be identified in the Prospectus Supplement. Mr. Prince, Senior Vice President,
General Counsel and Secretary of the Company, beneficially owns, or has rights
to acquire under the Company's employee benefit plans, an aggregate of less than
1% of the Company's Common Stock. Certain legal matters will be passed upon for
the Selling Stockholder by Louise M. Parent, General Counsel of the Selling
Stockholder, or counsel to be identified in the Prospectus Supplement, and for
the Underwriters by counsel to be identified in the Prospectus Supplement.
EXPERTS
The consolidated financial statements and schedules of the Company
(formerly Primerica Corporation) as of December 31, 1992 and 1991, and for each
of the years in the three-year period ended December 31, 1992, included in the
Company's Annual Report on Form 10-K for the year 1992, have been incorporated
by reference herein, in reliance upon the reports (also incorporated by
reference herein) of KPMG Peat Marwick, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick covering the December 31,
20
<PAGE>
1992 consolidated financial statements refers to a change in accounting for
income taxes. The consolidated financial statements of The Travelers
Corporation as of December 31, 1992 and 1991, and for each of the years in the
three-year period ended December 31, 1992, included in the Company's Annual
Report on Form 10-K for the year 1992, have been incorporated by reference
herein, in reliance upon the report which includes an explanatory paragraph
referring to changes in the method of accounting for postretirement benefits
other than pensions, accounting for income taxes and accounting for foreclosed
assets in 1992 (also incorporated by reference herein) of Coopers & Lybrand,
independent accountants, and upon the authority of said firm as experts in
accounting and auditing. The combined statement of assets acquired and
liabilities assumed of the Shearson Lehman Brothers and SLB Asset Management
Divisions ("SLBD") of Shearson Lehman Brothers Holdings Inc. as of December 31,
1992 and 1991, the related combined statement of operations of SLBD for the
years then ended and the combined statement of cash provided by net income, as
adjusted for non cash expenses and changes in assets acquired and liabilities
assumed, exclusive of investing and financing activities for the year ended
December 31, 1992, included in the Company's Current Report on Form 8-K dated
April 28, 1993, have been incorporated by reference herein, in reliance upon
the report (also incorporated by reference herein) of Ernst & Young,
independent auditors, given upon the authority of said firm as experts in
accounting and auditing.
<PAGE>
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDER OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT NOR
THE PROSPECTUS SHALL CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE SUCH DATE.
---------------------------
TABLE OF CONTENTS
PAGE
---------
PROSPECTUS SUPPLEMENT
DESCRIPTION OF WARRANTS....................... S-2
UNDERWRITING.................................. S-2
LEGAL MATTERS................................. S-3
PROSPECTUS
AVAILABLE INFORMATION......................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE..................................... 2
THE COMPANY................................... 3
RECENT OPERATING RESULTS...................... 5
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED
STOCK DIVIDENDS............................. 5
USE OF PROCEEDS............................... 5
SELLING STOCKHOLDER........................... 6
DESCRIPTION OF CAPITAL STOCK.................. 7
DESCRIPTION OF OFFERED SECURITIES............. 9
PLAN OF DISTRIBUTION.......................... 18
ERISA MATTERS................................. 20
LEGAL MATTERS................................. 20
EXPERTS....................................... 20
- ------------------------------------------------------
- ------------------------------------------------------
THE TRAVELERS INC.
3,749,466 WARRANTS TO PURCHASE
SHARES OF COMMON STOCK
------------------------
PROSPECTUS SUPPLEMENT
MARCH 2, 1994
(INCLUDING PROSPECTUS
DATED MARCH 2, 1994)
---------------------------
SMITH BARNEY SHEARSON INC.
LEHMAN BROTHERS
- ------------------------------------------------------
- ------------------------------------------------------
