AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1997
REGISTRATION NO. 333-27155
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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TRAVELERS GROUP INC. DELAWARE 52-1568099
TRAVELERS CAPITAL IV DELAWARE 06-6432183
TRAVELERS CAPITAL V DELAWARE 06-6432184
TRAVELERS CAPITAL VI DELAWARE 06-6446485
TRAVELERS CAPITAL VII DELAWARE 06-6446486
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBERS)
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388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(212) 816-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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CHARLES O. PRINCE, III
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
(212) 816-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE FOR EACH REGISTRANT)
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COPIES TO:
KENNETH J. BIALKIN, ESQ. FREDERICK W. KANNER, ESQ.
SKADDEN, ARPS, SLATE, DEWEY BALLANTINE
MEAGHER & FLOM LLP 1301 AVENUE OF THE AMERICAS
919 THIRD AVENUE NEW YORK, NEW YORK 10019
NEW YORK, N.Y. 10022 (212) 259-8000
(212) 735-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of the registration statement, as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED MAY 22, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
1
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
TRUST PREFERRED SECURITIES
TRAVELERS CAPITAL IV
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $ PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
TRAVELERS GROUP INC.
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The % Trust Preferred Securities (the "Preferred Securities") offered
hereby represent preferred undivided beneficial interests in the assets of
Travelers Capital IV, a statutory business trust formed under the laws of the
State of Delaware ("TRV Capital" or the "Trust"). Travelers Group Inc., a
Delaware corporation (the "Company"), will directly or indirectly own all the
common securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of TRV Capital. TRV Capital exists for the sole purpose of issuing
the Preferred Securities and Common Securities and investing the proceeds
thereof in an equivalent amount of % Junior Subordinated Deferrable Interest
Debentures due , 203 (the "Junior Subordinated Debt Securities") of
the Company.
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE S-8 FOR A DISCUSSION OF FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED
SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF SUCH DEFERRAL.
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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
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INITIAL PUBLIC UNDERWRITING PROCEEDS TO TRV
OFFERING PRICE(1) COMMISSIONS(2) CAPITAL(3)(4)(5)
Per Preferred Security $ (3) $
Total $ (3) $
(1) Plus accrued distributions, if any, from , 199 .
(2) For information regarding indemnification of the Underwriters, see
"Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will be
invested in the Junior Subordinated Debt Securities, the Company has agreed
to pay to the Underwriters, as compensation ("Underwriters' Compensation")
for their arranging the investment therein of such proceeds, $ per
Preferred Security ($ in the aggregate); PROVIDED, that such
compensation for sales of 10,000 or more Preferred Securities to a single
purchaser will be $ per Preferred Security. Therefore, to the extent of
such sales, the actual amount of Underwriters' Compensation will be less
than the aggregate amount specified in the preceding sentence. See
"Underwriting."
(4) Expenses of the offering, which are payable by the Company, are estimated to
be $ .
(5) The Trust has granted to the Underwriters a 30-day option to purchase up to
additional Preferred Securities on the same terms as set forth
above solely to cover over-allotments, if any. See "Underwriting." If such
option is exercised in full, the total Initial Public Offering Price and
Proceeds to TRV Capital will be $ and $ , respectively. The
Company will pay Underwriters' Compensation in the amounts per Preferred
Security set forth above with respect to such additional Preferred
Securities.
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The Preferred Securities offered hereby are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if accepted by
them and subject to certain conditions. It is expected that delivery of the
Preferred Securities will be made only in book-entry form through the facilities
of The Depository Trust Company, on or about , 199 .
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SMITH BARNEY INC.
, 199
(CONTINUED FROM PREVIOUS PAGE)
Upon the event of a default under the Declaration (as defined herein), the
holders of Preferred Securities will have a preference over the holders of the
Common Securities with respect to payments in respect of distributions and
payments upon redemption, liquidation and otherwise.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $ per
Preferred Security, accruing from, and including, the date of original issuance
and payable in arrears on of each
year, commencing , 199 ("distributions"). The payment of
distributions out of monies held by TRV Capital and payments on liquidation of
TRV Capital or the redemption of Preferred Securities out of monies held by TRV
Capital, as set forth below, are guaranteed by the Company (the "Guarantee") to
the extent described under "Description of Guarantee." The Guarantee covers
payments of distributions and other payments on the Preferred Securities only if
and to the extent that the Company has made a payment of interest or principal
or other payments on the Junior Subordinated Debt Securities held by TRV Capital
as its sole asset. The Guarantee, when taken together with the Company's
obligations under the Junior Subordinated Debt Securities, the Indenture (as
defined herein) pursuant to which the Junior Subordinated Debt Securities are
issued and its obligations under the Declaration, including its liabilities to
pay costs, expenses, debts and liabilities of TRV Capital (other than with
respect to the Trust Securities), provides a full and unconditional guarantee of
amounts due on the Preferred Securities. The obligations of the Company under
the Guarantee rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) PARI PASSU with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any subsidiary of the Company and (iii) senior to the
Company's common stock. The obligations of the Company under the Junior
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness (as defined herein) of the Company.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated Debt
Securities, which will be the sole assets of TRV Capital. As a result, if
principal or interest is not paid on the Junior Subordinated Debt Securities by
the Company, no amounts will be paid on the Preferred Securities because TRV
Capital will not have sufficient funds to make distributions on the Preferred
Securities. In such event, the Guarantee will not apply to such distributions
until TRV Capital has sufficient funds available therefor.
The Company has the right to defer payments of interest on the Junior
Subordinated Debt Securities by extending the interest payment period on the
Junior Subordinated Debt Securities at any time for up to consecutive
(each, an "Extension Period"), PROVIDED, that no Extension Period may
extend beyond the maturity of the Junior Subordinated Debt Securities. If
interest payments are so deferred, distributions on the Preferred Securities
will also be deferred. During any Extension Period, distributions on the
Preferred Securities will continue to accrue with interest thereon (to the
extent permitted by applicable law) at an annual rate of % per annum
compounded . Additionally, during any Extension Period, holders of
Preferred Securities will be required to include deferred interest income in the
form of original issue discount in their gross income for United States federal
income tax purposes in advance of receipt of the cash distributions with respect
to such deferred interest payments. There could be up to Extension Periods of
varying lengths throughout the term of the Junior Subordinated Debt Securities.
See "Description of the Junior Subordinated Debt Securities--Option to Extend
Interest Payment Period," "Risk Factors Relating to the Preferred
Securities--Option to Extend Interest Payment Period" and "United States Federal
Income Taxation--Interest Income and Original Issue Discount."
The Junior Subordinated Debt Securities are redeemable by the Company, in
whole or in part, from time to time, on or after , 200 , or at any
time, in whole or in part, in certain circumstances upon the occurrence of a Tax
Event (as defined herein). If the Company redeems Junior Subordinated Debt
Securities, TRV Capital must redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed at $ per Trust Security plus accrued
and unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Preferred Securities--Mandatory Redemption
of Trust Securities." The Preferred Securities will be redeemed upon maturity of
the Junior Subordinated Debt Securities. The Junior Subordinated Debt Securities
mature on , 203 . In addition, upon the occurrence of a Special Event
arising from a change in law or a change in legal interpretation regarding tax
or investment company matters, unless the Junior Subordinated Debt Securities
are redeemed in the limited circumstances described herein, TRV Capital shall be
dissolved, with the result that the Junior Subordinated Debt Securities will be
distributed to the holders of the Trust Securities, on a PRO RATA basis, in lieu
of any cash distribution. See "Description of the Preferred Securities--Special
Event Redemption or Distribution." In certain circumstances, the Company will
have the right to redeem the Junior Subordinated Debt Securities prior to
, 200 , which would result in the redemption by TRV Capital of Trust
Securities in the same amount on a PRO RATA basis. If the
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Junior Subordinated Debt Securities are distributed to the holders of the
Preferred Securities, the Company will use its best efforts to have the Junior
Subordinated Debt Securities listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed. See "Description of
the Preferred Securities--Special Event Redemption or Distribution" and
"Description of the Junior Subordinated Debt Securities."
In the event of the involuntary or voluntary dissolution, winding up or
termination of TRV Capital, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $ plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, the Junior
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution."
Following the initial distribution of Preferred Securities, Smith Barney
Inc. ("Smith Barney"), an indirect wholly owned subsidiary of the Company and an
affiliate of TRV Capital, may offer and sell previously issued Preferred
Securities in the course of its business as a broker-dealer (subject to
obtaining any necessary approval of the New York Stock Exchange for any such
offers and sales). Smith Barney may act as a principal or agent in such
transactions.
This Prospectus Supplement, together with an appropriate Prospectus, may be
used by Smith Barney in connection with offers and sales of an indeterminate
amount of the Preferred Securities in market-making transactions at negotiated
prices related to prevailing market prices at the time of sale. Smith Barney may
act as principal or agent in such transactions.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES, INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
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SUMMARY
THE FOLLOWING INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS.
THE COMPANY
The Company is a financial services holding company engaged, through its
subsidiaries, principally in four business segments: Investment Services,
Consumer Finance Services, Property & Casualty Insurance Services and Life
Insurance Services.
The Company's Investment Services segment consists of investment banking,
asset management, brokerage and other financial services provided through Smith
Barney Holdings Inc. and its subsidiaries. The Company's Consumer Finance
Services segment includes consumer lending services conducted primarily under
the name "Commercial Credit" and credit-related insurance and credit card
services. The Company's Property & Casualty Insurance Services segment includes
the operations of Travelers Property Casualty Corp., an 82% owned subsidiary of
the Company ("TAP"), and its subsidiary and affiliated property-casualty
insurance companies, which provide a wide range of commercial and personal
property and casualty insurance products and services to businesses, government
units, associations and individuals. The Company's Life Insurance Services
segment includes individual life insurance, annuities and pension programs which
are offered primarily through The Travelers Insurance Company, The Travelers
Life and Annuity Company and Primerica Life Insurance Company.
In addition to its four business segments, the Company's Corporate and Other
segment consists of unallocated expenses and earnings primarily related to
interest, corporate administration, and certain corporate investments.
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 and its telephone number is (212) 816-8000.
TRV CAPITAL
TRV Capital is a statutory business trust formed under Delaware law pursuant
to (i) a declaration of trust, dated as of September 19, 1996, executed by the
Company, as sponsor (the "Sponsor"), and the trustees of TRV Capital (as
described below) and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on September 19, 1996. Such
declaration will be amended and restated in its entirety (as so amended and
restated, the "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part. The Declaration has been qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the purchasers
thereof will own all of the Preferred Securities. See "Description of the
Preferred Securities--Book-Entry Only Issuance--The Depository Trust Company."
The Company will directly or indirectly acquire Common Securities in an
aggregate liquidation amount equal to 3% or more of the total capital of TRV
Capital. TRV Capital exists for the exclusive purposes of (i) issuing the Trust
Securities representing undivided beneficial interests in the assets of the
Trust, (ii) investing the gross proceeds of the Trust Securities in the Junior
Subordinated Debt Securities and (iii) engaging in only those other activities
necessary or incidental thereto.
TRV Capital's business and affairs are conducted by its trustees, each
appointed by the Company as holder of the Common Securities. Pursuant to the
Declaration, the number of trustees of TRV Capital will be four: The Chase
Manhattan Bank, a New York banking association that is unaffiliated with the
Company, as the institutional trustee (the "Institutional Trustee"), Chase
Manhattan Bank Delaware, a banking association with its principal place of
business in the State of Delaware, as the Delaware trustee (the "Delaware
Trustee"), and two individual trustees (the "Regular Trustees" and, together
with the Institutional Trustee and the Delaware Trustee, the "TRV Trustees") who
will be persons who are employees or officers of, or who are affiliated with the
Company. Initially, the Regular Trustees will be Heidi G. Miller and Irwin
Ettinger, each of whom is an officer of the Company. The Institutional Trustee
will act as the sole indenture trustee under the Declaration for purposes of
compliance with the Trust Indenture Act until removed or replaced by the holder
of the Common Securities. The Chase Manhattan Bank will also act as indenture
trustee (the "Guarantee Trustee") under the Guarantee. See "Description of
Guarantee" and "Description of Junior Subordinated Debt Securities."
The Institutional Trustee will hold title to the Junior Subordinated Debt
Securities for the benefit of the holders of the Trust Securities and, in its
capacity as the holder, the Institutional Trustee will have the power to
exercise all
S-4
rights, powers and privileges under the indenture pursuant to which the Junior
Subordinated Debt Securities are issued. In addition, the Institutional Trustee
will maintain exclusive control of a segregated non-interest bearing bank
account (the "Property Account") to hold all payments made in respect of the
Junior Subordinated Debt Securities for the benefit of the holders of the Trust
Securities. The Institutional Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Guarantee Trustee will
hold the Guarantee for the benefit of the holders of the Preferred Securities.
The Company, as the direct or indirect holder of all the Common Securities, will
have the right, subject to certain restrictions contained in the Declaration, to
appoint, remove or replace any TRV Trustee and to increase or decrease the
number of TRV Trustees. The Company will pay all fees and expenses related to
TRV Capital and the offering of the Trust Securities. See "Description of the
Junior Subordinated Debt Securities--Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
PREFERRED SECURITIES OFFERING
General...................... The Preferred Securities represent undivided beneficial interests in
TRV Capital's assets, which will consist solely of the Junior
Subordinated Debt Securities. The Junior Subordinated Debt Securities,
in which the proceeds of the Preferred Securities offered hereby will
be invested, mature on , 203 , unless the Junior
Subordinated Debt Securities are redeemed by the Company prior to such
maturity as described under "Description of the Preferred
Securities--Mandatory Redemption of Trust Securities" and "Description
of the Preferred Securities--Special Event Redemption or
Distribution."
Distributions................ The distributions payable on each Preferred Security will be fixed at
a rate per annum of % of the stated liquidation amount of $ per
Preferred Security, will be cumulative, will accrue from ,
199 , the date of issuance of the Preferred Securities, and will be
payable in arrears, on of each year commencing
, 199 . See "Description of the Preferred
Securities--Distributions."
Option to Extend Interest
Payment Period............... The Company has the right, at any time, to defer payments of interest
on the Junior Subordinated Debt Securities for a period not exceeding
consecutive ; PROVIDED, that no Extension Period may extend
beyond the maturity date of the Junior Subordinated Debt Securities.
As a consequence of the Company's extension of the interest payment
period, distributions on the Preferred Securities would be
deferred (though such distributions would continue to accrue with
interest thereon compounded , since interest would continue to
accrue on the Junior Subordinated Debt Securities) during any such
extended interest payment period. In the event that the Company
exercises its right to extend an interest payment period, then (a) the
Company shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make
any guarantee payment with respect thereto, and (b) the Company shall
not make any payment of interest on or principal of (or premium, if
any, on), or repay, repurchase or redeem, any debt securities issued
by the Company which rank PARI PASSU with or junior to the Junior
Subordinated Debt Securities. The foregoing, however, will not apply
(i) to any stock dividends paid by the Company where the dividend
stock is the same stock as that on which the dividend is being paid or
(ii) in certain other limited events. Prior to the termination of any
Extension Period, the Company may further extend such Extension
Period, PROVIDED that such Extension Period together with all such
previous and further extensions thereof may not exceed consecutive
. Upon the
S-5
termination of any Extension Period and the payment of all amounts
then due, the Company may commence a new Extension Period, subject to
the foregoing requirements. See "Description of the Junior
Subordinated Debt Securities-- Interest" and "--Option to Extend
Interest Payment Period."
Should an Extension Period occur, Preferred Security holders will
continue to recognize interest income for United States federal income
tax purposes. As a result, such holders will be required to include
such interest in gross income for United States federal income tax
purposes in advance of the receipt of cash, and such holders will not
receive the cash from TRV Capital related to such income if such
holders dispose of Preferred Securities prior to the record date for
payment of distributions. See "United States Federal Income
Taxation--Interest Income and Original Issue Discount."
Mandatory Redemption......... Upon the repayment of the Junior Subordinated Debt Securities, whether
at maturity or upon earlier redemption as provided in the Indenture,
the proceeds from such repayment will be applied by the Institutional
Trustee to redeem a like amount of Trust Securities, upon the terms
and conditions described herein. See "Description of the Preferred
Securities--Mandatory Redemption of Trust Securities."
Optional Redemption.......... The Company has the right to redeem the Junior Subordinated Debt
Securities (a) on or after , 200 , in whole at any time or in
part from time to time, subject to the conditions described in
"Description of the Junior Subordinated Debt Securities--Optional
Redemption" or (b) at any time, in whole or in part, in certain
circumstances upon the occurrence of a Tax Event (as defined herein)
as described under "Description of the Preferred Securities--Special
Event Redemption or Distribution," in each case at a redemption price
equal to 100% of the principal amount of Junior Subordinated Debt
Securities being redeemed, together with any accrued but unpaid
interest, to but not including the redemption date. See "Description
of the Junior Subordinated Debt Securities-- Optional Redemption." If
the Company redeems any Junior Subordinated Debt Securities, the
proceeds from such redemption will be applied by the Institutional
Trustee to redeem a like amount of Trust Securities.
Special Event Distribution... Subject to certain conditions and except in limited circumstances, if
at any time a Special Event (as defined herein) shall occur and be
continuing, TRV Capital shall be dissolved with the result that Junior
Subordinated Debt Securities with an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and with accrued and unpaid
interest thereon equal to accrued and unpaid distributions on, the
Trust Securities outstanding at such time, would be distributed to the
holders of the Trust Securities in liquidation of such holders'
interests in TRV Capital on a PRO RATA basis within 90 days following
the occurrence of such Special Event. See "Description of the
Preferred Securities--Special Event Redemption or Distribution."
Voting Rights................ Generally, the holders of the Preferred Securities will not have any
voting rights. See "Description of the Preferred Securities--Voting
Rights."
Subject to certain conditions, including that the Institutional
Trustee obtain the opinion of counsel described under "Description of
the Preferred Securities-- Voting Rights" prior to taking certain
actions, the holders of a majority in aggregate liquidation amount of
the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration
including the right to direct the Institutional Trustee, as holder of
the Junior Subordinated
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Debt Securities, to (i) exercise the remedies available under the
Indenture with respect to the Junior Subordinated Debt Securities,
(ii) waive any past Indenture Event of Default that is waivable under
the Indenture (as defined herein), (iii) exercise any right to rescind
or annul a declaration that the principal of all the Junior
Subordinated Debt Securities shall be due and payable, or (iv) consent
to any amendment, modification or termination of the Indenture or the
Junior Subordinated Debt Securities where such consent shall be
required; PROVIDED, HOWEVER, that where a consent or action under the
Indenture would require the consent or act of a Super Majority (as
defined herein) of holders of the Junior Subordinated Debt Securities
affected thereby, only the holders of at least such Super Majority in
aggregate liquidation amount of the Preferred Securities may direct
the Institutional Trustee to give such consent or take such action.
See "Description of the Preferred Securities--Voting Rights."
ERISA Matters................ Prospective purchasers representing employee benefit plans and other
retirement vehicles must carefully consider the restrictions on
purchase set forth under "ERISA Matters."
Use of Proceeds.............. The proceeds from the sale of the Preferred Securities offered hereby
will be used by TRV Capital to purchase the Junior Subordinated Debt
Securities issued by the Company. The Company expects to use such
proceeds for general corporate purposes. See "Use of Proceeds."
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus, the matters set forth under the caption "Risk Factors" in this
Prospectus Supplement before purchasing the Preferred Securities offered hereby.
------------------------
UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS' OPTION
TO PURCHASE FROM THE TRUST UP TO ADDITIONAL PREFERRED SECURITIES SOLELY TO
COVER OVER-ALLOTMENTS, IF ANY. SEE "UNDERWRITING."
S-7
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, THE FOLLOWING RISK FACTORS BEFORE PURCHASING THE PREFERRED
SECURITIES OFFERED HEREBY.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBT SECURITIES
AND THE GUARANTEE
The obligations of the Company under the Junior Subordinated Debt Securities
are subordinate and junior in right of payment to all present and future Senior
Indebtedness of the Company. No payment of principal (including redemption
payments, if any), premium, if any, or interest on the Junior Subordinated Debt
Securities may be made if (i) any Senior Indebtedness of the Company is not paid
when due and any applicable grace period with respect to such default has ended
with such default not having been cured or waived or ceasing to exist, or (ii)
the maturity of any Senior Indebtedness of the Company has been accelerated
because of a default. The Company's obligations under the Guarantee rank (i)
subordinate and junior in right of payment to all other liabilities of the
Company, (ii) PARI PASSU with the most senior preferred or preference stock now
or hereafter issued by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock of
any subsidiary of the Company and (iii) senior to the Company's Common Stock.
There are no terms in the Preferred Securities, the Junior Subordinated Debt
Securities or the Guarantee that limit the Company's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Junior
Subordinated Debt Securities and the Guarantee. See "Description of
Guarantee--Status of the Guarantee" and "Description of the Junior Subordinated
Debt Securities-- Subordination."
RIGHTS UNDER THE GUARANTEE
The Guarantee has been qualified as an indenture under the Trust Indenture
Act. The Chase Manhattan Bank will act as indenture trustee under the Guarantee
for the purposes of compliance with the provisions of the Trust Indenture Act.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent TRV Capital has funds available
therefor, (ii) the Redemption Price with respect to Preferred Securities called
for redemption by TRV Capital, to the extent TRV Capital has funds available
therefor, and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of TRV Capital (other than in connection with the distribution of
Junior Subordinated Debt Securities to the holders of Preferred Securities or a
redemption of all the Preferred Securities), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid distributions on the Preferred
Securities to the date of the payment and (b) the amount of assets of TRV
Capital remaining available for distribution to holders of the Preferred
Securities in liquidation of TRV Capital. The holders of a majority in
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails
to enforce the Guarantee, any holder of Preferred Securities may directly
institute a legal proceeding against the Company to enforce the Guarantee
Trustee's rights under the Guarantee without first instituting a legal
proceeding against TRV Capital, the Guarantee Trustee or any other person or
entity. A holder of Preferred Securities may also directly institute a legal
proceeding against the Company to enforce such holder's right to receive payment
under the Guarantee without first (i) directing the Guarantee Trustee to enforce
the terms of the Guarantee or (ii) instituting a legal proceeding against TRV
Capital or any other person or entity. If the Company were to default on its
obligation to pay amounts payable on the Junior Subordinated Debt Securities,
TRV Capital would lack available funds for the payment of distributions or
amounts payable on redemption of the Preferred Securities or otherwise, and, in
such event, holders of the Preferred Securities would not be able to rely upon
the Guarantee for payment of such amounts. Instead, a holder of the Preferred
Securities would rely on the enforcement (1) by the Institutional Trustee of its
rights as registered holder of the Junior Subordinated Debt Securities against
the Company pursuant to the terms of the Junior Subordinated Debt Securities or
(2) by such holder of Preferred Securities of its right against the Company to
enforce payments on the Junior Subordinated Debt Securities. See "Description of
Guarantees" and "Description of Junior Subordinated Debt Securities" in the
accompanying
S-8
Prospectus. The Declaration provides that each holder of Preferred Securities,
by acceptance thereof, agrees to the provisions of the Guarantee, including the
subordination provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debt Securities against the Company. In addition, the holders of a
majority in liquidation amount of the Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee or to direct the exercise of any
trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it as a holder of the Junior Subordinated Debt Securities. If the
Institutional Trustee fails to enforce its rights under the Junior Subordinated
Debt Securities, any holder of Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Institutional Trustee's
rights under the Junior Subordinated Debt Securities without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. If a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debt Securities on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder (a "Direct Action") on or after the respective due
date specified in the Junior Subordinated Debt Securities without first (i)
directing the Institutional Trustee to enforce the terms of the Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of Preferred Securities under
the Declaration to the extent of any payment made by the Company to such holder
of Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from TRV Capital. The holders
of Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debt Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period from time to time on the Junior Subordinated Debt Securities for an
Extension Period not exceeding consecutive interest
periods during which no interest shall be due and payable, PROVIDED, that no
Extension Period may extend beyond the maturity of the Junior Subordinated Debt
Securities. As a consequence of such an extension, distributions on the
Preferred Securities would be deferred (but despite such deferral would continue
to accrue with interest thereon compounded ) by TRV Capital during any
such extended interest payment period. In the event that the Company exercises
this right to defer interest payments, then (a) the Company shall not declare or
pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payment with respect thereto (other than (i)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank PARI PASSU with or junior to such Junior Subordinated Debt
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any Extension Period, the
Company may further extend such Extension Period; PROVIDED, that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed consecutive
S-9
interest periods; PROVIDED, FURTHER, that no Extension Period may extend beyond
the maturity of the Junior Subordinated Debt Securities. Upon the termination of
any Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements.
Consequently, there could be up to Extension Periods of varying lengths
throughout the term of the Junior Subordinated Debt Securities. See "Description
of the Preferred Securities--Distributions" and "Description of the Junior
Subordinated Debt Securities--Option to Extend Interest Payment Period."
The junior subordinated debt securities issued from time to time in
connection with the issuance of trust preferred securities by a Trust will
contain the same restrictive covenants described in the preceding paragraph. The
effect of such restrictive covenants will be to limit the rights of holders of
Preferred Securities to receive payments with respect thereto if there has been
a deferral of interest under any such junior subordinated debt securities.
Should the Company exercise its right to defer any payment of interest on
the Junior Subordinated Debt Securities by extending the interest payment
period, each holder of Preferred Securities will accrue income in the form of
original issue discount ("OID") in respect of the deferred interest allocable to
its Preferred Securities for United States federal income tax purposes, which
will be allocated but not distributed, to holders of record of Preferred
Securities. As a result, during any Extension Period, each such holder of
Preferred Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash from
TRV Capital related to such income if such holder disposes of its Preferred
Securities prior to the record date for the date on which distributions of such
amounts are made. The Company has no current intention of exercising its right
to defer payments of interest by extending the interest payment period on the
Junior Subordinated Debt Securities. However, should the Company exercise such
right in the future, the market price of the Preferred Securities is likely to
be affected. A holder that disposes of its Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Preferred Securities. In addition, as a
result of the existence of the Company's right to defer interest payments, the
market price of the Preferred Securities (which represent an undivided
beneficial interest in the Junior Subordinated Debt Securities) may be more
volatile than other similar securities where the issuer does not have such
rights to defer interest payments. See "United States Federal Income
Taxation--Interest Income and Original Issue Discount" and "--Sales of Preferred
Securities."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event (as defined herein), TRV Capital will
be dissolved, except in the limited circumstance described below, with the
result that the Junior Subordinated Debt Securities will be distributed to the
holders of the Trust Securities in connection with the liquidation of TRV
Capital. In certain circumstances in connection with a Tax Event, the Company
has the right to redeem the Junior Subordinated Debt Securities, in whole or in
part, in lieu of a distribution of the Junior Subordinated Debt Securities to
holders of Trust Securities by TRV Capital, in which event TRV Capital will
redeem the Trust Securities on a PRO RATA basis to the same extent as the Junior
Subordinated Debt Securities are redeemed by the Company. See "Description of
the Preferred Securities-- Special Event Redemption or Distribution."
Under current United States federal income tax law, a distribution of Junior
Subordinated Debt Securities upon the dissolution of TRV Capital would not be a
taxable event to holders of the Preferred Securities. Upon the occurrence of a
Tax Event, however, a dissolution of TRV Capital in which holders of the
Preferred Securities receive cash would be a taxable event to such holders. See
"United States Federal Income Taxation--Receipt of Junior Subordinated Debt
Securities or Cash Upon Liquidation of TRV Capital."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of TRV Capital
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debt Securities that a holder of Preferred Securities
may receive on dissolution and liquidation of TRV Capital, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby. Because holders of Preferred Securities may receive
Junior Subordinated Debt Securities upon the occurrence of a Special Event,
prospective purchasers of Preferred Securities are also making an investment
decision with regard to the Junior Subordinated Debt Securities and should
carefully review all the information regarding the Junior Subordinated Debt
Securities contained herein and in the
S-10
accompanying Prospectus. See "Description of the Preferred Securities--Special
Event Redemption or Distribution" and "Description of the Junior Subordinated
Debt Securities--General."
PROPOSED LEGISLATION
On February 6, 1997, the U.S. Treasury Department released an explanation of
President Clinton's fiscal 1998 budget proposal (the "Proposed Legislation").
The Proposed Legislation would, among other things, generally deny corporate
issuers a deduction for interest in respect of certain debt obligations, such as
the Junior Subordinated Debt Securities, issued on or after the date of first
congressional committee action. If the Proposed Legislation were enacted in its
current form, it would not apply to the Junior Subordinated Debt Securities
because the Junior Subordinated Debt Securities will be issued prior to the date
of first congressional committee action. There can be no assurance, however,
that the Proposed Legislation, if enacted, will be enacted in its current form
or that other legislation enacted after the date hereof will not adversely
affect the Company's ability to deduct the interest payable on the Junior
Subordinated Debt Securities. Such a change could give rise to a Tax Event,
which could result in the distribution of the Junior Subordinated Debt
Securities to holders of the Preferred Securities or, in certain limited
circumstances, the redemption of the Junior Subordinated Debt Securities by the
Company and the distribution of the resulting cash in redemption of the
Preferred Securities. See "--Special Event Redemption or Distribution" and
"Description of the Preferred Securities--Special Event Redemption or
Distribution."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
under certain limited circumstances, will not be entitled to vote to appoint,
remove or replace, or to increase or decrease the number of, TRV Trustees, which
voting rights are generally vested exclusively in the holder of the Common
Securities. See "Description of the Preferred Securities--Voting Rights."
TRADING PRICE
Should the Company exercise its option to defer any payment of interest on
the Junior Subordinated Debt Securities, the Preferred Securities may trade at a
price that does not fully reflect the value of accrued but unpaid interest with
respect to the underlying Junior Subordinated Debt Securities. In the event of
such a deferral, a holder of Preferred Securities who disposes of its Preferred
Securities between record dates for payments of distributions thereon will be
required to include in income as ordinary income accrued but unpaid interest on
the Junior Subordinated Debt Securities to the date of disposition, and to add
such amount to its adjusted tax basis in its PRO RATA share of the underlying
Junior Subordinated Debt Securities deemed disposed of. To the extent the
selling price is less than such holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), such holder will recognize
a capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "United States Federal Income Taxation-- Interest Income and Original Issue
Discount" and "--Sales of Preferred Securities."
S-11
USE OF PROCEEDS
All of the net proceeds from the sale of the Preferred Securities offered
hereby will be invested by TRV Capital in Junior Subordinated Debt Securities of
the Company. The Company will use the proceeds from the sale of the Junior
Subordinated Debt Securities to TRV Capital for general corporate purposes,
which may include capital contributions to subsidiaries of the Company, the
redemption of shares of preferred stock of the Company, and/or the reduction or
refinancing of borrowings of the Company or its subsidiaries. See
"Capitalization."
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED --------------------------------------------
MARCH 31, 1997 1996 1995 1994 1993
----------------------- --------- --------- --------- -----------
Ratio of earnings to combined fixed charges and
preferred stock dividends 2.45 2.30 2.09 2.12 2.64
1992
---------
Ratio of earnings to combined fixed charges and
preferred stock dividends 2.57
The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed by dividing earnings from continuing operations
before income taxes and fixed charges by the combined fixed charges and
preferred stock dividends. For purposes of these ratios, fixed charges consist
of interest expense and that portion of rentals deemed representative of the
appropriate interest factor.
ACCOUNTING TREATMENT
The financial statements of TRV Capital will be reflected in the Company's
consolidated financial statements with the Preferred Securities shown as
"TRV-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trusts
holding solely Junior Subordinated Debt Securities."
S-12
CAPITALIZATION
The following table sets forth the capitalization of the Company at March
31, 1997, and as adjusted to give effect to (i) the issuance and sale of
additional long-term debt of certain subsidiaries of the Company after March 31,
1997 through the date hereof, (ii) the issuance of the Preferred Securities, and
(iii) the application of the proceeds from the issuance of such long-term debt
and the Preferred Securities to the repayment of investment banking and
brokerage borrowings and short-term borrowings, as if such transactions had
occurred on March 31, 1997.
AT MARCH 31, 1997
------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN MILLIONS)
Debt:
Investment banking and brokerage borrowings......................................................... $ 3,752 $
Short-term borrowings............................................................................... 2,112
Long-term debt...................................................................................... 10,882
----------- -----------
Total debt...................................................................................... $ 16,746 $
TRV-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trusts holding solely Junior
Subordinated Debt Securities of TRV(1).................................................................. 1,000
-----------
TAP-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trusts holding solely Junior
Subordinated Debt Securities of TAP(2).................................................................. 900
-----------
Stockholders' equity:
Preferred stock at aggregate liquidation value...................................................... 675
Common stock ($.01 par value; authorized shares: 1,500,000,000; issued shares: 743,142,534
outstanding and as adjusted)....................................................................... 7
Additional paid-in capital.......................................................................... 7,433
Retained earnings................................................................................... 7,977
Treasury stock at cost (102,127,812 shares outstanding and as adjusted)............................. (2,614)
Unrealized gain (loss) on investment securities..................................................... (131)
Other, principally unearned compensation............................................................ (489)
----------- -----------
Total stockholders' equity.................................................................... 12,858
----------- -----------
Total capitalization.......................................................................... $ 31,504 $
----------- -----------
----------- -----------
- ------------------------
(1) The sole asset of each trust will be junior subordinated deferrable interest
debentures of the Company. The sole asset of TRV Capital will be
$ million aggregate principal amount of % junior subordinated
deferrable interest debentures of the Company due , 20 . The sole
asset of Travelers Capital I is $412,372,000 aggregate principal amount of
8% junior subordinated deferrable interest debentures of the Company due
September 30, 2036. The sole asset of Travelers Capital II is $412,372,000
aggregate principal amount of 7 3/4% junior subordinated deferrable interest
debentures due December 1, 2036. The sole asset of Travelers Capital III is
$206,186,000 aggregate principal amount of 7 5/8% junior subordinated
deferrable interest debentures due December 1, 2036.
(2) The sole asset of TAP Capital I is $824,743,000 aggregate principal amount
of 8.08% junior subordinated deferrable interest debentures of TAP due April
30, 2036. The sole asset of TAP Capital II is $103,093,000 aggregate
principal amount of 8% junior subordinated deferrable interest debentures of
TAP due May 15, 2036.
S-13
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration has been qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The Chase Manhattan Bank, will act as
indenture trustee under the Declaration for purposes of compliance with the
provisions of the Trust Indenture Act. The terms of the Preferred Securities
will include those stated in the Declaration and those made part of the
Declaration by the Trust Indenture Act. This description supplements the
description of the general terms and provisions of the Preferred Securities set
forth in the accompanying Prospectus under the caption "Description of Preferred
Securities." The following summary of the material terms and provisions of the
Preferred Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Declaration (a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement is a part), the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of TRV
Capital the Trust Securities, which represent undivided beneficial interests in
the assets of TRV Capital. All of the Common Securities will be owned, directly
or indirectly, by the Company. The Common Securities rank PARI PASSU, and
payments will be made thereon on a PRO RATA basis, with the Preferred
Securities, except that upon the occurrence and during the continuance of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Declaration does not permit the issuance by TRV
Capital of any securities other than the Trust Securities or the incurrence of
any indebtedness by TRV Capital. Pursuant to the Declaration, the Institutional
Trustee will hold title to the Junior Subordinated Debt Securities purchased by
TRV Capital for the benefit of the holders of the Trust Securities. The payment
of distributions out of money held by TRV Capital, and payments upon redemption
of the Preferred Securities or liquidation of TRV Capital out of money held by
TRV Capital, are guaranteed by the Company to the extent described under
"Description of Guarantee." The Guarantee will be held by The Chase Manhattan
Bank, the Guarantee Trustee, for the benefit of the holders of the Preferred
Securities. The Guarantee does not cover payment of distributions when TRV
Capital does not have sufficient available funds to pay such distributions. In
such event, the remedy of a holder of Preferred Securities is to (i) vote to
direct the Institutional Trustee to enforce the Institutional Trustee's rights
under the Junior Subordinated Debt Securities or (ii) if the failure of TRV
Capital to pay distributions is attributable to the failure of the Company to
pay interest or principal on the Junior Subordinated Debt Securities, institute
a proceeding directly against the Company for enforcement of payment to such
holder of the principal or interest on the Junior Subordinated Debt Securities
having a principal amount equal to the aggregate liquidation amount of the
Preferred Securities of such holder on or after the respective due date
specified in the Junior Subordinated Debt Securities. See "--Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $ per Preferred Security.
Distributions in arrears beyond the first date such distributions are payable
(or would be payable, if not for any Extension Period or default by the Company
on the Junior Subordinated Debt Securities) will bear interest thereon at the
rate per annum of % thereof compounded . The term "distribution" as used
herein includes any such interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from and including , 199 , and will be payable in arrears on
of each year, commencing , 199 .
When, as and if available for payment, distributions will be made by the
Institutional Trustee, except as otherwise described below.
The distribution rate and the distribution payment dates and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated Debt
Securities.
The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period from time to time on the Junior Subordinated Debt Securities for an
Extension Period not exceeding consecutive interest periods during
which no interest shall be due and
S-14
payable, PROVIDED, that no Extension Period may extend beyond the maturity of
the Junior Subordinated Debt Securities. As a consequence of the Company's
extension of the interest payment period, distributions on the Preferred
Securities would be deferred (though such distributions would continue to accrue
with interest thereon compounded , since interest would continue to
accrue on the Junior Subordinated Debt Securities) during any such extended
interest payment period. In the event that the Company exercises its right to
extend the interest payment period, then (a) the Company shall not declare or
pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payment with respect thereto (other than (i)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank PARI PASSU with or junior to the Junior Subordinated Debt
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any Extension Period, the
Company may further extend such Extension Period; PROVIDED, that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed consecutive interest periods; PROVIDED FURTHER, that no
Extension Period may extend beyond the maturity of the Junior Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the above requirements. Consequently, there could be up to Extension Periods
of varying lengths throughout the term of the Junior Subordinated Debt
Securities. See "Description of the Junior Subordinated Debt
Securities--Interest" and "--Option to Extend Interest Payment Period." The
Regular Trustees shall give the holders of the Preferred Securities notice of
any Extension Period upon their receipt of notice thereof from the Company. See
"Description of the Junior Subordinated Debt Securities--Option To Extend
Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to holders of record of
the Preferred Securities as they appear on the books and records of TRV Capital
on the record date next following the termination of such deferral period.
Distributions on the Preferred Securities will be made on the dates payable
to the extent that TRV Capital has funds available for the payment of such
distributions in the Property Account. TRV Capital's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from the Company on the Junior Subordinated Debt Securities.
See "Description of the Junior Subordinated Debt Securities." The payment of
distributions out of monies held by TRV Capital is guaranteed by the Company to
the extent set forth under "Description of Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of TRV Capital at the close of
business on the relevant record dates, which, as long as the Preferred
Securities remain in book-entry only form, will be one Business Day prior to the
relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the Junior
Subordinated Debt Securities in the Property Account for the benefit of the
holders of the Trust Securities. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment will be made as
described under "--Book-Entry Only Issuance--The Depository Trust Company"
below. In the event that the Preferred Securities do not continue to remain in
book-entry only form, the relevant record dates shall conform to the rules of
any securities exchange on which the Preferred Securities are listed and, if
none, the Regular Trustees shall have the right to select relevant record dates,
which shall be more than 14 days but less than 60 days prior to the relevant
payment dates. In the event that any date on which distributions are to be made
on the Preferred Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such record date.
A "Business Day" shall mean any day other than Saturday, Sunday or any other day
on which banking institutions in New York City (in the State of New York) are
permitted or required by any applicable law to close.
S-15
MANDATORY REDEMPTION OF TRUST SECURITIES
The Preferred Securities have no stated maturity date but will be redeemed
upon the maturity of the Junior Subordinated Debt Securities or to the extent
the Junior Subordinated Debt Securities are redeemed. The Junior Subordinated
Debt Securities will mature on , 203 , and may be redeemed, in whole or
in part, at any time on or after , 200 , or at any time, in whole or in
part, in certain circumstances upon the occurrence of a Tax Event (as described
under "Special Event Redemption or Distribution" below). See "Description of the
Junior Subordinated Debt Securities--Optional Redemption." Upon the maturity of
the Junior Subordinated Debt Securities, the proceeds of the repayment thereof
shall simultaneously be applied to redeem all outstanding Trust Securities at
the Redemption Price. Upon the redemption of the Junior Subordinated Debt
Securities, whether in whole or in part (either at the option of the Company or
pursuant to a Tax Event), the proceeds from such redemption shall simultaneously
be applied to redeem Trust Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Junior Subordinated Debt
Securities so redeemed at the Redemption Price; PROVIDED, that holders of Trust
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption. In the event that fewer than all of the outstanding Preferred
Securities are to be redeemed, the Preferred Securities will be redeemed PRO
RATA as described under "--Book-Entry Only Issuance--The Depository Trust
Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after the date of this Prospectus Supplement), in
either case after the date of this Prospectus Supplement, there is more than an
insubstantial risk that (i) TRV Capital would be subject to United States
federal income tax with respect to income accrued or received on the Junior
Subordinated Debt Securities, (ii) interest payable to TRV Capital on the Junior
Subordinated Debt Securities would not be deductible, in whole or in part, by
the Company for United States federal income tax purposes or (iii) TRV Capital
would be subject to more than a DE MINIMIS amount of other taxes, duties or
other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practicing under the 1940 Act (as defined herein) to the effect that, as a
result of the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that TRV Capital is or will be
considered an "investment company" which is required to be registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus
Supplement.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, TRV Capital
shall, except in the limited circumstances described below, be dissolved with
the result that Junior Subordinated Debt Securities with an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and with accrued and unpaid interest
equal to accrued and unpaid distributions on, the Trust Securities outstanding
at such time would be distributed to the holders of the Trust Securities in
liquidation of such holders' interests in TRV Capital on a PRO RATA basis within
90 days following the occurrence of such Special Event; PROVIDED, HOWEVER, that
in the case of the occurrence of a Tax Event, such dissolution and distribution
shall be conditioned on the Regular Trustees' receipt of an opinion of
nationally recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on, among other things, published
revenue rulings of the Internal Revenue Service, to the effect that the holders
of the Trust Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of such dissolution and distribution of
Junior Subordinated Debt Securities and, PROVIDED FURTHER, that, if at the time
there is available to the Company or TRV Capital the opportunity to eliminate,
within such 90 day period, the Special Event by taking some ministerial action,
such as filing a form or making an election, or pursuing some other similar
reasonable measure, that will have no adverse effect on TRV Capital, the Company
or the holders of the Trust Securities, the Company or TRV Capital will pursue
such measure in lieu of dissolution. Furthermore, if in the case of
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the occurrence of a Tax Event, (i) the Company has received an opinion (a
"Redemption Tax Opinion") of nationally recognized independent tax counsel
experienced in such matters that, as a result of such Tax Event, there is more
than an insubstantial risk that the Company would be precluded from deducting
the interest on the Junior Subordinated Debt Securities for United States
federal income tax purposes, even after the Junior Subordinated Debt Securities
were distributed to the holders of Trust Securities in liquidation of such
holders' interests in TRV Capital as described above, or (ii) the Regular
Trustees shall have been informed by such tax counsel that it cannot deliver a
No Recognition Opinion to the Regular Trustees, the Company shall have the
right, upon not less than 30 nor more than 60 days' notice, to redeem the Junior
Subordinated Debt Securities, in whole or in part, for cash within 90 days
following the occurrence of such Tax Event, and, following such redemption,
Trust Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debt Securities so redeemed shall be
redeemed by TRV Capital at the Redemption Price on a PRO RATA basis; PROVIDED,
HOWEVER, that if at the time there is available to the Company or TRV Capital
the opportunity to eliminate, within such 90-day period, the Tax Event by taking
some ministerial action, such as filing a form or making an election or pursuing
some other similar reasonable measure that will have no adverse effect on TRV
Capital, the Company or the holders of the Trust Securities, the Company or TRV
Capital will pursue such measure in lieu of redemption.
If the Junior Subordinated Debt Securities are distributed to the holders of
the Preferred Securities, the Company will use its best efforts to cause the
Junior Subordinated Debt Securities to be listed on the New York Stock Exchange
or on such other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debt Securities
upon dissolution of TRV Capital, (i) the Preferred Securities will no longer be
deemed to be outstanding, (ii) the securities depositary or its nominee, as the
record holder of the Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debt Securities
to be delivered upon such distribution, and (iii) any certificates representing
Preferred Securities not held by the Depositary or its nominee will be deemed to
represent Junior Subordinated Debt Securities having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and with accrued and unpaid interest
equal to accrued and unpaid distributions on, such Preferred Securities until
such certificates are presented to the Company or its agent for transfer or
reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of TRV
Capital were to occur. Accordingly, the Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Junior Subordinated Debt Securities that an investor may receive
if a dissolution and liquidation of TRV Capital were to occur, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
REDEMPTION PROCEDURES
TRV Capital may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all distribution periods terminating on or prior
to the date of redemption.
If TRV Capital gives a notice of redemption in respect of the Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, and if the Company has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Debt Securities, the
Institutional Trustee will irrevocably deposit with the Depositary (as defined
in the accompanying Prospectus) funds sufficient to pay the applicable
Redemption Price and will give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. See "-- Book-Entry Only Issuance--The Depository Trust Company." If
notice of redemption shall have been given and funds deposited as required,
then, immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by TRV Capital, or by the
Company pursuant to the Guarantee, distributions on such Preferred Securities
will continue to accrue at the then applicable rate from the original redemption
date to the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
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In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed in accordance with the
Depositary's standard procedures. See "--Book-Entry Only Issuance--The
Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its subsidiaries,
including, without limitation, Smith Barney, may at any time, and from time to
time, purchase outstanding Preferred Securities by tender, in the open market or
by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of TRV Capital (each a "Liquidation"), the holders of
the Preferred Securities will be entitled to receive out of the assets of TRV
Capital, after satisfaction of liabilities to creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $ per
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment (the "Liquidation Distribution"), unless, in connection with such
Liquidation, Junior Subordinated Debt Securities in an aggregate stated
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and with accrued and unpaid
interest equal to accrued and unpaid distributions on, the Preferred Securities
outstanding at such time have been distributed on a PRO RATA basis to the
holders of such Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because TRV Capital has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by TRV
Capital on the Preferred Securities shall be paid on a PRO RATA basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such Liquidation PRO RATA with the holders of the Preferred Securities,
except that if a Declaration Event of Default has occurred and is continuing the
Preferred Securities shall have a preference over the Common Securities with
regard to such distributions.
Pursuant to the Declaration, TRV Capital shall terminate (i) on ,
2052, the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Company or the holder of the Common Securities, (iii) upon the filing of a
certificate of dissolution or its equivalent with respect to the holder of the
Common Securities or the Company, the filing of a certificate of cancellation
with respect to TRV Capital, or the revocation of the charter of the holder of
the Common Securities or the Company and the expiration of 90 days after the
date of revocation without a reinstatement thereof, (iv) upon the distribution
of Junior Subordinated Debt Securities upon the occurrence of a Special Event,
(v) upon the entry of a decree of a judicial dissolution of the holder of the
Common Securities, the Company or TRV Capital, or (vi) upon the redemption of
all the Trust Securities.
Under the terms of the Indenture, the Company has covenanted that, for so
long as the Preferred Securities remain outstanding, it will not voluntarily
dissolve, wind-up or terminate TRV Capital, except in connection with a
distribution of Junior Subordinated Debt Securities upon a Special Event or in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); PROVIDED, that pursuant to the
Declaration the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture. In the event that any Declaration Event of Default with respect to
the Preferred Securities is waived by the holders of the Preferred Securities as
provided in the Declaration, the holders of Common Securities pursuant to the
Declaration have agreed that such waiver also constitutes a waiver of such
Declaration Event of Default with respect to the Common Securities for all
purposes under the Declaration without any further act, vote or consent of the
holders of Common Securities. See "--Voting Rights."
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If the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debt Securities, any holder of Preferred Securities may directly
institute a legal proceeding against the Company to enforce the Institutional
Trustee's rights under the Junior Subordinated Debt Securities without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. If a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
the redemption date), then a holder of Preferred Securities may also directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debt Securities without first (i) directing the
Institutional Trustee to enforce the terms of the Junior Subordinated Debt
Securities or (ii) instituting a legal proceeding against the Company to enforce
the Institutional Trustee's rights under the Junior Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Preferred Securities in such Direct Action. Consequently, the Company will be
entitled to payment of amounts that a holder of Preferred Securities receives in
respect of an unpaid distribution that resulted in the bringing of a Direct
Action to the extent that such holder receives or has already received full
payment with respect to such unpaid distribution from TRV Capital. The holders
of Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debt Securities.
Upon the occurrence of an Indenture Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debt Securities will have
the right under the Indenture to declare the principal of and interest on the
Junior Subordinated Debt Securities to be immediately due and payable. The
Company and TRV Capital are each required to file annually with the
Institutional Trustee an officers' certificate as to its compliance with all
conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described in this Prospectus Supplement and in the accompanying
Prospectus under "Description of Guarantees--Modification of Guarantees;
Assignment," and except as provided under the Trust Act, the Trust Indenture Act
and as otherwise required by law and the Declaration, the holders of the
Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debt Securities, to (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee, or exercising any trust or power conferred on the
Indenture Trustee with respect to the Junior Subordinated Debt Securities, (ii)
waive any past Indenture Event of Default that is waivable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debt Securities shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debt Securities where such consent shall be
required; PROVIDED, HOWEVER, that, where a consent or action under the Indenture
would require the consent or act of holders of more than a majority in principal
amount of the Junior Subordinated Debt Securities (a "Super Majority") affected
thereby, only the holders of at least such Super Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
record holder of Preferred Securities may directly institute a legal proceeding
against the Company to enforce the Institutional Trustee's rights under the
Junior Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity. The
Institutional Trustee shall notify all holders of the Preferred Securities of
any notice of default received from the Indenture Trustee with respect to the
Junior Subordinated Debt Securities. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy available to the Institutional Trustee, the Institutional Trustee, as
holder of the Junior Subordinated Debentures, shall not take any of the actions
described in clauses (i), (ii), (iii) or
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(iv) above unless the Institutional Trustee has obtained an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that, as a result of such action, TRV Capital will not fail to be
classified as a grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debt Securities, is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Institutional Trustee shall request the written direction of the holders of the
Trust Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a majority in liquidation amount of the Trust Securities voting
together as a single class; PROVIDED, HOWEVER, that where any amendment,
modification or termination under the Indenture would require the consent of a
Super Majority, the Institutional Trustee may only give such consent at the
direction of the holders of at least the proportion in aggregate liquidation
amount of the Trust Securities which the relevant Super Majority represents of
the aggregate principal amount of the Junior Subordinated Debt Securities
outstanding. The Institutional Trustee shall be under no obligation to take any
such action in accordance with the directions of the holders of the Trust
Securities unless the Institutional Trustee has obtained an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that for United States federal income tax purposes TRV Capital will not
be classified as other than a grantor trust.
A waiver of an Indenture Event of Default by the Institutional Trustee at
the direction of the holders of the Preferred Securities will constitute a
waiver of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for TRV Capital to
redeem and cancel Preferred Securities or distribute Junior Subordinated Debt
Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "--Book-Entry Only Issuance--The
Depository Trust Company."
Except under certain limited circumstances, holders of the Preferred
Securities will have no rights to appoint or remove the TRV Trustees, who
generally may be appointed, removed or replaced solely by the Company as the
indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee and the
Delaware Trustee), PROVIDED, that, if any proposed amendment provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of TRV Capital other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of holders of at least a majority in liquidation amount of the Trust
Securities affected thereby; PROVIDED, that, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Preferred
Securities or the Common Securities, then only holders of the affected class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of holders of a
majority in liquidation amount of such class of Trust Securities.
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Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause TRV Capital to
be classified for United States federal income tax purposes as other than a
grantor trust, (ii) reduce or otherwise adversely affect the powers of the
Institutional Trustee or (iii) cause TRV Capital to be deemed an "investment
company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
TRV Capital may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body except as
described below. TRV Capital may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; PROVIDED, that (i) such successor entity either (x)
expressly assumes all of the obligations of TRV Capital under the Trust
Securities or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities rank the same as the Trust
Securities rank with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) the Company expressly acknowledges a trustee of
such successor entity possessing the same powers and duties as the Institutional
Trustee, in its capacity as the holder of the Junior Subordinated Debt
Securities, (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another organization on
which the Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of TRV Capital, (vii) prior to such merger,
consolidation, amalgamation or replacement, TRV Capital has received an opinion
of a nationally recognized independent counsel to TRV Capital experienced in
such matters to the effect that, (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in the new entity), and (B) following such merger, consolidation,
amalgamation or replacement, neither TRV Capital nor such successor entity will
be required to register as an "investment company" under the 1940 Act; and
(viii) the Company guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, TRV Capital shall not, except with the consent of
holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
in the opinion of a nationally recognized independent tax counsel experienced in
such matters, such consolidation, amalgamation, merger or replacement would
cause TRV Capital or the Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes. In addition, so
long as any Preferred Securities are outstanding and are not held entirely by
the Company, TRV Capital may not voluntarily liquidate, dissolve, wind-up or
terminate except as described above under "--Special Event Redemption
Distribution."
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates,
representing the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Preferred Securities
as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds
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securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. (the "NASD"). Access to the DTC system is also available to
others, such as securities brokers and dealers, banks and trust companies that
clear transactions through or maintain a direct or indirect custodial
relationship with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Preferred Securities, except in the event that
use of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Preferred Securities in accordance
with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to TRV Capital as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co. consenting or voting
rights to those Direct Participants to whose accounts the Preferred Securities
are credited on the record date (identified in a listing attached to the Omnibus
Proxy). The Company and TRV Capital believe that the arrangements among DTC,
Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights that
can be directly exercised by a holder of a beneficial interest in TRV Capital.
Distribution payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in "street name," and such
payments will be the responsibility of such Participant and not of DTC, TRV
Capital or the Company, subject to any statutory or regulatory requirements to
the contrary that may be in effect from time to time. Payment of distributions
to DTC is the responsibility of TRV Capital, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
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Except as provided herein, a Beneficial Owner in a global Preferred Security
certificate will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
TRV Capital. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with the consent of
the Company) may decide to discontinue use of the system of book-entry transfers
through DTC (or any successor depositary) with respect to the Preferred
Securities. In that event, certificates for the Preferred Securities will be
printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and TRV Capital believe to be
reliable, but neither the Company nor TRV Capital takes responsibility for the
accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such a default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provisions, the Institutional
Trustee is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. Notwithstanding the foregoing, the holders of
Preferred Securities will not be required to offer such indemnity in the event
such holders, by exercising their voting rights, direct the Institutional
Trustee to take any action following a Declaration Event of Default.
The Institutional Trustee has extended substantial credit facilities (the
borrowings under which constitute Senior Indebtedness (as defined herein)) to
the Company. The Company and certain of its subsidiaries also maintain bank
accounts, borrow money and have other customary commercial banking or investment
banking relationships with the Institutional Trustee in the ordinary course of
business.
PAYING AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions will apply:
The Institutional Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of TRV Capital, but upon payment (with the giving of such
indemnity as TRV Capital or the Company may require) in respect of any tax or
other government charges that may be imposed in relation to it.
TRV Capital will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate TRV Capital in
such a way so that TRV Capital will not be required to register as an
"investment company" under the 1940 Act or be characterized as other than a
grantor trust for United States federal income tax purposes. The Company is
authorized and directed to conduct its
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affairs so that the Junior Subordinated Debt Securities will be treated as
indebtedness of the Company for United States federal income tax purposes. In
this connection, the Company and the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of TRV
Capital or the certificate of incorporation of the Company, that each of the
Company and the Regular Trustees determine in their discretion to be necessary
or desirable to achieve such end, as long as such action does not adversely
affect the interests of the holders of the Preferred Securities or vary the
terms thereof.
Holders of the Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Junior
Subordinated Debt Securities in which TRV Capital will invest the proceeds from
the issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Junior Subordinated Debt
Securities set forth in the accompanying Prospectus under the caption
"Description of Junior Subordinated Debt Securities." The following description
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the description of the Junior Subordinated Debt
Securities in the accompanying Prospectus; the Indenture, dated as of October 7,
1996 (the "Indenture"), between the Company and The Chase Manhattan Bank, as
Trustee (the "Indenture Trustee"), the form of which is filed as an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part; and the Trust Indenture Act. Certain
capitalized terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of TRV Capital
following the occurrence of a Special Event, Junior Subordinated Debt Securities
may be distributed to the holders of the Trust Securities in liquidation of TRV
Capital. See "Description of the Preferred Securities--Special Event Redemption
or Distribution."
If the Junior Subordinated Debt Securities are distributed to the holders of
the Preferred Securities, the Company will use its best efforts to have the
Junior Subordinated Debt Securities listed on the New York Stock Exchange or on
such other national securities exchange or similar organization on which the
Preferred Securities are then listed or quoted.
GENERAL
The Junior Subordinated Debt Securities will be issued as unsecured debt
under the Indenture. The Junior Subordinated Debt Securities will be limited in
aggregate principal amount to approximately $ ($ if the
Underwriters exercise the over-allotment option in full), such amount being the
sum of the aggregate stated liquidation amount of the Preferred Securities and
the capital contributed by the Company to TRV Capital in exchange for the Common
Securities (the "TRV Payment").
The Junior Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debt
Securities will mature and become due and payable, together with any accrued and
unpaid interest thereon including Compound Interest (as defined herein) and
Additional Interest (as defined herein), if any, on , 203 .
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in TRV Capital,
such Junior Subordinated Debt Securities will initially be issued in the form of
one or more Global Securities (as defined under "Book-Entry and Settlement"
below). As described herein, under certain limited circumstances, Junior
Subordinated Debt Securities may be issued in certificated form in exchange for
a Global Security. See "Book-Entry and Settlement" below. In the event that
Junior Subordinated Debt Securities are issued in certificated form, such Junior
Subordinated Debt Securities will be in denominations of $ and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Junior Subordinated Debt Securities issued as a Global
Security will be made to DTC, to a successor depositary or, in the event that no
depositary is used, to a Paying Agent for the Junior Subordinated Debt
Securities. In the event Junior Subordinated Debt Securities are issued in
certificated form, principal and interest will be payable, the transfer of the
Junior Subordinated Debt Securities will be registrable and Junior Subordinated
Debt Securities will be exchangeable for Junior Subordinated Debt Securities of
other denominations of a like aggregate principal amount at the corporate trust
office of the Indenture Trustee in New York, New York; PROVIDED, that payment of
interest may be made at the option of the Company by check mailed to the address
of the persons entitled thereto.
The Company does not intend to issue and sell the Junior Subordinated Debt
Securities to any purchasers other than TRV Capital.
There are no covenants or provisions in the Indenture that would afford the
holders of the Junior Subordinated Debt Securities protection in the event of a
highly leveraged transaction, reorganization, restructuring, merger or similar
transaction involving the Company that may adversely affect such holders.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebtedness of the
Company. No payment of principal (including redemption payments), premium, if
any, or interest on the Junior Subordinated Debt Securities may be made if (i)
any Senior Indebtedness of
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the Company has not been paid when due and any applicable grace period with
respect to such default has ended and such default has not been cured or waived
or ceased to exist, or (ii) the maturity of any Senior Indebtedness of the
Company has been accelerated because of a default. Upon any distribution of
assets of the Company to creditors upon any dissolution, winding-up, liquidation
or reorganization, whether voluntary or involuntary, or in bankruptcy,
insolvency, receivership or other proceedings, all principal, premium, if any,
and interest due or to become due on all Senior Indebtedness of the Company must
be paid in full before the holders of Junior Subordinated Debt Securities are
entitled to receive or retain any payment. Upon satisfaction of all claims
related to all Senior Indebtedness of the Company then outstanding, the rights
of the holders of the Junior Subordinated Debt Securities will be subrogated to
the rights of the holders of Senior Indebtedness of the Company to receive
payments or distributions applicable to Senior Indebtedness until all amounts
owing on the Junior Subordinated Debt Securities are paid in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of such
obligor for money borrowed and (B) indebtedness evidenced by securities, notes,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
conditional sale or title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations,
contingent or otherwise, of such obligor in respect of any letters of credit,
banker's acceptance, security purchase facilities or similar credit
transactions, (v) all obligations in respect of interest rate swap, cap or other
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other similar agreements, (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise and (vii) all obligations of the type referred
to in clauses (i) through (vi) above of other persons secured by any lien on any
property or asset of such obligor (whether or not such obligation is assumed by
such obligor), except for (1) any such indebtedness that is by its terms
subordinated to or PARI PASSU with the Junior Subordinated Debt Securities and
(2) any indebtedness between or among such obligor or its affiliates, including
all other debt securities and guarantees in respect of those debt securities,
issued to (a) any other TRV Trust or a trustee of such trust and (b) any other
trust, or a trustee of such trust, partnership or other entity affiliated with
the Company that is a financing vehicle of the Company (a "financing entity") in
connection with the issuance by such financing entity of preferred securities or
other securities that rank PARI PASSU with, or junior to, the Preferred
Securities. Such Senior Indebtedness shall continue to be Senior Indebtedness
and be entitled to the benefits of the subordination provisions irrespective of
any amendment, modification or waiver of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by the Company.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Junior Subordinated Debt
Securities, in whole or in part, from time to time, on or after , 200 ,
or at any time in certain circumstances upon the occurrence of a Tax Event as
described under "Description of the Preferred Securities--Special Event
Redemption or Distribution," upon not less than 30 nor more than 60 days'
notice, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest (as
defined herein), if any, to, but not including, the redemption date. If a
partial redemption of the Preferred Securities resulting from a partial
redemption of the Junior Subordinated Debt Securities would result in the
delisting of the Preferred Securities, the Company may only redeem the Junior
Subordinated Debt Securities in whole.
PROPOSED TAX LEGISLATION
On February 6, 1997, the U.S. Treasury Department released an explanation of
the Proposed Legislation. The Proposed Legislation would, among other things,
generally deny corporate issuers a deduction for interest in respect of certain
debt obligations, such as the Junior Subordinated Debt Securities, issued on or
after the date of first congressional committee action. If the Proposed
Legislation were enacted in its current form, it would not apply to the Junior
Subordinated Debt Securities because the Junior Subordinated Debt Securities
will be issued prior to the date of first congressional committee action. There
can be no assurance, however, that the Proposed Legislation, if enacted, will be
enacted in its current form or that other legislation enacted after the date
hereof will not adversely affect the Company's ability to deduct the interest
payable on the Junior Subordinated Debt Securities. Such a change could give
rise to a Tax Event, which could result in the distribution of the Junior
Subordinated Debt Securities to holders of the Preferred Securities or, in
certain limited circumstances, the redemption of the Junior Subordinated Debt
Securities by the Company and the distribution of the resulting cash in
redemption of the Preferred Securities. See "Description of the Preferred
Securities--Special Event Redemption or Distribution."
S-26
INTEREST
Each Junior Subordinated Debt Security shall bear interest at the rate of
% per annum, from and including the original date of issuance, payable
in arrears on of each year (each an "Interest Payment Date"),
commencing , 199 to the person in whose name such Junior Subordinated
Debt Security is registered, subject to certain exceptions, at the close of
business on the Business Day next preceding such Interest Payment Date. In the
event the Junior Subordinated Debt Securities shall not continue to remain in
book-entry only form, the Company shall have the right to select record dates,
which shall be at least 14 days but no more than 60 days prior to the Interest
Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debt Securities is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, during
the term of the Junior Subordinated Debt Securities, to defer payments of
interest by extending the interest payment period for a period not exceeding
consecutive , PROVIDED, that no Extension Period may extend beyond the
maturity of the Junior Subordinated Debt Securities, at the end of which
Extension Period, the Company shall pay all interest then accrued and unpaid
(including any Additional Interest) together with interest thereon compounded
at the rate specified for the Junior Subordinated Debt Securities to the
extent permitted by applicable law ("Compound Interest"); PROVIDED FURTHER, that
during any such Extension Period, (a) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto (other than (i) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged), and (b) the
Company shall not make any payment of interest on or principal of (or premium,
if any, on), or repay, repurchase or redeem, any debt securities issued by the
Company which rank PARI PASSU with or junior to the Junior Subordinated Debt
Securities. The foregoing, however, will not apply to any stock dividends paid
by the Company where the dividend stock is the same stock as that on which the
dividend is being paid. Prior to the termination of any Extension Period, the
Company may further defer payments of interest by extending such Extension
Period; PROVIDED, HOWEVER, that such Extension Period, including all such
previous and further extensions, may not exceed consecutive interest
periods (including the interest period in which notice of such Extension
Period (as described below) is given); PROVIDED FURTHER, that no Extension
Period may extend beyond the maturity of the Junior Subordinated Debt
Securities. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the terms set forth in this section. No interest during an Extension Period,
except at the end thereof, shall be due and payable. The Company has no present
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Junior Subordinated Debt Securities. If the
Institutional Trustee shall be the sole holder of the Junior Subordinated Debt
Securities, the Company shall give the Regular Trustees and the Institutional
Trustee notice of its selection of such Extension Period one Business Day prior
to the earlier of (i) the date distributions on the Preferred Securities would
be payable, if not for such Extension Period, or (ii) the date the Regular
Trustees are required to give notice to the New York Stock Exchange (or other
applicable self-regulatory organization) or to holders of the Preferred
Securities of the record date or the date such distribution would be payable, if
not for such Extension Period, but in any event one Business Day prior to such
record date. The Regular Trustees shall give notice of the Company's selection
of such Extension Period to the holders of the Preferred Securities. If the
Institutional Trustee shall not be the sole holder of the Junior Subordinated
Debt Securities, the Company shall give the holders of the Junior Subordinated
Debt Securities notice of its selection of such Extension Period ten Business
Days prior to the earlier of (i) the next
S-27
succeeding Interest Payment Date or (ii) the date upon which the Company is
required to give notice to the New York Stock Exchange (or other applicable
self-regulatory organization) or to holders of the Junior Subordinated Debt
Securities of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time TRV Capital shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Junior Subordinated Debt Securities such additional amounts as shall be
required so that the net amounts received and retained by TRV Capital after
paying any such taxes, duties, assessments or other governmental charges will be
not less than the amounts TRV Capital would have received had no such taxes,
duties, assessments or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debt Securities,
will have the right to declare the principal of and the interest on the Junior
Subordinated Debt Securities (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debt Securities. See "Description of Junior
Subordinated Debt Securities--Events of Default" in the accompanying Prospectus
for a description of the Indenture Events of Default. An Indenture Event of
Default also constitutes a Declaration Event of Default. The holders of
Preferred Securities in certain circumstances have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Junior
Subordinated Debt Securities. See "Description of the Preferred
Securities--Declaration Events of Default" and "--Voting Rights."
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Junior Subordinated Debt Securities
on the date such interest or principal is otherwise payable, the Company
acknowledges that, in such event, a holder of Preferred Securities may institute
a Direct Action for payment on or after the respective due date specified in the
Junior Subordinated Debt Securities. The Company may not amend the Indenture to
remove the foregoing right to bring a Direct Action without the prior written
consent of all of the holders of Preferred Securities of TRV Capital.
Notwithstanding any payment made to such holder of Preferred Securities by the
Company in connection with a Direct Action, the Company shall remain obligated
to pay the principal of or interest on the Junior Subordinated Debt Securities
held by TRV Capital or the Institutional Trustee of TRV Capital, and the Company
shall be subrogated to the rights of the holder of such Preferred Securities
with respect to payments on the Preferred Securities to the extent of any
payments made by the Company to such holder in any Direct Action. The holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debt Securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of TRV Capital
as a result of the occurrence of a Special Event, the Junior Subordinated Debt
Securities will be issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the depositary or its nominee.
Except under the limited circumstances described below, Junior Subordinated Debt
Securities represented by a Global Security will not be exchangeable for, and
will not otherwise be issuable as, Junior Subordinated Debt Securities in
definitive form. The Global Securities described above may not be transferred
except by the depositary to a nominee of the depositary or by a nominee of the
depositary to the depositary or another nominee of the depositary or to a
successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debt Securities in definitive form and will not be considered the
Holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debt
Securities shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the depositary or its
nominee or to a successor depositary or its nominee. Accordingly, each
Beneficial Owner must rely on the procedures of the depositary or if such person
is not a
S-28
Participant, on the procedures of the Participant through which such person owns
its interest to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in TRV Capital,
DTC will act as securities depositary for the Junior Subordinated Debt
Securities. For a description of DTC and the specific terms of the depositary
arrangements, see "Description of the Preferred Securities--Book-Entry Only
Issuance--The Depository Trust Company." As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. The
Company may appoint a successor to DTC or any successor depositary in the event
DTC or such successor depositary is unable or unwilling to continue as a
depositary for the Global Securities.
None of the Company, TRV Capital, the Indenture Trustee, any paying agent
and any other agent of the Company or the Indenture Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Junior Subordinated Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than the depositary or its
nominee only if (i) the depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Junior Subordinated Debt Securities. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Junior
Subordinated Debt Securities registered in such names as the depositary shall
direct. It is expected that such instructions will be based upon directions
received by the depositary from its Participants with respect to ownership of
beneficial interests in such Global Security.
MISCELLANEOUS
The Indenture will provide that the Company will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Junior Subordinated
Debt Securities, (ii) the organization, maintenance and dissolution of TRV
Capital, (iii) the retention of the TRV Trustees and (iv) the enforcement by the
Institutional Trustee of the rights of the holders of the Preferred Securities.
S-29
DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by the Company for the benefit of the holders of
Preferred Securities. The Guarantee has been qualified as an indenture under the
Trust Indenture Act. The Chase Manhattan Bank will act as indenture trustee
under the Guarantee (the "Guarantee Trustee"). The terms of the Guarantee will
be those set forth in the Guarantee and those made part of the Guarantee by the
Trust Indenture Act. This description supplements the description of the general
terms and provisions of the Guarantee set forth in the accompanying Prospectus
under the caption "Description of Guarantees." The summary does not purport to
be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the form of Guarantee, which is filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
forms a part, and the Trust Indenture Act. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Preferred Securities.
GENERAL
Pursuant to and to the extent set forth in the Guarantee, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities (except to the extent paid by TRV Capital), as and when
due, regardless of any defense, right of set-off or counterclaim which TRV
Capital may have or assert, the following payments (the "Guarantee Payments"),
without duplication: (i) any accrued and unpaid distributions that are required
to be paid on the Preferred Securities, to the extent TRV Capital has funds
available therefor, and (ii) the redemption price of $ per Preferred Security,
plus all accrued and unpaid distributions (the "Redemption Price"), to the
extent TRV Capital has funds available therefor, with respect to any Preferred
Securities called for redemption by TRV Capital, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of TRV Capital (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Preferred Securities or the redemption of all of the Preferred
Securities) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment or (b) the amount of assets of TRV Capital remaining for distribution to
holders of the Preferred Securities in liquidation of TRV Capital. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of Preferred Securities or by
causing TRV Capital to pay such amounts to such holders.
The Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities from the time of issuance of the Preferred Securities
but will not apply to any payment of distributions or Redemption Price, or to
payments upon the dissolution, winding-up or termination of TRV Capital, except
to the extent TRV Capital shall have funds available therefor. If the Company
does not make interest payments on the Junior Subordinated Debt Securities, TRV
Capital will not pay distributions on the Preferred Securities and will not have
funds available therefor. See "Description of Junior Subordinated Debt
Securities." The Guarantee, when taken together with the Company's obligations
under the Junior Subordinated Debt Securities, the Indenture and the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of TRV Capital (other than with respect to Trust Securities), will
provide a full and unconditional guarantee on a subordinated basis by the
Company of payments due on the Preferred Securities.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Preferred
Securities remain outstanding, if there shall have occurred any event that would
constitute an Event of Default under such Guarantee or the Declaration, then (a)
the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto (other than (i) repurchases, redemptions or other acquisitions of shares
of capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of employees,
officers, directors or consultants, (ii) as a result of an exchange or
conversion of any class or series of the Company's capital stock for any other
class or series of the Company's capital stock, or (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) and (b) the Company shall not make any payment of
interest on, or principal of (or premium, if any, on), or repay, repurchase or
redeem, any debt securities issued by the Company which rank PARI PASSU with or
junior to the Junior Subordinated Debt Securities. The
S-30
Guarantee, however, will except from the foregoing any stock dividends paid by
the Company where the dividend stock is the same stock as that on which the
dividend is being paid.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Guarantee may be amended only with the prior approval of the holders of not less
than a majority in aggregate liquidation amount of the outstanding Preferred
Securities. All guarantees and agreements contained in the Guarantee shall bind
the successors, assignees, receivers, trustees and representatives of the
Company and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
the Guarantee Trustee's rights under the Guarantee, any holder of related
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against TRV Capital, the Guarantee Trustee
or any other person or entity. A holder of Preferred Securities may also
directly institute a legal proceeding against the Company to enforce such
holder's right to receive payment under the Guarantee without first (i)
directing the Guarantee Trustee to enforce the terms of the Guarantee or (ii)
instituting a legal proceeding against TRV Capital or any other person or
entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under the Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to the Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
The Guarantee Trustee has extended substantial credit facilities (the
borrowings under which constitute Senior Indebtedness) to the Company. The
Company and certain of its subsidiaries also maintain bank accounts, borrow
money and have other customary commercial banking or investment banking
relationships with the Guarantee Trustee in the ordinary course of business.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the Preferred Securities upon full
payment of the Redemption Price of all Preferred Securities, upon distribution
of the Junior Subordinated Debt Securities to the holders of the Preferred
Securities or upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of TRV Capital. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) PARI PASSU with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any subsidiary of the Company and (iii) senior to the
Company's common stock. The terms of the Preferred Securities provide that each
holder of Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
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EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of TRV Capital is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
TRV Capital, and to invest the proceeds from such issuance and sale in the
Junior Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debt
Securities will be equal to the sum of the aggregate stated liquidation amount
of the Trust Securities; (ii) the interest rate and the interest and other
payment dates on the Junior Subordinated Debt Securities will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) pursuant to the Indenture, the Company shall pay, and TRV
Capital shall not be obligated to pay, directly or indirectly, all costs,
expenses, debt and obligations of TRV Capital other than with respect to the
Trust Securities; and (iv) the Declaration further provides that the TRV
Trustees shall not cause or permit TRV Capital to, among other things, engage in
any activity that is not consistent with the purposes of TRV Capital.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by the Company as and to the extent set forth under
"Description of Guarantees" in the accompanying Prospectus. If the Company does
not make interest payments on the Junior Subordinated Debt Securities purchased
by TRV Capital, it is expected that TRV Capital will not have sufficient funds
to pay distributions on the Preferred Securities. The Guarantee is a guarantee
on a subordinated basis with respect to the Preferred Securities from the time
of its issuance but does not apply to any payment of distributions unless and
until TRV Capital has sufficient funds for the payment of such distributions.
The Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal or other payments on the Junior Subordinated
Debt Securities held by TRV Capital as its sole asset. The Guarantee, when taken
together with the Company's obligations under the Junior Subordinated Debt
Securities and the Indenture and its obligations under the Declaration,
including its obligations to pay costs, expenses, debts and liabilities of TRV
Capital (other than with respect to the Trust Securities), will provide a full
and unconditional guarantee of distributions, redemption payments and
liquidation payments on the Preferred Securities.
If the Company fails to make interest or other payments on the Junior
Subordinated Debt Securities when due (taking account of any Extension Period),
the Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities--Book Entry Only Issuance-- The Depository Trust Company" and
"--Voting Rights," may direct the Institutional Trustee to enforce its rights
under the Junior Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
holder of Preferred Securities may directly institute a legal proceeding against
the Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Junior Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities may also institute a Direct Action for payment on
or after the respective due date specified in the Junior Subordinated Debt
Securities without first (i) directing the Institutional Trustee to enforce the
terms of the Junior Subordinated Debt Securities or (ii) instituting a legal
proceeding against the Company to enforce the Institutional Trustee's rights
under the Junior Subordinated Debt Securities. In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by the
Company to such holder of Preferred Securities in such Direct Action.
Consequently, the Company will be entitled to payment of amounts that a holder
of Preferred Securities receives in respect of an unpaid distribution that
resulted in the bringing of a Direct Action to the extent that such holder
receives or has already received full payment with respect to such unpaid
distribution from TRV Capital. The Company, under the Guarantee, acknowledges
that the Guarantee Trustee shall enforce the Guarantee on behalf of the holders
of the Preferred Securities. If the Company fails to make payments under the
Guarantee, the Guarantee provides a mechanism whereby the holders of the
Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against TRV
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Capital, the Guarantee Trustee, or any other person or entity. A holder of
Preferred Securities may also directly institute a legal proceeding against the
Company to enforce such holder's right to receive payment under the Guarantee
without first (i) directing the Guarantee Trustee to enforce the terms of the
Guarantee or (ii) instituting a legal proceeding against TRV Capital or any
other person or entity.
The Company and TRV Capital believe that the above mechanisms and
obligations, taken together, are equivalent to a full and unconditional
guarantee by the Company of payments due on the Preferred Securities. See
"Description of Guarantee--General."
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Preferred Securities.
Unless otherwise stated, this summary deals only with Preferred Securities held
as capital assets by holders who purchase the Preferred Securities upon original
issuance. It does not deal with special classes of holders such as banks,
thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors,
persons that have a functional currency other than the U.S. Dollar or persons
that will hold the Preferred Securities as a position in a "straddle," as part
of a "synthetic security" or "hedge," as part of a "conversion transaction" or
other integrated investment, or as other than a capital asset. Further, it does
not include any description of any alternative minimum tax consequences or the
tax laws of any state or local government or of any foreign government that may
be applicable to the Preferred Securities. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations thereunder
and administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
In connection with the issuance of the Junior Subordinated Debt Securities,
Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden, Arps"), tax counsel to the
Company and TRV Capital, will render its opinion generally to the effect that,
under then current law and assuming full compliance with the terms of the
Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Junior Subordinated Debt Securities
held by TRV Capital will be classified for United States federal income tax
purposes as indebtedness of the Company.
CLASSIFICATION OF TRV CAPITAL
In connection with the issuance of the Preferred Securities, Skadden, Arps
will render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, TRV Capital will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Preferred Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debt Securities, and each holder
will be required to include in its gross income interest (or OID) with respect
to its allocable share of those Junior Subordinated Debt Securities.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under applicable Treasury regulations (the "Regulations"), a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. The Company believes
that the likelihood of its exercising its option to defer payments is remote.
Based on the foregoing, the Company believes that the Junior Subordinated Debt
Securities will not be considered to be issued with OID at the time of their
original issuance and, accordingly, a holder of the Preferred Securities should
include in gross income such holder's allocable share of interest on the Junior
Subordinated Debt Securities in accordance with such holder's method of tax
accounting.
Under the Regulations, if the Company exercised its option to defer any
payment of interest, the Junior Subordinated Debt Securities would at that time
be treated as issued with OID, and all stated interest on the Junior
Subordinated Debt Securities would thereafter be treated as OID as long as the
Junior Subordinated Debt Securities remained outstanding. In such event, all of
a holder's taxable interest income with respect to the Junior Subordinated Debt
Securities would be accounted for as OID on an economic accrual basis regardless
of such holder's method of
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tax accounting, and actual distributions of stated interest would not be
reported as taxable income. Consequently, a holder of Preferred Securities would
be required to include in gross income OID even though the Company would not
make any actual cash payments during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the Internal Revenue Service (the "IRS"), and it is possible
that the IRS could take a position contrary to the interpretation herein.
Because income on the Preferred Securities will constitute interest or OID,
corporate holders of Preferred Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Preferred Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF TRV
CAPITAL
Under certain circumstances, as described under "Description of the
Preferred Securities--Special Event Redemption or Distribution," Junior
Subordinated Debt Securities may be distributed to holders in exchange for the
Preferred Securities upon the liquidation of TRV Capital. Under current law,
such a distribution, for United States federal income tax purposes, would be
treated as a non-taxable event to each holder, and each holder would receive an
aggregate tax basis in the Junior Subordinated Debt Securities equal to such
holder's aggregate tax basis in its Preferred Securities. A holder's holding
period in the Junior Subordinated Debt Securities received in liquidation of TRV
Capital would include the period during which the Preferred Securities were held
by such holder.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debt Securities may be redeemed
by the Company for cash and the proceeds of such redemption distributed by TRV
Capital to holders in redemption of their Preferred Securities. Under current
law, such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Preferred Securities, and a
holder could recognize gain or loss as if it sold such redeemed Preferred
Securities for cash. See "United States Federal Income Taxation--Sales of
Preferred Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will be considered to have disposed
of all or part of its PRO RATA share of the Junior Subordinated Debt Securities
and will recognize gain or loss equal to the difference between its adjusted tax
basis in the Preferred Securities and the amount realized on the sale of such
Preferred Securities. Assuming that the Company does not exercise its option to
defer payment of interest on the Junior Subordinated Debt Securities, a holder's
adjusted tax basis in the Preferred Securities generally will be its initial
purchase price. If the Junior Subordinated Debt Securities are deemed to be
issued with OID as a result of the Company's deferral of any interest payment, a
holder's tax basis in the Preferred Securities generally will be its initial
purchase price, increased by OID previously includible in such holder's gross
income to the date of disposition and decreased by distributions or other
payments received on the Preferred Securities since and including the date of
the first Extension Period. Such gain or loss generally will be a capital gain
or loss (except to the extent of any accrued interest with respect to such
holder's PRO RATA share of the Junior Subordinated Debt Securities not
previously included in income) and generally will be a long-term capital gain or
loss if the Preferred Securities have been held for more than one year.
Should the Company exercise its option to defer any payment of interest on
the Junior Subordinated Debt Securities, the Preferred Securities may trade at a
price that does not accurately reflect the value of accrued but unpaid interest
with respect to the underlying Junior Subordinated Debt Securities. In the event
of such a deferral, a holder who disposes of its Preferred Securities between
record dates for payments of distributions thereon will be required to include
in income as ordinary income accrued but unpaid interest on the Junior
Subordinated Debt Securities to the date of disposition and to add such amount
to its adjusted tax basis in its PRO RATA share of the underlying Junior
Subordinated Debt Securities deemed disposed of. To the extent the selling price
is less than the holder's adjusted tax basis, such holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
PROPOSED TAX LEGISLATION
On February 6, 1997, the U.S. Treasury Department released an explanation of
the Proposed Legislation. The Proposed Legislation would, among other things,
generally deny corporate issuers a deduction for interest in respect of certain
debt obligations, such as the Junior Subordinated Debt Securities, issued on or
after the date of first congressional committee action. If the Proposed
Legislation were enacted in its current form, it would not apply to the Junior
Subordinated Debt Securities because the Junior Subordinated Debt Securities
will be issued prior to the date of first congressional committee action. There
can be no assurance, however, that the Proposed Legislation, if
S-34
enacted, will be enacted in its current form or that other legislation enacted
after the date hereof will not adversely affect the Company's ability to deduct
the interest payable on the Junior Subordinated Debt Securities. Such a change
could give rise to a Tax Event, which could result in the distribution of the
Junior Subordinated Debt Securities to holders of the Preferred Securities or,
in certain limited circumstances, the redemption of the Junior Subordinated Debt
Securities by the Company and the distribution of the resulting cash in
redemption of the Preferred Securities. See "Description of the Preferred
Securities--Special Event Redemption or Distribution."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law: (i) payments by TRV
Capital or any of its paying agents to any holder of a Preferred Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided, that, (a) the beneficial owner of the
Preferred Security does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (b) the beneficial owner of the Preferred Security is not a controlled
foreign corporation that is related to the Company through stock ownership, and
(c) either (A) the beneficial owner of the Preferred Security certifies to TRV
Capital or its agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Preferred Security in such capacity, certifies to
TRV Capital or its agent, under penalties of perjury, that such statement has
been received from the beneficial owner by it or by a Financial Institution
holding such security for the beneficial owner and furnishes TRV Capital or its
agent with a copy thereof; and (ii) a United States Alien Holder of a Preferred
Security will not be subject to United States federal withholding tax on any
gain realized upon the sale or other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Preferred Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Preferred Securities by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income tax, provided the
required information is provided to the IRS on a timely basis.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
ERISA MATTERS
A fiduciary of a pension, profit-sharing or other employee benefit plan (an
"ERISA Plan") subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), should consider the fiduciary standards of ERISA in the
context of the ERISA Plan's particular circumstances before authorizing an
investment in the Preferred Securities. Among other factors, the fiduciary
should consider whether such an investment is in accordance with the documents
governing the ERISA Plan and whether the investment is appropriate for the ERISA
Plan in view of its overall investment policy and diversification of its
portfolio.
Certain provisions of ERISA and the Code prohibit ERISA Plans, as well as
individual retirement accounts and Keogh plans subject to section 4975 of the
Code (collectively, "Plans"), from engaging in certain transactions involving
"plan assets" with parties that are "parties in interest" under ERISA or
"disqualified persons" under the
S-35
Code with respect to the Plan. The U.S. Department of Labor has issued a final
regulation (the "Regulation") with regard to whether the underlying assets of an
entity in which employee benefit plans acquire equity interests are deemed to be
plan assets.
Under such Regulation, for purposes of ERISA and section 4975 of the Code,
the assets of the Trust would be deemed to be "plan assets" of a Plan whose
assets were used to purchase Preferred Securities issued by the Trust if the
Preferred Securities were considered to be equity interests in the Trust and no
exception to plan asset status were applicable under the Regulation.
If the assets of the Trust were deemed to be plan assets of Plans that are
holders of the Preferred Securities, a Plan's investment in the Preferred
Securities might be deemed to constitute a delegation under ERISA of the duty to
manage plan assets by a fiduciary investing in Preferred Securities. Also, the
Company might be considered a "party in interest" or "disqualified person" with
respect to Plans whose assets were used to purchase Preferred Securities. If
this were the case, an investment in Preferred Securities by a Plan might
constitute or, in the course of the operation of the Trust, give rise to a
prohibited transaction under ERISA or the Code. In particular, it is likely that
under such circumstances a prohibited extension of credit to the Company would
be considered to occur under ERISA and the Code.
In addition, the Company might be considered a "party in interest" or
"disqualified person" with respect to certain Plans for reasons unrelated to the
operation of the Trust, e.g., because of the provision of services by the
Company or an affiliate to the Plan. A purchase of Preferred Securities by any
such Plan would be likely to result in a prohibited extension of credit to the
Company, without regard to whether the assets of the Trust constitute plan
assets.
Because of the possibility that a prohibited extension of credit could occur
as a result of the purchase or holding of the Preferred Securities by a Plan,
the Preferred Securities may be not purchased or held by any Plan or any person
investing "plan assets" of any Plan unless such purchaser or holder is eligible
for the exemptive relief available under Prohibited Transaction Class Exemption
("PTCE") 96-23 (for certain transactions determined by in-house asset managers),
PTCE 95-60 (for certain transactions involving insurance company general
accounts), PTCE 91-38 (for certain transactions involving bank collective
investment funds), PTCE 90-1 (for certain transactions involving insurance
company separate accounts), or PTCE 84-14 (for certain transactions determined
by independent qualified asset managers). Any prospective purchaser of the
Preferred Securities (or any interest therein) will be deemed to make a
representation, to the Trust by its purchase and holding of the Preferred
Securities, that either (a) it is not a Plan and is not purchasing such
securities (or interest therein) on behalf of or with "plan assets" of any Plan
or (b) its purchase and holding of the Preferred Securities (or any interest
therein) is eligible for the exemptive relief available under PTCE 96-23, 95-60,
91-38, 90-1 or 84-14.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that any person considering
the purchase of Preferred Securities with Plan assets consult with its counsel
regarding the consequences under ERISA and the Code of the acquisition and
ownership of Preferred Securities and the availability of exemptive relief under
the class exemptions listed above. IN JOHN HANCOCK MUTUAL LIFE INSURANCE CO. V
HARRIS TRUST AND SAVINGS BANK, 114 S. Ct. 517 (1993), the Supreme Court ruled
that assets held in an insurance company's general account may be deemed to be
"plan assets" for ERISA purposes under certain circumstances. The issues raised
in HARRIS TRUST have also been the subject of legislative action, and will be
addressed in regulations to be issued by the U.S. Department of Labor in June
1997.
ANY PURCHASER PROPOSING TO ACQUIRE PREFERRED SECURITIES WITH ASSETS OF ANY
PLAN SHOULD CONSULT WITH ITS COUNSEL.
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UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated , 199 (the "Underwriting Agreement"), each Underwriter named below
(the "Underwriters") has severally agreed to purchase from TRV Capital, and TRV
Capital has agreed to sell to such Underwriter, the number of Preferred
Securities set forth opposite the name of such Underwriter below.
NUMBER OF
PREFERRED
UNDERWRITERS SECURITIES
- ---------------------------------------------------------------------------------------------------------- ------------------
Smith Barney Inc. ........................................................................................
------------------
Total.................................................................................................
------------------
------------------
The Underwriters are obligated to take and pay for the total number of
Preferred Securities offered hereby if any such Preferred Securities are
purchased. In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.
TRV Capital has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus Supplement, to purchase up to an aggregate
of additional Preferred Securities at the initial public offering price
set forth on the cover page of this Prospectus Supplement. The Company will pay
Underwriters' Compensation in the amounts per Preferred Security set forth on
the cover page hereof with respect to such additional Preferred Securities. The
Underwriters may exercise such option to purchase additional Preferred
Securities solely for the purpose of covering over-allotments, if any, incurred
in connection with the sale of the Preferred Securities offered hereby. To the
extent such option is exercised, each Underwriter will become obligated, subject
to certain conditions, to purchase approximately the same percentage of such
additional Preferred Securities as the number of Preferred Securities set forth
opposite such Underwriter's name in the preceding table bears to the total
number of Preferred Securities in such table.
The Underwriting Agreement provides that TRV Capital and the Company will
indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, and to make certain
contributions in respect thereof.
TRV Capital and the Company have agreed, during the period beginning on the
date of the Underwriting Agreement and continuing to and including the date that
is 60 days after the closing date for the purchase of the Preferred Securities,
not to offer, sell, contract to sell or otherwise dispose of any preferred
securities or any other securities (including any backup undertakings of such
other securities) of the Company or of TRV Capital, in each case that are
substantially similar to the Preferred Securities, or any securities convertible
into or exchangeable for the Preferred Securities or such substantially similar
securities of either TRV Capital or the Company, except preferred securities
offered pursuant to the accompanying Prospectus, without the prior written
consent of Smith Barney.
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Junior Subordinated Debt
Securities of the Company, the Underwriting Agreement provides that the Company
will pay as compensation to the Underwriters $ per Preferred Security for the
accounts of the several Underwriters; PROVIDED that such compensation for sales
of 10,000 or more Preferred Securities to a single purchaser will be $ per
Preferred Security. Therefore, to the extent of such sales, the actual amount of
Underwriters' Compensation will be less than the aggregate amount specified in
the preceding sentence.
The Underwriters propose to offer the Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at a price that
represents a concession not in excess of , provided that such concession for
sales of 10,000 or more Preferred Securities to a single person will not be in
excess of per Preferred Security. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of per Preferred Security to certain
brokers and dealers. After the Preferred Securities are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the Representatives.
In connection with the offering of the Preferred Securities and in
accordance with applicable law and industry practice, the Underwriters may
over-allot or effect transactions which stabilize, maintain or otherwise affect
the market price of the Preferred Securities at levels above those which might
otherwise prevail in the open market, including by entering stabilizing bids,
effecting syndicate covering transactions or imposing penalty bids. A
stabilizing
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bid means the placing of any bid, or the effecting of any purchase, for the
purpose of pegging, fixing or maintaining the price of a security. A syndicate
covering transaction means the placing of any bid on behalf of the underwriting
syndicate or the effecting of any purchase to reduce a short position created in
connection with the offering. A penalty bid means an arrangement that permits
the manager underwriter to reclaim a selling concession from a syndicate member
in connection with the offering when Preferred Securities originally sold by the
syndicate member are purchased in syndicate covering transactions. Such
transactions may be effected in the over-the-counter market or otherwise. The
Underwriters are not required to engage in any of these activities. Any such
activities, if commenced, may be discontinued at any time.
Smith Barney is an indirect wholly owned subsidiary of the Company and an
affiliate of TRV Capital. The offering of Preferred Securities will comply with
the requirements of Rule 2720 of the Conduct Rules of the NASD regarding a NASD
member firm's underwriting securities of an affiliate. Certain of the
Underwriters and their affiliates have in the past provided, and may in the
future provide, investment and/or commercial banking services to the Company and
its subsidiaries in the ordinary course of business.
This Prospectus Supplement together with an applicable Prospectus may also
be used by Smith Barney, in connection with offers and sales of the Preferred
Securities in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Smith Barney may act as principal
or agent in such transactions. Smith Barney has no obligation to make a market
in any of the Preferred Securities and may discontinue any market-making
activities at any time without notice, at its sole discretion.
LEGAL MATTERS
The validity of the Preferred Securities, the Junior Subordinated Debt
Securities, the Guarantee and certain matters relating thereto and certain
United States federal income tax matters will be passed upon for the Company and
TRV Capital by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
Certain legal matters will be passed upon for the Underwriters by Dewey
Ballantine, New York, New York. Kenneth J. Bialkin, a partner of Skadden, Arps,
Slate, Meagher & Flom LLP is a director of the Company and he and other
attorneys in such firm beneficially own an aggregate of less than one percent of
the Common Stock of the Company.
S-38
SUBJECT TO COMPLETION DATED MAY 22, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
TRAVELERS GROUP INC.
PREFERRED STOCK
DEPOSITARY SHARES
JUNIOR SUBORDINATED DEBT SECURITIES
------------------
TRAVELERS CAPITAL IV
TRAVELERS CAPITAL V
TRAVELERS CAPITAL VI
TRAVELERS CAPITAL VII
TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
TRAVELERS GROUP INC.
----------------
Travelers Group Inc., a Delaware corporation (the "Company"), may offer,
from time to time, (i) its unsecured junior subordinated debt securities (the
"Junior Subordinated Debt Securities"), consisting of debentures, notes or other
evidences of indebtedness, in one or more series, and (ii) shares of its
preferred stock, $1.00 par value (the "Preferred Stock"), which may be issued in
the form of depositary shares (the "Depositary Shares") evidenced by depositary
receipts, in amounts, at prices and on terms to be determined at or prior to the
time of any such offering. The Company's obligations under the Junior
Subordinated Debt Securities will be subordinate and junior in right of payment
to certain other indebtedness of the Company as described herein or as may be
described in an accompanying Prospectus Supplement (the "Prospectus
Supplement").
Travelers Capital IV, Travelers Capital V, Travelers Capital VI and
Travelers Capital VII (each, a "TRV Trust" and, together, the "TRV Trusts"),
each a statutory business trust formed under the laws of the State of Delaware,
may offer, from time to time, trust preferred securities, representing undivided
beneficial interests in the assets of the respective TRV Trust ("Preferred
Securities") with the payment of periodic cash distributions ("distributions")
and payments on liquidation, redemption or otherwise of such Preferred
Securities guaranteed (each, a "Guarantee") on a subordinated basis by the
Company to the extent described herein. See "Description of Guarantees." The
Company's obligations under the Guarantees will rank PARI PASSU with the most
senior preferred or preference stock now or hereafter issued by the Company. See
"Description of Guarantees--Status of Guarantees." Junior Subordinated Debt
Securities may be issued and sold from time to time in one or more series by the
Company to a TRV Trust, or a trustee of such trust, in connection with the
investment of the proceeds from the offering of Preferred Securities and Common
Securities (as defined herein) of such TRV Trust, but the Company does not
intend to issue and sell the Junior Subordinated Debt Securities directly to
other purchasers, including the general public. The Junior Subordinated Debt
Securities purchased by a TRV Trust may be subsequently distributed PRO RATA to
holders of Preferred Securities and Common Securities in connection with the
dissolution of such TRV Trust upon the occurrence of certain events as may be
described in an accompanying Prospectus Supplement. The Guarantees, when taken
together with the Company's obligations under the Junior Subordinated Debt
Securities, the Indenture (as defined herein) and the Declaration (as defined
herein), including its obligations to pay costs, expenses, debts and liabilities
of such TRV Trust (other than with respect to the Preferred Securities and the
Common Securities), will provide a full and unconditional guarantee on a
subordinated basis by the Company of payments due on Preferred Securities.
(CONTINUED ON NEXT PAGE)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------------
SMITH BARNEY INC.
, 1997
(CONTINUED FROM PREVIOUS PAGE)
Specific terms of the Junior Subordinated Debt Securities of any series, the
Preferred Securities of any TRV Trust, the Preferred Stock of any series or the
Depositary Shares in respect of which this Prospectus is being delivered (the
"Offered Securities") will be set forth in a Prospectus Supplement with respect
to such Offered Securities, which will describe, without limitation and where
applicable, the following: (i) in the case of Junior Subordinated Debt
Securities, the specific designation, aggregate principal amount, denomination,
maturity, premium, if any, redemption or sinking fund provisions, if any,
interest rate (which may be fixed or variable), if any, the time and method of
calculating interest payments, if any, dates on which premium, if any, and
interest, if any, will be payable, the right of the Company, if any, to defer
payment of interest on the Junior Subordinated Debt Securities and the maximum
length of such deferral period, the initial public offering price, subordination
terms, and any listing on a securities exchange and other specific terms of the
offering of Junior Subordinated Debt Securities, (ii) in the case of Preferred
Securities, the designation, number of securities, liquidation preference per
security, initial public offering price, any listing on a securities exchange,
distribution rate (or method of calculation thereof), dates on which
distributions shall be payable and dates from which distributions shall accrue,
any voting rights, any redemption or sinking fund provisions, any other rights,
preferences, privileges, limitations or restrictions relating to the Preferred
Securities and the terms upon which the proceeds of the sale of the Preferred
Securities shall be used to purchase a specific series of Junior Subordinated
Debt Securities, and (iii) in the case of Preferred Stock and Depositary Shares,
the specific designation, the number of shares, any dividend (including the
method of calculating payment of dividends), seniority, liquidation, redemption,
voting and other rights, any terms for any conversion or exchange into shares of
the common stock, $.01 par value, of the Company (the "Common Stock"), any
listing on a securities exchange, the initial public offering price and any
other terms.
If as set forth in the applicable Prospectus Supplement, the Company has the
right to defer payments of interest on a series of Junior Subordinated Debt
Securities by extending the interest payment period of such series of Junior
Subordinated Debt Securities (each, an "Extension Period"), distributions on the
corresponding series of Preferred Securities will also be deferred.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; PROVIDED, HOWEVER, that the aggregate
initial public offering price of all Offered Securities shall not exceed
$1,000,000,000. Any Prospectus Supplement relating to any series of Offered
Securities will contain information concerning certain United States federal
income tax considerations, if applicable, to the Offered Securities.
The Company or any of the TRV Trusts may sell the Offered Securities
directly, through agents designated from time to time or through underwriters or
dealers. See "Plan of Distribution." If any agents of the Company, any of the
TRV Trusts or any underwriters or dealers are involved in the sale of the
Offered Securities, the names of such agents, underwriters or dealers and any
applicable commissions and discounts will be set forth in any related Prospectus
Supplement.
This Prospectus, together with an appropriate Prospectus Supplement, may be
used by Smith Barney Inc. ("Smith Barney"), an indirect wholly owned subsidiary
of the Company and an affiliate of the TRV Trusts, 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. Smith Barney may
act as principal or agent in such transactions.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES
OFFERED HEREBY, INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE
COVERING TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
2
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE TRV
TRUSTS, OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE DELIVERY OF THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR ANY OF THE TRV TRUSTS SINCE THE DATE HEREOF OR
THEREOF. THIS PROSPECTUS AND ANY RELATED PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at: Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and Seven World Trade Center, New York, New York 10048. Copies of
such material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a site on the World Wide Web, the address
of which is http://www.sec.gov, that contains reports, proxy and information
statements and other information regarding issuers, such as the Company, that
file electronically with the Commission. The Company's common stock is listed on
the New York Stock Exchange, Inc. (the "NYSE") and The Pacific Exchange, Inc.
(the "PCX"), and such reports, proxy statements, and other information can also
be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005, and The Pacific Exchange, Inc., 301 Pine
Street, San Francisco, California 94104, and 233 South Beaudry Avenue, Los
Angeles, California 90012.
The Company and the TRV Trusts have filed with the Commission a Registration
Statement on Form S-3 (the "Registration Statement," which term shall include
all amendments, exhibits, annexes and schedules thereto) pursuant to the
Securities Act of 1933, as amended (the "Act"), with respect to the Offered
Securities. This Prospectus does not contain all the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company, the TRV Trusts and the Offered Securities, reference is
made to the Registration Statement and exhibits thereto. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or document filed as an exhibit to the Company's Registration
Statement, each such statement being qualified in all respects by such
reference.
No separate financial statements of the TRV Trusts have been included or
incorporated by reference herein. The Company does not consider that such
financial statements would be material to holders of the Preferred Securities
because (i) all of the voting securities of the TRV Trusts will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) the TRV Trusts have no independent operations but exist for the sole
purpose of issuing securities representing undivided beneficial interests in
their respective assets and investing the proceeds thereof in Junior
Subordinated Debt Securities issued by the Company, and (iii) the obligations of
the TRV Trusts under the Preferred Securities are fully and unconditionally
guaranteed by the Company to the extent that the respective TRV Trust has funds
available to meet such obligations. See "Description of Junior Subordinated Debt
Securities" and "Description of Guarantees."
3
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 on Form 10-K of the Company for the fiscal year ended
December 31, 1996;
2. Quarterly Report on Form 10-Q of the Company for the quarter ended
March 31, 1997;
3. Current Reports on Form 8-K of the Company, dated January 19, 1996,
as amended, April 2, 1996, as amended, and June 7, 1996; and
4. The Company's Registration Statement on Form 8-B, dated May 10, 1988,
describing the Common Stock, including any amendments or reports filed for
the purpose of updating such description.
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 Smith Barney 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
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 Travelers Group
Inc., 388 Greenwich Street, New York, New York 10013; Attention: Treasurer;
telephone (212) 816-8000.
4
THE COMPANY
The Company is a financial services holding company engaged, through its
subsidiaries, principally in four business segments: Investment Services,
Consumer Finance Services, Property & Casualty Insurance Services and Life
Insurance Services.
The Company's Investment Services segment consists of investment banking,
asset management, brokerage and other financial services provided through Smith
Barney Holdings Inc. and its subsidiaries. The Company's Consumer Finance
Services segment includes consumer lending services conducted primarily under
the name "Commercial Credit" and credit-related insurance and credit card
services. The Company's Property & Casualty Insurance Services segment includes
the operations of Travelers Property Casualty Corp., an 82% owned subsidiary of
the Company, and its subsidiary and affiliated property-casualty insurance
companies, which provide a wide range of commercial and personal property and
casualty insurance products and services to businesses, government units,
associations and individuals. The Company's Life Insurance Services segment
includes individual life insurance, annuities and pension programs which are
offered primarily through The Travelers Insurance Company, The Travelers Life
and Annuity Company and Primerica Life Insurance Company.
In addition to its four business segments, the Company's Corporate and Other
segment consists of unallocated expenses and earnings primarily related to
interest, corporate administration, and certain corporate investments.
The principal offices of the Company are located at 388 Greenwich Street,
New York, New York 10013 and its telephone number is (212) 816-8000.
TRV TRUSTS
Each of the TRV Trusts is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust executed by the Company, as sponsor
for such trust (the "Sponsor"), and the trustees of such trust dated (x) with
respect to Travelers Capital IV and Travelers Capital V, as of September 19,
1996, and (y) with respect to Travelers Capital VI and Travelers Capital VII, as
of May 14, 1997, and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on (x) with respect to Travelers
Capital IV and Travelers Capital V, September 19, 1996 and (y) with respect to
Travelers Capital VI and Travelers Capital VII, May 14, 1997. Each such
declaration will be amended and restated in its entirety (as so amended and
restated, each a "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. Each of the
TRV Trusts exists for the exclusive purposes of (i) issuing the Preferred
Securities and common securities representing undivided beneficial interests in
the assets of the Trust (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities"), (ii) investing the gross proceeds
from the sale of the Trust Securities in the Junior Subordinated Debt Securities
and (iii) engaging in only those other activities necessary or incidental
thereto. All of the Common Securities will be directly or indirectly owned by
the Company. The Common Securities will rank PARI PASSU, and payments will be
made thereon PRO RATA, with the Preferred Securities, except that, upon an event
of default under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Company will directly or indirectly acquire Common
Securities in an aggregate liquidation amount equal to 3% or more of the total
capital of each TRV Trust.
Each TRV Trust has a term of approximately 55 years but may terminate
earlier, as provided in each Declaration. Each TRV Trust's business and affairs
will be conducted by the trustees of each applicable Trust (the "TRV Trustees")
appointed by the Company as the direct or indirect holder of all the Common
Securities. The holder of the Common Securities will be entitled to appoint,
remove or replace any of, or increase or reduce the number of, the TRV Trustees
of the TRV Trusts, except in certain limited circumstances. The duties and
obligations of the TRV Trustees shall be governed by the Declaration of such TRV
Trust. Each TRV Trust will have two TRV Trustees (the "Regular Trustees") who
are employees or officers of or who are affiliated with the Company. One TRV
Trustee of each TRV Trust will be a financial institution that is not affiliated
with the Company and that has a specified minimum amount of aggregate capital,
surplus, and undivided profits of not less than $50,000,000, which shall act as
property trustee and as indenture trustee for the purposes of compliance with
the provisions of Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), pursuant to the terms set forth in a Prospectus Supplement (the
"Institutional Trustee"). In addition, unless the Institutional Trustee
maintains a principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law, one TRV Trustee of each TRV Trust will
have a principal place of business or
5
reside in the State of Delaware (the "Delaware Trustee"). The Company will pay
all fees and expenses related to the TRV Trusts and the offering of the Trust
Securities.
The office of the Delaware Trustee for each of the TRV Trusts is Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. The
address for each TRV Trust is c/o the Company, the Sponsor of the TRV Trusts, at
the Company's corporate headquarters located at 388 Greenwich Street, New York,
New York 10013, telephone (212) 816-8000.
USE OF PROCEEDS
All of the net proceeds from the sale of any Preferred Securities offered
hereby will be invested by the TRV Trust in Junior Subordinated Debt Securities.
The Company will use the proceeds from the sale of the Junior Subordinated Debt
Securities to the TRV Trusts, and the proceeds from the sale of any Preferred
Stock or Depositary Shares offered hereby, for general corporate purposes, which
may include capital contributions to subsidiaries of the Company, the redemption
of shares of the Company's preferred stock, and/or the reduction or refinancing
of borrowings of the Company or its subsidiaries.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED --------------------------------------------
MARCH 31, 1997 1996 1995 1994 1993
----------------------- --------- --------- --------- -----------
Ratio of earnings to combined fixed charges and preferred
stock dividends 2.45 2.30 2.09 2.12 2.64
1992
---------
Ratio of earnings to combined fixed charges and preferred
stock dividends 2.57
The ratio of earnings to combined fixed charges and preferred stock
dividends has been computed by dividing earnings from continuing operations
before income taxes and fixed charges by the combined fixed charges and
preferred stock dividends. For purposes of these ratios, fixed charges consist
of interest expense and that portion of rentals deemed representative of the
appropriate interest factor.
6
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Junior Subordinated Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Junior Subordinated Debt Securities offered
by any Prospectus Supplement and the extent, if any, to which such general
provisions may apply to the Junior Subordinated Debt Securities so offered will
be described in the Prospectus Supplement relating to such Junior Subordinated
Debt Securities.
The Junior Subordinated Debt Securities may be issued, from time to time, in
one or more series, under an Indenture, dated as of October 7, 1996 (the
"Indenture"), between the Company and The Chase Manhattan Bank, as trustee (the
"Indenture Trustee"), the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
The following summary of certain provisions of the Junior Subordinated Debt
Securities and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by express reference to, all of the provisions
of the Indenture, including the definitions therein of certain terms. All
article and section references appearing herein are to articles and sections of
the Indenture, unless otherwise indicated, and capitalized terms which are not
otherwise defined in this Prospectus shall have the meanings specified in the
Indenture.
GENERAL. The Junior Subordinated Debt Securities will be direct, unsecured
obligations of the Company. The Indenture does not limit the amount of Junior
Subordinated Debt Securities which may be issued thereunder, and provides that
Junior Subordinated Debt Securities may be issued thereunder in series up to the
aggregate principal amount which may be authorized from time to time by the
Board of Directors of the Company. (Section 3.1)
Reference is made to the Prospectus Supplement relating to the particular
series of Junior Subordinated Debt Securities being offered thereby for the
following terms and other information: (i) the designation, priority, aggregate
principal amount and authorized denominations; (ii) the percentage of their
principal amount at which such Junior Subordinated Debt Securities will be
issued; (iii) the date on which such Junior Subordinated Debt Securities will
mature; (iv) the rate per annum at which such Junior Subordinated Debt
Securities will bear interest or the method of determination of such rate; (v)
the dates on which such interest will be payable; (vi) the rights, if any, to
defer payments of interest on the Junior Subordinated Debt Securities by
extending the interest payment period, and the maximum duration of such
extensions; (vii) the place or places where payments on such Junior Subordinated
Debt Securities shall be made; (viii) any redemption terms or sinking fund
provisions; (ix) the terms of subordination of Junior Subordinated Debt
Securities; (x) whether Debt Securities issued in fully registered form will be
represented by either a global security delivered to a depositary and recorded
in a book-entry system maintained by such depositary or by a certificate
delivered to the Holder; (xi) the restrictions, if any, applicable to the
exchange of Junior Subordinated Debt Securities of a series of one form for
another of such series and to the offer, sale and delivery of the Junior
Subordinated Debt Securities; (xii) whether and under what circumstances the
Company will pay additional amounts in the event of certain developments with
respect to United States withholding tax or information reporting laws; or
(xiii) other specific terms.
Unless otherwise specified in the applicable Prospectus Supplement, Junior
Subordinated Debt Securities will be issued in fully registered form without
coupons, will be exchangeable for other Junior Subordinated Debt Securities of
the same series, registered in the same name, for a like aggregate principal
amount in authorized denominations, and will be transferable at any time or from
time to time at the Corporate Trust Office of the Indenture Trustee or at any
other office or agency of the Company maintained for that purpose. No charge
will be made to the Holder for any such exchange or transfer except for any tax
or governmental charge incidental thereto.
Unless otherwise described in the applicable Prospectus Supplement, there
are no covenants or provisions contained in the Indenture which afford the
Holders of the Junior Subordinated Debt Securities protection in the event of a
highly leveraged transaction involving the Company.
CONSOLIDATION, MERGER AND SALE OF ASSETS. The Indenture provides that the
Company will not consolidate with or merge into any other corporation or convey,
transfer or lease its assets substantially as an entirety unless (a) the
successor is a corporation organized in the United States and expressly assumes
the due and punctual payment of the principal of (and premium, if any) and
interest on all Junior Subordinated Debt Securities issued thereunder and the
performance of every other covenant of the Indenture on the part of the Company
and (b) immediately thereafter no Event of Default and no event which, after
notice or lapse of time, or both, would become an Event of Default, shall have
happened and be continuing. Upon any such consolidation, merger, conveyance or
transfer, the successor
7
corporation shall succeed to and be substituted for the Company under the
Indenture and thereafter the predecessor corporation shall be relieved of all
obligations and covenants under the Indenture and the Junior Subordinated Debt
Securities. (Article Eight)
EVENTS OF DEFAULT. The Indenture provides that the following are Events of
Default thereunder with respect to any series of the Junior Subordinated Debt
Securities: (a) default in the payment of the principal of (or premium, if any,
on) any Junior Subordinated Debt Security of such series at its maturity; (b)
default in making a sinking fund payment, if any, when and as the same shall be
due and payable by the terms of the Junior Subordinated Debt Securities of such
series; (c) default for 30 days in the payment of any installment of interest on
any Junior Subordinated Debt Security of such series; (d) default for 90 days
after written notice in the performance of any other covenant in respect of the
Junior Subordinated Debt Securities of such series contained in the Indenture;
(e) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of the Company; (f) any other
Event of Default provided in the applicable resolution of the Board of Directors
or supplemental indenture under which the Junior Subordinated Debt Securities
are issued; and (g) in the event Junior Subordinated Debt Securities of a series
are issued and sold to a TRV Trust or a trustee of such trust in connection with
the issuance of Trust Securities by such TRV Trust, such TRV Trust shall have
voluntarily or involuntarily dissolved, wound-up its business or otherwise
terminated its existence, except in connection with (i) the distribution of
Junior Subordinated Debt Securities to holders of Trust Securities in
liquidation or redemption of their interests in such TRV Trust upon a Special
Event, (ii) the redemption of all of the outstanding Trust Securities of such
TRV Trust or (iii) certain mergers, consolidations or amalgamations, each as
permitted by the Declaration of such TRV Trust. (Section 5.1) The Indenture
Trustee may withhold notice to the Holders of the Junior Subordinated Debt
Securities of any default with respect thereto (except in the payment of
principal, premium or interest) if it considers such withholding to be in the
interests of such Holders. (Section 6.2)
If an Event of Default with respect to the Junior Subordinated Debt
Securities shall have occurred and be continuing, the Indenture Trustee or the
Holders of 25% in aggregate principal amount of the Junior Subordinated Debt
Securities may declare the principal of all the Junior Subordinated Debt
Securities to be due and payable immediately. (Section 5.2)
The Indenture contains a provision entitling the Indenture Trustee to be
indemnified by the Holders before proceeding to exercise any right or power
under the Indenture at the request of any of the Holders. (Section 6.3). The
Indenture provides that the Holders of a majority in principal amount of the
outstanding Junior Subordinated Debt Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture Trustee,
with respect to the Junior Subordinated Debt Securities. (Section 5.12) The
right of a Holder to institute a proceeding with respect to the Indenture is
subject to certain conditions precedent including notice and indemnity to the
Indenture Trustee, but the Holder has an absolute right to receipt of principal,
premium, if any, and interest on the Junior Subordinated Debt Securities at the
Stated Maturity (or, in the case of redemption, on the Redemption Date) or to
institute suit for the enforcement thereof. (Sections 5.7 and 5.8)
The Holders of not less than a majority in principal amount of the
Outstanding Junior Subordinated Debt Securities may on behalf of the Holders of
all the Junior Subordinated Debt Securities waive any past defaults except (a) a
default in payment of the principal of (or premium, if any) or interest on any
Junior Subordinated Debt Security and (b) a default in respect of a covenant or
provision of the Indenture which cannot be amended or modified without the
consent of the Holder of each affected Junior Subordinated Debt Security;
PROVIDED, HOWEVER, that if the Junior Subordinated Debt Securities are held by a
TRV Trust or a trustee of such trust, such waiver or modification to such waiver
shall not be effective until the holders of a majority in liquidation preference
of Trust Securities of the applicable TRV Trust shall have consented to such
waiver or modification to such waiver; PROVIDED FURTHER, that if the consent of
the Holder of each outstanding Junior Subordinated Debt Security is required,
such waiver shall not be effective until each holder of the Trust Securities of
the applicable TRV Trust shall have consented to such waiver. (Section 5.13)
The Indenture requires the Company to furnish to the Indenture Trustee an
annual statement as to defaults, if any, by the Company under the Indenture.
(Section 10.4)
MODIFICATIONS AND AMENDMENTS. Modifications and amendments to the Indenture
may be made by the Company and the Indenture Trustee with the consent of the
Holders of a majority in principal amount of the Junior Subordinated Debt
Securities at the time outstanding of each series which is affected thereby,
PROVIDED, that no such
8
modification or amendment may, without the consent of the Holder of each Junior
Subordinated Debt Security affected thereby: (i) modify the terms of payment of
principal, premium, if any, or interest or; or (ii) reduce the percentage of
Holders of Junior Subordinated Debt Securities necessary to modify or amend the
Indenture or waive compliance by the Company with any covenant or past default,
PROVIDED, FURTHER, that if the Junior Subordinated Debt Securities of such
series are held by a TRV Trust or a trustee of such trust, such supplemental
indenture shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the applicable TRV Trust shall have consented
to such supplemental indenture; PROVIDED FURTHER, that if the consent of the
Holder of each outstanding Junior Subordinated Debt Security is required, such
supplemental indenture shall not be effective until each holder of the Trust
Securities of the applicable TRV Trust shall have consented to such supplemental
indenture. (Section 9.2)
DISCHARGE AND DEFEASANCE. The Company may discharge all of its obligations
(except those set forth below) to holders of any series of Junior Subordinated
Debt Securities issued under the Indenture, which Junior Subordinated Debt
Securities have not already been delivered to the Indenture Trustee for
cancellation and which either have become due and payable or are by their terms
due and payable within one year (or are to be called for redemption within one
year) by depositing with the Indenture Trustee an amount certified to be
sufficient to pay when due the principal of and premium, if any, and interest on
all outstanding Junior Subordinated Debt Securities of such series and to make
any mandatory sinking fund payments thereon when due. (Section 4.1)
Unless otherwise specified in the applicable Prospectus Supplement with
respect to the Junior Subordinated Debt Securities of a series, the Company, at
its option, (i) will be discharged from any and all obligations in respect of
the Junior Subordinated Debt Securities of such series (except for certain
obligations to pay all expenses of the applicable TRV Trust, to register the
transfer or exchange of Junior Subordinated Debt Securities of such series, to
replace mutilated, defaced, destroyed, lost or stolen Junior Subordinated Debt
Securities of such series, and to maintain Paying Agents and hold monies for
payment in trust), or (ii) need not comply with certain covenants specified in
the applicable Prospectus Supplement with respect to the Junior Subordinated
Debt Securities of that series, and the occurrence of an event described in
clause (d) under "Events of Default" above with respect to any defeased covenant
and clause (f) of the "Events of Default" above shall no longer be an Event of
Default if, in either case, the Company deposits with the Indenture Trustee, in
trust, money or U.S. Government Obligations that through the payment of interest
thereon and principal thereof in accordance with their terms will provide money
in an amount sufficient to pay all the principal of (and premium, if any) and
any interest on the Junior Subordinated Debt Securities of such series on the
dates such payments are due (which may include one or more redemption dates
designated by the Company) in accordance with the terms of such Junior
Subordinated Debt Securities. Such a trust may only be established, if, among
other things, the Company shall have delivered an Opinion of Counsel, which, in
the case of a discharge pursuant to clause (i), must be based upon a ruling or
administrative pronouncement of the Internal Revenue Service, to the effect that
the Holders of the Junior Subordinated Debt Securities will not recognize gain
or loss for federal income tax purposes as a result of such deposit or
defeasance and will be subject to federal income tax in the same manner as if
such defeasance had not occurred. (Sections 4.2, 4.3 and 4.4) In the event the
Company omits to comply with its remaining obligations under the Indenture after
a defeasance of the Indenture with respect to the Junior Subordinated Debt
Securities of any series as described under clause (ii) above and the Junior
Subordinated Debt Securities of such series are declared due and payable because
of the occurrence of any undefeased Event of Default, the amount of money and
U.S. Government Obligations on deposit with the Indenture Trustee may be
insufficient to pay amounts due on the Junior Subordinated Debt Securities of
such series at the time of the acceleration resulting from such Event of
Default. However, the Company will remain liable in respect of such payments.
CONCERNING THE INDENTURE TRUSTEE. The Indenture Trustee has extended
substantial credit facilities (the borrowings under which constitute Senior
Indebtedness) to the Company. The Company and certain of its subsidiaries also
maintain bank accounts, borrow money and have other customary commercial banking
or investment banking relationships with the Indenture Trustee in the ordinary
course of business.
GLOBAL SECURITIES. The Indenture provides that the registered Junior
Subordinated Debt Securities of a series may be issued in the form of one or
more fully registered Global Securities (a "Registered Global Security") that
will be deposited with a depositary (a "Depositary") or with a nominee for a
Depositary identified in the Prospectus Supplement relating to such series and
registered in the name of the Depositary or a nominee thereof. (Section 3.1) In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Junior Subordinated Debt Securities
9
to be represented by such Registered Global Security or Securities. Unless and
until it is exchanged in whole for Junior Subordinated Debt Securities in
definitive registered form, a Registered Global Security may not be transferred
except as a whole by the Depositary for such Registered Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor. The Depositary
currently accepts only debt securities that are payable in U.S. dollars.
The specific terms of the depositary arrangement with respect to any portion
of a series of Junior Subordinated Debt Securities to be represented by a
Registered Global Security will be described in the Prospectus Supplement
relating to such series.
Ownership of beneficial interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The accounts to be credited shall be
designated by any dealers, underwriters or agents participating in the
distribution of such Junior Subordinated Debt Securities. Ownership of
beneficial interests in such Registered Global Security will be shown on, and
the transfer of such ownership interests will be effected only through, records
maintained by the Depositary for such Registered Global Security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, transfer or pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Junior Subordinated Debt Securities represented by such Registered Global
Security for all purposes under the Indenture. Except as set forth below, owners
of beneficial interests in a Registered Global Security will not be entitled to
have the Junior Subordinated Debt Securities represented by such Registered
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of such Junior Subordinated Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture. Accordingly, each person owning a beneficial interest in a
Registered Global Security must rely on the procedures of the Depositary for
such Registered Global Security and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, if the Company requests any action of
holders or if an owner of a beneficial interest in a Registered Global Security
desires to give or take any action which a holder is entitled to give or take
under the Indenture, the Depositary for such Registered Global Security would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments on Junior Subordinated
Debt Securities represented by a Registered Global Security registered in the
name of a Depositary or its nominee will be made to such Depositary or its
nominee, as the case may be, as the registered owner of such Registered Global
Security. None of the Company, the Indenture Trustee or any other agent of the
Company or agent of the Indenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Registered Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary for any Junior Subordinated Debt
Securities represented by a Registered Global Security, upon receipt of any
payment of principal, premium or interest in respect of such Registered Global
Security, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in such
Registered Global Security as shown on the records of such Depositary. The
Company also expects that payments by participants to owners of beneficial
interests in such Registered Global Security held through such participants will
be governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
participants.
10
If the Depositary for any Junior Subordinated Debt Securities represented by
a Registered Global Security is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered under the Exchange Act,
and a successor Depositary registered as a clearing agency under the Exchange
Act is not appointed by the Company within 90 days, the Company will issue such
Junior Subordinated Debt Securities in definitive form in exchange for such
Registered Global Security. In addition, the Company may at any time and in its
sole discretion determine not to have any of the Junior Subordinated Debt
Securities of a series represented by one or more Registered Global Securities
and, in such event, will issue Junior Subordinated Debt Securities of such
series in definitive form in exchange for all of the Registered Global Security
or Securities representing such Junior Subordinated Debt Securities. Any Junior
Subordinated Debt Securities issued in definitive form in exchange for a
Registered Global Security will be registered in such name or names as the
Depositary shall instruct the relevant Trustee. It is expected that such
instructions will be based upon directions received by the Depositary from
participants with respect to ownership of beneficial interests in such
Registered Global Security.
The Junior Subordinated Debt Securities of a series may also be issued in
the form of one or more bearer global Securities (a "Bearer Global Security")
that will be deposited with a common depositary for Euroclear and Cedel Bank,
societe anonyme, or with a nominee for such depositary identified in the
Prospectus Supplement relating to such series. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any portion of a series of Junior Subordinated Debt Securities to be
represented by a Bearer Global Security will be described in the Prospectus
Supplement relating to such series.
RANKING OF JUNIOR SUBORDINATED DEBT SECURITIES. The Junior Subordinated
Debt Securities will be subordinated and junior in right of payment to certain
indebtedness of the Company to the extent set forth in the Prospectus Supplement
that will accompany this Prospectus.
CERTAIN PROVISIONS APPLICABLE TO TRV TRUSTS. In the event Junior
Subordinated Debt Securities of a series are issued and sold to a TRV Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such TRV Trust, such Junior Subordinated Debt Securities subsequently may be
distributed PRO RATA to the holders of such Trust Securities in connection with
the dissolution of such TRV Trust upon the occurrence of certain events
described in the Prospectus Supplement relating to such Trust Securities. Only
one series of Junior Subordinated Debt Securities will be issued to a TRV Trust,
or a trustee of such trust, in connection with the issuance of Trust Securities
by such TRV Trust. If Junior Subordinated Debt Securities are issued to a TRV
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such TRV Trust and (i) there shall have occurred and be continuing
an Event of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the related Guarantee, or (iii) the Company
shall have given notice of its election to defer payments of interest on such
Junior Subordinated Debt Securities by extending the interest payment period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Company shall not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payment with respect thereto (other than (i) repurchases, redemptions
or other acquisitions of shares of capital stock of the Company in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of employees, officers, directors or consultants, (ii) as a
result of an exchange or conversion of any class or series of the Company's
capital stock for any other class or series of the Company's capital stock, or
(iii) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged), and (b) the Company shall not make
any payment of interest on or principal of (or premium, if any, on), or repay,
repurchase or redeem any debt securities issued by the Company which rank PARI
PASSU with or junior to such Junior Subordinated Debt Securities. The foregoing,
however, will not apply to any stock dividends paid by the Company where the
dividend stock is the same stock as that on which the dividend is being paid.
In the event Junior Subordinated Debt Securities are issued to a TRV Trust
or a trustee of such trust in connection with the issuance of Trust Securities
of such TRV Trust, for so long as such Trust Securities remain outstanding, the
Company will covenant (i) to directly or indirectly maintain 100% ownership of
the Common Securities of such TRV Trust; PROVIDED, HOWEVER, that any permitted
successor of the Company under the Indenture may succeed to the Company's
ownership of such Common Securities, (ii) to not voluntarily dissolve, wind-up
or terminate such TRV Trust, except in connection with a distribution of Junior
Subordinated Debt Securities upon a Special Event and in connection with certain
mergers, consolidations or amalgamations permitted by the Declaration of the
applicable TRV Trust, (iii) to timely perform its duties as Sponsor of the
applicable TRV Trust and (iv) to use its reasonable efforts to cause such TRV
Trust (a) to remain a statutory business trust, except in connection with the
11
distribution of Junior Subordinated Debt Securities to the holders of Trust
Securities in liquidation of such TRV Trust, the redemption of all of the Trust
Securities of such TRV Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration of such TRV Trust, and (b)
to otherwise continue to be classified as a grantor trust for United States
federal income tax purposes. (Section 10.5)
DESCRIPTION OF PREFERRED SECURITIES
The following description sets forth certain general terms and provisions of
the Preferred Securities to which any Prospectus Supplement may relate. The
particular terms of the Preferred Securities offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Preferred Securities so offered will be described in the Prospectus
Supplement relating to such Preferred Securities. The description does not
purport to be complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the forms of Declarations, which
are filed as exhibits to the Registration Statement of which this Prospectus
forms a part.
Each TRV Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each TRV Trust authorizes the Regular Trustees of such TRV
Trust to issue on behalf of such TRV Trust one series of Preferred Securities.
Each Declaration has been or will be qualified as an indenture under the Trust
Indenture Act. The Preferred Securities will have such terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the Declaration of the TRV Trust issuing such Preferred Securities or made part
of such Declaration by the Trust Indenture Act. Reference is made to any
Prospectus Supplement relating to the Preferred Securities of a TRV Trust for
specific terms, including (i) the distinctive designation of such Preferred
Securities, (ii) the number of Preferred Securities issued by such TRV Trust,
(iii) the annual distribution rate (or method of determining such rate) for
Preferred Securities issued by such TRV Trust and the date or dates upon which
such distributions shall be payable, (iv) whether distributions on Preferred
Securities issued by such TRV Trust shall be cumulative, and, in the case of
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities issued by such TRV Trust shall be cumulative, (v) the
amount or amounts which shall be paid out of the assets of such TRV Trust to the
Holders of Preferred Securities of such TRV Trust upon voluntary or involuntary
dissolution, winding-up or termination of such TRV Trust, (vi) the obligation,
if any, of such TRV Trust to purchase or redeem Preferred Securities issued by
such TRV Trust and the price or prices at which, the period or periods within
which and the terms and conditions upon which Preferred Securities issued by
such TRV Trust shall be purchased or redeemed, in whole or in part, pursuant to
such obligation, (vii) the voting rights, if any, of Preferred Securities issued
by such TRV Trust in addition to those required by law, including the number of
votes per Preferred Security and any requirement for the approval by the holders
of Preferred Securities, or of Preferred Securities issued by one or more TRV
Trusts, or of both, as a condition to specified action or amendments to the
Declaration of such TRV Trust, and (viii) any other relevant rights,
preferences, privileges, limitations or restrictions of Preferred Securities
issued by such TRV Trust consistent with the Declaration of such TRV Trust or
with applicable law. All Preferred Securities offered hereby will be guaranteed
by the Company to the extent set forth below under "Description of Guarantees."
Certain United States federal income tax considerations applicable to any
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto.
In connection with the issuance of Preferred Securities, each TRV Trust will
issue one series of Common Securities. The Declaration of each TRV Trust
authorizes the Regular Trustees of such trust to issue on behalf of such TRV
Trust one series of Common Securities having such terms including distributions,
redemption, voting, liquidation rights or such restrictions as shall be set
forth therein. The terms of the Common Securities issued by such TRV Trust will
be substantially identical to the terms of the Preferred Securities issued by
such TRV Trust and the Common Securities will rank PARI PASSU, and payments will
be made thereon PRO RATA with such Preferred Securities except that, upon an
Event of Default under the Declaration of such TRV Trust, the rights of the
holders of such Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of such Preferred Securities. Except in certain limited
circumstances, the Common Securities of a TRV Trust will also carry the right to
vote and to appoint, remove or replace any of the TRV Trustees of such TRV
Trust. All of the Common Securities of a TRV Trust will be directly or
indirectly owned by the Company.
If an Event of Default with respect to a Declaration of any TRV Trust occurs
and is continuing, then the holders of Preferred Securities of such TRV Trust
would rely on the enforcement by the Institutional Trustee of its rights as a
12
holder of the Junior Subordinated Debt Securities against the Company. In
addition, the holders of a majority in liquidation amount of such Preferred
Securities will have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee under such Declaration, including the right to direct the Institutional
Trustee to exercise the remedies available to it as a holder of the Junior
Subordinated Debt Securities. If the Institutional Trustee fails to enforce its
rights under the Junior Subordinated Debt Securities, any holder of such
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If an Event of
Default with respect to the Declaration of any TRV Trust has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Preferred Securities of such TRV Trust
may also directly institute a proceeding for enforcement of payment to such
holder of the principal of or interest on the Junior Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of such Preferred Securities of such holder (a "Direct Action") on or after the
respective due date specified in the Junior Subordinated Debt Securities without
first (i) directing the Institutional Trustee to enforce the terms of the Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's Rights under the Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of such Preferred Securities
under such Declaration to the extent of any payment made by the Company to such
holder of such Preferred Securities in such Direct Action. Consequently, the
Company will be entitled to payment of amounts that a holder of Preferred
Securities receives in respect of an unpaid distribution that resulted in the
bringing of a Direct Action to the extent that such holder receives or has
already received full payment with respect to such unpaid distribution from a
TRV Trust. The holders of Preferred Securities of a TRV Trust will not be able
to exercise directly any other remedy available to the holders of the Junior
Subordinated Debt Securities.
13
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders,
from time to time, of Preferred Securities. Each Guarantee will be qualified as
an indenture under the Trust Indenture Act. The Chase Manhattan Bank will act as
indenture trustee under each Guarantee (the "Guarantee Trustee"). The terms of
each Guarantee will be those set forth in such Guarantee and those made part of
such Guarantee by the Trust Indenture Act. The summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the form of Guarantee, which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
the Trust Indenture Act. Each Guarantee will be held by the Guarantee Trustee
for the benefit of the holders of the Preferred Securities of a TRV Trust.
GENERAL
Pursuant to and to the extent set forth in each Guarantee, and except as
otherwise set forth in the applicable Prospectus Supplement, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Preferred Securities issued by a TRV Trust (except to the extent paid by such
TRV Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such TRV Trust may have or assert, the following payments
(the "Guarantee Payments"), without duplication: (i) any accrued and unpaid
distributions that are required to be paid on such Preferred Securities, to the
extent such TRV Trust has funds available therefor, and (ii) the redemption
price per Preferred Security set forth in the applicable Prospectus Supplement,
which will not be lower than the stated liquidation amount, plus all accrued and
unpaid distributions (the "Redemption Price"), to the extent such TRV Trust has
funds available therefor, with respect to any Preferred Securities called for
redemption by such TRV Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such TRV Trust (other than in
connection with the distribution of Junior Subordinated Debt Securities to the
holders of Preferred Securities or the redemption of all of the Preferred
Securities) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Preferred Securities to the date of
payment or (b) the amount of assets of such TRV Trust remaining for distribution
to holders of such Preferred Securities in liquidation of such TRV Trust. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of Preferred
Securities or by causing such TRV Trust to pay such amounts to such holders.
Each Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities issued by a TRV Trust from the time of issuance of such
Preferred Securities but will not apply to any payment of distributions or
Redemption Price, or to payments upon the dissolution, winding-up or termination
of such TRV Trust, except to the extent such TRV Trust shall have funds
available therefor. If the Company does not make interest payments on the Junior
Subordinated Debt Securities purchased by a TRV Trust, such TRV Trust will not
pay distributions on the Preferred Securities issued by such TRV Trust and will
not have funds available therefor. See "Description of Junior Subordinated Debt
Securities." The Guarantee, when taken together with the Company's obligations
under the Junior Subordinated Debt Securities, the Indenture and the Declaration
of any TRV Trust, including its obligations to pay costs, expenses, debts and
liabilities of such TRV Trust (other than with respect to Trust Securities) will
provide a full and unconditional guarantee on a subordinated basis by the
Company of payments due on the Preferred Securities issued by such TRV Trust.
CERTAIN COVENANTS OF THE COMPANY
In each Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by a TRV Trust remain outstanding, if there shall have
occurred any event that would constitute an Event of Default under such
Guarantee or the Declaration of such TRV Trust, then (a) the Company shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or make any guarantee payment with respect thereto (other than
(i) repurchases, redemptions or other acquisitions of shares of capital stock of
the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) as a result of an exchange or conversion of any class or
series of the Company's capital stock for any other class or series of the
Company's capital stock, or (iii) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged) and (b) the
Company shall not make any payment of interest on, or principal of (or premium,
if any, on), or repay,
14
repurchase or redeem, any debt securities issued by the Company which rank PARI
PASSU with or junior to such Junior Subordinated Debt Securities. Each
Guarantee, however, will except from the foregoing any stock dividends paid by
the Company where the dividend stock is the same stock as that on which the
dividend is being paid.
MODIFICATION OF THE GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities to which a Guarantee relates (in which case
no vote will be required), each Guarantee may be amended only with the prior
approval of the holders of not less than a majority in aggregate liquidation
amount of the outstanding related Preferred Securities issued by a TRV Trust.
The manner of obtaining any such approval of holders of such Preferred
Securities will be set forth in an accompanying Prospectus Supplement. All
guarantees and agreements contained in a Guarantee shall bind the successors,
assignees, receivers, trustees and representatives of the Company and shall
inure to the benefit of the holders of the related Preferred Securities of a TRV
Trust then outstanding.
EVENTS OF DEFAULT
An Event of Default under a Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Preferred
Securities to which a Guarantee relates have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee. If the
Guarantee Trustee fails to enforce the Guarantee Trustee's rights under a
Guarantee, any holder of related Preferred Securities may directly institute a
legal proceeding against the Company to enforce the Guarantee Trustee's rights
under such Guarantee without first instituting a legal proceeding against the
TRV Trust that issued such Preferred Securities, the Guarantee Trustee or any
other person or entity. A holder of Preferred Securities may also directly
institute a legal proceeding against the Company to enforce such holder's right
to receive payment under such Guarantee without first (i) directing the
Guarantee Trustee to enforce the terms of the Guarantee or (ii) instituting a
legal proceeding against the TRV Trust that issued such Preferred Securities or
any other person or entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each of the Guarantees and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
a Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to a Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by a
Guarantee at the request of any holder of Preferred Securities to which such
Guarantee relates unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate as to the Preferred Securities issued by a TRV
Trust upon full payment of the Redemption Price of all Preferred Securities of
such TRV Trust, upon distribution of the Junior Subordinated Debt Securities
held by such TRV Trust to the holders of the Preferred Securities of such TRV
Trust or upon full payment of the amounts payable in accordance with the
Declaration of such TRV Trust upon liquidation of such TRV Trust. Each Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of related Preferred Securities issued by a TRV Trust must
restore payment of any sums paid under such Preferred Securities or such
Guarantee.
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STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) PARI PASSU with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any subsidiary of the Company and (iii) senior to the
Company's common stock. The terms of the Preferred Securities provide that each
holder of Preferred Securities issued by a TRV Trust by acceptance thereof
agrees to the subordination provisions and other terms of the applicable
Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under a Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
The Guarantees will be governed by, and construed in accordance with, the
internal laws of the State of New York.
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of the date of this Prospectus, the Company's authorized capital stock
consists of 1,500,000,000 shares of Common Stock and 30,000,000 shares of
Preferred Stock. The descriptions below of certain provisions of the Company's
Common Stock and Preferred Stock do not purport to be complete and are subject
to and qualified in their entirety by reference to the Certificate of
Incorporation (as defined below) which is incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus forms a part.
COMMON STOCK
As of April 30, 1997, the Company had outstanding approximately 641.3
million shares of its Common Stock. Each holder of Common Stock is entitled to
one vote per share for the election of directors and for all other matters to be
voted on by the Company's stockholders. Except as otherwise provided by law, the
holders of shares of Common Stock vote as one class together with the shares of
Series C Preferred Stock (as defined below). Holders of Common Stock may not
cumulate their votes in the election of directors, and are entitled to share
equally in such dividends as may be declared by the Board of Directors out of
funds legally available therefor, but only after payment of dividends required
to be paid on outstanding shares of Preferred Stock.
Upon voluntary or involuntary liquidation, dissolution or winding up of the
Company, the holders of the Common Stock share PRO RATA in the assets remaining
after payments to creditors and provision for the preference of any Preferred
Stock. There are no preemptive or other subscription rights, conversion rights
or redemption or sinking fund provisions with respect to shares of Common Stock.
All of the outstanding shares of Common Stock are fully paid and nonassessable.
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 PCX.
PREFERRED STOCK
Under the Company's Restated Certificate of Incorporation (as amended, the
"Certificate of Incorporation"), the Board of Directors of the Company is
authorized to issue shares of the Preferred Stock in one or more series, and to
establish from time to time the number of shares to be included in each such
series and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions thereof,
as shall be stated and expressed in the resolution or resolutions providing for
the issue thereof adopted by the Board of Directors of the Company and as are
not stated and expressed in the Certificate of Incorporation. Prior to the
issuance of each series of Preferred Stock, the Board of Directors of the
Company will adopt resolutions creating and designating such series as a series
of Preferred Stock and such resolutions will be filed in a Certificate of
Designation (a "Certificate of Designation") as an amendment to the Certificate
of Incorporation. As used herein the term "Board of Directors of the Company"
means the Board of Directors of the Company and includes any duly authorized
committee thereof.
16
The rights of holders of the Preferred Stock offered hereby will be subject
to, and may be adversely affected by, the rights of holders of any shares of
Preferred Stock that may be issued in the future. The Board of Directors may
cause shares of Preferred Stock to be issued in public or private transactions
for any proper corporate purpose, 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.
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"), 2,978,803 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 2,262 shares of
its Cumulative Adjustable Rate Preferred Stock, Series Y (the "Series Y
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 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 "Stated Value"). 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 2.61 votes per share, subject
to adjustment as the conversion price is adjusted, 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. The Series C
Preferred Stock is convertible at the option of the holder into that number of
shares of Common Stock determined by dividing the Stated Value by the conversion
price. as adjusted pursuant to the provisions of the Certificate of
Incorporation. The conversion price as of the date of this Prospectus is $32.98
per share of Series C Preferred Stock.
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.
17
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 Y PREFERRED STOCK. The Series Y Preferred Stock ranks on a parity as
to dividends, other distributions and upon liquidation with all of the currently
outstanding series of Preferred Stock. The holder of the Series Y Preferred
Stock is entitled to a cumulative quarterly dividend at an annual rate equal to
the greater of (i) the Short Term Rate and (ii) 4.85%. The "Short Term Rate"
generally will be equal to either 85% or 78% of the Money Market Yield (as
defined in the Certificate of Incorporation) of the 90-day rate for commercial
paper multiplied by the stock's $100,000 per share liquidation value. The Series
Y Preferred Stock is owned by a subsidiary of the Company, is redeemable without
premium at the Company's option at any time at a redemption price of $100,000
per share, plus accrued and unpaid dividends thereon to the date fixed for
redemption, and is subject to repurchase at the holder's request at its
liquidation value of $100,000 per share, plus accrued and unpaid dividends, if
not redeemed on or prior to March 31, 1999. The holder of the Series Y 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 Y Preferred Stock.
CERTAIN 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 (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 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 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.
VACANCIES. 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.
DESCRIPTION OF PREFERRED STOCK OFFERED HEREBY
The following summary contains a description of certain general terms of the
Company's Preferred Stock to which any Prospectus Supplement may relate. Certain
terms of any series of Preferred Stock offered by any Prospectus Supplement will
be described in the Prospectus Supplement relating thereto. If so indicated in
the
18
Prospectus Supplement, the terms of any series may differ from the terms set
forth below. The description of certain provisions of the Company's Preferred
Stock does not purport to be complete and is subject to and qualified in its
entirety by reference to the provisions of the Company's Certificate of
Incorporation and the Certificate of Designation relating to each particular
series of Preferred Stock which will be filed or incorporated by reference, as
the case may be, as an exhibit to the Registration Statement of which this
Prospectus forms a part at or prior to the time of the issuance of such
Preferred Stock.
GENERAL
The Preferred Stock may be issued in one or more series, with such
designations of titles; dividend rates; any redemption provisions; special or
relative rights in the event of liquidation, dissolution, distribution or
winding up of the Company; any sinking fund provisions; any conversion or
exchange provisions; any voting rights thereof; and any other preferences,
privileges, powers, rights, qualifications, limitations and restrictions, as
shall be set forth as and when established by the Board of Directors of the
Company. The shares of any series of Preferred Stock will be, when issued, fully
paid and non-assessable and holders thereof will have no preemptive rights in
connection therewith.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of Preferred Stock will be specified in the
Prospectus Supplement relating thereto.
RANK
Unless otherwise specified in the Prospectus Supplement relating to the
shares of any series of Preferred Stock, such shares will rank on a parity with
each other series of Preferred Stock and prior to the Common Stock as to
dividends and distributions of assets.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive, when,
as and if declared by the Board of Directors of the Company out of funds legally
available therefor, cash dividends at such rates and on such dates as are set
forth in the Prospectus Supplement relating to such series of Preferred Stock.
Such rates may be fixed or variable or both. Dividends will be payable to
holders of record of Preferred Stock as they appear on the books of the Company
(or, if applicable, the records of the Depositary referred to below under
"Description of Depositary Shares") on such record dates as shall be fixed by
the Board of Directors. Dividends on any series of Preferred Stock may be
cumulative or noncumulative.
No full dividends may be declared or paid on funds set apart for the payment
of dividends on any series of Preferred Stock unless dividends shall have been
paid or set apart for such payment on equity securities ranking on a parity with
respect to dividends with such series of Preferred Stock. If full dividends are
not so paid, such series of Preferred Stock shall share dividends PRO RATA with
such other equity securities.
CONVERSION AND EXCHANGE
The Prospectus Supplement for any series of Preferred Stock will state the
terms, if any, on which shares of that series are convertible into or
exchangeable for shares of Common Stock.
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Company or the holder thereof and may be subject to
mandatory redemption pursuant to a sinking fund or otherwise upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by mandatory
or optional redemption, the shares to be redeemed will be determined by lot or
PRO RATA, as may be determined by the Board of Directors of the Company, or by
any other method determined to be equitable by the Board of Directors.
On and after a redemption date, unless the Company defaults in the payment
of the redemption price, dividends will cease to accrue on shares of Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
19
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, holders of each series of Preferred Stock will be entitled to
receive out of assets of the Company available for distribution to shareholders,
before any distribution is made on any securities ranking junior with respect to
liquidation, including Common Stock, distributions upon liquidation in the
amount set forth in the Prospectus Supplement relating to such series of
Preferred Stock, plus an amount equal to any accrued and unpaid dividends. If,
upon any voluntary or involuntary liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Preferred Stock of any series
and any other securities ranking on a parity with respect to liquidation rights
are not paid in full, the holders of the Preferred Stock of such series and such
other securities will share ratably in any such distribution of assets of the
Company in proportion to the full liquidation preferences to which each is
entitled. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of such series of Preferred Stock will not
be entitled to any further participation in any distribution of assets of the
Company.
VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a particular
series of Preferred Stock or except as expressly required by applicable law, the
holders of shares of Preferred Stock will have no voting rights.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below of certain material provisions of the
Deposit Agreement (as defined below) and of the Depositary Shares and Depositary
Receipts (as defined below) is subject to and qualified in its entirety by
reference to the forms of Deposit Agreement and Depositary Receipt relating to
the Preferred Stock, which will be filed or incorporated by reference, as the
case may be, as exhibits to the Registration Statement of which this Prospectus
forms a part at or prior to the issuance of Depositary Shares. The particular
terms of any Depositary Shares, any Depositary Receipts and any Deposit
Agreement relating to a particular series of Preferred Stock which vary from the
terms set forth below will be set forth in the applicable Prospectus Supplement.
GENERAL
The Company may, at its option, elect to offer fractional shares of
Preferred Stock, rather than full shares of Preferred Stock. In such event, the
Company will issue receipts for Depositary Shares, each of which will represent
a fraction (to be set forth in the Prospectus Supplement relating to a
particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under a Deposit Agreement (the "Deposit Agreement") between
the Company and a bank or trust company selected by the Company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000 (the "Preferred Stock Depositary"). Subject to the terms
of the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, conversion
and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing the fractional shares
of Preferred Stock in accordance with the terms of the applicable Prospectus
Supplement.
Pending the preparation of definitive Depositary Receipts, the Preferred
Stock Depositary may, upon the written order of the Company or any holder of
deposited Preferred Stock, execute and deliver temporary Depositary Receipts
which are substantially identical to, and entitle the holders thereof to all the
rights pertaining to, the definitive Depositary Receipts. Depositary Receipts
will be prepared thereafter without unreasonable delay, and temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts.
20
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited Preferred Stock to the
record holders of Depositary Shares relating to such Preferred Stock in
proportion to the number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto. If the Preferred Stock Depositary determines
that it is not feasible to make such distribution, it may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.
REDEMPTION OF PREFERRED STOCK
If a series of Preferred Stock represented by Depositary Shares is to be
redeemed, the Depositary Shares will be redeemed from the proceeds received by
the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of such series of Preferred Stock held by the Preferred Stock Depositary.
The Depositary Shares will be redeemed by the Preferred Stock Depositary at a
price per Depositary Share equal to the applicable fraction of the redemption
price per share payable in respect of the shares of Preferred Stock so redeemed.
Whenever the Company redeems shares of Preferred Stock held by the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem as of the same date
the number of Depositary Shares representing shares of Preferred Stock so
redeemed. If fewer than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by the Preferred Stock
Depositary by lot or PRO RATA or by any other equitable method as may be
determined by the Preferred Stock Depositary.
WITHDRAWAL OF PREFERRED STOCK
Any holder of Depositary Shares may, upon surrender of the Depositary
Receipts at the corporate trust office of the Preferred Stock Depositary (unless
the related Depositary Shares have previously been called for redemption),
receive the number of whole shares of the related series of Preferred Stock and
any money or other property represented by such Depositary Receipts. Holders of
Depositary Shares making such withdrawals will be entitled to receive whole
shares of Preferred Stock on the basis set forth in the related Prospectus
Supplement for such series of Preferred Stock, but holders of such whole shares
of Preferred Stock will not thereafter be entitled to deposit such Preferred
Stock under the Deposit Agreement or to receive Depositary Receipts therefor. If
the Depositary Shares surrendered by the holder in connection with such
withdrawal exceed the number of Depositary Shares that represent the number of
whole shares of Preferred Stock to be withdrawn, the Preferred Stock Depositary
will deliver to such holder at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited Preferred Stock are entitled to vote, the Preferred Stock Depositary
will mail the information contained in such notice of meeting to the record
holders of the Depositary Shares relating to such series of Preferred Stock.
Each record holder of such Depositary Shares on the record date (which will be
the same date as the record date for the relevant series of Preferred Stock)
will be entitled to instruct the Preferred Stock Depositary as to the exercise
of the voting rights pertaining to the amount of the Preferred Stock represented
by such holder's Depositary Shares. The Preferred Stock Depositary will
endeavor, insofar as practicable, to vote the amount of such series of Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all reasonable actions that may
be deemed necessary by the Preferred Stock Depositary in order to enable the
Preferred Stock Depositary to do so. The Preferred Stock Depositary will vote
all shares of any series of Preferred Stock held by it proportionately with
instructions received, to the extent it does not receive specific instructions
from the holders of Depositary Shares representing such series of Preferred
Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Preferred Stock Depositary. However, any amendment
that imposes additional charges or materially and adversely alters any
substantial existing right of the holders of Depositary Shares will not be
effective unless such amendment has been approved by the holders of at least
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a majority of the affected Depositary Shares then outstanding. Every holder of
an outstanding Depositary Receipt at the time any such amendment becomes
effective, or any transferee of such holder, shall be deemed, by continuing to
hold such Depositary Receipt, or by reason of the acquisition thereof, to
consent and agree to such amendment and to be bound by the Deposit Agreement as
amended thereby. The Deposit Agreement automatically terminates if (i) all
outstanding Depositary Shares have been redeemed; or (ii) each share of
Preferred Stock has been converted into or exchanged for Common Stock; or (iii)
there has been a final distribution in respect of the Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company and
such distribution has been distributed to the holders of Depositary Shares. The
Deposit Agreement may be terminated by the Company at any time and the Preferred
Stock Depositary will provide notice of such termination to the record holders
of all outstanding Depositary Receipts not less than 30 days prior to the
termination date, in which event the Preferred Stock Depositary will deliver or
make available for delivery to holders of Depositary Shares, upon surrender of
such Depositary Shares, the number of whole or fractional shares of the related
series of Preferred Stock as are represented by such Depositary Shares.
CHARGES OF DEPOSITARY; TAXES AND OTHER GOVERNMENTAL CHARGES
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay all charges of the Preferred Stock Depositary in connection with the
initial deposit of the relevant series of Preferred Stock and any redemption of
such Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges or expenses as are
expressly provided in the Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its intent to do so, and the Company may at any time remove
the Preferred Stock Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock Depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward all reports and communications
from the Company which are delivered to the Preferred Stock Depositary and which
the Company is required to furnish to the holders of the deposited Preferred
Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Preferred Stock Depositary under the Deposit Agreement will be
limited to performance in good faith of their duties thereunder and they will
not be obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares, Depositary Receipts or shares of Preferred Stock unless
satisfactory indemnity is furnished. The Company and the Preferred Stock
Depositary may rely upon written advice of counsel or accountants, or upon
information provided by holders of Depositary Receipts or other persons believed
to be competent and on documents believed to be genuine.
PLAN OF DISTRIBUTION
The Company may sell any series of Preferred Stock or Depositary Shares and
any TRV Trust may sell Preferred Securities in one or more of the following ways
from time to time: (i) to or through underwriters or dealers, (ii) directly to
purchasers, or (iii) through agents. Any such underwriters, dealers or agents
may include Smith Barney. The Prospectus Supplement with respect to any Offered
Securities will set forth (i) the terms of the offering of the Offered
Securities, including the name or names of any underwriters, dealers or agents,
(ii) the purchase price of the Offered Securities and the proceeds to the
Company or a TRV Trust, as the case may be, from such sale, (iii) any
underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation, (iv) any initial public
offering prices, (v) any discounts or concessions allowed or reallowed or paid
to dealers and (vi) any securities exchange on which such Offered Securities may
be listed. Any initial public offering price, discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
22
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all the
Offered Securities if any are purchased.
In connection with underwritten offerings of the Offered Securities and in
accordance with applicable law and industry practice, underwriters may
over-allot or effect transactions which stabilize, maintain or otherwise affect
the market price of the Offered Securities at levels above those which might
otherwise prevail in the open market, including by entering stabilizing bids,
effecting syndicate covering transactions or imposing penalty bids. A
stabilizing bid means the placing of any bid, or the effecting of any purchase,
for the purpose of pegging, fixing or maintaining the price of a security. A
syndicate covering transaction means the placing of any bid on behalf of the
underwriting syndicate or the effecting of any purchase to reduce a short
position created in connection with the offering. A penalty bid means an
arrangement that permits the managing underwriter to reclaim a selling
concession from a syndicate member in connection with the offering when Offered
Securities originally sold by the syndicate member are purchased in syndicate
covering transactions. Such transactions may be effected on the NYSE, in the
over-the-counter market, or otherwise. Underwriters are not required to engage
in any of these activities. Any such activities, if commenced, may be
discontinued at any time.
If dealers are utilized in the sale of Offered Securities, the Company or
the applicable TRV Trust will sell such Offered Securities to the dealers as
principals. The dealers may then resell such Offered Securities to the public at
varying prices to be determined by such dealers at the time of resale. The names
of the dealers and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offered Securities may be sold directly by the Company and/or, if
applicable, any TRV Trust to one or more institutional purchasers, or through
agents designated by the Company and/or, if applicable, any TRV Trust from time
to time, at a fixed price, or prices, which may be changed, or at varying prices
determined at time of sale. Any agent involved in the offer or sale of the
Offered Securities in respect to which this Prospectus is delivered will be
named, and any commissions payable by the Company or the applicable TRV Trust to
such agent will be set forth in the Prospectus Supplement relating thereto.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company or the applicable
TRV Trust will authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase Offered Securities from the Company or
such TRV Trust at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts (the "Contracts") providing
for payment and delivery on a specified date or dates in the future. Such
Contracts will not be subject to any conditions except (a) the purchase by an
institution of the Offered Securities covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject and (b) if the Offered Securities
are being sold to underwriters, the Company shall have sold to such underwriters
the total principal amount of the Offered Securities less the principal amount
thereof covered by the Contracts. The Prospectus Supplement will set forth the
commission payable for solicitation of such Contracts.
Smith Barney, a member of the National Association of Securities Dealers,
Inc. (the "NASD"), a subsidiary of the Company and an affiliate of the TRV
Trusts, may participate in distributions of the Offered Securities. Accordingly,
the offerings of Offered Securities will conform with the requirements set forth
in Rule 2720 of the Conduct Rules of the NASD.
This Prospectus together with an applicable Prospectus Supplement may also
be used by Smith Barney 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. Smith Barney may act as principal
or agent in such transactions. Smith Barney has no obligation to make a market
in any of the Offered Securities and may discontinue any market-making
activities at any time without notice, at its sole discretion.
23
Agents, dealers and underwriters may be entitled, under agreements with the
Company or a TRV Trust, to indemnification by the Company or the applicable TRV
Trust against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments that such agents,
dealers or underwriters may be required to make in respect thereof. Agents,
dealers and underwriters may be customers of, engage in transactions with, or
perform services for the Company or a TRV Trust in the ordinary course of
business.
Each series of Offered Securities will be a new issue of securities and will
have no established trading market. Any underwriters to whom Offered Securities
are sold for public offering and sale may make a market in such Offered
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The Offered Securities
may or may not be listed on a national securities exchange. No assurance can be
given that there will be a market for the Offered Securities.
LEGAL MATTERS
The validity of the Preferred Securities, the Junior Subordinated Debt
Securities, the Guarantees, the Preferred Stock and the Depositary Shares and
certain matters relating thereto and certain United States federal income tax
matters will be passed upon for the Company and the TRV Trusts by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York. Certain legal matters will be
passed upon for the Underwriters by Dewey Ballantine, New York, New York.
Kenneth J. Bialkin, a partner of Skadden, Arps, Slate, Meagher & Flom LLP, is a
director of the Company and he and other attorneys in such firm beneficially own
an aggregate of less than one percent of the Common Stock of the Company.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, incorporated by reference or included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, have been
incorporated by reference herein, in reliance upon the reports (also
incorporated by reference herein) of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing. The combined financial statements as of and for the
year ended December 31, 1995 and 1994 of The Aetna Casualty and Surety Company
and The Standard Fire Insurance Company and their subsidiaries included in the
Company's Current Report on Form 8-K dated April 2, 1996, as amended, have been
incorporated by reference herein, in reliance upon the report (also incorporated
by reference herein) of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.
24
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY TRAVELERS
GROUP INC., TRAVELERS CAPITAL IV OR ANY UNDERWRITER, DEALER OR AGENT. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF TRAVELERS GROUP INC. OR TRAVELERS CAPITAL IV SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
PAGE
---------
PROSPECTUS SUPPLEMENT
Summary........................................ S-4
Risk Factors................................... S-8
Use of Proceeds................................ S-12
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.................... S-12
Accounting Treatment........................... S-12
Capitalization................................. S-13
Description of the Preferred Securities........ S-14
Description of the Junior Subordinated Debt
Securities................................... S-25
Description of Guarantee....................... S-30
Effect of Obligations Under the Junior
Subordinated Debt Securities and the
Guarantee.................................... S-32
United States Federal Income Taxation.......... S-33
ERISA Matters.................................. S-37
Underwriting................................... S-36
Legal Matters.................................. S-38
PROSPECTUS
Available Information.......................... 3
Incorporation of Certain Documents by
Reference.................................... 4
The Company.................................... 5
TRV Trusts..................................... 5
Use of Proceeds................................ 6
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.................... 6
Description of Junior Subordinated Debt
Securities................................... 7
Description of Preferred Securities............ 12
Description of Guarantees...................... 14
Description of Capital Stock................... 15
Description of Preferred Stock Offered Hereby.. 18
Description of Depositary Shares............... 19
Plan of Distribution........................... 22
Legal Matters.................................. 24
Experts........................................ 24
TRUST PREFERRED SECURITIES
TRAVELERS CAPITAL IV
% TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
TRAVELERS GROUP INC.
------
PROSPECTUS SUPPLEMENT
(INCLUDING PROSPECTUS
DATED , 1997)
---------
SMITH BARNEY INC.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the Company
in connection with the Securities being registered hereby. All of the fees set
forth below are estimates except for the SEC registration fee and the NASD fee.
Securities and Exchange Commission Filing Fee............................. $ 303,031
NASD Filing Fee........................................................... 30,500
Rating Agency Fees........................................................ 400,000
Blue Sky Fees and Expenses................................................ 5,000
Trustees' Fees and Expenses............................................... 5,000
Printing Fees and Expenses................................................ 250,000
Accounting Fees and Expenses.............................................. 75,000
Legal Fees and Expenses................................................... 100,000
Miscellaneous............................................................. 1,469
---------
Total............................................................... $1,170,000
---------
---------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the Delaware General Corporation Law
("DGCL") empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted in
any of the capacities set forth above, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section
145, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that indemnification provided for by Section
145 shall, unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of such person's heirs, executors and administrators; and
empowers the corporation to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
II-1
against such liabilities under Section 145. Section Three of Article V of the
Company's By-Laws provides that the Company shall indemnify its directors and
officers to the fullest extent permitted by the DGCL.
The Company also provides liability insurance for its directors and officers
which provides for coverage against loss from claims made against directors and
officers in their capacity as such, including, subject to certain exceptions,
liabilities under the federal securities laws. In certain employment agreements,
the Company or its subsidiaries have also agreed to indemnify certain officers
against loss from claims made against such officers in connection with the
performance of their duties under their employment agreements. Such
indemnification is generally to the same extent as provided in the Company's
By-laws.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts of omissions
not in good faith or which involve international misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article Tenth of the Company's Restated Certificate of Incorporation limits the
liability of directors to the fullest extent permitted by Section 102(b)(7).
The Declaration of each TRV Trust provides that no Institutional Trustee or
any of its affiliates, Delaware Trustee or any of its affiliates, or officer,
director, shareholder, member, partner, employee, representative custodian,
nominee or agent of the Institutional Trustee or the Delaware Trustee (each a
"Fiduciary Indemnified Person"), and no Regular Trustee, affiliate of any
Regular Trustee, or any officer, director, shareholder, member, partner,
employee, representative or agent of any Regular Trustee, or any employee or
agent of such TRV Trust or its affiliates (each a "Company Indemnified Person")
shall be liable, responsible or accountable in damages or otherwise to such TRV
Trust, any Affiliate of such TRV Trust or any holder of securities issued by
such TRV Trust, or to any officer, director, shareholder, partner, member,
representative, employee or agent of such TRV Trust or its Affiliates for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Fiduciary Indemnified Person or Company Indemnified Person in
good faith on behalf of such TRV Trust and in a manner such Fiduciary
Indemnified Person or Company Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Fiduciary Indemnified Person
or Company Indemnified Person by such Declaration or by law, except that a
Fiduciary Indemnified Person or a Company Indemnified Person shall be liable for
any loss, damage or claim incurred by reason of such Fiduciary Indemnified
Person's or Company Indemnified Person's gross negligence (or in the case of a
Fiduciary Indemnified Person, negligence) or willful misconduct with respect to
such acts or omissions. The Declaration of each TRV Trust also provides that, to
the full extent permitted by law, the Company shall indemnify any Company
Indemnified Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such TRV Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the TRV Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Declaration of each
TRV Trust also provides that to the full extent permitted by law, the Company
shall indemnify any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of such TRV Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the TRV Trust and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such Company Indemnified
Person shall have been adjudged to be liable to the TRV Trust unless and only to
the extent that the Court of Chancery of Delaware or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such Court of Chancery or such other court shall deem proper. The Declaration of
each TRV Trust further provides that expenses (including attorneys' fees)
incurred by a Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to in the
immediately preceding two sentences shall be paid by the Company in advance of
the final disposition of such action, suit or
II-2
preceding upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Company as authorized in the
Declaration. The directors and officers of the Company and the Regular Trustees
are covered by insurance policies indemnifying them against certain liabilities,
including certain liabilities arising under the Securities Act, which might be
incurred by them in such capacities and against which they cannot be indemnified
by the Company or the TRV Trusts. Any agents, dealers or underwriters who
execute any of the agreements filed as Exhibit 1.1 to this Registration
Statement will agree to indemnify the Company's directors and their officers and
the TRV Trustees who signed the Registration Statement against certain
liabilities that may arise under the Securities Act with respect to information
furnished to the Company or any of the TRV Trusts by or on behalf of any such
indemnifying party.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(a) Exhibits
1.1 --Form of Underwriting Agreement for Trust Preferred Securities*
1.2 --Form of Underwriting Agreement for Preferred Stock*
3.1 --Restated Certificate of Incorporation of the Company, as amended, incorporated in reference
to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 (File No. 1-9924) (the "1996 10-K")
3.2 --Restated By-Laws of the Company, as amended, incorporated by reference to Exhibit 3.2 to the
1996 10-K
4.1 --Certificate of Trust of Travelers Capital IV incorporated by reference to Exhibit 4.4 to the
Company's Registration Statement on Form S-3 (No. 333-12439) (the "First Registration
Statement")
4.2 --Certificate of Trust of Travelers Capital V incorporated by reference to Exhibit 4.5 to the
First Registration Statement
4.3 --Certificate of Trust of Travelers Capital VI*
4.4 --Certificate of Trust of Travelers Capital VII*
4.5 --Form of Amended and Restated Declaration of Trust for Travelers Capital IV incorporated by
reference to Exhibit 4.9 to the First Registration Statement
4.6 --Form of Amended and Restated Declaration of Trust for Travelers Capital V incorporated by
reference to Exhibit 4.10 to the First Registration Statement
4.7 --Form of Amended and Restated Declaration of Trust for Travelers Capital VI*
4.8 --Form of Amended and Restated Declaration of Trust for Travelers Capital VII*
4.9 --Form of Indenture between Travelers Group Inc. and The Chase Manhattan Bank, as Trustee,
incorporated by reference to Exhibit 4.11 to the First Registration Statement
4.10 --Form of Preferred Security (included in Exhibit 4.5)
4.11 --Form of Common Security (included in Exhibit 4.5)
4.12 --Form of Guarantee with respect to the Preferred Securities of Travelers Capital IV
incorporated by reference to Exhibit 4.17 to the First Registration Statement
4.13 --Form of Guarantee with respect to the Preferred Securities of Travelers Capital V
incorporated by reference to Exhibit 4.18 to the First Registration Statement
4.14 --Form of Guarantee with respect to the Preferred Securities of Travelers Capital VI*
4.15 --Form of Guarantee with respect to the Preferred Securities of Travelers Capital VII*
4.16 --Form of Junior Subordinated Debt Securities (included in Exhibit 4.9)
4.17 --Form of Certificate for Preferred Stock will be filed as an exhibit to a Current Report on
Form 8-K of the Company and incorporated herein by reference
4.18 --Form of Deposit Agreement*
4.19 --Form of Depositary Receipt (included in Exhibit 4.18)
5.1 --Opinion of Skadden, Arps, Slate, Meagher & Flom LLP*
12.1 --Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends of
Travelers Group Inc.*
23.1 --Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants
23.2 --Consent of KPMG Peat Marwick LLP, Independent Certified Public Accountants
23.3 --Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1)
24.1 --Powers of Attorney of certain directors*
II-3
25.1 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Trustee under the Indenture incorporated by reference to Exhibit 25.1 to
the First Registration Statement
25.2 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Trustee under the Declaration of Trust of Travelers Capital IV
incorporated by reference to Exhibit 25.5 to the First Registration Statement
25.3 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Trustee under the Declaration of Trust of Travelers Capital V incorporated
by reference to Exhibit 25.6 to the First Registration Statement
25.4 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Trustee under the Declaration of Trust of Travelers Capital VI*
25.5 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Trustee under the Declaration of Trust of Travelers Capital VII*
25.6 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Guarantee Trustee under the Preferred Securities Guarantee of Travelers
Group Inc. for the benefit of holders of Preferred Securities of Travelers Capital IV
incorporated by reference to Exhibit 25.10 to the First Registration Statement
25.7 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Guarantee Trustee under the Preferred Securities Guarantee of Travelers
Group Inc. for the benefit of holders of Preferred Securities of Travelers Capital V
incorporated by reference to Exhibit 25.11 to the First Registration Statement
25.8 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Guarantee Trustee under the Preferred Securities Guarantee of Travelers
Group Inc. for the benefit of holders of Preferred Securities of Travelers Capital VI*
25.9 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Chase
Manhattan Bank, as Guarantee Trustee under the Preferred Securities Guarantee of Travelers
Group Inc. for the benefit of holders of Preferred Securities of Travelers Capital VII*
- ------------------------
* Previously filed.
ITEM 17. UNDERTAKING.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) that, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect to the Plan of
Distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by Travelers Group Inc. pursuant to Section 13 or Section
15(d) of the Exchange Act of 1934, as amended (the "Exchange Act") that
are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of Travelers
Group Inc.'s Annual Report pursuant to Section 13(a) or Section 15(d) of the
Exchange
II-4
Act (and where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15 (other than the
insurance policies referred to therein), or otherwise, the Registrants have been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Travelers Group
Inc. hereby certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 22nd day of May, 1997.
TRAVELERS GROUP INC.
By /s/ JAMES DIMON
------------------------------------------
Name: James Dimon
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities indicated on the 22nd day of May, 1997.
SIGNATURE TITLE
- ------------------------------ --------------------------
Chairman of the Board and
/s/ SANFORD I. WEILL Chief Executive Officer
- ------------------------------ (Principal Executive
Sanford I. Weill Officer) and Director
Senior Vice President and
/s/ HEIDI G. MILLER Chief Financial Officer
- ------------------------------ (Principal Financial
Heidi G. Miller Officer)
Executive Vice President
/s/ IRWIN ETTINGER and Chief Accounting
- ------------------------------ Officer (Principal
Irwin Ettinger Accounting Officer)
*
- ------------------------------ Director
C. Michael Armstrong
- ------------------------------ Director
Judith Arron
*
- ------------------------------ Director
Kenneth J. Bialkin
- ------------------------------ Director
Edward H. Budd
*
- ------------------------------ Director
Joseph A. Califano, Jr.
- ------------------------------ Director
Douglas D. Danforth
- ------------------------------ Director
Robert F. Daniell
/s/ JAMES DIMON
- ------------------------------ Director
James Dimon
- ------------------------------ Director
Leslie B. Disharoon
- ------------------------------ Director
Gerald R. Ford
II-6
SIGNATURE TITLE
- ------------------------------ --------------------------
*
- ------------------------------ Director
Thomas Jones
- ------------------------------ Director
Ann D. Jordan
*
- ------------------------------ Director
Robert I. Lipp
- ------------------------------ Director
Michael Masin
*
- ------------------------------ Director
Dudley C. Mecum
- ------------------------------ Director
Andrall E. Pearson
- ------------------------------ Director
Frank J. Tasco
*
- ------------------------------ Director
Linda J. Wachner
*
- ------------------------------ Director
Joseph R. Wright, Jr.
*
- ------------------------------ Director
Arthur Zankel
*By: /s/ JAMES DIMON
-------------------------
James Dimon
ATTORNEY-IN-FACT
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Travelers
Capital IV, Travelers Capital V, Travelers Capital VI and Travelers Capital VII
each hereby certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 22nd day of May, 1997.
TRAVELERS CAPITAL IV
By: /s/ HEIDI G. MILLER
-----------------------------------
Heidi G. Miller, as Trustee
By: /s/ IRWIN ETTINGER
-----------------------------------
Irwin Ettinger, as Trustee
TRAVELERS CAPITAL V
By: /s/ HEIDI G. MILLER
-----------------------------------
Heidi G. Miller, as Trustee
By: /s/ IRWIN ETTINGER
-----------------------------------
Irwin Ettinger, as Trustee
TRAVELERS CAPITAL VI
By: /s/ HEIDI G. MILLER
-----------------------------------
Heidi G. Miller, as Trustee
By: /s/ IRWIN ETTINGER
-----------------------------------
Irwin Ettinger, as Trustee
TRAVELERS CAPITAL VII
By: /s/ HEIDI G. MILLER
-----------------------------------
Heidi G. Miller, as Trustee
By: /s/ IRWIN ETTINGER
-----------------------------------
Irwin Ettinger, as Trustee
II-8