SEVENTH PARAGRAPH UNDER THE CAPTION "LEGAL PROCEEDINGS" BEGINNING ON PAGE
11 OF THE ANNUAL REPORT ON FORM 10-K OF SSBH FOR THE YEAR ENDED DECEMBER 31,
1999 (FILE NO. 1-4346).
In March 1999, a complaint seeking in excess of $250 million was filed by a hedge fund and its investment
advisor against SSB in the Supreme Court of the State of New York, County of New York (MKP Master
Fund, LDC et al. v. Salomon Smith Barney Inc.). Plaintiffs allege that while acting as their prime broker SSB
breached its contracts with plaintiffs, converted plaintiffs' monies and engaged in tortious conduct, including
breaching its fiduciary duties. In October 1999, the court dismissed plaintiffs' tort claims, including the breach of
fiduciary duty claims, but allowed the breach of contract and conversion claims to stand. In December 1999,
SSB filed an answer and asserted counterclaims against the investment advisor. In response to plaintiffs' motion
to strike the counterclaims, in January 2000, SSB amended its counterclaims against the investment advisor to
seek indemnification and contribution. Plaintiffs moved to strike SSB's amended counterclaims in February 2000.