EXHIBIT 4.01
CERTIFICATE OF DESIGNATION
of
5.864% CUMULATIVE PREFERRED STOCK, SERIES M
of
TRAVELERS GROUP INC.
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pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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TRAVELERS GROUP INC., a Delaware corporation (the "Corporation"),
hereby certifies that:
1. The Restated Certificate of Incorporation, as amended, of the
Corporation (the "Certificate of Incorporation") fixes the total number of
shares of all classes of capital stock that the Corporation shall have the
authority to issue at one billion five hundred million (1,500,000,000) shares of
common stock, par value $.01 per share ("Common Stock") and thirty million
(30,000,000) shares of preferred stock, par value $1.00 per share ("Preferred
Stock").
2. The Certificate of Incorporation expressly grants to the Board of
Directors of the Corporation (the "Board of Directors") authority to provide for
the issuance of the shares of Preferred Stock in 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. Pursuant to
resolutions duly adopted by the Board of Directors in accordance with Section
141 of the General Corporation Law of the State of Delaware (the "DGCL"), the
Board of Directors has granted such authority to its Executive Committee (the
"Executive Committee").
3. Pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation, and upon the Executive Committee by
resolution of the Board of Directors, the Executive Committee, by action duly
taken on July 8, 1997, and the Notes Committee by action duly taken on October
3, 1997 adopted resolutions that provide for a series of Preferred Stock as
follows:
RESOLVED, that an issue of a series of Preferred Stock is hereby
provided for, and the number of shares to be included in such series is
established,
and the designation, powers, preference and rights, and qualifications,
limitations or restrictions thereof, of such series are fixed, hereby as
follows:
1. DESIGNATION AND NUMBER OF SHARES. The designation of such
series shall be 5.864% Cumulative Preferred Stock, Series M (the "Series M
Preferred Stock"), and the number of shares constituting such series shall
be 800,000. The number of authorized shares of Series M Preferred Stock may
be reduced (but not below the number of shares thereof then outstanding) by
further resolution duly adopted by the Board of Directors or the Executive
Committee and by the filing of a certificate pursuant to the provisions of
the DGCL stating that such reduction has been so authorized, but the number
of authorized shares of Series M Preferred Stock shall not be increased.
2. DIVIDENDS. Dividends on each share of Series M Preferred
Stock shall be cumulative from the date of original issue of such share and
shall be payable, when and as declared by the Board of Directors out of
funds legally available therefor, in cash on February 1, May 1, August 1
and November 1 of each year, commencing November 1, 1997.
Each quarterly period beginning on February 1, May 1, August 1
and November 1 in each year and ending on and including the day next
preceding the first day of the next such quarterly period shall be a
"Dividend Period." If a share of Series M Preferred Stock is outstanding
during an entire Dividend Period, the dividend payable on such share on the
first day of the calendar month immediately following the last day of such
Dividend Period shall be $3.665 (or one-fourth of 5.864% of the Liquidation
Preference (as defined in Section 7) for such share). If a share of Series
M Preferred Stock is outstanding for less than an entire Dividend Period,
the dividend payable on such share on the first day of the calendar month
immediately following the last day of such Dividend Period on which such
share shall be outstanding shall be the product of $3.665 multiplied by the
ratio (which shall not exceed one) that the number of days that such share
was outstanding during such Dividend Period bears to the number of days in
such Dividend Period.
If, prior to 18 months after the date of the original issuance of
the Series M Preferred Stock, one or more amendments to the Internal
Revenue Code of 1986, as amended
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(the "Code") are enacted that reduce the percentage of the
dividends-received deduction (currently 70%) as specified in section
243(a)(1) of the Code or any successor provision (the "Dividends-Received
Percentage"), the amount of each dividend payable (if declared) per share
of Series M Preferred Stock for dividend payments made on or after the
effective date of such change in the Code will be adjusted by multiplying
the amount of the dividend payable described above (before adjustment) by
the following fraction (the "DRD Formula"), and rounding the result to the
nearest cent (with one-half cent rounded up):
1-.35(1-.70)
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1-.35(1-DRP)
For the purposes of the DRD Formula, "DRP" means the Dividends-Received
Percentage (expressed as a decimal) applicable to the dividend in question;
provided, however, that if the Dividends-Received Percentage applicable to
the dividend in question shall be less than 50%, then the DRP shall equal
.50. Notwithstanding the foregoing provisions, if, with respect to any
such amendment, the Company receives either an unqualified opinion of
nationally recognized independent tax counsel selected by the Company or a
private letter ruling or similar form of authorization from the Internal
Revenue Service ("IRS") to the effect that such amendment does not apply to
a dividend payable on the Series M Preferred Stock, then such amendment
will not result in the adjustment provided for pursuant to the DRD Formula
with respect to such dividend. Such opinion shall be based upon the
legislation amending or establishing the DRP or upon a published
pronouncement of the IRS addressing such legislation.
If any such amendment to the Code is enacted after the dividend
payable on a dividend payment date has been declared, the amount of the
dividend payable on such dividend payment date will not be increased;
instead, additional dividends (the "Post Declaration Date Dividends") equal
to the excess, if any, of (x) the product of the dividend paid by the
Company on such dividend payment date and the DRD Formula (where the DRP
used in the DRD Formula would be equal to the greater of the
Dividends-Received Percentage applicable to the dividend in question and
.50) over (y) the dividend paid by the Company on such dividend payable
date, will be payable (if declared) to holders of Series M Preferred Stock
on the record date applicable
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to the next succeeding dividend payment date or, if the Series M Preferred
Stock is called for redemption prior to such record date, to holders of
Series M Preferred Stock on the applicable redemption date, as the case may
be, in addition to any other amounts payable on such date.
If any such amendment to the Code is enacted and the reduction in
the Dividends-Received Percentage retroactively applies to a dividend
payment date as to which the Company previously paid dividends on the
Series M Preferred Stock (each, an "Affected Dividend Payment Date"), the
Company will pay (if declared) additional dividends (the "Retroactive
Dividends") to holders of Series M Preferred Stock on the record date
applicable to the next succeeding dividend payment date (or, if such
amendment is enacted after the dividend payable on such dividend payment
date has been declared, to holders of Series M Preferred Stock on the
record date following the date of enactment) or, if the Series M Preferred
Stock is called for redemption prior to such record date, to holders of
Series M Preferred Stock on the applicable redemption date, as the case may
be, in an amount equal to the excess of (x) the product of the dividend
paid by the Company on each Affected Dividend Payment Date and the DRD
Formula (where the DRP used in the DRD Formula would be equal to the
greater of the Dividends-Received Percentage and .50 applied to each
Affected Dividend Payment Date) over (y) the sum of the dividend paid by
the Company on each Affected Dividend Payment Date; provided, however that
if the Company has received the opinion, letter ruling or authorization
referred to above, with respect to a dividend payable on the Affected
Payment Date, then no such Retroactive Dividends will be payable.
Each dividend on the shares of Series M Preferred Stock shall be
paid to the holders of record of shares of Series M Preferred Stock as they
appear on the stock register of the Company on such record date, not more
than 60 days nor less than 10 days preceding the payment date of such
dividend, as shall be fixed in advance by the Board of Directors. Dividends
on account of arrears for any past Dividend Periods may be declared and
paid at any time, without reference to any regular dividend payment date,
to holders of record on such date, not exceeding 45 days preceding the
payment date thereof, as may be fixed in advance by the Board of Directors.
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If there shall be outstanding shares of any other class or series
of preferred stock of the Company ranking on a parity as to dividends with
the Series M Preferred Stock, the Company, in making any dividend payment
on account of arrears on the Series M Preferred Stock or such other class
or series of preferred stock, shall make payments ratably upon all
outstanding shares of Series M Preferred Stock and such other class or
series of preferred stock in proportion to the respective amounts of
dividends in arrears upon all such outstanding shares of Series M Preferred
Stock and such other class or series of preferred stock to the date of such
dividend payment.
Holders of shares of Series M Preferred Stock shall not be
entitled to any dividend, whether payable in cash, property or stock, in
excess of full cumulative dividends on such shares. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend
payment that is in arrears.
3. REDEMPTION. The Series M Preferred Stock is not subject
to any mandatory redemption pursuant to a sinking fund or otherwise. The
Company, at its option, may redeem shares of Series M Preferred Stock, as a
whole or in part, at any time or from time to time on or after October 8,
2007, at a price of $250 per share, plus accrued and accumulated but unpaid
dividends thereon to but excluding the date fixed for redemption (the
"Redemption Price").
If the Company shall redeem shares of Series M Preferred Stock
pursuant to this Section 3, notice of such redemption shall be given by
first class mail, postage prepaid, not less than 30 or more than 90 days
prior to the redemption date, to each holder of record of the shares to be
redeemed, at such holder's address as shown on the stock register of the
Company. Each such notice shall state: (a) the redemption date; (b) the
number of shares of Series M Preferred Stock to be redeemed and, if less
than all such shares held by such holder are to be redeemed, the number of
such shares to be redeemed from such holder; (c) the Redemption Price;
(d) the place or places where certificates for such shares are to be
surrendered for payment of the Redemption Price; and (e) that dividends on
the shares to be redeemed will cease to accrue on such redemption date.
Notice having been mailed as aforesaid, from and after the redemption date
(unless default shall be made by the Company in providing money for the
payment of the Redemption Price) dividends on the shares of Series
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M Preferred Stock so called for redemption shall cease to accrue, and such
shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Company (except the right to receive
from the Company the Redemption Price) shall cease. Upon surrender in
accordance with such notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the Board of Directors
shall so require and the notice shall so state), the Company shall redeem
such shares at the Redemption Price. If less than all the outstanding
shares of Series M Preferred Stock are to be redeemed, the Company shall
select those shares to be redeemed from outstanding shares of Series M
Preferred Stock not previously called for redemption by lot or pro rata (as
nearly as may be) or by any other method determined by the Board of
Directors to be equitable.
The Company shall not redeem less than all the outstanding shares
of Series M Preferred Stock pursuant to this Section 3, or purchase or
acquire any shares of Series M Preferred Stock otherwise than pursuant to a
purchase or exchange offer made on the same terms to all holders of shares
of Series M Preferred Stock, unless full cumulative dividends shall have
been paid or declared and set apart for payment upon all outstanding shares
of Series M Preferred Stock for all past Dividend Periods, and unless all
matured obligations of the Company with respect to all sinking funds,
retirement funds or purchase funds for all series of Preferred Stock then
outstanding have been met.
4. SHARES TO BE RETIRED. All shares of Series M Preferred
Stock redeemed by the Company shall be retired and canceled and shall be
restored to the status of authorized but unissued shares of Preferred
Stock, without designation as to series, and may thereafter be reissued.
5. CONVERSION OR EXCHANGE. The holders of shares of Series M
Preferred Stock shall not have any rights to convert any such shares into
or exchange any such shares for shares of any other class or series of
capital stock of the Company.
6. VOTING. Except as otherwise provided in this Section 6 or
as otherwise required by law, the Series M Preferred Stock shall have no
voting rights.
If six quarterly dividends (whether or not consecutive) payable
on shares of Series M Preferred Stock are in
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arrears at the time of the record date to determine stockholders for any
annual meeting of stockholders of the Company, the number of directors of
the Company shall be increased by two, and the holders of shares of Series
M Preferred Stock (voting separately as a class with the holders of shares
of any one or more other series of Preferred Stock upon which like voting
rights have been conferred and are exercisable) shall be entitled at such
annual meeting of stockholders to elect two directors of the Company, with
the remaining directors of the Company to be elected by the holders of
shares of any other class or classes or series of stock entitled to vote
therefor. In any such election, holders of shares of Series M Preferred
Stock shall have one vote for each share held.
At all meetings of stockholders at which holders of Preferred
Stock shall be entitled to vote for Directors as a single class, the
holders of a majority of the outstanding shares of all classes and series
of capital stock of the Company having the right to vote as a single class
shall be necessary to constitute a quorum, whether present in person or by
proxy, for the election by such single class of its designated Directors.
In any election of Directors by stockholders voting as a class, such
Directors shall be elected by the vote of at least a plurality of shares
held by such stockholders present or represented at the meeting. At any
such meeting, the election of Directors by stockholders voting as a class
shall be valid notwithstanding that a quorum of other stockholders voting
as one or more classes may not be present or represented at such meeting.
Any director who has been elected by the holders of shares of
Series M Preferred Stock (voting separately as a class with the holders of
shares of any one or more other series of Preferred Stock upon which like
voting rights have been conferred and are exercisable) may be removed at
any time, with or without cause, only by the affirmative vote of the
holders of the shares at the time entitled to cast a majority of the votes
entitled to be cast for the election of any such director at a special
meeting of such holders called for that purpose, and any vacancy thereby
created may be filled by the vote of such holders. If a vacancy occurs
among the Directors elected by such stockholders voting as a class, other
than by removal from office as set forth in the preceding sentence, such
vacancy may be filled by the remaining Director so elected, or his
successor then in office, and the Director so elected to fill such vacancy
shall serve until the next meeting of stockholders for the election of
Directors.
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The voting rights of the holders of the Series M Preferred Stock
to elect Directors as set forth above shall continue until all dividend
arrearages on the Series M Preferred Stock have been paid or declared and
set apart for payment. Upon the termination of such voting rights, the
terms of office of all persons who may have been elected pursuant to such
voting rights shall immediately terminate, and the number of directors of
the Company shall be decreased by two.
Without the consent of the holders of shares entitled to cast at
least two-thirds of the votes entitled to be cast by the holders of the
total number of shares of Preferred Stock then outstanding, voting
separately as a class without regard to series, with the holders of shares
of Series M Preferred Stock being entitled to cast one vote per share, the
Company may not:
(i) create any class of stock that shall have preference as
to dividends or distributions of assets over the Series M Preferred Stock;
or
(ii) alter or change the provisions of the Certificate of
Incorporation (including any Certificate of Amendment or Certificate of
Designation relating to the Series M Preferred Stock) so as to adversely
affect the powers, preferences or rights of the holders of shares of Series
M Preferred Stock;
PROVIDED, however, that if such creation or such alteration or change would
adversely affect the powers, preferences or rights of one or more, but not
all, series of Preferred Stock at the time outstanding, such alteration or
change shall require consent of the holders of shares entitled to cast at
least two-thirds of the votes entitled to be cast by the holders of all of
the shares of all such series so affected, voting as a class.
7. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the Company, voluntary or involuntary, the
holders of Series M Preferred Stock shall be entitled to receive out of the
assets of the Company available for distribution to stockholders, before
any distribution of assets shall be made to the holders of the Common Stock
or of any other shares of stock of the Company ranking as to such
distribution junior to the Series M Preferred Stock, a liquidating
distribution in an amount equal to $250 per share (the "Liquidation
Preference") plus an amount equal to any accrued and accumulated but unpaid
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dividends thereon to the date of final distribution. The holders of the
Series M Preferred Stock shall not be entitled to receive the Liquidation
Preference and such accrued dividends, however, until the liquidation
preference of any other class of stock of the Company ranking senior to the
Series M Preferred Stock as to rights upon liquidation, dissolution or
winding up shall have been paid (or a sum set aside therefor sufficient to
provide for payment) in full.
If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the assets available for distribution are
insufficient to pay in full the amounts payable with respect to the Series
M Preferred Stock and any other shares of stock of the Company ranking as
to any such distribution on a parity with the Series M Preferred Stock, the
holders of the Series M Preferred Stock and of such other shares shall
share ratably in any distribution of assets of the Company in proportion to
the full respective preferential amounts to which they are entitled.
After payment to the holders of the Series M Preferred Stock of
the full preferential amounts provided for in this Section 7, the holders
of the Series M Preferred Stock shall be entitled to no further
participation in any distribution of assets by the Company.
Consolidation or merger of the Company with or into one or more
other corporations, or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Company, shall not be deemed or construed to be a liquidation, dissolution
or winding up of the Company within the meaning of this Section 7 if the
preferences or special voting rights of the holders of shares of Series M
Preferred Stock are not impaired thereby.
8. LIMITATION ON DIVIDENDS ON JUNIOR STOCK. So long as any
Series M Preferred Stock shall be outstanding the Company shall not declare
any dividends on the Common Stock or any other stock of the Company ranking
as to dividends or distributions of assets junior to the Series M Preferred
Stock (the Common Stock and any such other stock being herein referred to
as "Junior Stock"), or make any payment on account of, or set apart money
for, a sinking fund or other similar fund or agreement for the purchase,
redemption or other retirement of any shares of Junior Stock, or make any
distribution in respect thereof, whether
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in cash or property or in obligations or stock of the Company, other than a
distribution of Junior Stock (such dividends, payments, setting apart and
distributions being herein called "Junior Stock Payments"), unless the
following conditions shall be satisfied at the date of such declaration in
the case of any such dividend, or the date of such setting apart in the
case of any such fund, or the date of such payment or distribution in the
case of any other Junior Stock Payment:
(i) full cumulative dividends shall have been paid or
declared and set apart for payment on all outstanding shares of Preferred
Stock other than Junior Stock; and
(ii) the Company shall not be in default or in arrears with
respect to any sinking fund or other similar fund or agreement for the
purchase, redemption or other retirement of any shares of Preferred Stock
other than Junior Stock;
PROVIDED, however, that any funds theretofore deposited in any sinking fund
or other similar fund with respect to any Preferred Stock in compliance
with the provisions of such sinking fund or other similar fund may
thereafter be applied to the purchase or redemption of such Preferred Stock
in accordance with the terms of such sinking fund or other similar fund
regardless of whether at the time of such application full cumulative
dividends upon shares of Series M Preferred Stock outstanding to the last
dividend payment date shall have been paid or declared and set apart for
payment by the Company.
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Travelers Group Inc. has caused this Certificate to be duly executed by its
Executive Vice President, and attested by its Assistant Secretary this 7th
day of October, 1997.
TRAVELERS GROUP INC.
By /s/ Charles O. Prince, III
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Charles O. Prince, III
Executive Vice President
Attest:
/s/ Shelley J. Dropkin
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Shelley J. Dropkin
Assistant Secretary
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