THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO A NOMINEE OF DTC OR BY DTC OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
TO CITIGROUP GLOBAL MARKETS HOLDINGS INC. OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. R-1 INITIAL PRINCIPAL AMOUNT
CUSIP 173075 86 2 REPRESENTED $-
representing - SEQUINS
($10 per SEQUINS)
CITIGROUP GLOBAL MARKETS HOLDINGS INC.
-% Select EQUity Indexed NoteS(SM) Based Upon
the Common Stock of Hewlett-Packard Company Due -, 2005
Citigroup Global Markets Holdings Inc., a New York corporation
(hereinafter referred to as the "Company", which term includes any successor
corporation under the Indenture herein referred to), for value received and on
condition that this Note is not redeemed by the Company prior to -, 2005 (the
"Stated Maturity Date"), hereby promises to pay to CEDE & CO., or its registered
assigns, the Maturity Payment (as defined below), on the Stated Maturity Date.
This Note will bear quarterly payments of interest, is not subject to any
sinking fund, is not subject to redemption at the option of the holder thereof
prior to the Stated Maturity Date, and is not subject to the defeasance
provisions of the Indenture.
Payment of the Maturity Payment with respect to this Note shall be made
upon presentation and surrender of this Note at the corporate trust office of
the Trustee in the Borough of Manhattan, The City and State of New York, in the
common stock of Hewlett-Packard Company ("Hewlett-Packard").
This Note is one of the series of -% Select EQUity Indexed NoteS(SM) based
upon the common stock of Hewlett-Packard Company due -, 2005 (the "SEQUINS").
INTEREST
The SEQUINS bear interest at the rate of -% per annum. Interest will be
paid in cash quarterly on each - day of each February, May, August and November,
commencing on August -, 2004 (each such date, an "Interest Payment Date").
Interest will be payable to the persons in whose names the SEQUINS are
registered at the close of business on the fifth Business Day preceding each
Interest Payment Date. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. If an Interest Payment Date falls on a day that is not
a Business Day, the interest payment to be made on such Interest Payment Date
will be made on the next succeeding Business Day with the same force and effect
as if made on such Interest Payment Date, and no additional interest will accrue
as a result of such delayed payment.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which the securities exchanges or banking institutions or trust companies in the
City of New York are authorized or obligated by law or executive order to close.
PAYMENT AT MATURITY
On the Stated Maturity Date, if the Company does not exercise its Call
Option (as described below) prior to or on such date, holders of the SEQUINS
will receive for each SEQUINS the final quarterly interest payment and the
Maturity Payment described below.
DETERMINATION OF THE MATURITY PAYMENT
The Maturity Payment for each SEQUINS equals a number of shares of
Hewlett-Packard common stock equal to the Exchange Ratio. The Exchange Ratio
equals -.
In lieu of any fractional share of Hewlett-Packard common stock otherwise
payable in respect of any SEQUINS, at maturity each holder of a SEQUINS will
receive an amount in cash equal to the value of such fractional share. The
number of full shares of Hewlett-Packard common stock, and any cash in lieu of a
fractional share, to be delivered at maturity to a holder of a SEQUINS will be
calculated based on the aggregate number of SEQUINS held by such holder.
CALL OPTION
The Company may exercise its option to call (its "Call Option") the
SEQUINS in whole, but not in part, on any Business Day beginning on -, 2005
through and including the Stated Maturity Date (such day being the "Call Date").
The Company will provide up to 10 Business Days' but no less than five Business
Days' notice (as described below) before the Call Date.
If the Company exercises its Call Option, holders of the SEQUINS will
receive for each SEQUINS a price in cash (the "Call Price") that, together with
all other payments made on the SEQUINS from the date hereof (the "Issue Date")
to and including the Call Date, will provide a
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yield to call of -% per annum (compounded annually). The Call Price will be
calculated by determining the amount that, when discounted from the Call Date to
the Issue Date by a discount factor based on an annual yield to call of -%
(calculated on the basis of a 360-day year of twelve 30-day months, compounded
annually) and added to the present value of all interest payments made to and
including the Call Date discounted to the Issue Date by that same discount
factor, will equal the initial price of the SEQUINS. The present value of each
interest payment on the SEQUINS used to determine the Call Price will be
calculated assuming each payment is made on the calendar day scheduled for that
payment. A delay in payment may arise for reasons such as a scheduled Interest
Payment Date falling on a day that is not a Business Day and, as a result, the
payment being delayed until the next succeeding Business Day. Any such delay
will not be taken into account when calculating the Call Price. The Call Price
will be rounded to the fourth decimal place and will not include the amount of
unpaid interest accrued to and including the Call Date; however, on the Call
Date holders of the SEQUINS will receive the Call Price plus an amount equal to
the accrued and unpaid interest.
So long as the SEQUINS are represented by this Note and are held on behalf
of DTC, notices relating to the Company's Call Option and all other notices will
be given by delivery to DTC, in which event such notice will be deemed to have
been given to holders of the SEQUINS on the seventh trading day after the day on
which such notice is delivered. If the SEQUINS are no longer represented by this
Note and are not held on behalf of DTC, notices relating to the Company's Call
Option and all other notices will be published in a leading daily newspaper in
the City of New York, which is expected to be The Wall Street Journal.
DILUTION ADJUSTMENTS
If Hewlett-Packard, after the closing date of the offering of the SEQUINS,
(1) pays a stock dividend or makes a distribution with respect to its
common stock in shares of the stock,
(2) subdivides or splits the outstanding shares of its common stock into a
greater number of shares,
(3) combines the outstanding shares of the common stock into a smaller
number of shares, or
(4) issues by reclassification of shares of its common stock any shares of
other common stock of Hewlett-Packard,
then, in each of these cases, the Exchange Ratio will be multiplied by a
dilution adjustment equal to a fraction, the numerator of which will be the
number of shares of common stock outstanding immediately after the event, plus,
in the case of a reclassification referred to in (4) above, the number of shares
of such other common stock of Hewlett-Packard, and the denominator of which will
be the number of shares of common stock outstanding immediately before the
event.
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If Hewlett-Packard, after the closing date, issues, or declares a record
date in respect of an issuance of, rights or warrants to all holders of its
common stock entitling them to subscribe for or purchase shares of its common
stock at a price per share less than the Then-Current Market Price of the common
stock, other than rights to purchase common stock pursuant to a plan for the
reinvestment of dividends or interest, then, in each case, the Exchange Ratio
will be multiplied by a dilution adjustment equal to a fraction, the numerator
of which will be the number of shares of common stock outstanding immediately
before the adjustment is effected, plus the number of additional shares of
common stock offered for subscription or purchase pursuant to the rights or
warrants, and the denominator of which will be the number of shares of common
stock outstanding immediately before the adjustment is effected by reason of the
issuance of the rights or warrants, plus the number of additional shares of
common stock which the aggregate offering price of the total number of shares of
common stock offered for subscription or purchase pursuant to the rights or
warrants would purchase at the Then-Current Market Price of the common stock,
which will be determined by multiplying the total number of shares so offered
for subscription or purchase by the exercise price of the rights or warrants and
dividing the product obtained by the Then-Current Market Price. To the extent
that, after the expiration of the rights or warrants, the shares of common stock
offered thereby have not been delivered, the Exchange Ratio will be further
adjusted to equal the Exchange Ratio which would have been in effect had the
adjustment for the issuance of the rights or warrants been made upon the basis
of delivery of only the number of shares of common stock actually delivered.
If Hewlett-Packard, after the closing date, declares or pays a dividend or
makes a distribution to all holders of the common stock of any class of its
capital stock, the capital stock of one or more of its subsidiaries, evidences
of its indebtedness or other non-cash assets, excluding any dividends or
distributions referred to in the above paragraph, or issues to all holders of
its common stock rights or warrants to subscribe for or purchase any of its or
one or more of its subsidiaries' securities, other than rights or warrants
referred to in the above paragraph, then, in each of these cases, the Exchange
Ratio will be multiplied by a dilution adjustment equal to a fraction, the
numerator of which will be the Then-Current Market Price of one share of the
common stock, and the denominator of which will be the Then-Current Market Price
of one share of the common stock, less the fair market value (as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Company, whose determination will be final) as of the time the
adjustment is effected of the portion of the capital stock, assets, evidences of
indebtedness, rights or warrants so distributed or issued applicable to one
share of common stock.
Notwithstanding the foregoing, in the event that, with respect to any
dividend or distribution to which the above paragraph would otherwise apply, the
denominator in the fraction referred to in the above formula is less than $1.00
or is a negative number, then the Company may, at its option, elect to have the
adjustment provided by the above paragraph not be made and in lieu of this
adjustment, the Maturity Payment will be deemed to be equal to the fair market
value of the capital stock, evidences of indebtedness, assets, rights or
warrants (determined, as of the date the dilution adjustment would otherwise be
effected as described below, by a nationally recognized independent investment
banking firm retained for this purpose by the Company, whose determination will
be final) so distributed or issued applicable to one share of Hewlett-
4
Packard common stock and each holder of the SEQUINS will have the right to
receive at maturity cash in an amount per SEQUINS equal to the Exchange Ratio
multiplied by such fair market value.
If Hewlett-Packard, after the closing date, declares a record date in
respect of a distribution of cash, other than any Permitted Dividends described
below, any cash distributed in consideration of fractional shares of common
stock and any cash distributed in a Reorganization Event referred to below, by
dividend or otherwise, to all holders of its common stock, or makes an Excess
Purchase Payment, then the Exchange Ratio will be multiplied by a dilution
adjustment equal to a fraction, the numerator of which will be the Then-Current
Market Price of the common stock, and the denominator of which will be the
Then-Current Market Price of the common stock on the record date less the amount
of the distribution applicable to one share of common stock which would not be a
Permitted Dividend, or, in the case of an Excess Purchase Payment, less the
aggregate amount of the Excess Purchase Payment for which adjustment is being
made at the time divided by the number of shares of common stock outstanding on
the record date.
For purposes of these adjustments:
A "Permitted Dividend" is any quarterly cash dividend in respect of
Hewlett-Packard common stock, other than a quarterly cash dividend that exceeds
the immediately preceding quarterly cash dividend, and then only to the extent
that the per share amount of this dividend results in an annualized dividend
yield on the common stock in excess of 10%.
An "Excess Purchase Payment" is the excess, if any, of (x) the cash and
the value (as determined by a nationally recognized independent investment
banking firm retained for this purpose by the Company, whose determination will
be final) of all other consideration paid by Hewlett-Packard with respect to one
share of common stock acquired in a tender offer or exchange offer by
Hewlett-Packard, over (y) the Then-Current Market Price of the common stock.
Notwithstanding the foregoing, in the event that, with respect to any
dividend, distribution or Excess Purchase Payment to which the fifth paragraph
in this section would otherwise apply, the denominator in the fraction referred
to in the formula in that paragraph is less than $1.00 or is a negative number,
then the Company may, at its option, elect to have the adjustment provided by
the fifth paragraph in this section not be made and in lieu of this adjustment,
the Maturity Payment will be deemed to be equal to the sum of the amount of cash
and the fair market value of other consideration (determined, as of the date the
dilution adjustment would otherwise be effected as described below, by a
nationally recognized independent investment banking firm retained for this
purpose by the Company, whose determination will be final) so distributed or
applied to the acquisition of the common stock in the tender offer or exchange
offer applicable to one share of Hewlett-Packard common stock and each holder of
the SEQUINS will have the right to receive at maturity cash in an amount per
SEQUINS equal to the Exchange Ratio multiplied by such sum.
5
Each dilution adjustment will be effected as follows:
- in the case of any dividend, distribution or issuance, at the
opening of business on the Business Day next following the record
date for determination of holders of Hewlett-Packard common stock
entitled to receive this dividend, distribution or issuance or, if
the announcement of this dividend, distribution, or issuance is
after this record date, at the time this dividend, distribution or
issuance was announced by Hewlett-Packard;
- in the case of any subdivision, split, combination or
reclassification, on the effective date of the transaction;
- in the case of any Excess Purchase Payment for which Hewlett-Packard
announces, at or prior to the time it commences the relevant share
repurchase, the repurchase price per share for shares proposed to be
repurchased, on the date of the announcement; and
- in the case of any other Excess Purchase Payment, on the date that
the holders of the repurchased shares become entitled to payment in
respect thereof.
All dilution adjustments will be rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th. No adjustment in the Exchange Ratio will be required unless the
adjustment would require an increase or decrease of at least one percent
therein, provided, however, that any adjustments which by reason of this
sentence are not required to be made will be carried forward (on a percentage
basis) and taken into account in any subsequent adjustment. If any announcement
or declaration of a record date in respect of a dividend, distribution, issuance
or repurchase requiring an adjustment as described herein is subsequently
canceled by Hewlett-Packard, or this dividend, distribution, issuance or
repurchase fails to receive requisite approvals or fails to occur for any other
reason, then, upon the cancellation, failure of approval or failure to occur,
the Exchange Ratio will be further adjusted to the Exchange Ratio which would
then have been in effect had adjustment for the event not been made. If any
Reorganization Event, as described below, occurs after the occurrence of one or
more events requiring an adjustment as described herein, the dilution
adjustments previously applied to the Exchange Ratio will not be rescinded but
will be applied to the new Exchange Ratio provided for below.
The "Then-Current Market Price" of the common stock, for the purpose of
applying any dilution adjustment, means the average Closing Price per share of
common stock for the ten Trading Days immediately before this adjustment is
effected or, in the case of an adjustment effected at the opening of business on
the Business Day next following a record date, immediately before the earlier of
the date the adjustment is effected and the related Ex-Date. For purposes of
determining the Then-Current Market Price, the determination of the Closing
Price by the calculation agent in the event of a Market Disruption Event, as
described in the definition of Closing Price, may be deferred by the calculation
agent for up to five consecutive Trading Days on which a Market Disruption Event
is occurring.
6
The "Closing Price" of Hewlett-Packard common stock (or any other security
for which a Closing Price must be determined) on any date of determination will
be (1) if the common stock is listed on a national securities exchange on that
date of determination, the closing sale price or, if no closing sale price is
reported, the last reported sale price on that date on the principal U.S.
exchange on which the common stock is listed or admitted to trading, (2) if the
common stock is not listed on a national securities exchange on that date of
determination, or if the closing sale price or last reported sale price is not
obtainable (even if the common stock is listed or admitted to trading on such
exchange), and the common stock is quoted on the Nasdaq National Market, the
closing sale price or, if no closing sale price is reported, the last reported
sale price on that date as reported on the Nasdaq, and (3) if the common stock
is not quoted on the Nasdaq on that date of determination or, if the closing
sale price or last reported sale price is not obtainable (even if the common
stock is quoted on the Nasdaq), the last quoted bid price for the common stock
in the over-the-counter market on that date as reported by the OTC Bulletin
Board, the National Quotation Bureau or a similar organization. If no closing
sale price or last reported sale price is available pursuant to clauses (1), (2)
or (3) of the preceding sentence or if there is a Market Disruption Event, the
Closing Price on any date of determination, unless deferred by the calculation
agent as described in the preceding paragraph, will be the arithmetic mean, as
determined by the calculation agent, of the bid prices of the common stock
obtained from as many dealers in such stock (which may include the Company or
any of its other subsidiaries or affiliates), but not exceeding three such
dealers, as will make such bid prices available to the calculation agent. A
security "quoted on the Nasdaq National Market" will include a security included
for listing or quotation in any successor to such system and the term "OTC
Bulletin Board" will include any successor to such service.
A "Trading Day" means a day, as determined by the calculation agent, on
which trading is generally conducted (or was scheduled to have been generally
conducted, but for the occurrence of a Market Disruption Event) on the New York
Stock Exchange, the American Stock Exchange, the Nasdaq National Market, the
Chicago Mercantile Exchange and the Chicago Board Options Exchange, and in the
over-the-counter market for equity securities in the United States.
The "Ex-Date" with respect to any dividend, distribution or issuance is
the first date on which the shares of the common stock trade in the regular way
on their principal market without the right to receive this dividend,
distribution or issuance.
A "Market Disruption Event" means the occurrence or existence of any
suspension of or limitation imposed on trading (by reason of movements in price
exceeding limits permitted by any exchange or market or otherwise) of, or the
unavailability, through a recognized system of public dissemination of
transaction information, of accurate price, volume or related information in
respect of, (1) the shares of Hewlett-Packard common stock on any exchange or
market, or (2) any options contracts or futures contracts relating to the shares
of Hewlett-Packard common stock, or any options on such futures contracts, on
any exchange or market if, in each case, in the determination of the calculation
agent, any such suspension, limitation or unavailability is material.
7
In the event of any of the following "Reorganization Events":
- any consolidation or merger of Hewlett-Packard, or any surviving
entity or subsequent surviving entity of Hewlett-Packard, with or
into another entity, other than a merger or consolidation in which
Hewlett-Packard is the continuing corporation and in which the
common stock outstanding immediately before the merger or
consolidation is not exchanged for cash, securities or other
property of Hewlett-Packard or another issuer;
- any sale, transfer, lease or conveyance to another corporation of
the property of Hewlett-Packard or any successor as an entirety or
substantially as an entirety;
- any statutory exchange of securities of Hewlett-Packard or any
successor of Hewlett-Packard with another issuer, other than in
connection with a merger or acquisition; or
- any liquidation, dissolution or winding up of Hewlett-Packard or any
successor of Hewlett-Packard,
each holder of the SEQUINS will have the right to receive a Maturity Payment per
SEQUINS of (i) cash in an amount equal to the Exchange Ratio multiplied by the
sum of clauses (1) and (2) in the definition of "Transaction Value" below and
(ii) the number of Marketable Securities received for each share of stock in the
Reorganization Event multiplied by the Exchange Ratio.
The "Transaction Value" will be the sum of:
(1) for any cash received in a Reorganization Event, the amount of cash
received per share of common stock,
(2) for any property other than cash or Marketable Securities received
in a Reorganization Event, an amount equal to the market value on
the date the Reorganization Event is consummated of that property
received per share of common stock, as determined by a nationally
recognized independent investment banking firm retained for this
purpose by the Company, whose determination will be final, and
(3) for any Marketable Securities received in a Reorganization Event, an
amount equal to the Closing Price per share of these Marketable
Securities on the applicable Trading Day multiplied by the number of
these Marketable Securities received for each share of common stock.
"Marketable Securities" are any perpetual equity securities or debt
securities with a stated maturity after the maturity date, in each case that are
listed on a U.S. national securities exchange or reported by the Nasdaq Stock
Market. The number of shares of any equity securities
8
constituting Marketable Securities included in the calculation of Transaction
Value pursuant to clause (3) above will be adjusted if any event occurs with
respect to the Marketable Securities or the issuer of the Marketable Securities
between the time of the Reorganization Event and maturity that would have
required an adjustment as described above, had it occurred with respect to
Hewlett-Packard common stock or Hewlett-Packard. Adjustment for these subsequent
events will be as nearly equivalent as practicable to the adjustments described
above.
GENERAL
This Note is one of a duly authorized issue of debt securities of the
Company (the "Debt Securities"), issued and to be issued in one or more series
under a Senior Debt Indenture, dated as of October 27, 1993, as supplemented by
a First Supplemental Indenture, dated as of November 28, 1997, a Second
Supplemental Indenture, dated as of July 1, 1999, and as further supplemented
from time to time (the "Indenture"), between the Company and The Bank of New
York, as Trustee (the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the holders of the SEQUINS, and the terms upon
which the SEQUINS are, and are to be, authenticated and delivered.
If an Event of Default with respect to the SEQUINS shall have occurred and
be continuing, the principal of the SEQUINS may be declared due and payable in
the manner and with the effect provided in the Indenture. In such case, the
amount declared due and payable upon any acceleration permitted by the Indenture
will be determined by the calculation agent and will be equal to, with respect
to this Note, the Maturity Payment calculated as though the Stated Maturity Date
of this Note were the date of early repayment. In case of default at Maturity of
this Note, this Note shall bear interest, payable upon demand of the beneficial
owners of this Note in accordance with the terms of the SEQUINS, from and after
Maturity through the date when payment of such amount has been made or duly
provided for, at the rate of -% per annum on the unpaid amount (or the cash
equivalent of such unpaid amount) due.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series affected thereby. The Indenture also contains provisions permitting
the holders of specified percentages in aggregate principal amount of the Debt
Securities of any series at the time Outstanding, on behalf of the holders of
all Debt Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the holder of
this Note shall be conclusive and binding upon such holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
The holder of this Note may not enforce such holder's rights pursuant to
the Indenture or the SEQUINS except as provided in the Indenture. No reference
herein to the Indenture and no
9
provision of this Note or of the Indenture shall alter or impair the obligation
of the Company to pay the Maturity Payment with respect to this Note, and to pay
any interest on any overdue amount thereof at the time, place and rate, and in
the coin or currency, herein prescribed.
All terms used in this Note which are defined in the Indenture but not in
this Note shall have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purposes.
10
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CITIGROUP GLOBAL MARKETS HOLDINGS INC.
By:___________________________________
Name: Xxxx X. Xxxxxxxx
Title: Executive Vice President
and Treasurer
Corporate Seal
Attest:
By:_________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Assistant Secretary
Dated: April 29, 2004
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in
the within-mentioned Indenture.
The Bank of New York,
as Trustee
By:_________________________________
Authorized Signatory
