Terms Agreement for Sale of Equity Linked Securities (ELKS) by Salomon Smith Barney Holdings Inc. to Salomon Smith Barney Inc.

Summary

Salomon Smith Barney Holdings Inc. agrees to sell $18,500,000 of Equity Linked Securities (ELKS) based on Texas Instruments stock to Salomon Smith Barney Inc. The agreement sets the purchase price at 97.5% of the principal amount, with the transaction closing on June 25, 2002. The ELKS mature on June 26, 2003, pay semi-annual coupons, and are not redeemable before maturity. The agreement incorporates terms from a prior underwriting agreement and specifies delivery, payment, and certain restrictions on similar offerings before closing.

EX-1.01 3 y61790exv1w01.txt TERMS AGREEMENT Exhibit 1.01 TERMS AGREEMENT June 20, 2002 Salomon Smith Barney Holdings Inc. 388 Greenwich Street New York, New York 10013 Attention: Treasurer Dear Sirs: We understand that Salomon Smith Barney Holdings Inc., a New York corporation (the "Company"), proposes to issue and sell $18,500,000 aggregate principal amount of its Equity Linked Securities (ELKS?) (1,850,000 ELKS) based upon the common stock of Texas Instruments Incorporated due June 26, 2003 (the "Securities"). Subject to the terms and conditions set forth herein or incorporated by reference herein, Salomon Smith Barney Inc. (the "Underwriter") offers to purchase 1,850,000 Securities in the principal amount of $18,500,000 at 97.5% of the principal amount. The Closing Date shall be June 25, 2002 at 9:00 a.m. at the offices of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York 10006. The Securities shall have the following terms: Title: Equity Linked Securities (ELKS?) based upon the Common Stock of Texas Instruments Incorporated due June 26, 2003 Maturity: June 26, 2003 Coupon: Each ELKS will pay a total coupon of $1.0028 in cash in two separate semi-annual installments payable in part on each of two separate Interest Payment Dates. The first coupon of $0.5028 will be composed of $0.1097 of interest and a partial payment of an option premium in the amount of $0.3931. The second coupon of $0.5000 will be composed of $0.1091 of interest and a partial payment of an option premium in the amount of $0.3909. Maturity Payment: Holders of the ELKS will be entitled to receive at maturity the Maturity Payment (as defined in the Prospectus Supplement dated June 20, 2002 relating to the Securities) Interest Payment Dates: December 26, 2002 and June 26, 2003 Regular Record Dates: December 25, 2002 and June 25, 2003 Initial Price To Public: 100% of the principal amount thereof, plus accrued interest from June 25, 2002 to date of payment and delivery Redemption Provisions: The Securities are not redeemable by the Company prior to maturity. Trustee: The Bank of New York Indenture: Indenture, dated as of October 27, 1993, as amended from time to time All the provisions contained in the document entitled "Salomon Smith Barney Holdings Inc. - Debt Securities - Underwriting Agreement Basic Provisions" and dated December 1, 1997 (the "Basic Provisions"), a copy of which you have previously received, are, except as indicated below, herein incorporated by reference in their entirety and shall be deemed to be a part of this Terms Agreement to the same extent as if the Basic Provisions had been set forth in full herein. Terms defined in the Basic Provisions are used herein as therein defined. Basic Provisions varied with respect to this Terms Agreement: (A) Notwithstanding the provisions set forth in Section 3 of the Basic Provisions, the Company and the Underwriter hereby agree that the Securities will be in the form of Book-Entry Notes and shall be delivered on June 25, 2002 against payment of the purchase price to the Company by wire transfer in immediately available funds to such accounts with such financial institutions as the Company may direct. (B) Paragraph 4(j) of the Basic Provisions shall be amended and restated as follows: "The Company will not, without the consent of Salomon Smith Barney Inc., offer, sell, contract to offer or sell or otherwise dispose of any securities, including any backup undertaking for such securities, of the Company, in each case that are substantially similar to the Securities or any security convertible into or exchangeable for the ELKS or such substantially similar securities, during the period beginning the date of the Terms Agreement and ending the Closing Date." (C) Paragraph 5(g) of the Basic Provisions shall be amended and restated as follows: "You shall have received on the Closing Date letters from PricewaterhouseCoopers LLP and KPMG LLP covering the matters set forth in Exhibit II hereto, with respect to the Registration Statement and the Prospectus at the time of the Terms Agreement." The Underwriter hereby agrees in connection with the underwriting of the Securities to comply with the requirements set forth in any applicable sections of Section 2720 to the By-Laws of the National Association of Securities Dealers, Inc. Marcy Engel, Esq., is counsel to the Company. Cleary, Gottlieb, Steen & Hamilton is counsel to the Underwriter. Cleary, Gottlieb, Steen & Hamilton is special tax counsel to the Company. Please accept this offer no later than 9:00 p.m. on June 20, 2002, by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us, or by sending us a written acceptance in the following form: "We hereby accept your offer, set forth in the Terms Agreement, dated June 20, 2002, to purchase the Securities on the terms set forth therein." Very truly yours, SALOMON SMITH BARNEY INC. By: /S/ Ramesh K. Menon ----------------------------- Name: Ramesh K. Menon Title: Managing Director ACCEPTED: SALOMON SMITH BARNEY HOLDINGS INC. By: /S/ Mark Kleinman --------------------------------------------- Name: Mark Kleinman Title: Executive Vice President and Treasurer