<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 23, 1994
LEHMAN BROTHERS HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-9466 13-3216325
(Commission File Number) (IRS Employer Identification No.)
3 World Financial Center
New York, New York 10285
(Address of principal (Zip Code)
execuitve offices)
Registrant's telephone number, including
area code: (212) 596-7000
-------------------------
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ITEM 5. OTHER EVENTS.
Filed herewith are (i) a Warrant Agreement used in connection with the
sale of 1,000,000 AMEX Hong Kong 30 Index Call Warrants Expiring February 26,
1996 (the "Warrants") by Lehman Brothers Holdings Inc. and (ii) a tax opinion
issued with respect to the issuance of the Warrants and referring to the
prospectus supplement filed with the Securities and Exchange Commission dated
August 23, 1994 relating to the Warrants.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
The following Exhibits are filed as a part of this Report.
4 Index Warrant Agreement dated as of
August 30, 1994
8 Opinion of Simpson Thacher & Bartlett
re tax matters
The Exhibit Index to this Report is incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
LEHMAN BROTHERS HOLDINGS INC.
BY: /S/ KAREN M. MULLER
---------------------
KAREN M. MULLER
VICE PRESIDENT
DATE: SEPTEMBER 2, 1994
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EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
- - ----------- -------
Exhibit 4 Index Warrant Agreement dated as of
August 30, 1994
Exhibit 8 Opinion of Simpson Thacher & Bartlett
re tax matters
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EXHIBIT 4
================================================================================
LEHMAN BROTHERS HOLDINGS INC.
and
CITIBANK, N.A.,
as Index Warrant Agent
and
LEHMAN BROTHERS INC.,
as Calculation Agent
------------------------------
INDEX WARRANT AGREEMENT
dated as of August 30, 1994
AMEX Hong Kong 30 Index Call Warrants
Expiring February 26, 1996
================================================================================
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TABLE OF CONTENTS(1)
<TABLE>
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ARTICLE I
ISSUANCE, FORM, EXECUTION,
DELIVERY AND REGISTRATION OF INDEX WARRANTS . . . . . . . . . . . . . 1
SECTION 1.1 Issuance of Index Warrants; Conversion of
Index Warrants to Book-Entry . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Form, Execution and Delivery of Warrant Certificates . . . . . . . 3
SECTION 1.3 Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.4 Registration of Transfers and Exchanges . . . . . . . . . . . . . . . 4
SECTION 1.5 Mutilated or Missing Warrant Certificates . . . . . . . . . . . . . . 5
SECTION 1.6 Registered Holders . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.7 Global Warrant Certificate . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
DURATION AND EXERCISE OF INDEX WARRANTS . . . . . . . . . . . . . . . 9
SECTION 2.1 Duration of Index Warrants; Minimum and Maximum
Exercise Amounts; Notice of Exercise 9
SECTION 2.2 Exercise and Delivery of Index Warrants . . . . . . . . . . . . . . . 10
SECTION 2.3 Automatic Exercise of Warrants . . . . . . . . . . . . . . . . . . . 16
SECTION 2.4 Limitation of Number of Exercisable Warrants . . . . . . . . . . . . 18
SECTION 2.5 Discontinuance or Modification of the Index . . . . . . . . . . . . . 19
SECTION 2.6 Covenant of the Company . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.7 Return of the Global Warrant Certificate . . . . . . . . . . . . . . 20
SECTION 2.8 Return of Moneys Held Unclaimed for Two Years . . . . . . . . . . . . 20
SECTION 2.9 Designation of Agent for Receipt of Notice . . . . . . . . . . . . . 21
SECTION 2.10 Extraordinary Events and Exercise
</TABLE>
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(1) The Table of Contents is not a part of the Index
Warrant Agreement
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<TABLE>
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Limitation Events . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANTHOLDERS . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.1 Holders of Index Warrants May Enforce Rights . . . . . . . . . . . . 24
SECTION 3.2 Consolidation, Merger or Other Disposition . . . . . . . . . . . . . 24
ARTICLE IV
CANCELLATION OF INDEX WARRANTS . . . . . . . . . . . . . . . . . . . 25
SECTION 4.1 Cancellation of Index Warrants . . . . . . . . . . . . . . . . . . . 25
SECTION 4.2 Treatment of Warrantholders . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.3 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
CONCERNING THE INDEX WARRANT AGENT . . . . . . . . . . . . . . . . 26
SECTION 5.1 Index Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.2 Conditions of Index Warrant Agent's Obligations . . . . . . . . . . . 26
SECTION 5.3 Compliance With Applicable Laws . . . . . . . . . . . . . . . . . . . 28
SECTION 5.4 Resignation and Appointment of Successor . . . . . . . . . . . . . . 29
ARTICLE VI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.1 Modification, Supplementation or Amendment . . . . . . . . . . . . . 30
SECTION 6.2 Notices and Demands to the Company and Index Warrant Agent . . . . . 31
SECTION 6.3 Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.4 Notices to Warrantholders . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.6 Obtaining of Governmental Approvals . . . . . . . . . . . . . . . . . 32
</TABLE>
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SECTION 6.7 Persons Having Rights Under the Index Warrant Agreement . . . . . . . 32
SECTION 6.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.10 Inspection of Agreement . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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EXHIBIT A - Form of Warrant Certificate
EXHIBIT A-1 - Form of Exercise Notice from Warrantholder
EXHIBIT B - Form of Global Warrant Certificate
EXHIBIT B-1 - Form of Exercise Notice from Depository Participant
EXHIBIT C-1 - Form of Confirmation of Exercise for Warrant Certificate
EXHIBIT C-2 - Form of Confirmation of Exercise for Global Warrant
Certificate
EXHIBIT D-1 - Form of Notice of Rejection for Warrant Certificate
EXHIBIT D-2 - Form of Notice of Rejection for Global Warrant Certificate
EXHIBIT E - Form of Notice of Rejection Relating to Limit Option
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INDEX WARRANT AGREEMENT
THIS AGREEMENT, dated as of August 30, 1994, among LEHMAN
BROTHERS HOLDINGS INC., a corporation duly incorporated and existing under the
laws of the State of Delaware (the "Company"), Citibank, N.A., a banking
association duly incorporated and existing under the laws of the State of New
York, as Index Warrant Agent (the "Index Warrant Agent"), and Lehman Brothers
Inc., a corporation duly incorporated and existing under the laws of the State
of Delaware (the "Calculation Agent"). An index of defined terms is attached
hereto as Annex 1.
W I T N E S S E T H T H A T :
WHEREAS, the Company proposes to sell index warrants (the
"Index Warrants" or, individually, an "Index Warrant") representing the right
to receive from the Company an amount in U.S. dollars to be determined by
reference to increases in the AMEX Hong Kong 30 Index (the "Index"); and
WHEREAS, the Company wishes the Index Warrant Agent to act on
behalf of the Company in connection with the issuance, transfer and exercise of
the Index Warrants, and wishes to set forth herein, among other things, the
provisions of the Index Warrants and the terms and conditions under which they
may be issued, transferred, exercised and cancelled;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION,
DELIVERY AND REGISTRATION OF INDEX WARRANTS
SECTION 1.1 Issuance of Index Warrants; Conversion of Index
Warrants to Book-Entry. (a) The Index Warrants will be originally issued as
certificates in definitive form (each a "Warrant Certificate"). Each Index
Warrant shall represent the right, subject to the provisions contained herein,
to receive the Cash Settlement Value (as defined in Section 2.2(d)) or, under
certain circumstances, the Alternative Settlement Amount (as defined in Section
2.3) of such Index Warrant. Such Cash Settlement Value or Alternative
Settlement Amount will be payable only in U.S. dollars. In no event shall any
beneficial owner of book-entry Index Warrants or the registered owner of
certificated Index Warrants (each a "Warrantholder") be entitled to receive any
interest on the Cash Settlement Value or Alternative Settlement Amount, and the
Index Warrants will not entitle the Warrantholders to any of the rights of the
holder of any stock underlying the Index or any Successor Index (the
"Underlying Stock") or any other securities. An Index Warrant will not require
or entitle the holder thereof to sell, deliver, purchase
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2
or take delivery of any currency, security or other instrument underlying such
Index Warrant to or from the Company, nor will the Company be under any
obligation to, nor will it, purchase or take delivery, or sell or deliver, any
currency, security or other instrument underlying such Warrant to or from the
Warrantholders.
(b) The Index Warrants will constitute direct, unconditional
and unsecured contractual obligations of the Company and will rank on a parity
with the Company's other unsecured contractual obligations and with the
Company's unsecured and unsubordinated debt.
(c) Forty-five calendar days after the closing of the
offering on October 14, 1994, each registered holder of a Warrant Certificate
will have the option (the "Conversion Option") to convert the form in which
such holder holds his Index Warrants from definitive form to book-entry form
within a forty-five calendar day period (the "Conversion Option Period"). To
utilize the Conversion Option such Warrantholder must deliver or arrange to
deliver his Warrant Certificates to a Participant (as defined in Section
1.7(c)) entitled to execute, clear and settle transactions through the
Depository (as defined in Section 1.7(c)) and through which such
Warrantholder's beneficial interest after electing the Conversion Option will
be maintained, who will then deposit the Index Warrants with the Depository or
its nominee. Ownership of the Index Warrants surrendered under the Conversion
Option will be represented by a single certificate (the "Global Warrant
Certificate"). After the last day of the Conversion Option Period, the
Depository will not be required to accept delivery of Index Warrants
represented by Warrant Certificates ("Certificated Warrants") for exchange for
Index Warrants in book-entry form ("Book-Entry Warrants") but may permit
Warrant Certificates to be so exchanged on a case-by-case basis. It is
anticipated that after the Conversion Option Period, Warrant Certificates
delivered to the Depository in proper form for deposit will be accepted by the
Depository for exchange for Book-Entry Warrants, generally within three to four
New York Business Days after delivery to the Depository. However, there can be
no assurance that such Warrant Certificates will be accepted for exchange.
Further, there can be no assurance, with respect to Warrant Certificates
accepted for exchange, that exchange will occur within that time period.
Certificated Warrants surrendered at any time for exchange for Book-Entry
Warrants may not be exercised or delivered for settlement of transfer until
such exchange has been effected. If the Depository is at any time unwilling or
unable to continue as securities depository for the Index Warrants and a
successor depository is not appointed by the Company within 90 days, the
Company will reissue Warrant Certificates in exchange for the Global Warrant
Certificate. In addition, the Company may at any time and in its sole
discretion determine not to have the Index Warrants available in book-entry
form and, in such event, will
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3
issue Warrant Certificates in exchange for the Global Warrant Certificate. In
any such instance, and in accordance with the provisions of this Agreement,
each Warrantholder will be entitled to have a number of Index Warrants
equivalent to such Warrantholder's beneficial interest in the Global Warrant
Certificate registered in the name of the Warrantholder and will be entitled to
physical delivery of such Index Warrants in definitive form by a Participant.
The provisions of Section 1.7 shall apply only if and when the Conversion
Option is utilized and a Global Warrant Certificate is issued hereunder.
SECTION 1.2 Form, Execution and Delivery of Warrant
Certificates. (a) Certificated Warrants, whenever issued, shall be
represented by Warrant Certificates in registered form substantially in the
form set forth in Exhibit A hereto, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement, and may represent any number of whole Index Warrants. The
Warrant Certificates may have imprinted or otherwise reproduced thereon such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the officers of the Company executing the same may
approve (execution thereof to be conclusive evidence of such approval) and
which are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto, or with any rule or regulation of any stock exchange on which the
Index Warrants may be listed, or of any securities depository, or to conform to
usage. Warrant Certificates shall be signed on behalf of the Company by its
chairman, its president or one of its vice presidents and under its corporate
seal reproduced thereon and attested by its secretary or an assistant
secretary. The signature of any of such officers may be either manual or
facsimile. Typographical and other minor errors or defects in any such
signature shall not affect the validity or enforceability of any Warrant
Certificate that has been duly countersigned and delivered by the Index Warrant
Agent.
(b) In case any officer of the Company who shall have signed
a Warrant Certificate, either manually or by facsimile signature, shall cease
to be such officer before such Warrant Certificate shall have been
countersigned and delivered by the Index Warrant Agent to the Company or
delivered by the Company, such Warrant Certificate nevertheless may be
countersigned and delivered as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company; and the Warrant
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate, although at the date
of the execution of this Agreement any such person was not such an officer.
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4
SECTION 1.3 Warrant Certificates. Each Warrant Certificate,
when signed on behalf of the Company in accordance with Section 1.2, shall be
delivered to the Index Warrant Agent, which shall manually countersign and
deliver the same to or upon the order of the Company. Each Warrant Certificate
shall be dated the date of its countersignature. A Warrant Certificate shall
not be valid for any purpose, and no Index Warrant evidenced thereby shall be
exercisable, unless and until such Warrant Certificate has been countersigned
by the manual signature of the Index Warrant Agent. Such countersignature by
the Index Warrant Agent on any Warrant Certificate signed by the Company in
accordance with Section 1.2 shall be conclusive evidence that the Warrant
Certificate so countersigned has been duly issued hereunder.
SECTION 1.4 Registration of Transfers and Exchanges. (a)
Except as otherwise provided herein or in the Warrant Certificate, the Index
Warrant Agent shall from time to time register ownership and transfers of any
outstanding Warrant Certificates upon the records to be maintained by it for
that purpose (the "Index Warrant Register") at the Index Warrant Agent's Office
(as defined herein), subject to such reasonable regulations as the Company or
the Index Warrant Agent may prescribe, upon surrender thereof, duly endorsed,
or accompanied by a written instrument or instruments of transfer in form
satisfactory to the Index Warrant Agent and the Company duly executed by the
registered holder(s) thereof or by the duly appointed legal representative
thereof or by its duly authorized attorney, such signature to be guaranteed by
a bank or trust company located, or with a correspondent office, in New York
City or by a broker or dealer which is a member of a national securities
exchange, or in any other manner acceptable to the Index Warrant Agent. Upon
any such registration of transfer, a new Warrant Certificate shall be issued to
the transferee(s) and the surrendered Warrant Certificate shall be cancelled by
the Index Warrant Agent.
(b) At the option of a Warrantholder, Warrant Certificates
may be exchanged for other Warrant Certificates, representing a like number of
unexercised Index Warrants, upon surrender to the Index Warrant Agent of the
Warrant Certificates to be exchanged at its offices maintained for such
purposes (the location of which shall be provided to the Company) (the "Index
Warrant Agent's Office"), Attention: Corporate Trust Department, or at the
office of any successor Index Warrant Agent (as provided for in Section 5.4).
Upon surrender of any Index Warrant Certificate for exchange, the Index Warrant
Agent shall cancel such Warrant Certificate, and the Company shall execute, and
the Index Warrant Agent shall countersign and deliver, in accordance with
Sections 1.2 and 1.3, one or more new Warrant Certificates of like tenor and
representing a like number of unexercised Index Warrants.
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5
(c) Warrant Certificates issued upon transfer or exchange
pursuant to Section 1.4(a) or (b) shall be valid obligations of the Company,
evidencing the same obligations of the Company as the Warrant Certificates
surrendered for transfer or exchange, and entitled to the same benefits under
this Agreement as were such Warrant Certificates prior to such surrender.
(d) Except as provided in Section 1.5, no service charge
shall be made for any registration of transfer or exchange of Warrant
Certificates, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Index Warrant Certificates, other than
exchanges pursuant to this Section 1.4 not involving any transfer.
(e) In the event that upon any exercise of Index Warrants
evidenced by a Warrant Certificate the number of Index Warrants exercised shall
be less than the total number of Index Warrants evidenced by such Warrant
Certificate, there shall be issued to the holder thereof or such holder's
assignee a new Warrant Certificate evidencing the number of Index Warrants not
exercised.
SECTION 1.5 Mutilated or Missing Warrant Certificates. (a)
If any Warrant Certificate is mutilated, lost, stolen or destroyed, the Company
may in its discretion execute, and the Index Warrant Agent may countersign and
deliver, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing
an equivalent number of Index Warrants, bearing an identification number not
contemporaneously outstanding, but only (in case of loss, theft or destruction)
upon receipt of evidence satisfactory to the Company and the Index Warrant
Agent of such loss, theft or destruction of such Warrant Certificate and
security or indemnity, if requested, also satisfactory to them. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company or
the Index Warrant Agent may prescribe.
(b) In case such mutilated, lost, stolen or destroyed Index
Warrant Certificate has been or is about to be exercised, or deemed to be
exercised, the Company in its absolute discretion may, instead of issuing a new
Warrant Certificate, direct the Index Warrant Agent to treat the same as if it
had received irrevocable notice of exercise in proper form in respect thereof,
as provided herein, or as being subject to automatic exercise, as the case may
be.
(c) Each new Warrant Certificate issued pursuant to this
Section 1.5 in lieu of any lost, stolen or destroyed Warrant
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6
Certificate shall be an original, additional contractual obligation of the
Company, whether or not, in the case of any lost, stolen or destroyed Index
Warrant Certificate, such Warrant Certificate shall at any time be enforceable
by anyone, and shall be entitled to the same benefits under this Agreement as
the Warrant Certificate that was lost, stolen or destroyed.
(d) Upon the issuance of any new Warrant Certificate in
accordance with this Section 1.5, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Index Warrant Agent) connected therewith.
(e) The provisions of this Section 1.5 are exclusive and
shall preclude (to the extent lawful) any other rights and remedies with
respect to the replacement or payment of mutilated, lost, stolen or destroyed
Warrant Certificates.
(f) All Warrant Certificates surrendered for exercise,
registration of transfer or exchange shall, if surrendered to any person other
than the Index Warrant Agent, be delivered to the Index Warrant Agent and shall
be promptly cancelled by it. The Company may at any time deliver to the Index
Warrant Agent for cancellation any Warrant Certificates previously
countersigned and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Warrant Certificates so delivered shall be
promptly cancelled by the Index Warrant Agent. No Warrant Certificates shall
be countersigned in lieu of or in exchange for any Warrant Certificate
cancelled as provided in this Section 1.5, except as expressly permitted by
this Agreement. All cancelled Warrant Certificates held by the Index Warrant
Agent shall be destroyed unless otherwise directed by the Company.
SECTION 1.6 Registered Holders. Prior to due presentment
for registration of transfer, the Company, the Index Warrant Agent, and any
agent of the Company or the Index Warrant Agent, may deem and treat the person
in whose name a Warrant Certificate shall be registered in the Index Warrant
Register (a "Registered Holder") as the absolute owner of the Index Warrants
evidenced thereby (notwithstanding any notation of ownership or other writing
thereon) for any purpose whatsoever, and as the person entitled to exercise the
rights represented by the Index Warrants evidenced thereby, and neither the
Company nor the Index Warrant Agent, nor any agent of the Company or the Index
Warrant Agent, shall be affected by any notice to the contrary. This Section
1.6 shall be without prejudice to the rights of Warrantholders as described
elsewhere herein.
SECTION 1.7 Global Warrant Certificate. (a) Any Global
Warrant Certificate issued in accordance with this Section 1.7 shall be
substantially in the form set forth in Exhibit B
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7
hereto, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement, and may represent
any number of whole Index Warrants. The Global Warrant Certificate may have
imprinted or otherwise reproduced thereon such letters, numbers or other marks
of identification or designation and such legends or endorsements as the
officers of the Company executing the same may approve (execution thereof to be
conclusive evidence of such approval) and which are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto, or with any rule or
regulation of any stock exchange on which the Index Warrants may be listed or
of any Depository referred to herein, or to conform to usage. The Global Index
Warrant Certificate shall be signed on behalf of the Company upon the same
conditions, in substantially the same manner and with the same effect as the
Warrant Certificates.
(b) The Index Warrant Agent is authorized, from time to time
during the Conversion Option Period, upon receipt of a Global Warrant
Certificate from the Company, duly executed on behalf of the Company, to
countersign such Global Warrant Certificate. The Global Warrant Certificate
shall be manually countersigned and dated the date of its countersignature by
the Index Warrant Agent and shall not be valid for any purpose unless so
countersigned. The Index Warrant Agent shall deliver the Global Index Warrant
Certificate to or upon the order of the Company against receipt of an
appropriate amount of Certificated Warrants (such Certificated Warrants shall
be destroyed or otherwise disposed of in accordance with instructions provided
by the Company). One or more Global Warrant Certificates may be executed by
the Company and delivered to the Index Warrant Agent on or after the date of
execution of this Agreement; provided that only one Global Warrant Certificate
shall be outstanding at any one time.
The Company reserves the right to issue, from time to time
after the date of execution of this Agreement, additional Index Warrants, and
in connection therewith the Global Warrant Certificate may be exchanged for a
new Global Warrant Certificate to reflect the issuance by the Company of such
additional Index Warrants. To effect such an exchange the Company shall
deliver to the Index Warrant Agent a new Global Warrant Certificate duly
executed on behalf of the Company as provided in Section 1.3. The Index
Warrant Agent shall authenticate the new Global Warrant Certificate as provided
in this Section and shall deliver the new Global Warrant Certificate to the
Depository in exchange for, and upon receipt of, the Global Warrant Certificate
then held by the Depository. The Index Warrant Agent shall cancel the Global
Warrant Certificate delivered to it by the Depository, destroy such Global
Warrant Certificate and provide a certificate of destruction to the Company.
<PAGE> 13
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(c) The Global Warrant Certificate will initially be
registered in the name of a nominee of The Depository Trust Company (the
"Depository", which term, as used herein, includes any successor securities
depository selected by the Company). The Index Warrant holdings of the
Participants will be recorded on the books of the Depository. The holdings of
customers of the Participants and the identity of the Warrantholders will be
reflected on the books and records of such Participants and will not be known
to the Index Warrant Agent, the Company or the Depository. The Global Warrant
Certificate will be held by the Depository or its agent.
"Participants" include securities brokers and dealers, banks
and trust companies, clearing organizations and certain other organizations
which are participants in the Depository's book-entry system and, for purposes
of this Agreement, shall also mean participants in the book-entry system of any
successor Depository. Access to the Depository's system is also available to
others such as banks, securities dealers and trust companies ("Indirect
Participants") that clear or maintain a custodial relationship with a
Participant, either directly or indirectly. The Global Warrant holdings of
Warrantholders who are customers of Indirect Participants will be reflected on
the books and records of Participants in the name of the respective Indirect
Participants. The Global Warrant Certificate will be held by the Depository or
its agent. Neither the Company nor the Warrant Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global Warrant
Certificate or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interest.
The Company may from time to time select a new entity to act
as Depository with respect to the Index Warrants and, if such selection is
made, the Company shall promptly give the Index Warrant Agent notice to such
effect identifying the new Depository, and the Global Warrant Certificate shall
be delivered to the Index Warrant Agent and shall be transferred to the new
Depository as provided below as promptly as possible. Appropriate changes may
be made in the forms of the Global Warrant Certificate, the notice of exercise
and the related notices to be delivered in connection with an exercise to
reflect the selection of the new Depository.
(d) Except as otherwise provided herein or in the Global
Warrant Certificate, the Index Warrant Agent shall from time to time register
the transfer of the Global Warrant Certificate in its records (which may be
maintained electronically), subject to such reasonable regulations as the
Company or the Index Warrant Agent may prescribe, only to the Depository, to
another nominee of the Depository, to a successor Depository or to a nominee of
a successor Depository, upon surrender of such Global Warrant Certificate to
the Warrant
<PAGE> 14
9
Agent's Office, or at the office of any successor Warrant Agent (as provided in
Section 5.4), duly endorsed, or accompanied by a written instrument or
instruments of transfer in form satisfactory to the Index Warrant Agent and the
Company, duly executed by the registered holder thereof or by the duly
appointed legal representative thereof, or by its duly authorized attorney,
such signature to be guaranteed by a bank or trust company with a correspondent
officer the New York City or by a member of a United States national securities
exchange, or in any other manner acceptable to the Index Warrant Agent. Upon
any such registration of transfer, a new Global Warrant Certificate of like
tenor and representing a like number of unexercised Index Warrants shall be
issued to the transferee and the surrendered Global Warrant Certificate shall
be cancelled by the Index Warrant Agent.
ARTICLE II
DURATION AND EXERCISE OF INDEX WARRANTS
SECTION 2.1 Duration of Index Warrants; Minimum and Maximum
Exercise Amounts; Notice of Exercise. (a) Subject to the limitations
described in this Article II, each Index Warrant may be irrevocably exercised
in whole but not in part on any New York Business Day from the date of issuance
until 3:00 P.M., New York City time on the earlier of (i) the New York Business
Day immediately preceding February 26, 1996 (the "Expiration Date") and (ii)
the last New York Business Day prior to the Delisting Date. There is no
exercise price payable by any Warrantholder in connection with the exercise of
an Index Warrant. Each Index Warrant may be exercised by (a) transfer of the
related Index Warrants on the records of the Depository free to the Index
Warrant Agent Participant Account (Account No. 2659), or such other account of
the Index Warrant Agent at the Depository as the Index Warrant Agent shall
specify (the "Index Warrant Account"), in the case of Book-Entry Warrants, or
surrender of the Warrant Certificate or Certificates to the Index Warrant Agent
at the Index Warrant Agent's Office, in the case of Certificated Warrants and
(b) delivery of written notice (an "Exercise Notice") to the Index Warrant
Agent executed by the Participant acting on behalf of the beneficial owner of
such Index Warrant, in the case of Book-Entry Warrants, or from the Registered
Holder of such Index Warrants, in the case of Certificated Warrants; provided,
however, that Exercise Notices are subject to rejection by the Index Warrant
Agent as provided herein.
(b) The Exercise Notice, which shall be irrevocable, shall be
in substantially the form set forth in Exhibit A-1 hereto in the case of
Certificated Warrants, and in Exhibit B-1 hereto in the case of Book-Entry
Warrants, and shall be in writing, duly completed and executed, and delivered
to the Index Warrant Agent (which shall include facsimile transmissions,
followed promptly by an executed original, but the date and time
<PAGE> 15
10
of receipt of such transmission shall be the effective date and time of such
notice) at its address as set forth in such Exercise Notice or at such other
address as the Index Warrant Agent may specify from time to time. An
irrevocable Exercise Notice may be conditioned by the Warrantholder pursuant to
the Limit Option as set forth in Section 2.2(f), but shall otherwise be
unconditional.
(c) As used herein, "New York Business Day" means any day
other than a Saturday or Sunday or a day on which either the New York Stock
Exchange or the American Stock Exchange (the "AMEX") is not open for securities
trading or commercial banks in New York City are authorized or required by law
or executive order to remain closed.
(d) Except as provided in Section 2.2(b), the Index Warrant
Agent and the Company shall be entitled to rely conclusively on any Exercise
Notice received by them with no duty of inquiry by either of them.
SECTION 2.2 Exercise and Delivery of Index Warrants. (a)
Except in the case of automatic exercise as provided in Section 2.3, and
subject to the Limit Option provided in Section 2.2(f), the exercise date (the
"Exercise Date") for an Index Warrant shall be (i) if the Index Warrant Agent
receives delivery of such Index Warrant and an Exercise Notice in proper form
at or prior to 3:00 P.M., New York City time on a New York Business Day, then
such New York Business Day and (ii) otherwise the New York Business Day next
succeeding the day on which the Index Warrant Agent receives such Index Warrant
and such Exercise Notice. The "Valuation Date" for an Index Warrant will be
the first Index Calculation Day following the Exercise Date, subject to
postponement upon the occurrence of an Extraordinary Event or an Exercise
Limitation Event pursuant to Section 2.10. "Index Calculation Day" means any
day on which the Index or any Successor Index (as defined herein) is calculated
and published.
(b) Following receipt of the Index Warrants and the Exercise
Notice related to such Index Warrants, the Index Warrant Agent shall:
(i) promptly (1) in the case of Certificated
Warrants, determine whether the Exercise Notice has been duly completed
and is in proper form duly executed by the Registered Holder thereof or
by the duly appointed legal representative thereof or by a duly
authorized attorney and (2) in the case of Book-Entry Warrants,
determine whether such Exercise Notice has been duly completed and is
in proper form and if the Index Warrant Agent determines that the
Exercise Notice has not been duly completed or is not in proper form
or, in the case of Certificate Warrants, has not been so executed, the
Index Warrant Agent promptly (X) shall reject such Exercise Notice and
shall send to the entity
<PAGE> 16
11
that delivered such Exercise Notice a notice of rejection substantially
in the form set forth in Exhibit D-1 or Exhibit D-2 hereto, as
applicable, and, in the case of Certificated Warrants, shall return to
the Registered Holder that submitted such Exercise Notice, by first
class mail, the Warrant Certificates evidencing such Index Warrants or,
in the case of Book-Entry Warrants, shall redeliver such Index Warrants
free through the facilities of the Depository to the account from which
they were transferred to the Index Warrant Agent and, in either case,
(Y) shall not take the actions required by clauses (ii)-(viii) below
with respect to such Exercise Notice or the related Index Warrants;
provided, however, that the Index Warrant Agent shall deliver a copy of
the Exercise Notice relating to such Index Warrants to the Company, if
the Company so requests, as required by Section 2.2(b)(viii) below and
the Company may waive any defect in the form of such Exercise Notice;
(ii) notify the Company by 5:00 p.m., New York City
time, on the Exercise Date for such Index Warrants of (A) the total
number of Index Warrants covered by such Exercise Notice, (B) the
number of such Index Warrants subject to the Limit Option
("Contingently Tendered Warrants") and (C) the number of such Index
Warrants not subject to the Limit Option;
(iii) obtain the Spot Index from the Calculation
Agent no later than 5:00 p.m., New York City time, on the applicable
Valuation Date (or, if such Valuation Date is not a New York Business
Day, on the next succeeding New York Business Day);
(iv) if any of the Index Warrants covered by such
Exercise Notice constitute Contingently Tendered Warrants, the Index
Warrant Agent shall, by 5:00 p.m., New York City time, on the
applicable Valuation Date (or, if such Valuation Date is not a New York
Business Day, on the next succeeding New York Business Day) (A) obtain
from the Calculation Agent the Limit Option Reference Index (as defined
in Section 2.2(f); (B) determine in accordance with Section 2.2(f)
whether such Contingently Tendered Warrants will be subject to exercise
after giving effect to the Limit Option and, if such Warrants will not
be subject to exercise, send to the Registered Holder, in the case of
Certificated Warrants, or to the Participant that submitted such
Exercise Notice, in the case of Book-Entry Warrants, a notice of
rejection substantially in the form set forth in Exhibit E hereto with
respect to such Index Warrants and return to the Registered Holder that
submitted such Exercise Notice, by first class mail, the Warrant
Certificates evidencing such Index Warrants, or, in the case of
Book-Entry Warrants, redeliver the Warrants free through the facilities
of the Depository to the account from which they
<PAGE> 17
12
were transferred to the Index Warrant Agent; and (C) notify the Company
as to whether such Contingently Exercised Warrants will be subject to
exercise;
(v) by 5:00 p.m., New York City time, on the second
New York Business Day after the applicable Exercise Date (A) determine
the sum of (1) the number of such Index Warrants not subject to the
Limit Option (i.e., the number of Index Warrants determined pursuant to
clause (ii)(C) above) plus (2) the number of such Index Warrants that
are Contingently Exercised Index Warrants that will be subject to
exercise notwithstanding the Limit Option (i.e., the number of Index
Warrants so identified pursuant to clause (iv)(B) above) (all of such
Warrants, the "Exercised Warrants") and (B) notify the Company of the
total number of Exercised Warrants so determined (if such number is
zero, the Warrant Agent shall not take the actions required by clauses
(vi), (vii) and (viii) with respect to such Exercise Notice or the
related Index Warrants);
(vi) obtain the Cash Settlement Value of the
Exercised Warrants as of their Valuation Date from the Calculation
Agent, which shall be calculated in the manner set forth in Section
2.2(d) by no later than 5:00 p.m., New York City time, on the
applicable Valuation Date (or, if such Valuation Date is not a New York
Business Day, on the next succeeding New York Business Day);
(vii) notify the Company by 5:00 p.m., New York
City time, on the Valuation Date (or, if such Valuation Date is not a
New York Business Day, on the next succeeding New York Business Day) of
the aggregate Cash Settlement Value payable in respect of the exercise
of such Exercised Warrants, and send notices of confirmation
substantially in the form included in Exhibit C-1 or Exhibit C-2
hereto, as the case may be, to the appropriate Registered Holder or
Participant specifying therein the reference number assigned by the
Index Warrant Agent to each accepted Exercise Notice; and
(viii) promptly deliver a copy of each Exercise
Notice to the Company upon request of the Company and advise the
Company of such other matters relating to the Exercised Warrants as the
Company shall reasonably request. Any notice to be given to the
Company by the Warrant Agent pursuant to this Section 2.2 or Section
2.3 shall be by telephone (promptly confirmed in writing) or facsimile.
Except in the case of Warrants subject to automatic exercise
and Warrants that upon exercise entitle the holder thereof to receive an
Alternative Settlement Amount in lieu of the Cash Settlement Value, if on any
Valuation Date the Cash Settlement Value for any Warrants then exercised would
be zero, then, in such case, the exercise of such Warrants shall be
<PAGE> 18
13
ignored and either (i) for Certificated Warrants, the Warrant Certificate
evidencing such Warrants shall be promptly returned by the Warrant Agent to the
Registered Holder by first class mail at the Calculation Agent's expense or
(ii) for Book-Entry Warrants, the Warrants will be transferred by the Warrant
Agent back to the account from which they were submitted to the Warrant Agent
free on the records of the Depository and, in either case, such Warrantholder
shall be permitted to exercise such Warrants until 3:00 p.m., New York City
time, on the earlier of (i) the New York Business Day immediately preceding the
Expiration Date, and (ii) the last New York Business Day prior to the Delisting
Date.
(c) Except in the case of Index Warrants subject to automatic
exercise, provided that the Company has made adequate funds available to the
Index Warrant Agent in a timely manner, which shall (A) in the case of Warrants
not held through the facilities of the Depository, in no event be later than
3:00 p.m., New York City time, on the fifth New York Business Day following a
Valuation Date (or, if the Valuation Date is not a New York Business Day, on
the fifth New York Business Day following the New York Business Day next
succeeding the Valuation Date) and (B) in the case of Warrants held through the
facilities of the Depository, in no event be later than 3:00 p.m., New York
City time, on the sixth New York Business Day following a Valuation Date (or,
if the Valuation Date is not a New York Business Day, on the sixth New York
Business Day following the New York Business Day next succeeding the Valuation
Date) (the "Settlement Date"), the Index Warrant Agent will be responsible for
making payment available either (i) for Certificated Warrants, to each
appropriate Registered Holder in the form of a cashier's check or an official
bank check, or (in the case of payments of $100,000 or more) by wire transfer
to a U.S. Dollar account maintained by such Registered Holder in the United
States (at such Registered Holder's election as specified in the applicable
Exercise Notice), after 3:00 p.m., New York City time, but prior to the close
of business, on the first New York Business Day immediately succeeding such
Settlement Date or (ii) for Book-Entry Warrants, to each appropriate
Participant in the form of a cashier's check or an official bank check, or (in
the case of payments of $100,000 or more) by wire transfer to a U.S. Dollar
account maintained by such Participant in the United States (at the
Participant's election as specified in the Exercise Notice), after 3:00 p.m.,
New York City time, but prior to the close of business, on the first New York
Business Day immediately succeeding such Settlement Date.
(d) The "Cash Settlement Value" of an exercised Warrant will
be calculated by the Calculation Agent on the Valuation Date and will equal an
amount in U.S. Dollars equal to the quotient (rounded down to the nearest cent)
of (A) the amount, if any, by which the Spot Index for the applicable Valuation
Date exceeds the Strike Index divided by (B) 2.5,
<PAGE> 19
14
divided by (C) the fixed Hong Kong dollar/U.S. dollar exchange rate of
H.K.$7.7278 per U.S.$1.00. If the Strike Index is equal to or exceeds the Spot
Index for such Valuation Date, the Cash Settlement Value will be zero.
The "Strike Index" is 463.55.
Subject to the provisions of Section 2.5, the "Spot Index" for
any date means the closing level, on such date, of the Index as compiled and
published by the AMEX.
References in this Agreement to "U.S. Dollars" or "$" are to
the lawful currency of the United States of America. References to "Hong Kong
dollar" or "H.K.$" are to the lawful currency of Hong Kong.
(e) In the event a Global Warrant Certificate is issued, the
Warrant Agent shall cause its records, which may be kept electronically, to be
marked to reflect the reduction in the number of Index Warrants represented by
the Global Warrant Certificate by the number of Index Warrants that were
delivered to the Index Warrant Account and for which payment has been made as
provided in Section 2.2(c) promptly after such delivery and payment. Absent
manifest error, the Index Warrant Agent's records shall be conclusive evidence
of such matters.
(f) Except in the case of an automatic exercise (as described
in Section 2.3 below) or cancellation or with respect to payments of any
Alternative Settlement Amount, the related Exercise Notice may specify that
such exercise be subject to the condition that the Spot Index used to determine
the Cash Settlement Value of such Index Warrants not be 5% or more lower than
the Limit Option Reference Index for such Warrants. "Limit Option Reference
Index", with respect to any Contingently Tendered Warrants, means the closing
level of the Index on the New York Business Day when such Exercise Notice has
been received (or shall be deemed to have been received) (or, if such New York
Business Day is not an Index Calculation date, on the Index Calculation Date
immediately preceding such New York Business Day). The option of a
Warrantholder to condition an exercise of Index Warrants as provided in this
Section 2.2(f) is herein referred to as the "Limit Option". If a Warrantholder
elects the Limit Option in connection with any exercise of Index Warrants, the
following provisions shall apply:
(i) To be valid, such election must be specified in
the related Exercise Notice. Each of the Index Warrant Agent and the
Company shall be entitled to rely conclusively on such Exercise Notice,
as received by the Index Warrant Agent, in determining whether such
election has been validly made. In connection with any exercise of 500
or more Index Warrants, a Warrantholder may elect to subject only a
portion of such Index Warrants to the Limit Option; provided
<PAGE> 20
15
that the number of such Index Warrants not subject to the Limit Option
shall in each case not be less than 500. Registered Holders and
Participants shall be required to certify that the number of Index
Warrants exercised on behalf of any Warrantholder pursuant to the
related Exercise Notice that are subject to the Limit Option is an
amount that is not less than 500.
(ii) The Limit Option Reference Index shall be
obtained by the Index Warrant Agent from the Calculation Agent and the
Calculation Agent's determination of the Limit Option Reference Index
shall be conclusive and binding for all purposes relating to such
exercise.
(iii) In the event that the Spot Index on the
Valuation Date for such Index Warrants is 5% or more lower than the
Limit Option Reference Index for such Warrants, such Index Warrants (A)
shall not be subject to exercise and shall be treated for all purposes
of this Agreement and the Warrant Certificates and Global Warrant
Certificate as if the related Exercise Notice had never been received
by the Warrant Agent, and (B) shall not constitute "Exercised Warrants"
for purposes of Section 2.2(b). If such Spot Index is not 5% or more
lower than such Limit Option Reference Index, such Index Warrants shall
be subject to exercise as provided in this Section 2.2 and shall be
deemed to be "Exercised Warrants" for such purposes. The Index Warrant
Agent's determination shall be conclusive and binding for all purposes
relating to such Index Warrants.
(iv) Once elected by a Warrantholder in connection
with an exercise of Index Warrants, the Limit Option will continue to
apply, on the basis of the Limit Option Reference Index as initially
determined for such Index Warrants, even if the Valuation Date for such
Index Warrants is postponed, except when such Valuation Date is
postponed until the Expiration Date or the Delisting Date. Pursuant to
the Limit Option, such Warrants will either (i) be exercised on a
delayed basis if the applicable Spot Index is not less than the Limit
Option Reference Index by 5% or more, or (ii) be excluded from being
exercised if, on any applicable postponed Valuation Date, the
applicable Spot Index is less than the Limit Option Reference Index by
5% or more.
(g) The Company has appointed Lehman Brothers Inc., and
Lehman Brothers Inc. accepts such appointment, to be the Company's Calculation
Agent to make certain calculations, as provided herein. The Calculation Agent
shall act as an independent expert and not as an agent of the Company, and,
unless otherwise provided by this Agreement, its calculations under this
Agreement shall, absent manifest error, be final and
<PAGE> 21
16
binding on the Company, the Index Warrant Agent, the Warrantholders, the
Registered Holders and any Participant. Any such calculations will be made
available to a Warrantholder for inspection at the Index Warrant Agent's
Office.
The Company agrees, for the benefit of the Warrantholders from
time to time, that there shall at all times be a Calculation Agent hereunder
until all the Index Warrants are no longer outstanding or until moneys for the
payment of all outstanding Index Warrants, if any, shall have been paid to the
Index Warrant Agent, whichever occurs earlier. Resignation, removal and
appointment of the Calculation Agent shall be in accordance with the procedures
set forth for the resignation, removal and appointment of the Index Warrant
Agent, as provided in Section 5.4, except that a successor Calculation Agent
need not be a banking institution with offices south of Chambers Street in the
Borough of Manhattan, The City of New York, and may only be appointed if such
successor has been nominated by the Company.
SECTION 2.3 Automatic Exercise of Warrants. All Warrants
for which the Warrant Agent has not received an Exercise Notice in proper form
by 3:00 p.m., New York City time, on (i) the New York Business Day immediately
preceding the Expiration Date, or (ii) the last New York Business Day prior to
the Delisting Date or for which the Warrant Agent has received an Exercise
Notice in proper form but with respect to which timely delivery of the relevant
Index Warrants has not been made, and which have not been canceled prior to
such time, together with any Index Warrants the Valuation Date for which has at
such time been postponed pursuant to Section 2.10 will be deemed automatically
exercised on the Expiration Date or Delisting Date, as the case may be, without
any requirement of delivery of an Exercise Notice or Index Warrants to the
Index Warrant Agent. Accordingly, the Exercise Date for such Index Warrants
shall be the Expiration Date or the Delisting Date, as the case may be, or, if
such date is not a New York Business Day, the next succeeding New York Business
Day and the Valuation Date for such Index Warrants shall be the first Index
Calculation Day following the Exercise Date for such Index Warrants.
"Delisting Date" shall mean the effective date on which the Index Warrants are
delisted from, or permanently suspended from trading (within the meaning of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission thereunder) on, the AMEX (or any
successor Self-Regulatory Organization) and not accepted at the same time for
listing on another Self-Regulatory Organization; provided, however, that if the
Company first receives notice of the delisting or suspension of the Index
Warrants on the same day on which such Index Warrants are delisted or
suspended, such day will be deemed the Delisting Date for purposes of this
Agreement. "Self-Regulatory Organization" means a self-regulatory organization
on which warrants are traded and the rules of which
<PAGE> 22
17
are filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
The Index Warrant Agent shall by 5:00 p.m., New York City
time, on the Expiration Date or the Delisting Date, as the case may be, notify
the Company of the number of Index Warrants to be automatically exercised on
such day. The Warrant Agent shall (i) obtain from the Calculation Agent on the
applicable Valuation Date the Cash Settlement Value or the Alternative
Settlement Amount on such Valuation Date of the Index Warrants to be
automatically exercised, (ii) by 3:00 p.m., New York City time, on the New York
Business Day next succeeding such Valuation Date, notify the Company of the
Cash Settlement Value or the Alternative Settlement Amount payable in respect
of such exercised Index Warrants and (iii) advise the Company of such other
matters relating to the exercised Index Warrants as the Company shall
reasonably request.
With respect to all Index Warrants, other than Book-Entry
Warrants and Warrants subject to postponed exercise following the occurrence of
an Extraordinary Event or an Exercise Limitation Event, subject to automatic
exercise, the Company shall make available to the Index Warrant Agent, not
later than 3:00 p.m., New York City time, on the fourth New York Business Day
following the Valuation Date (or, if the Valuation Date is not a New York
Business Day, on the fourth New York Business Day following the New York
Business Day succeeding the Valuation Date) for automatically exercised Index
Warrants (in any such case, the "Automatic Settlement Date"), funds in an
amount equal to, and for the payment of, the aggregate Cash Settlement Value or
Alternative Settlement Amount, as applicable, of such Index Warrants. Subject
to such funds having been made available as provided in the preceding
sentence, the Index Warrant Agent will be responsible for making its payment
available to the appropriate Registered Holder in the form of a cashier's check
or an official bank check, or (in the case of payments of $100,000 or more) by
wire transfer to a U.S. Dollar account maintained by such Registered Holder in
the United States (at such Registered Holder's election), after 3:00 p.m., New
York City time, but prior to the close of business, on the Automatic Settlement
Date, against receipt by the Index Warrant Agent at the Index Warrant Agent's
Office from such Registered Holder of its Warrant Certificates.
In the case of Book-Entry Warrants subject to automatic
exercise (other than Warrants subject to postponed exercise following the
occurrence of an Extraordinary Event or an Exercise Limitation Event), the
Company shall make available to the Warrant Agent, not later than 3:00 p.m.,
New York City time, on the Automatic Settlement Date, funds in an amount equal
to, and for the payment of, the aggregate Cash Settlement Value of such Index
Warrants. Subject to such funds having been made available as provided in the
preceding sentence, the Index Warrant Agent
<PAGE> 23
18
will be responsible for making funds available to the Depository, against
receipt of the Global Warrant Certificate, after 3:00 p.m., New York City time,
but prior to the close of business, on the Automatic Settlement Date.
All Index Warrants shall be deemed to be cancelled on and as
of the Automatic Settlement Date and each Warrantholder's rights under the
Index Warrants and hereunder shall thereupon cease, except for the right to
receive the Cash Settlement Value or the Alternative Settlement Amount, as
applicable.
Each Index Warrant will entitle the Warrantholder thereof to
receive the Alternative Settlement Amount in lieu of the Cash Settlement Value
thereof under the circumstances indicated in Section 2.10 or in the event that
such Index Warrants are automatically exercised on the Delisting Date. The
"Alternative Settlement Amount" of an Index Warrant will equal an amount in
U.S. Dollars (rounded down to the nearest cent) which is equal to the amount
"X" calculated using the formula set forth below:
X = I + [T/2 x A/B]
where
I = the Cash Settlement Value of the Warrants determined
as described above, but calculated with a Spot Index
determined by the Calculation Agent which, in the
reasonable opinion of the Calculation Agent, fairly
reflects the value of the stocks which comprise the
Index or any Successor Index on the Cancellation
Date;
T = U.S.$4.50 the initial offering price per Warrant;
A = the total number of days from but excluding the
Cancellation Date for such Warrants to and including
the Expiration Date; and
B = the total number of days from but excluding the date
the Warrants were initially sold to and including
the Expiration Date.
Any such calculations will be made available to a
Warrantholder for inspection at the Warrant Agent's Office. Neither the
Company nor the Calculation Agent shall have any responsibility for good faith
errors or omissions in calculating the Alternative Settlement Amount.
The Company will advise the Index Warrant Agent as soon as
practicable of the date of any expected delisting or permanent suspension of
trading of the Index Warrants and will immediately inform the Index Warrant
Agent after the Company has received
<PAGE> 24
19
notice that such delisting or suspension has occurred, but in no event will
notice of such delisting or suspension be given to the Warrant Agent later than
9:30 a.m., New York City time, on the New York Business Day following the date
that such delisting or suspension occurs.
SECTION 2.4 Limitation of Number of Exercisable Warrants.
Not fewer than 500 warrants may be exercised by a Warrantholder at any one time
except in the case of automatic exercise or cancellation. All exercises of
Index Warrants (other than on the Expiration Date, Delisting Date or the
Cancellation Date) shall be subject, at the Calculation Agent's option, to the
limitation that not more than 1,000,000 Index Warrants in total may be
exercised on any Exercise Date and not more than 250,000 Warrants may be
exercised by or on behalf of any person or entity, either individually or in
concert with any other person or entity, on any Exercise Date. If any New York
Business Day would otherwise, under the terms hereof, be the Exercise Date in
respect of more than 1,000,000 Index Warrants, then upon the Calculation
Agent's exercising such option (by giving notice thereof to the Warrant Agent
not later than 3:00 p.m., New York City time, on the New York Business Day
following such Exercise Date), 1,000,000 of such Index Warrants shall be
deemed exercised on such Exercise Date (selected by the Index Warrant Agent on
a pro rata basis, but if, as a result of such pro rata selection, any
Registered Holders would be deemed to have exercised less than 500 Index
Warrants, then the Index Warrant Agent shall first select additional Index
Warrants of such holder so that no such holder shall be deemed to have
exercised less than 500 Index Warrants), and the remainder of such Index
Warrants (the "Remaining Warrants") shall be deemed exercised on the New York
Business Day following the otherwise applicable Exercise Date (subject to
successive applications of this Section 2.4); provided that any Remaining
Warrant in respect of which an Exercise Notice was delivered on a given
Exercise Date shall be deemed exercised before any other Index Warrants in
respect of which an Exercise Notice was delivered on a later Exercise Date. If
any individual Warrantholder attempts to exercise more than 250,000 Index
Warrants on any Exercise Date, then at the Calculation Agent's election (as
notified to the Index Warrant Agent by giving notice thereof to the Index
Warrant Agent not later than 3:00 p.m., New York City time, on the New York
Business Day following such Exercise Date) 250,000 of such Index Warrants shall
be deemed exercised on such Exercise Date and the remainder shall be deemed
exercised on the New York Business Day following the otherwise applicable
Exercise Date (subject to successive applications of this Section 2.4).
SECTION 2.5 Discontinuance or Modification of the Index. (a)
In the event that the Index is not calculated and publicly announced by the
AMEX on a Valuation Date but is calculated and publicly announced by another
person or party not affiliated with the Company and acceptable to the
Calculation
<PAGE> 25
20
Agent (the "Third Party"), the applicable Cash Settlement Value shall
nevertheless be calculated by reference to the value of the closing quotation
for the Index so announced by the Third Party.
In the event that prior to a Valuation Date the AMEX or the
Third Party makes a material change in the formula for, or the method of,
calculating the Index, the Calculation Agent shall make such calculations as
may be required to determine the applicable Cash Settlement Value using the
formula and method of calculating the Index as was in effect prior to such
change or modification.
If on a Valuation Date either the AMEX or any Third Party
discontinues publication of the Index and publishes a successor or substitute
index that the Calculation Agent determines to be comparable to the Index (any
such index being a "Successor Index"), the Calculation Agent shall determine
the Spot Index for any date thereafter based on the closing level of the
Successor Index on such date. If the AMEX and/or any Third Party discontinues
publication of the Index and/or any Successor Index, the Company will cause the
Calculation Agent to determine the applicable Cash Settlement Value based on
the formula and method used in calculating the Index or any Successor Index as
in effect on the date the Index or such Successor Index was last published.
(b) If calculation or publication of the Index or a Successor
Index is changed, modified, discontinued or suspended, as provided in this
Section 2.5, then the Calculation Agent shall promptly notify the Index Warrant
Agent, and the Index Warrant Agent shall in turn promptly notify the
Warrantholders, of such change, modification, discontinuance or suspension and
of any modification or adjustment to be made with respect to calculation of the
Cash Settlement Value or Alternative Settlement Amount, as applicable.
(c) The Calculation Agent will have no responsibility for
good faith errors or omissions in calculating or disseminating information
regarding the Index, any Successor Index, adjustments or calculations by the
Calculation Agent (as provided above) in order to arrive at a calculation of a
stock index comparable to the Index or any Successor Index, or the Cash
Settlement Value or the Alternative Settlement Amount, as applicable.
SECTION 2.6 Covenant of the Company. The Company covenants,
for the benefit of the Warrantholders, that (i) it will cause the Index
Warrants to be listed on the AMEX and (ii) until the Expiration Date, it will
not seek the delisting of the Index Warrants from, or permanent suspension of
their trading on the AMEX unless prior to such delisting or suspension the
Index Warrants shall have been listed, and shall be accepted for
<PAGE> 26
21
trading pursuant to the rules of another Self-Regulatory Organization.
SECTION 2.7 Return of the Global Warrant Certificate. At
such time as all of the Index Warrants have been exercised, deemed
automatically exercised or otherwise cancelled, the Index Warrant Agent shall
return the cancelled Global Warrant Certificate to the Company.
SECTION 2.8 Return of Moneys Held Unclaimed for Two Years.
Any moneys deposited with or paid to the Index Warrant Agent for the payment of
the Cash Settlement Value or the Alternative Settlement Amount of any Index
Warrants and not applied but remaining unclaimed for two years after the date
upon which such Cash Settlement Value or the Alternative Settlement Amount
shall have become due and payable, shall be repaid by the Index Warrant Agent
to the Company, and the holder of such Index Warrants shall thereafter look
only to the Company for any payment which such Warrantholder may be entitled to
collect and all liability of the Index Warrant Agent with respect to such
moneys shall thereupon cease; provided, however, that the Index Warrant Agent,
before making any such repayment, may at the expense of the Company notify, in
the case of Book-Entry Warrants, the Participants concerned, or, in the case of
Certificated Warrants, the Warrantholders concerned, that said moneys have not
been so applied and remain unclaimed and that after a date named therein any
unclaimed balance of said moneys then remaining will be returned to the
Company.
SECTION 2.9 Designation of Agent for Receipt of Notice. The
Company may from time to time designate in writing to the Index Warrant Agent a
designee for receipt of all notices to be given by the Index Warrant Agent
pursuant to this Article II and all such notices thereafter shall be given in
the manner herein provided by the Index Warrant Agent to such designee.
SECTION 2.10 Extraordinary Events and Exercise Limitation
Events. (a) If the Company determines that, on a Valuation Date with respect
to any Index Warrant, an Extraordinary Event has occurred and is continuing,
then the Cash Settlement Value in respect of an exercise shall be calculated on
the basis that the Valuation Date shall be the next Index Calculation Day on
which there is no Extraordinary Event or Exercise Limitation Event; provided,
that, if the Valuation Date has not occurred on or prior to the Expiration Date
or the Delisting Date, the Warrantholder will receive the Alternative
Settlement Amount in lieu of the Cash Settlement Value which shall be
calculated as if the Index Warrant had been cancelled on the Expiration Date or
the Delisting Date, as the case may be. The Company shall promptly give notice
to Warrantholders, by publication in a United States newspaper with a national
circulation (currently expected to be The Wall Street Journal), if an
Extraordinary Event shall have occurred.
<PAGE> 27
22
"Extraordinary Event" means any of the following events:
(i) a suspension or absence of trading on the Honk
Kong Stock Exchange Ltd. (the "HKSE") of all the Underlying Stocks
which then comprise the Index or a Successor Index; or
(ii) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or
any other U.S. or non-U.S. governmental authority which would make it
unlawful for the Company to perform any of its obligations under this
Agreement or the Warrants; or
(iii) any outbreak or escalation of hostilities or
other national or international calamity or crisis (including, without
limitation, natural calamities which in the opinion of the Company may
materially and adversely affect the economy of Hong Kong or the trading
or securities generally on the HKSE) which has or will have a material
adverse effect on the ability of the Company to perform its obligations
under the Warrants or to modify the hedge of its position with respect
to the Index.
For the purposes of determining whether an Extraordinary Event
has occurred: (1) a limitation on the hours or number of days of trading will
not constitute an Extraordinary Event if it results from an announced change in
the regular business hours of the HKSE, and (2) an "absence of trading", on the
HKSE will not include any time when the HKSE itself is closed for trading under
ordinary circumstances.
If the Calculation Agent determines that an Extraordinary
Event has occurred and is continuing, and if the Extraordinary Event is
expected by the Calculation Agent to continue, the Company may immediately
cancel the Index Warrants by notifying the Index Warrant Agent of such
cancellation (the date such notice is given being the "Cancellation Date"), and
each Warrantholder's rights under the Index Warrants and this Agreement shall
thereupon cease; provided, that each Index Warrant shall be exercised (even if
such Index Warrant would not otherwise be exercisable on such date because of
the Limit Option) on the basis that the Exercise Date for such Index Warrant
shall be the Cancellation Date and the holder of each such Index Warrant will
receive, in lieu of the Cash Settlement Value of such Index Warrant, the
Alternative Settlement Amount thereof.
(b) If the Company determines that, on a Valuation Date with
respect to any Index Warrant, an Exercise Limitation Event has occurred and is
continuing, then the Cash Settlement
<PAGE> 28
23
Value in respect of an exercise shall be calculated on the basis that the
Valuation Date shall be the next Index Calculation Day on which there is no
Exercise Limitation Event or Extraordinary Event; provided, that, if the
Valuation Date has not occurred on or prior to the Expiration Date or the
Delisting Date, the Warrantholder will receive the Alternative Settlement
Amount in lieu of the Cash Settlement Value which shall be calculated as if the
Index Warrants had been cancelled on the Expiration Date or the Delisting Date,
as the case may be. The Company shall promptly give notice to Warrantholders,
by publication in a United States newspaper with a national circulation
(currently expected to be The Wall Street Journal), if an Exercise Limitation
Event shall have occurred.
"Exercise Limitation Event" means either of the following
events:
(i) a suspension or absence of trading on the HKSE
of (A) 20% or more of the Underlying Stocks which then comprise the
Index or a Successor Index and/or (B) the stocks of any three of the
four most highly capitalized companies included in the Underlying
Stocks which then comprise the Index or a Successor Index; or
(ii) the suspension or material limitation on the
Hong Kong Futures Exchange Ltd. (the "HK Futures Exchange") or any
other major futures or securities market of trading in futures or
option contracts related to the stock index of the Hang Seng Bank Ltd.,
the Index or a Successor Index.
For the purposes of determining whether an Exercise Limitation
Event has occurred: (1) a limitation on the hours or number of days of trading
will not constitute an Exercise Limitation Event if it results from an
announced change in the regular business hours of the relevant exchange, (2) a
decision to permanently discontinue trading in the relevant contract will not
constitute an Exercise Limitation Event, (3) a suspension in trading in a
futures or options contract on the stock index maintained by the Hang Seng Bank
Ltd., the Index or a Successor Index by the HK Futures Exchange or other major
futures or securities market by reason of (x) a price change violating limits
set by the HK Futures Exchange or such futures or securities market, (y) an
imbalance of orders relating to such contracts or (Z) a disparity in bid and
ask quotes relating to such contracts, will constitute a suspension or material
limitation of trading in futures or options contracts related to the stock
index maintained by the Hang Seng Bank Ltd., the Index, or such Successor
Index, (4) an "absence of trading" on the HK Futures Exchange or a major
futures or securities market on which futures or options contracts related to
the stock index maintained by the Hang Seng Bank Ltd., the Index or a Successor
Index are traded will not include any time when the HK Futures Exchange or such
futures or securities market, as the case may
<PAGE> 29
24
be, itself is closed for trading under ordinary circumstance and (5) the
occurrence of an Extraordinary Event described in clause (i) of the definition
of Extraordinary Event will not constitute, and will supersede the occurrence
of, an Exercise Limitation Event.
With respect to all Warrants as to which the Valuation Date
has been postponed or which have been canceled as described above, the Company
shall make available to the Warrant Agent not later than 3:00 p.m., New York
City time, on the fourth New York Business Day following the date on which the
Cash Settlement Value or Alternative Settlement Amount, as the case may be, has
been calculated (the "Alternative Settlement Date"), funds in an amount equal
to, and for the payment of, the aggregate Cash Settlement Value or Alternative
Settlement Amount, as applicable, of such Warrants. Subject to such funds
having been made available as provided in the preceding sentence, the Warrant
Agent will be responsible for making a payment (i) with respect to the Warrants
as to which the Valuation Date has been postponed as described above and as to
which the Cash Settlement Value is payable, (A) in the case of Certificated
Warrants, to each Registered Holder that has submitted its Warrant Certificate
for exercise or (B) in the case of Book-Entry Warrants, to each appropriate
Participant, after 3:00 p.m., New York City time, but prior to the close of
business on, the Alternative Settlement Date, in an amount equal to the
aggregate Cash Settlement Value of such exercised Warrants, or (ii) with
respect to the Warrants as to which the Valuation Date has been postponed and
has not occurred on or prior to the Expiration Date or the Delisting Date or
with respect to the Warrants which have been cancelled as described above, (A)
in the case of Certificated Warrants, to each Registered Holder that has
submitted its Warrant Certificate or (B) in the case of Book-Entry Warrants, to
the Depository, after 3:00 p.m., New York City time, but prior to the close of
business on, the Alternative Settlement Date, in an amount equal to the
aggregate Alternative Settlement Amount of such exercised Warrants.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANTHOLDERS
SECTION 3.1 Holders of Index Warrants May Enforce Rights.
Notwithstanding any of the provisions of this Agreement, any Warrantholder,
without the consent of the Index Warrant Agent, may, in and for his own behalf,
enforce and may institute and maintain any suit, action or proceeding against
the Company suitable to enforce, or otherwise in respect of, his right to
exercise and to receive payment for his Index Warrants provided in this
Agreement and the Warrant Certificates or Global Warrant Certificate, as the
case may be.
<PAGE> 30
25
SECTION 3.2 Consolidation, Merger or Other Disposition. If
at any time the Company shall consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to another person, then in any such event the
successor or assuming corporation shall succeed to and be substituted for the
Company, with the same effect as if it had been named as the Company herein and
in the Index Warrants; the Company shall thereupon be relieved of any further
obligation hereunder or under the Index Warrants, and, in the event of any such
consolidation, merger, conveyance, transfer or lease, the Company as the
predecessor corporation may thereupon or at any time thereafter be dissolved,
wound up or liquidated. Such successor or assuming corporation shall expressly
assume, by an amendment to this Agreement, executed and delivered to the Index
Warrant Agent, in form satisfactory to such Index Warrant Agent, the due and
punctual payment of any and all amounts payable by the Company pursuant to this
Agreement and the performance of every covenant of this Agreement on the part
of the Company to be performed or observed. Such successor or assuming
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of the Company, a new Warrant Certificate or Global Warrant
Certificate representing the Index Warrants not theretofore exercised, in
exchange and substitution for the Warrant Certificate or Global Warrant
Certificate theretofore issued. Such Warrant Certificate or Global Warrant
Certificate shall in all respects have the same legal rank and benefit under
this Agreement as the Warrant Certificate or Global Warrant Certificate
theretofore issued in accordance with the terms of this Agreement as though
such new Warrant Certificate or Global Warrant Certificate had been issued at
the date of the execution hereof. In any case of any such consolidation,
merger, conveyance, transfer or lease of substantially all of the assets of the
Company, such changes in phraseology and form (but not in substance) may be
made in the new Warrant Certificates or Global Warrant Certificate as may be
appropriate.
The Index Warrant Agent may receive a written opinion of legal
counsel as conclusive evidence that any such consolidation, merger, conveyance,
transfer or lease of substantially all of the assets of the Company complies
with the provisions of this Section 3.2.
ARTICLE IV
CANCELLATION OF INDEX WARRANTS
SECTION 4.1 Cancellation of Index Warrants. In the event the
Company shall purchase or otherwise acquire Index Warrants, such Index Warrants
may, at the option of the Company, (i) in the case of Book-Entry Warrants, be
surrendered free through a Participant for credit to the account of the Index
Warrant Agent maintained at the Depository, and if so credited, the Index
Warrant Agent shall promptly note the cancellation of
<PAGE> 31
26
such Index Warrants by notation on the records of the Index Warrant Agent or
(ii) in the case of Certificated Warrants, delivered to the Index Warrant
Agent, and if so delivered the Index Warrant Agent shall promptly note the
cancellation of such Index Warrants on the records of the Index Warrant Agent.
Such Index Warrants may also, at the option of the Company, be resold by the
Company directly to or through any of its affiliates in lieu of being
surrendered to the Depository. No Warrant Certificate or Global Warrant
Certificate shall be countersigned in lieu of or in exchange for any Index
Warrant which is cancelled as provided herein, except as otherwise expressly
permitted by this Agreement.
SECTION 4.2 Treatment of Warrantholders. The Company, the
Index Warrant Agent and any agent of the Company or the Index Warrant Agent may
deem and treat the person in whose name a Global Warrant Certificate shall be
registered in the records of the Index Warrant Agent as the holder of all
right, title and interest in such Global Warrant Certificate (notwithstanding
any notation of ownership or other writing thereon) for any purpose and as the
person entitled to exercise the rights represented by the Index Warrants
evidenced thereby, and neither the Company nor the Index Warrant Agent, nor any
agent of the Company or the Index Warrant Agent shall be affected by any notice
to the contrary, except that the Index Warrant Agent and the Company shall be
entitled to rely on and act pursuant to instructions of Participants as
contemplated by Article II of this Agreement. This Section 4.2 shall be
without prejudice to the rights of Warrantholders as described elsewhere
herein.
SECTION 4.3 Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Index Warrants;
provided, however, that the Company shall not be required to pay any tax or
other governmental charge which may be payable in respect of any transfer
involving any beneficial or record interest in or ownership interest of any
Index Warrants.
ARTICLE V
CONCERNING THE INDEX WARRANT AGENTSECTION 5.1
SECTION 5.1 Index Warrant Agent. The Company hereby appoints
Citibank, N.A. as Index Warrant Agent of the Company in respect of the Index
Warrants, the Warrant Certificates and the Global Warrant Certificate upon the
terms and subject to the conditions set forth herein, in the Warrant
Certificate and in the Global Warrant Certificate; and Citibank, N.A. hereby
accepts such appointment. The Index Warrant Agent shall have the powers and
authority granted to and conferred upon it in the Warrant Certificate and the
Global Warrant Certificate and hereby and such further powers and authority
acceptable to it to act on behalf of the Company as the Company may hereafter
grant to or confer upon it. All of the terms and provisions with respect to
such powers and authority contained in the Warrant Certificate
<PAGE> 32
27
and the Global Warrant Certificate are subject to and governed by the terms and
provisions hereof.
SECTION 5.2 Conditions of Index Warrant Agent's Obligations.
The Index Warrant Agent accepts its obligations herein set forth upon the terms
and conditions hereof and of the Warrant Certificates and the Global Warrant
Certificate, including the following, to all of which the Company agrees and to
all of which the rights hereunder of the Warrantholders from time to time of
the Index Warrants shall be subject:
(a) The Company agrees promptly to pay the Index
Warrant Agent the compensation to be agreed upon with the Company for
all services rendered by the Index Warrant Agent and to reimburse the
Index Warrant Agent for its reasonable out-of-pocket expenses
(including reasonable attorneys' fees and expenses) incurred by the
Index Warrant Agent without negligence, bad faith or breach of this
Agreement on its part in connection with the services rendered by it
hereunder. The Company also agrees to indemnify the Index Warrant
Agent for, and to hold it harmless against, any loss, liability or
expense (including reasonable attorneys' fees and expenses) incurred
without negligence, bad faith or breach of this Agreement on the part
of the Index Warrant Agent, arising out of or in connection with its
acting as such Index Warrant Agent hereunder or with respect to the
Index Warrants, as well as the reasonable costs and expenses of
defending against any claim of liability in the premises.
(b) In acting under this Agreement and in
connection with the Index Warrants, the Index Warrant Agent is acting
solely as agent of the Company and does not assume any obligation or
relationship of agency or trust for or with any of the Warrantholders
or the registered holder of the Global Warrant Certificate.
(c) The Index Warrant Agent may consult with
counsel satisfactory to it, and the opinion of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion of such counsel.
(d) The Index Warrant Agent shall be protected
and shall incur no liability for or in respect of any action taken or
omitted or thing suffered by it in reliance upon any Warrant
Certificate, Global Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by
the proper parties.
<PAGE> 33
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(e) The Index Warrant Agent, and its officers,
directors and employees, may become the Warrantholder of, or acquire
any interest in, any Index Warrants or other obligations of the
Company, with the same rights that it or they would have if it were not
the Index Warrant Agent hereunder, and, to the extent permitted by
applicable law, it or they may engage or be interested in any financial
or other transaction with the Company and may act on, or as depository,
trustee or agent for, any committee or body of holders of Index
Warrants or other obligations of the Company as freely as if it were
not the Index Warrant Agent hereunder.
(f) The Index Warrant Agent shall not be under any
liability for interest on any moneys at any time received by it
pursuant to any of the provisions of this Agreement, the Warrant
Certificates or the Global Warrant Certificate.
(g) The Index Warrant Agent shall not be under any
responsibility with respect to the validity or sufficiency of this
Agreement or the execution and delivery hereof (except the due
execution and delivery hereof by the Index Warrant Agent) or with
respect to the validity or execution of any Warrant Certificate or the
Global Warrant Certificate (except its countersignature thereof).
(h) The recitals contained herein and in the
Warrant Certificate and the Global Warrant Certificate (except as to
the Index Warrant Agent's countersignature thereon) shall be taken as
the statements of the Company and the Index Warrant Agent assumes no
responsibility for the correctness of the same.
(i) The Index Warrant Agent shall be obligated to
perform only such duties as are herein and in the Warrant Certificate
and the Global Warrant Certificate specifically set forth and no
implied duties or obligations shall be read into this Agreement, the
Warrant Certificate or the Global Warrant Certificate against the Index
Warrant Agent. The Index Warrant Agent shall not be under any
obligation to take any action hereunder likely to involve it in any
expense or liability, the payment of which is not, in its reasonable
opinion, assuThe Index.Warrant Agent shall not be accountable or under
any duty or responsibility for the use by the Company of the Warrant
Certificate or the Global Warrant Certificate countersigned by the
Index Warrant Agent and delivered by it to the Company pursuant to this
Agreement or for the application by the Company of any proceeds from
the sale thereof. The Index Warrant Agent shall have no duty or
responsibility in case of any default by the Company in the performance
of its covenants or agreements contained herein, in the Warrant
Certificate or in the Global Warrant Certificate or in the case of the
<PAGE> 34
29
receipt of any written demand from a holder of an Index Warrant with
respect to such default, except as provided in Section 6.2 hereof,
including, without limiting the generality of the foregoing, any duty
or responsibility to initiate or attempt to initiate any proceedings at
law or otherwise or to make any demand upon the Company.
(j) Unless specifically provided herein or in the
Warrant Certificate, the Global Warrant Certificate, any order,
certificate, notice, request, direction or other communication from the
Company made or given by the Company under any provision of this
Agreement shall be sufficient if signed by its Treasurer or any Vice
President.
SECTION 5.3 Compliance With Applicable Laws. The Index
Warrant Agent agrees to comply with all applicable federal and state laws in
respect of the services rendered by it under this Agreement, including (but not
limited to) the provisions of United States federal income tax laws regarding
information reporting and backup withholding. The Index Warrant Agent
expressly assumes all liability for its failure to comply with such laws,
including (but not limited to) any liability for its failure to comply with any
applicable provisions of United States federal income tax laws regarding
information reporting and backup withholding applicable to it.
SECTION 5.4 Resignation and Appointment of Successor.
(a) The Company agrees, for the benefit of the Warrantholders
from time to time of the Index Warrants, that there shall at all times be an
Index Warrant Agent hereunder until all the Index Warrants are no longer
exercisable.
(b) The Index Warrant Agent may at any time resign as such
agent by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective,
subject to the appointment of a successor Index Warrant Agent and acceptance of
such appointment by such successor Index Warrant Agent, as hereinafter
provided. The Index Warrant Agent hereunder may be removed at any time by the
filing with it of an instrument in writing signed by or on behalf of the
Company and specifying such removal and the date when it shall become
effective. Such resignation or removal shall take effect upon the appointment
by the Company, as hereinafter provided, of a successor Index Warrant Agent
(which shall be a banking institution organized under the laws of the United
States of America, or one of the states thereof and having an office or an
agent's office south of Chambers Street in the Borough of Manhattan, New York
City) and the acceptance of such appointment by such successor Index Warrant
Agent. In the event a successor Index Warrant Agent has not been appointed and
has not accepted its duties within 90 days of the Index Warrant Agent's notice
of resignation, the Index Warrant Agent may apply to any court of competent
jurisdiction for the designation of a
<PAGE> 35
30
successor Index Warrant Agent. The obligation of the Company under Section
5.2(a) shall continue to the extent set forth therein notwithstanding the
resignation or removal of the Index Warrant Agent.
(c) In case at any time the Index Warrant Agent shall resign,
or shall be removed, or shall become incapable of acting, or shall be adjudged
bankrupt or insolvent, or make an assignment for the benefit of its creditors
or consent to the appointment of a receiver or custodian of all or any
substantial part of its property, or shall admit in writing its inability to
pay or meet its debts as they mature, or if a receiver or custodian of it or
all or any substantial part of its property shall be appointed, or if any
public officer shall have taken charge or control of the Index Warrant Agent or
of its property or affairs, for the purpose of rehabilitation, conservation or
liquidation, a successor Index Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with the successor
Index Warrant Agent. Upon the appointment as aforesaid of a successor Index
Warrant Agent and acceptance by the latter of such appointment, the Index
Warrant Agent so superseded shall cease to be Index Warrant Agent hereunder.
(d) Any successor Index Warrant Agent appointed hereunder
shall execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Index Warrant Agent, without any further act, deed or conveyance, shall become
vested with all the authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if originally named as
Index Warrant Agent hereunder, and such predecessor, upon payment of its
charges and disbursements then unpaid, shall thereupon become obligated to
transfer, deliver and pay over, and such successor Index Warrant Agent shall be
entitled to receive, all moneys, securities and other property on deposit with
or held by such predecessor, as Index Warrant Agent hereunder.
(e) Any corporation into which the Index Warrant Agent
hereunder may be merged or converted or any corporation with which the Index
Warrant Agent may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Index Warrant Agent shall be a
party, or any corporation to which the Index Warrant Agent shall sell or
otherwise transfer all or substantially all of the assets and business of the
Index Warrant Agent, provided that it shall be qualified as aforesaid, shall be
the successor Index Warrant Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.
ARTICLE VI
MISCELLANEOUS
<PAGE> 36
31
SECTION 6.1 Modification, Supplementation or Amendment. (a)
This Agreement, the Warrant Certificates and the Global Warrant Certificate may
be modified, supplemented or amended by the Company and the Index Warrant
Agent, without the consent of the Warrantholders, for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein, maintaining the listing of
any Index Warrants on any U.S. national securities exchange or registration of
such Index Warrants under the Exchange Act, permitting the issuance of Index
Warrants in definitive form in accordance with paragraph (a) of Section 1.1,
reflecting the issuance by the Company of additional Index Warrants of the same
issue or reflecting the appointment of a successor Depository in accordance
with paragraph (c) of Section 1.1 or in any other manner which the Company may
deem necessary or desirable and which will not materially adversely affect the
interests of the holders of Index Warrants. Notwithstanding anything in this
Section 6.1 to the contrary, this Agreement may not be amended to provide for
the countersigning by the Index Warrant Agent of Warrant Certificates or Global
Warrant Certificate evidencing in the aggregate in excess of 1,150,000 Index
Warrants unless and until the Index Warrant Agent has received notice from the
AMEX or any successor U.S. national securities exchange or Self-Regulatory
Organization that the additional Index Warrants in excess of 1,150,000 have
been approved for listing on such exchange or Self-Regulatory Organization.
(b) The Company and the Index Warrant Agent may modify or amend this
Agreement, the Warrant Certificates and the Global Warrant Certificate with the
consent of the Warrantholders of not fewer than a majority in number of the
then outstanding unexercised Index Warrants affected by such modification or
amendment, for any purpose; provided, however, that no such modification or
amendment that increases the Strike Index, otherwise changes the determination
of the Cash Settlement Value, or the Alternative Settlement Amount of the Index
Warrants (or any aspects of such determination ) so as to reduce the amount
receivable upon exercise, shortens the period of time during which the Index
Warrants may be exercised, increases the minimum or decreases the maximum
number of Index Warrants that may be exercised by or on behalf of any one
Warrantholder at any one time, or otherwise materially and adversely affects
the exercise rights of the Warrantholders or reduces the number of outstanding
Index Warrants the consent of the Warrantholders of which is required for
modification or amendment of this Agreement, the Warrant Certificates, or the
Global Warrant Certificate may be made without the consent of each
Warrantholder affected thereby.
SECTION 6.2 Notices and Demands to the Company and Index
Warrant Agent. If the Index Warrant Agent shall receive any notice or demand
addressed to the Company by any
<PAGE> 37
32
Warrantholder pursuant to the provisions of the Warrant Certificates or the
Global Warrant Certificate, the Index Warrant Agent shall promptly forward such
notice or demand to the Company.
SECTION 6.3 Addresses for Notices. Any communications from
the Company to the Index Warrant Agent with respect to this Agreement shall be
addressed to Citibank, N.A., 120 Wall Street, 13th Floor, New York, New York
10043 (facsimile: (212) 480-1614) (telephone: (212) 412-6209, Attention:
Corporate Trust Department; any communications from the Index Warrant Agent to
the Company with respect to this Agreement shall be addressed to Lehman
Brothers Holdings Inc., 388 Greenwich Street, New York, New York 10013
(facsimile: (212) 464-6414) (telephone: (212) 526-2000), Attention: Treasurer
(or such other address as shall be specified in writing to the other parties
hereto by the Index Warrant Agent or the Company, respectively).
SECTION 6.4 Notices to Warrantholders. The Company may
cause to have notice given to the holders of Index Warrants by providing the
Index Warrant Agent with a form of notice to be distributed by (i) in the case
of Certificated Warrants, the Index Warrant Agent to the Registered Holders or
(ii) in the case of Book-Entry Warrants, the Depository to Participants in
accordance with the custom and practices of the Depository.
SECTION 6.5 Governing Law. The validity,
interpretation and performance of this Agreement and each Index Warrant issued
hereunder and of the respective terms and provisions thereof shall be governed
by the laws of the State of New York.
SECTION 6.6 Obtaining of Governmental Approvals. The Company
will from time to time use its best efforts to obtain and keep effective any
and all permits, consents and approvals of governmental agencies and
authorities and the AMEX and filings under the United States federal and state
laws, which may be or become requisite in connection with the issuance, sale,
trading, transfer or delivery of the Index Warrants, the Warrant Certificates,
the Global Warrant Certificate and the exercise of the Index Warrants.
SECTION 6.7 Persons Having Rights Under the Index Warrant
Agreement. Nothing in this Agreement expressed or implied and nothing that may
be inferred from any of the provisions hereof is intended, or shall be
construed, to confer upon, or give to, any person or corporation other than the
Company, the Index Warrant Agent, the registered holder of the Global Warrant
Certificate and the Warrantholders any right, remedy or claim under or by
reason of this Agreement or of any covenant, condition, stipulation, promise or
agreement hereof; and all covenants, conditions, stipulations, promises and
agreements in this Agreement contained shall be for the sole and exclusive
benefit of the Company and the Index Warrant Agent and their successors and of
the registered holder of the Global Warrant Certificate and the Warrantholders.
<PAGE> 38
33
SECTION 6.8 Headings. The descriptive headings of the
several Articles and Sections and the Table of Contents of this Agreement are
for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
SECTION 6.9 Counterparts. This Agreement may be executed by
the parties hereto in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original; but all such
counterparts shall together constitute but one and the same instrument.
SECTION 6.10 Inspection of Agreement. A copy of this
Agreement shall be available at all reasonable times at the principal corporate
trust office of the Index Warrant Agent, for inspection by the registered
holder of the Warrant Certificate, Participants, Indirect Participants and
Warrantholders.
<PAGE> 39
34
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Karen M, Muller
-------------------------
Name: Karen M. Muller
Title: Vice President
CITIBANK, N.A.
By: /s/ John W. Reasor
-------------------------
Name: John W. Reasor
Title: Assistant Vice President
LEHMAN BROTHERS INC.
By: /s/ Jeen Pae
-------------------------
Name: Jeen Pae
Title: Associate
<PAGE> 40
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
No. CUSIP No. 524908 18 3
LEHMAN BROTHERS HOLDING INC.
AMEX Hong Kong 30 Index Call Warrants
Expiring February 26, 1996
This Warrant Certificate certifies that , or
registered assigns, is the registered holder of AMEX Hong Kong 30
Index Call Warrants Expiring February 26, 1996 (the "Index Warrants"). Upon
receipt by Citibank, N.A. (the "Warrant Agent") of this Warrant Certificate and
the exercise notice on the reverse hereof (or an exercise notice in
substantially identical form delivered herewith), duly completed and executed,
at the offices of the Warrant Agent in the Borough of Manhattan, New York City,
each Warrant entitles the beneficial owner thereof (each a "Warrantholder") to
receive, subject to the conditions set forth herein and in the Warrant
Agreement, from Lehman Brothers Holdings Inc. (the "Company") the cash
settlement value in U.S. Dollars (the "Cash Settlement Value") equal to the
quotient (rounded down to the nearest cent) of (A) the amount, if any, by which
the closing level of the AMEX Hong Kong 30 Index (the "Index"), as compiled by
and published by the American Stock Exchange, Inc. (the "AMEX") on the
applicable Valuation Date for such Warrant (the "Spot Index") exceeds 463.55
(the "Strike Index") divided by (B)2.5, divided by (C) the fixed Hong Kong
dollar/U.S. dollar exchange rate of H.K.$ 7.7278 per U.S. $1.00; provided
however, that if such amount is less than or equal to zero, then the Cash
Settlement Value will be zero. In no event shall a Warrantholder be entitled
to interest on any Cash Settlement Value.
Subject to the terms of the Warrant Agreement, each Warrant
may be irrevocably exercised, in whole but not in part, at or prior to 3:00
p.m., New York City time, on any New York Business Day from its date of
issuance until 3:00 p.m., New York City time, on the earlier of (i) the New
York Business Day immediately preceding February 26, 1996 (the "Expiration
Date") and (ii) the last New York Business Day prior to the Delisting Date (as
defined herein) at which time the Warrants shall expire and all Warrants
evidenced hereby shall be automatically exercised and otherwise shall be void.
Except in the case of automatic exercise or cancellation of
the Warrants, as set forth herein and in the
<PAGE> 41
2
Warrant Agreement, not fewer than 500 Warrants may be exercised by or on behalf
of any one Warrantholder at any one time.
Except in the case of automatic exercise or cancellation of
the Warrants, all exercises of Warrants shall be subject, at the option of
Lehman Brothers Inc. (the "Calculation Agent"), to the limitation that not more
than 1,000,000 Warrants in total may be exercised on any Exercise Date and not
more than 250,000 Warrants may be exercised by or on behalf of any person or
entity, either individually or in concert with any other person or entity, on
any Exercise Date.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, Lehman Brothers Holdings, Inc. has caused
this instrument to be duly executed.
Dated: LEHMAN BROTHERS HOLDINGS INC.
By
-------------------------------
Title: Chairman of the Board
of Directors and Chief
Executive Officer
[SEAL]
Attest:
By
----------------------------
Title: Assistant Secretary
Countersigned for authentication only
as of the date above written:
Citibank, N.A.,
as Warrant Agent
By
Authorized Officer
<PAGE> 42
[REVERSE]
AMEX Hong Kong 30 Index Call Warrants
Expiring February 26, 1996
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued by the Company pursuant to a Warrant
Agreement, dated as of August 30, 1994 (the "Warrant Agreement"), among the
Company, Citibank, N.A. (the "Warrant Agent") and Lehman Brothers Inc. (the
"Calculation Agent") and are subject to the terms and provisions contained in
the Warrant Agreement, to all of which terms and provisions each Warrantholder
consents by acceptance of this Warrant Certificate and which Warrant Agreement
is hereby incorporated by reference in, and made a part of, this Warrant
Certificate. A copy of the Warrant Agreement is on file at the Warrant Agent.
The Warrants constitute direct, unconditional and unsecured
contractual obligations of the Company and rank on a parity with the Company's
other unsecured contractual obligations and with the Company's unsecured and
unsubordinated debt.
The Warrants will be unsecured obligations of the Company and
rank pari passu with all unsecured and unsubordinated indebtedness for borrowed
money of the Company.
Subject to the provisions hereof and of the Warrant Agreement,
each Warrant may be irrevocably exercised, in whole but not in part, at or
prior to 3:00 p.m., New York City time, on any New York Business Day (as
defined herein) from the date of its issuance until 3:00 p.m., New York City
time on the earlier of (i) the New York Business Day immediately preceding the
Expiration Date and (ii) the last New York Business Day prior to the Delisting
Date. The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate and attached exercise
notice (or an exercise notice in substantially identical form) (such notice, an
"Exercise Notice"), duly completed and executed, to the Warrant Agent's offices
in the Borough of Manhattan, the City of New York (the "Warrant Agent's
Office"), which are, on the date hereof, located at 111 Wall Street, 5th Floor,
New York, New York 10043 (telephone: (212) 657-7269; facsimile: (212)
825-3483). Except in the case of automatic exercise or cancellation of the
Warrants, as set forth herein and in the Warrant Agreement, not fewer than 500
Warrants may be exercised by or on behalf of any one Warrantholder at any one
time. Except in the case of automatic exercise or cancellation of the Warrants,
all exercises of the Warrants shall be subject, at the option of the
Calculation Agent, to the limitation that not more than 1,000,000 Warrants in
total may be exercised on any Exercise Date (as defined in the Warrant
Agreement) and not more than 250,000 Warrants may be exercised by or on behalf
of any person or entity, either individually or in concert with any other
person or entity, on any Exercise Date.
<PAGE> 43
2
The "Cash Settlement Value" of an exercised Warrant shall be
an amount in U.S. Dollars equal to the quotient (rounded down to the nearest
cent) of (A) the amount, if any, by which the Spot Index on the applicable
Valuation Date for such Warrants exceeds the Strike Index divided by (B) 2.5,
divided by (C) the fixed Hong Kong dollar/U.S. dollar exchange rate of
H.K.$7.7278 per U.S. $1.00; provided, however, that if such amount is less than
or equal to zero, then the Cash Settlement Value shall be zero.
The Company has appointed Lehman Brothers Inc. to be its
Calculation Agent to make such calculations as may be required upon the
occurrence of certain circumstances, as described in the Warrant Agreement and
herein, including, without limitation, calculation of the Cash Settlement Value
and under certain circumstances or the Alternative Settlement Amount (as
defined herein), as applicable, of a Warrant. The Calculation Agent shall act
as an independent expert and not as an agent of the Company, and, unless
otherwise provided by the Warrant Agreement, its calculations and
determinations under the Warrant Agreement and this Warrant Certificate shall,
absent manifest error, be final and binding on the Company, the Warrant Agent
and the Warrantholders.
In the event that the Index is not publicly announced by the
AMEX on a Valuation Date, but is publicly announced by another person or party
not affiliated with the Company and acceptable to the Calculation Agent (the
"Third Party"), the applicable Cash Settlement Value shall nevertheless be
calculated by reference to the value of the closing quotation for the Index so
announced by the Third Party.
In the event that prior to a Valuation Date the AMEX or the
Third Party makes a material change in the formula for, or the method of,
calculating the Index, the Calculation Agent shall make such calculations as
may be required to determine the applicable Cash Settlement Value using the
formula and method of calculating the Index as was in effect prior to such
change or modification.
If on a Valuation Date either the AMEX or any Third Party
discontinues publication of the Index and publishes a successor or substitute
index that the Company determines, in its sole discretion, to be comparable to
the Index (any such index being a "Successor Index"), then the Calculation
Agent shall determine the Spot Index for any date thereafter based on the
closing level of the Successor Index on such date. If the AMEX and/or any
Third Party discontinues publication of the Index and/or any Successor Index,
the Company will cause the Calculation Agent to determine the applicable Cash
Settlement Value based on the formula and method used in calculating the Index
or any Successor Index, as in effect on the date the Index or such Successor
Index was last published.
<PAGE> 44
3
The Calculation Agent will have no responsibility for good
faith errors or omissions in calculating or disseminating information regarding
the Index, any Successor Index, adjustments or calculations by the Calculation
Agent in order to arrive at a calculation of a stock index comparable to the
Index or any Successor Index, or the Cash Settlement Value or the Alternative
Settlement Amount, as applicable.
Subject to the Warrant Agreement and this Warrant Certificate,
and except in the case of exercise (whether automatic or by the Exercise
Notice) on the Expiration Date or the Delisting Date, or in the event an
Extraordinary Event or Exercise Limitation Event (as such terms are defined
herein) is declared, the valuation date (the "Valuation Date") for a Warrant
shall be the first Index Calculation Day (as defined in the Warrant Agreement)
following the applicable Exercise Date (as defined in the Warrant Agreement) on
which the Warrant Agent has received the Warrant Certificate representing such
Warrant, with the Exercise Notice, duly completed and executed, at or prior to
3:00 p.m., New York City time (the "Notice Date"), and if the Warrant Agent
shall receive any such Warrant Certificate or Exercise Notice after 3:00 p.m.,
New York City time, on such date, then such Warrant Certificate shall be deemed
to have been received at or prior to 3:00 p.m., New York City time, on the next
succeeding New York Business Day (which shall be considered the Notice Date),
and in such event the Valuation Date shall be the next Index Calculation Day
following the New York Business Day on which the Warrant Agent is deemed to
have received such Warrant Certificate together with the Exercise Notice. Any
Warrant Certificate received after 3:00 p.m., New York City time, on (i) the
New York Business Day immediately preceding the Expiration Date or (ii) the New
York Business Day immediately preceding the effective date on which the
Warrants are delisted from, or permanently suspended from trading (within the
meaning of the Securities Exchange Act of 1934 and the rules and regulations of
the Securities and Exchange Commission thereunder) on, the AMEX and not
accepted at the same time for listing on another Self- Regulatory Organization
(such New York Business Day being the "Delisting Date") shall be deemed not to
have been delivered and the related Exercise Notice shall be void and of no
effect; provided, however, that if the Company first receives notice of the
delisting or suspension of the Warrants on the same day on which such Warrants
are delisted or suspended, such day will be deemed the Delisting Date for
purposes of the Warrant Agreement and this Warrant Certificate.
If the Exercise Notice is not rejected as provided in the
Warrant Agreement, then the Calculation Agent will determine the Cash
Settlement Value of the exercised Warrants in accordance with the terms of the
Warrant Agreement. Except in the case of Warrants subject to automatic
exercise and Warrants that upon exercise entitle the holder thereof to receive
an Alternative
<PAGE> 45
4
Settlement Amount in lieu of the Cash Settlement Value, if on any Valuation
Date the Cash Settlement Value for any Warrants then exercised would be zero,
then in such case, the exercise of such Warrants shall be ignored and the
Warrant Certificate evidencing such Warrants will be promptly returned by the
Warrant Agent to the registered holder of the Warrant by first class mail at
the Calculation Agent's expense and such holder shall be permitted to
re-exercise such Warrants prior to the Expiration Date or the Delisting Date.
Except in the case of Warrants subject to automatic exercise
and for Warrants that upon exercise entitle the holder thereof to receive an
Alternative Settlement Amount in lieu of the Cash Settlement Value, provided
the Company will make adequate funds available to the Warrant Agent no later
than 3:00 p.m., New York City time, on the fifth New York Business Day
following the Valuation Date for such Warrants (or, if the Valuation Date is
not a New York Business Day, on the fifth New York Business Day following the
New York Business Day next succeeding the Valuation Date) (the "Settlement
Date"), the Warrant Agent shall make its payment available to each appropriate
registered holder in the form of a cashier's check or an official bank check,
or (in the case of payments of at least $100,000) by wire transfer to a U.S.
dollar bank account maintained by such holder in the United States (at the
holder's election as specified in the Exercise Notice), on the first New York
Business Day immediately succeeding such Settlement Date. Such payment shall
be in an amount equal to the aggregate Cash Settlement Value of the exercised
Warrants.
All Warrant Certificates for which the Warrant Agent has not
received the Exercise Notice in proper form by 3:00 p.m., New York City time,
on (i) the New York Business Day immediately preceding the Expiration Date or
(ii) the last New York Business Day prior to the Delisting Date, as the case
may be, or for which the Warrant Agent has received an Exercise Notice in
proper form but with respect to which timely delivery of the relevant Warrant
Certificate has not been made, and which have not been canceled prior to such
time, will be deemed automatically exercised on such date without any
requirement of an Exercise Notice to the Warrant Agent. The Exercise Date for
such Warrants shall be the Expiration Date or the Delisting Date, as the case
may be, or, if such date is not a New York Business Day, the next succeeding
New York Business Day, and the Valuation Date for such Warrants shall be the
first Index Calculation Date following the Exercise Date for such Warrants
except in the case of a postponed Exercise following the occurrence of an
Extraordinary Event or an Exercise Limitation Event (as defined herein).
If the Calculation Agent determines that an Extraordinary Event
or an Exercise Limitation Event has occurred and is continuing on the
Expiration Date or the Delisting Date, the Cash Settlement Value with respect
to the exercised Warrants
<PAGE> 46
5
shall be equal to, and be calculated in the same manner as, the Alternative
Settlement Amount (treating the Expiration Date or the Delisting Date, as the
case may be, as the date on which the Warrants were canceled), as provided
below and in the Warrant Agreement.
Payment with respect to automatically exercised Warrants shall
be made available to the appropriate registered holders of the Warrants in the
form of a cashier's check or an official bank check, or (in the case of
payments of at least $100,000) by wire transfer to a U.S. bank account
maintained by such holder in the United States (at such holder's election), on
the fourth New York Business Day following the Valuation Date for automatically
exercised Warrants (or if such Valuation Date is not a New York Business Day,
on the fourth New York Business Day following the New York Business Day next
succeeding such Valuation Date), against receipt by the Warrant Agent at the
Warrant Agent's Office from the holder of its Warrant Certificates. Such
payment shall be in the amount of the aggregate Cash Settlement Value in
respect of the Warrants, evidenced by the Warrant Certificates that were
exercised on the Expiration Date or the Delisting Date, as the case may be.
Anything in the Warrant Agreement or in this Warrant
Certificate to the contrary notwithstanding, if the Calculation Agent
determines that an Extraordinary Event or an Exercise Limitation Event has
occurred and is continuing on the Hong Kong Business Day (as defined herein)
with respect to which the Spot Index on a Valuation Date is to be determined
(the "Applicable Hong Kong Business Day"), then the Cash Settlement Value of
such Warrants in respect of an exercise shall be calculated on the basis that
the Valuation Date shall be the next Index Calculation Date following an
Applicable Hong Kong Business Day on which there is no Extraordinary Event or
Exercise Limitation Event; provided, however, that if the Cash Settlement Value
of such Warrants is not calculated on or prior to the Expiration Date or the
Delisting Date, then the Warrantholders will receive the Alternative Settlement
Amount in lieu of the Cash Settlement Value, which Alternative Settlement
Amount shall be calculated as if the Warrants had been canceled on the
Expiration Date or the Delisting Date, as the case may be.
If the Calculation Agent determines that an Extraordinary
Event has occurred and is continuing and if it is expected by the Calculation
Agent to continue, the Company may immediately cancel the Warrants by notifying
the Warrant Agent of such cancellation (the date such Warrants are canceled
being the "Cancellation Date"), and each Warrantholder's rights with respect to
the Warrants and under the Warrant Agreement shall thereupon cease; provided,
however, that each Warrant shall be exercised (even if such Warrant would not
otherwise be exercisable on such date because of the Limit Option (as defined
in the Warrant Agreement)) on the basis that the Valuation Date
<PAGE> 47
6
for such Warrant shall be the Cancellation Date and each Warrantholder shall
have the right to receive an Alternative Settlement Amount with respect to its
Warrants. The Calculation Agent shall use its best efforts to notify the
Warrantholders promptly of such cancellation.
With respect to all Warrant Certificates as to which the
Valuation Date has been postponed or which have been canceled as described
above, payment shall be made available to each appropriate registered holder of
the Warrants in the form of a cashier's check or an official bank check or (in
the case of payments of at least $100,000) by wire transfer to a U.S. dollar
bank account maintained by such holder in the United States (at such holder's
election) on the fourth New York Business Day following the date on which the
Cash Settlement Value or Alternative Settlement Amount, as the case may be, has
been calculated, against receipt, if not previously received, by the Warrant
Agent at the Warrant Agent's Office from such holder of its Warrant
Certificates. Such payment shall be in the amount of the aggregate Cash
Settlement Value or Alternative Settlement Amount, as the case may be, in
respect of the Warrants evidenced by such Warrant Certificates.
The "Alternative Settlement Amount" shall be an amount,
determined by the Calculation Agent, which is equal to the amount "X"
calculated using the formula set forth below:
X = I + [T/2 x A/B]
where
I = the Cash Settlement Value of the Warrants determined
as described above, but calculated with a Spot Index
determined by the Calculation Agent which, in the
reasonable opinion of the Calculation Agent, fairly
reflects the value of the stocks which comprise the
Index or any Successor Index on the Cancellation
Date;
T = U.S. $4.50, the initial offering price per Warrant;
A = the total number of days from but excluding the
Cancellation Date for such Warrants to and including
the Expiration Date; and
B = the total number of days from but excluding the date
the Warrants were initially sold to and including
the Expiration Date.
Any such calculation will be made available to a Warrantholder
for inspection at the Warrant Agent's Office. Neither the Company nor the
Calculation Agent shall have any
<PAGE> 48
7
responsibility for good faith errors or omissions in calculating the
Alternative Settlement Amount.
An "Extraordinary Event" shall mean any one of the events,
circumstances or causes listed below:
(i) a suspension or absence of trading on the Hong
Kong Stock Exchange Ltd. (the "HKSE") of all of the Underlying Stocks
which then comprise the Index or a successor or substitute index that
the Company determines, in its sole discretion, to be comparable to the
Index (a "Successor Index"); or
(ii) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or
any other U.S. or non-U.S. governmental authority which would render it
unlawful for the Company to perform any of its obligations under the
Warrant Agreement or the Warrants; or
(iii) any outbreak or escalation of hostilities or
other national or international calamity or crisis (including, without
limitation, natural calamities which in the opinion of the Company may
materially and adversely affect the economy of Hong Kong or the trading
of securities generally on the HKSE) which has or will have a material
adverse effect on the ability of the Company to perform its obligations
under the Warrants or to modify the hedge of its position with respect
to the Index.
An "Exercise Limitation Event" shall mean any one of the
events, circumstances or causes listed below:
(i) a suspension or absence of trading on the HKSE
of (a) 20% or more of the Underlying Stocks which then comprise the
Index or a Successor Index and/or (b) the stocks of any three of the
four most highly capitalized companies included in the Underlying
Stocks which then comprise the Index or a Successor Index; or
(ii) the suspension or material limitation on the
Hong Kong Futures Exchange Ltd. (the "HK Futures Exchange") or any
other major futures or securities market of trading in futures or
options contracts related to the stock index of the Hang Seng Bank
Ltd., the Index or a Successor Index.
Prior to due presentment for registration of transfer, the
Company, the Warrant Agent, and any agent of the Company or the Warrant Agent,
may deem and treat the registered owner hereof as the absolute owner of the
Warrants evidenced hereby (notwithstanding any notation of ownership or other
writing hereon) for any purpose whatsoever, and as the person entitled to
exercise the rights represented by the Warrants evidenced hereby,
<PAGE> 49
8
and neither the Company nor the Warrant Agent, nor any agent of the Company or
the Warrant Agent, shall be affected by any notice to the contrary.
The Warrant Agent shall, in accordance with the Warrant
Agreement, from time to time register the transfer of this Warrant Certificate
upon the records to be maintained by it for that purpose at the Warrant Agent's
Office upon surrender hereof, duly endorsed, or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent
duly executed, by the registered holder(s) hereof or by their duly appointed
legal representative or duly authorized attorney, such signature to be
guaranteed by a bank or trust company with a correspondent office in the City
of New York or by a member of a national securities exchange. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s).
As provided in the Warrant Agreement and subject to certain
limitations, this Warrant Certificate may be exchanged for other Warrant
Certificates, representing a like number of Warrants, upon surrender to the
Warrant Agent of this Warrant Certificate at the Warrant Agent's Office.
No service charge shall be made for any registration of
transfer or exchange of this Warrant Certificate, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
this Warrant Certificate, other than exchanges pursuant to the Warrant
Agreement not involving any transfer.
The Warrantholder may subject its exercise of Warrants to the
Limit Option, as provided in the Warrant Agreement.
Capitalized terms included herein but not defined herein have
the meanings assigned thereto in the Warrant Agreement.
References herein to "U.S. Dollars," "U.S.$" or "$" are to the
lawful currency of the United States of America, and references to "Hong Kong
dollars" or "H.K.$" are to the lawful currency of Hong Kong. As used herein, a
"New York Business Day" means any day other than a Saturday or a Sunday or a
day on which either the AMEX or the New York Stock Exchange is not open for
securities trading or commercial banks in New York City are required or
authorized by law or executive order to remain closed; a "Hong Kong Business
Day" means any day other than a Saturday or a Sunday or a day on which
commercial banks in Hong Kong are not open for a full day of business; and an
"Index Calculation Day" means any day on which the Index or any Successor Index
is calculated and published.
<PAGE> 50
9
The Warrant Agreement and the terms of the Warrants are
subject to amendment, as provided in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY, AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 51
Exhibit A-1
EXERCISE NOTICE
Warrants Represented by Warrant Certificates
Citibank, N.A.
111 Wall Street
5th Floor
New York, New York 10043
Telephone: (212) 657-7269
Facsimile: (212) 825-3483
1. This Notice / /DOES / /DOES NOT relate to "Contingently
Tendered Warrants" subject to a Limit Option, as provided for in the Warrant
Agreement. If this Exercise Notice relates to 500 or more Warrants and any of
such Warrants are Contingently Tendered Warrants, of such Warrants are
Contingently Tendered Warrants and are not. If the Spot Index
used to determine the Cash Settlement Value of Contingently Tendered Warrants
is lower than the Limit Option Reference Index by 5% or more, an Exercise
Notice with respect to such Contingently Tendered Warrants shall be void and of
no effect (and shall be disregarded for all purposes of the Warrant Agreement).
2. Subject to paragraph 1, the undersigned (the "Owner")
hereby irrevocably exercises Warrants (the "Exercised Warrants")
and delivers to you herewith a Warrant Certificate or Certificates, registered
in the Owner's name, representing a number of Warrants at least equal to the
number of Exercised Warrants. Each beneficial owner of Warrants that is
exercising Warrants pursuant to this Exercise Notice is exercising no fewer
than 500 Warrants.
3. The Owner hereby directs the Warrant Agent (a) to pay the
Cash Settlement Value, if any, with respect to the Exercised Warrants:
/ / By cashier's check or an official bank check;
or
/ / By wire transfer to the following U.S. dollar bank
account in the United States:
(Minimum payments of $100,000 only)
Bank: _____________________________
ABA Routing No.: __________________
Account No: ________ Reference:______________
<PAGE> 52
2
and (b) if the number of Exercised Warrants is less than the number of Warrants
represented by the enclosed Warrant Certificate, to deliver a Warrant
Certificate representing the unexercised Warrants to
Dated: , 19
--------------------------------
(Owner)
by
----------------------------
Authorized Signature
Address:
Telephone: ( )
<PAGE> 53
EXHIBIT B
[FORM OF GLOBAL WARRANT CERTIFICATE]
No. CUSIP No. 524908 18 3
LEHMAN BROTHERS HOLDING INC.
AMEX Hong Kong 30 Index Call Warrants
Expiring February 26, 1996
This Warrant Certificate certifies that CEDE & CO., or
registered assigns, is the registered holder of AMEX Hong Kong 30
Index Call Warrants Expiring February 26, 1996 (the "Index Warrants"). Upon
receipt by Citibank, N.A. (the "Warrant Agent") of this Warrant Certificate and
the exercise notice on the reverse hereof (or an exercise notice in
substantially identical form delivered herewith), duly completed and executed,
at the offices of the Warrant Agent in the Borough of Manhattan, New York City,
each Warrant entitles the beneficial owner thereof (each a "Warrantholder") to
receive, subject to the conditions set forth herein and in the Warrant
Agreement, from Lehman Brothers Holdings Inc. (the "Company") the cash
settlement value in U.S. Dollars (the "Cash Settlement Value") equal to the
quotient (rounded down to the nearest cent) of (A) the amount, if any, by which
the closing level of the AMEX Hong Kong 30 Index (the "Index"), as compiled by
and published by the American Stock Exchange, Inc. (the "AMEX") on the
applicable Valuation Date for such Warrant (the "Spot Index") exceeds 463.55
(the "Strike Index") divided by (B)2.5, divided by (C) the fixed Hong Kong
dollar/U.S. dollar exchange rate of H.K.$ 7.7278 per U.S. $1.00; provided
however, that if such amount is less than or equal to zero, then the Cash
Settlement Value will be zero. In no event shall a Warrantholder be entitled
to interest on any Cash Settlement Value.
Subject to the terms of the Warrant Agreement, each Warrant
may be irrevocably exercised, in whole but not in part, at or prior to 3:00
p.m., New York City time, on any New York Business Day from its date of
issuance until 3:00 p.m., New York City time, on the earlier of (i) the New
York Business Day immediately preceding February 26, 1996 (the "Expiration
Date") and (ii) the last New York Business Day prior to the Delisting Date (as
defined herein) at which time the Warrants shall expire and all Warrants
evidenced hereby shall be automatically exercised and otherwise shall be void.
Except in the case of automatic exercise or cancellation of
the Warrants, as set forth herein and in the
<PAGE> 54
2
Warrant Agreement, not fewer than 500 Warrants may be exercised by or on behalf
of any one Warrantholder at any one time.
Except in the case of automatic exercise or cancellation of
the Warrants, all exercises of Warrants shall be subject, at the option of
Lehman Brothers Inc. (the "Calculation Agent"), to the limitation that not more
than 1,000,000 Warrants in total may be exercised on any Exercise Date and not
more than 250,000 Warrants may be exercised by or on behalf of any person or
entity, either individually or in concert with any other person or entity, on
any Exercise Date.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, Lehman Brothers Holdings, Inc. has caused
this instrument to be duly executed.
Dated:
LEHMAN BROTHERS HOLDINGS INC.
By
---------------------------
Title:
[SEAL]
Attest:
By
----------------------------
Title: Assistant Secretary
Countersigned for authentication only
as of the date above written:
Citibank, N.A.,
as Warrant Agent
By
Authorized Officer
<PAGE> 55
[REVERSE]
AMEX Hong Kong 30 Index Call Warrants
Expiring February 26, 1996
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued by the Company pursuant to a Warrant
Agreement, dated as of August 30, 1994 (the "Warrant Agreement"), among the
Company, Citibank, N.A. (the "Warrant Agent") and Lehman Brothers Inc. (the
"Calculation Agent") and are subject to the terms and provisions contained in
the Warrant Agreement, to all of which terms and provisions each Warrantholder
consents by acceptance of this Warrant Certificate and which Warrant Agreement
is hereby incorporated by reference in, and made a part of, this Warrant
Certificate. A copy of the Warrant Agreement is on file at the Warrant Agent.
The Warrants constitute direct, unconditional and unsecured
contractual obligations of the Company and rank on a parity with the Company's
other unsecured contractual obligations and with the Company's unsecured and
unsubordinated debt.
The Warrants will be unsecured obligations of the Company and
rank pari passu with all unsecured and unsubordinated indebtedness for borrowed
money of the Company.
Subject to the provisions hereof and of the Warrant Agreement, each
Warrant may be irrevocably exercised, in whole but not in part, at or prior to
3:00 p.m., New York City time, on any New York Business Day (as defined herein)
from the date of its issuance until 3:00 p.m., New York City time on the
earlier of (i) the New York Business Day immediately preceding the Expiration
Date and (ii) the last New York Business Day prior to the Delisting Date. The
holder of Warrants evidenced by this Warrant Certificate may exercise them by
surrendering this Warrant Certificate and attached exercise notice (or an
exercise notice in substantially identical form) (such notice, an "Exercise
Notice"), duly completed and executed, to the Warrant Agent's offices in the
Borough of Manhattan, the City of New York (the "Warrant Agent's Office"),
which are, on the date hereof, located at 111 Wall Street, 5th Floor, New York,
New York 10043 (telephone: (212) 657-7269; facsimile: (212) 825-3483).
Except in the case of automatic exercise or cancellation of the Warrants, as
set forth herein and in the Warrant Agreement, not fewer than 500 Warrants may
be exercised by or on behalf of any one Warrantholder at any one time. Except
in the case of automatic exercise or cancellation of the Warrants, all
exercises of the Warrants shall be subject, at the option of the Calculation
Agent, to the limitation that not more than 1,000,000 Warrants in total may be
exercised on any Exercise Date (as defined in the Warrant Agreement) and not
more than 250,000 Warrants may be exercised by or on behalf of any person or
entity, either individually or in concert with any other person or entity, on
any Exercise Date.
<PAGE> 56
2
The "Cash Settlement Value" of an exercised Warrant shall be
an amount in U.S. Dollars equal to the quotient (rounded down to the nearest
cent) of (A) the amount, if any, by which the Spot Index on the applicable
Valuation Date for such Warrants exceeds the Strike Index divided by (B) 2.5,
divided by (C) the fixed Hong Kong dollar/U.S. dollar exchange rate of
H.K.$7.7278 per U.S. $1.00; provided, however, that if such amount is less than
or equal to zero, then the Cash Settlement Value shall be zero.
The Company has appointed Lehman Brothers Inc. to be its
Calculation Agent to make such calculations as may be required upon the
occurrence of certain circumstances, as described in the Warrant Agreement and
herein, including, without limitation, calculation of the Cash Settlement Value
and under certain circumstances or the Alternative Settlement Amount (as
defined herein), as applicable, of a Warrant. The Calculation Agent shall act
as an independent expert and not as an agent of the Company, and, unless
otherwise provided by the Warrant Agreement, its calculations and
determinations under the Warrant Agreement and this Warrant Certificate shall,
absent manifest error, be final and binding on the Company, the Warrant Agent
and the Warrantholders.
In the event that the Index is not publicly announced by the
AMEX on a Valuation Date, but is publicly announced by another person or party
not affiliated with the Company and acceptable to the Calculation Agent (the
"Third Party"), the applicable Cash Settlement Value shall nevertheless be
calculated by reference to the value of the closing quotation for the Index so
announced by the Third Party.
In the event that prior to a Valuation Date the AMEX or the
Third Party makes a material change in the formula for, or the method of,
calculating the Index, the Calculation Agent shall make such calculations as
may be required to determine the applicable Cash Settlement Value using the
formula and method of calculating the Index as was in effect prior to such
change or modification.
If on a Valuation Date either the AMEX or any Third Party
discontinues publication of the Index and publishes a successor or substitute
index that the Company determines, in its sole discretion, to be comparable to
the Index (any such index being a "Successor Index"), then the Calculation
Agent shall determine the Spot Index for any date thereafter based on the
closing level of the Successor Index on such date. If the AMEX and/or any
Third Party discontinues publication of the Index and/or any Successor Index,
the Company will cause the Calculation Agent to determine the applicable Cash
Settlement Value based on the formula and method used in calculating the Index
or any Successor Index, as in effect on the date the Index or such Successor
Index was last published.
<PAGE> 57
3
The Calculation Agent will have no responsibility for good
faith errors or omissions in calculating or disseminating information regarding
the Index, any Successor Index, adjustments or calculations by the Calculation
Agent in order to arrive at a calculation of a stock index comparable to the
Index or any Successor Index, or the Cash Settlement Value or the Alternative
Settlement Amount, as applicable.
Subject to the Warrant Agreement and this Warrant Certificate,
and except in the case of exercise (whether automatic or by the Exercise
Notice) on the Expiration Date or the Delisting Date, or in the event an
Extraordinary Event or Exercise Limitation Event (as such terms are defined
herein) is declared, the valuation date (the "Valuation Date") for a Warrant
shall be the first Index Calculation Day (as defined in the Warrant Agreement)
following the applicable Exercise Date (as defined in the Warrant Agreement) on
which the Warrant Agent has received the Warrant Certificate representing such
Warrant, with the Exercise Notice, duly completed and executed, at or prior to
3:00 p.m., New York City time (the "Notice Date"), and if the Warrant Agent
shall receive any such Warrant Certificate or Exercise Notice after 3:00 p.m.,
New York City time, on such date, then such Warrant Certificate shall be deemed
to have been received at or prior to 3:00 p.m., New York City time, on the next
succeeding New York Business Day (which shall be considered the Notice Date),
and in such event the Valuation Date shall be the next Index Calculation Day
following the New York Business Day on which the Warrant Agent is deemed to
have received such Warrant Certificate together with the Exercise Notice. Any
Warrant Certificate received after 3:00 p.m., New York City time, on (i) the
New York Business Day immediately preceding the Expiration Date or (ii) the New
York Business Day immediately preceding the effective date on which the
Warrants are delisted from, or permanently suspended from trading (within the
meaning of the Securities Exchange Act of 1934 and the rules and regulations of
the Securities and Exchange Commission thereunder) on, the AMEX and not
accepted at the same time for listing on another Self- Regulatory Organization
(such New York Business Day being the "Delisting Date") shall be deemed not to
have been delivered and the related Exercise Notice shall be void and of no
effect; provided, however, that if the Company first receives notice of the
delisting or suspension of the Warrants on the same day on which such Warrants
are delisted or suspended, such day will be deemed the Delisting Date for
purposes of the Warrant Agreement and this Warrant Certificate.
If the Exercise Notice is not rejected as provided in the
Warrant Agreement, then the Calculation Agent will determine the Cash
Settlement Value of the exercised Warrants in accordance with the terms of the
Warrant Agreement. Except in the case of Warrants subject to automatic
exercise and Warrants that upon exercise entitle the holder thereof to receive
an Alternative
<PAGE> 58
4
Settlement Amount in lieu of the Cash Settlement Value, if on any Valuation
Date the Cash Settlement Value for any Warrants then exercised would be zero,
then in such case, the exercise of such Warrants shall be ignored and the
Warrant Certificate evidencing such Warrants will be promptly returned by the
Warrant Agent to the registered holder of the Warrant by first class mail at
the Calculation Agent's expense and such holder shall be permitted to
re-exercise such Warrants prior to the Expiration Date or the Delisting Date.
Except in the case of Warrants subject to automatic exercise
and for Warrants that upon exercise entitle the holder thereof to receive an
Alternative Settlement Amount in lieu of the Cash Settlement Value, provided
the Company will make adequate funds available to the Warrant Agent no later
than 3:00 p.m., New York City time, on the fifth New York Business Day
following the Valuation Date for such Warrants (or, if the Valuation Date is
not a New York Business Day, on the fifth New York Business Day following the
New York Business Day next succeeding the Valuation Date) (the "Settlement
Date"), the Warrant Agent shall make its payment available to each appropriate
registered holder in the form of a cashier's check or an official bank check,
or (in the case of payments of at least $100,000) by wire transfer to a U.S.
dollar bank account maintained by such holder in the United States (at the
holder's election as specified in the Exercise Notice), on the first New York
Business Day immediately succeeding such Settlement Date. Such payment shall
be in an amount equal to the aggregate Cash Settlement Value of the exercised
Warrants.
All Warrant Certificates for which the Warrant Agent has not
received the Exercise Notice in proper form by 3:00 p.m., New York City time,
on (i) the New York Business Day immediately preceding the Expiration Date or
(ii) the last New York Business Day prior to the Delisting Date, as the case
may be, or for which the Warrant Agent has received an Exercise Notice in
proper form but with respect to which timely delivery of the relevant Warrant
Certificate has not been made, and which have not been canceled prior to such
time, will be deemed automatically exercised on such date without any
requirement of an Exercise Notice to the Warrant Agent. The Exercise Date for
such Warrants shall be the Expiration Date or the Delisting Date, as the case
may be, or, if such date is not a New York Business Day, the next succeeding
New York Business Day, and the Valuation Date for such Warrants shall be the
first Index Calculation Date following the Exercise Date for such Warrants
except in the case of a postponed Exercise following the occurrence of an
Extraordinary Event or an Exercise Limitation Event (as defined herein).
If the Calculation Agent determines that an Extraordinary
Event or an Exercise Limitation Event has occurred and is continuing on the
Expiration Date or the Delisting Date, the Cash Settlement Value with respect
to the exercised Warrants
<PAGE> 59
5
shall be equal to, and be calculated in the same manner as, the Alternative
Settlement Amount (treating the Expiration Date or the Delisting Date, as the
case may be, as the date on which the Warrants were canceled), as provided
below and in the Warrant Agreement.
Payment with respect to automatically exercised Warrants shall
be made available to the appropriate registered holders of the Warrants in the
form of a cashier's check or an official bank check, or (in the case of
payments of at least $100,000) by wire transfer to a U.S. bank account
maintained by such holder in the United States (at such holder's election), on
the fourth New York Business Day following the Valuation Date for automatically
exercised Warrants (or if such Valuation Date is not a New York Business Day,
on the fourth New York Business Day following the New York Business Day next
succeeding such Valuation Date), against receipt by the Warrant Agent at the
Warrant Agent's Office from the holder of its Warrant Certificates. Such
payment shall be in the amount of the aggregate Cash Settlement Value in
respect of the Warrants, evidenced by the Warrant Certificates that were
exercised on the Expiration Date or the Delisting Date, as the case may be.
Anything in the Warrant Agreement or in this Warrant
Certificate to the contrary notwithstanding, if the Calculation Agent
determines that an Extraordinary Event or an Exercise Limitation Event has
occurred and is continuing on the Hong Kong Business Day (as defined herein)
with respect to which the Spot Index on a Valuation Date is to be determined
(the "Applicable Hong Kong Business Day"), then the Cash Settlement Value of
such Warrants in respect of an exercise shall be calculated on the basis that
the Valuation Date shall be the next Index Calculation Date following an
Applicable Hong Kong Business Day on which there is no Extraordinary Event or
Exercise Limitation Event; provided, however, that if the Cash Settlement Value
of such Warrants is not calculated on or prior to the Expiration Date or the
Delisting Date, then the Warrantholders will receive the Alternative Settlement
Amount in lieu of the Cash Settlement Value, which Alternative Settlement
Amount shall be calculated as if the Warrants had been canceled on the
Expiration Date or the Delisting Date, as the case may be.
If the Calculation Agent determines that an Extraordinary
Event has occurred and is continuing and if it is expected by the Calculation
Agent to continue, the Company may immediately cancel the Warrants by notifying
the Warrant Agent of such cancellation (the date such Warrants are canceled
being the "Cancellation Date"), and each Warrantholder's rights with respect to
the Warrants and under the Warrant Agreement shall thereupon cease; provided,
however, that each Warrant shall be exercised (even if such Warrant would not
otherwise be exercisable on such date because of the Limit Option (as defined
in the Warrant Agreement)) on the basis that the Valuation Date
<PAGE> 60
6
for such Warrant shall be the Cancellation Date and each Warrantholder shall
have the right to receive an Alternative Settlement Amount with respect to its
Warrants. The Calculation Agent shall use its best efforts to notify the
Warrantholders promptly of such cancellation.
With respect to all Warrant Certificates as to which the
Valuation Date has been postponed or which have been canceled as described
above, payment shall be made available to each appropriate registered holder of
the Warrants in the form of a cashier's check or an official bank check or (in
the case of payments of at least $100,000) by wire transfer to a U.S. dollar
bank account maintained by such holder in the United States (at such holder's
election) on the fourth New York Business Day following the date on which the
Cash Settlement Value or Alternative Settlement Amount, as the case may be, has
been calculated, against receipt, if not previously received, by the Warrant
Agent at the Warrant Agent's Office from such holder of its Warrant
Certificates. Such payment shall be in the amount of the aggregate Cash
Settlement Value or Alternative Settlement Amount, as the case may be, in
respect of the Warrants evidenced by such Warrant Certificates.
The "Alternative Settlement Amount" shall be an amount,
determined by the Calculation Agent, which is equal to the amount "X"
calculated using the formula set forth below:
X = I + [T/2 x A/B]
where
I = the Cash Settlement Value of the Warrants determined
as described above, but calculated with a Spot Index
determined by the Calculation Agent which, in the
reasonable opinion of the Calculation Agent, fairly
reflects the value of the stocks which comprise the
Index or any Successor Index on the Cancellation
Date;
T = U.S. $4.50, the initial offering price per Warrant;
A = the total number of days from but excluding the
Cancellation Date for such Warrants to and including
the Expiration Date; and
B = the total number of days from but excluding the date
the Warrants were initially sold to and including
the Expiration Date.
Any such calculation will be made available to a Warrantholder
for inspection at the Warrant Agent's Office. Neither the Company nor the
Calculation Agent shall have any
<PAGE> 61
7
responsibility for good faith errors or omissions in calculating the
Alternative Settlement Amount.
An "Extraordinary Event" shall mean any one of the events,
circumstances or causes listed below:
(iii) a suspension or absence of trading on the
Hong Kong Stock Exchange Ltd. (the "HKSE") of all of the Underlying
Stocks which then comprise the Index or a successor or substitute index
that the Company determines, in its sole discretion, to be comparable
to the Index (a "Successor Index"); or
(iv) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or
any other U.S. or non-U.S. governmental authority which would render it
unlawful for the Company to perform any of its obligations under the
Warrant Agreement or the Warrants; or
(v) any outbreak or escalation of hostilities or
other national or international calamity or crisis (including, without
limitation, natural calamities which in the opinion of the Company may
materially and adversely affect the economy of Hong Kong or the trading
of securities generally on the HKSE) which has or will have a material
adverse effect on the ability of the Company to perform its obligations
under the Warrants or to modify the hedge of its position with respect
to the Index.
An "Exercise Limitation Event" shall mean any one of the
events, circumstances or causes listed below:
(i) a suspension or absence of trading on the HKSE
of (a) 20% or more of the Underlying Stocks which then comprise the
Index or a Successor Index and/or (b) the stocks of any three of the
four most highly capitalized companies included in the Underlying
Stocks which then comprise the Index or a Successor Index; or
(ii) the suspension or material limitation on the
Hong Kong Futures Exchange Ltd. (the "HK Futures Exchange") or any
other major futures or securities market of trading in futures or
options contracts related to the stock index of the Hang Seng Bank
Ltd., the Index or a Successor Index.
Prior to due presentment for registration of transfer, the
Company, the Warrant Agent, and any agent of the Company or the Warrant Agent,
may deem and treat the registered owner hereof as the absolute owner of the
Warrants evidenced hereby (notwithstanding any notation of ownership or other
writing hereon) for any purpose whatsoever, and as the person entitled to
exercise the rights represented by the Warrants evidenced hereby,
<PAGE> 62
8
and neither the Company nor the Warrant Agent, nor any agent of the Company or
the Warrant Agent, shall be affected by any notice to the contrary.
The Warrant Agent shall, in accordance with the Warrant
Agreement, from time to time register the transfer of this Warrant Certificate
upon the records to be maintained by it for that purpose at the Warrant Agent's
Office upon surrender hereof, duly endorsed, or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent
duly executed, by the registered holder(s) hereof or by their duly appointed
legal representative or duly authorized attorney, such signature to be
guaranteed by a bank or trust company with a correspondent office in the City
of New York or by a member of a national securities exchange. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s).
As provided in the Warrant Agreement and subject to certain
limitations, this Warrant Certificate may be exchanged for other Warrant
Certificates, representing a like number of Warrants, upon surrender to the
Warrant Agent of this Warrant Certificate at the Warrant Agent's Office.
No service charge shall be made for any registration of
transfer or exchange of this Warrant Certificate, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
this Warrant Certificate, other than exchanges pursuant to the Warrant
Agreement not involving any transfer.
The Warrantholder may subject its exercise of Warrants to the
Limit Option, as provided in the Warrant Agreement.
Capitalized terms included herein but not defined herein have
the meanings assigned thereto in the Warrant Agreement.
References herein to "U.S. Dollars," "U.S.$" or "$" are to the
lawful currency of the United States of America, and references to "Hong Kong
dollars" or "H.K.$" are to the lawful currency of Hong Kong. As used herein, a
"New York Business Day" means any day other than a Saturday or a Sunday or a
day on which either the AMEX or the New York Stock Exchange is not open for
securities trading or commercial banks in New York City are required or
authorized by law or executive order to remain closed; a "Hong Kong Business
Day" means any day other than a Saturday or a Sunday or a day on which
commercial banks in Hong Kong are not open for a full day of business; and an
"Index Calculation Day" means any day on which the Index or any Successor Index
is calculated and published.
<PAGE> 63
9
The Warrant Agreement and the terms of the Warrants are
subject to amendment, as provided in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY, AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 64
EXHIBIT B-1
EXERCISE NOTICE
(For Index Warrants Represented by the Global Warrant Certificate)
Citibank, N.A.
c/c Citicorp Data Distribution Inc.
404 Sette Drive
Paramus, New Jersey 07652 (Facsimile: (201) 262-7521)
(Telephone: (201) 262-5444)
1. Reference is made to the Warrant Agreement dated as of
August 30, 1994 (the "Warrant Agreement"), among Lehman Brothers Holdings Inc.
(the "Company"), Citibank, N.A., as warrant agent (the "Warrant Agent"), and
Lehman Brothers Inc., as calculation agent (the "Calculation Agent"). Subject
to paragraph 2, on behalf of certain beneficial owners, each of whom is
exercising no fewer than 500 Index Warrants that are covered by this Exercise
Notice and whose Warrants have been, or will be, transferred to the Warrant
Agent's DTC Participant Account, entitled Citibank, N.A. Corporate Trust
Warrant Agent Account, No. _____________ (the "Index Warrant Account"),
____________ Warrants (the "Exercised Warrants") are hereby irrevocably
exercised.
2. This Notice / /DOES / /DOES NOT relate to
"Contingently Tendered Warrants" subject to a Limit Option, as provided for in
the Warrant Agreement. If this Exercise Notice relates to 500 or more Warrants
and any of such Warrants are Contingently Tendered Warrants, at least
Warrants of each Warrantholder are Contingently Tendered Warrants and at least
Warrants of each Warrantholder are not. If the Spot Index used to determine
the Cash Settlement Value of Contingently Tendered Warrants does not exceed the
Limit Option Reference Index by 5% or more, an Exercise Notice with respect to
such Contingently Tendered Warrants shall be void and of no effect (and shall
be disregarded for all purposes of the Warrant Agreement).
3. The Participant hereby directs the Warrant Agent to pay
the Cash Settlement Value or the Alternative Settlement Amount, as applicable,
with respect to the Exercised Warrants:
/ / By cashier's check or an official bank check;
or
/ / By wire transfer to the following U.S. Dollar bank
account in the United States:
(Minimum payments of $100,000 only)
<PAGE> 65
2
Bank: ____________________________
ABA Routing No.:__________________
Account No: ________ Reference:
Dated: 19
[NAME OF DEPOSITORY
PARTICIPANT]
(Participant Number]
by
-------------------------------
Authorized Signature
Address:
Telephone: ( )
<PAGE> 66
EXHIBIT C-1
CONFIRMATION OF EXERCISE
[For Warrants Represented by Warrant Certificates]
[Name of Warrantholder]
[Address]
We hereby confirm receipt of your Exercise Notice with respect
to Index Warrants (the "Exercised Warrants") and the related
Warrant Certificates, which we have found to be duly completed and in proper
form. The Valuation Date of the Exercised Warrants was , 19
.
[As set forth in your Exercise Notice, none of the Index
Warrants covered thereby is subject to the Limit Option. Accordingly, for
purposes hereof, all such Index Warrants shall constitute Exercised Warrants,
which number we hereby confirm to be .] [Your Exercise Notice stated
that the Index Warrants covered thereby are subject to the Limit Option. The
applicable Limit Option Reference Index for such Index Warrants is
and the Spot Index for the date that would otherwise be the Valuation Date for
such Index Warrants is . Such Spot Index [does not exceed]
[exceeds] such Limit Option Reference Index by 5% or more. Accordingly, for
purposes hereof, [all] [none of] such Index Warrants shall constitute Exercised
Warrants. We hereby confirm the number of Exercised Warrants to be
.]
We hereby confirm that the aggregate Cash Settlement Value of
the Exercised Warrants is $____________ ($___________ per Warrant), which will
be made available to you in the form of a cashier's check or an official bank
check, or wire transfer to the bank account designated in your irrevocable
Exercise Notice, in New York Clearing House funds, for payment on the first New
York Business Day immediately succeeding the Settlement Date (as defined
herein), provided the Company will make available such funds to us no later
than 3:00 p.m., New York City time, on the fifth New York Business Day
following a Valuation Date (or, if the Valuation Date is not a New York
Business Day, on the fifth New York Business Day following the New York
Business Day next succeeding the Valuation Date) (the "Settlement Date").
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement, dated as of August 30,
1994, among Lehman Brothers Holdings, Inc., Citibank, N.A., as Index Warrant
Agent and Lehman Brothers Inc., as Calculation Agent.
Dated: , 19
<PAGE> 67
2
CITIBANK, N.A., as Warrant
Agent,
by
-------------------------------
Authorized Signature
<PAGE> 68
EXHIBIT C-2
CONFIRMATION OF EXERCISE
[For Index Warrants Represented by
the Global Warrant Certificate]
[Name of Depository Participant]
[Address]
We hereby confirm receipt of your Exercise Notice with respect
to Index Warrants (the "Exercised Warrants") which were
transferred by you (or on your behalf) to our DTC Participant Account No.
_____________. Such Exercise Notice we have found to be duly completed and in
proper form. The Valuation Date of the Exercised Warrants was , 19 .
[As set forth in your Exercise Notice, none of the Index
Warrants covered thereby is subject to the Limit Option. Accordingly, for
purposes hereof, all such Index Warrants shall constitute Exercised Warrants,
which number we hereby confirm to be .] [Your Exercise Notice stated
that the Index Warrants covered thereby are subject to the Limit Option. The
applicable Limit Option Reference Index for such Index Warrants is
and the Spot Index for the date that would otherwise be the Valuation Date for
such Index Warrants is . Such Spot Index [does not exceed]
[exceeds] such Limit Option Reference Index by 5% or more. Accordingly, for
purposes hereof, [all] [none of] such Index Warrants shall constitute Exercised
Warrants. We hereby confirm the number of Exercised Warrants to be
.]
We hereby confirm that the aggregate Cash Settlement Value of
the Exercised Warrants is $____________ ($___________ per Warrant), which will
be made available to you in the form of a cashier's check or an official bank
check, or wire transfer to the bank account designated in your irrevocable
Exercise Notice, in New York Clearing House funds, for payment on the first New
York Business Day immediately succeeding the Settlement Date (as defined
herein), provided the Company will make available such funds to us no later
than 3:00 p.m., New York City time, on the sixth New York Business Day
following a Valuation Date (or, if the Valuation Date is not a New York
Business Day, on the sixth New York Business Day following the New York
Business Day next succeeding the Valuation Date) (the "Settlement Date").
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Index Warrant Agreement dated as of August 30,
1994, among Lehman Brothers Holdings Inc., Citibank, N.A., as Index Warrant
Agent as Index Warrant Agent, and Lehman Brothers Inc. as Calculation Agent.
Dated: , 19
<PAGE> 69
2
CITIBANK, N.A., as Warrant
Agent,
by
--------------------------------
Authorized Signature
<PAGE> 70
D-1
NOTICE OF REJECTION
[For Warrants Represented by Warrant Certificates]
[Name of Warrantholder]
[Address]
You are hereby notified that [the Exercise Notice delivered by
you was determined by us not to have been [duly completed] [in proper form]]
[the Index Warrants to which the Exercise Notice delivered by you relates were
not received at the Warrant Agent's Office], as set forth in the Index Warrant
Agreement, dated as of August 30, 1994, among Lehman Brothers Holdings Inc.,
Citibank, N.A., as Index Warrant Agent and Lehman Brothers Inc., as Calculation
Agent. Accordingly, we have rejected your Exercise Notice.
Capitalized terms used but not defined herein have the
meanings assigned thereto in the Index Warrant Agreement.
Dated: , 19
CITIBANK, N.A., as Warrant
Agent,
by
---------------------------
Authorized Signature
<PAGE> 71
D-2
NOTICE OF REJECTION
[For Index Warrants Represented by
the Global Warrant Certificate]
[Name of Depository Participant]
[Address]
You are hereby notified that [the Exercise Notice delivered by
you was determined by us not to have been [duly completed] [in proper form]]
[the Index Warrants to which the Exercise Notice delivered by you relates were
not transferred to our DTC Participant Account No. _________], as set forth in
the Index Warrant Agreement, dated as of August 30, 1994, among Lehman Brother
Holdings, Inc., Citibank, N.A., as Index Warrant Agent and Lehman Brothers
Inc., as Calculation Agent. Accordingly, we have rejected your Exercise
Notice.
Capitalized terms used but not defined herein have the
meanings assigned thereto in the Index Warrant Agreement.
Dated: , 19
CITIBANK, N.A., as Warrant
Agent,
by
------------------------------
Authorized Signature
<PAGE> 72
EXHIBIT E
NOTICE OF REJECTION
RELATING TO LIMIT OPTION
[Name of Warrantholder or Depository Participant]
[Address]
We refer to your Exercise Notice dated , 19 , with
respect to Index Warrants that were subject to the Limit Option.
The applicable Limit Option Reference Index for such Index Warrants is
and the Spot Index for the date that would otherwise be the Valuation Date for
such Index Warrants is . Such Spot Index exceeds the Limit Option
Reference Index on the Exercise Date by 5% or more. Accordingly, we have
rejected such Exercise Notice pursuant to the Limit Option.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement dated as of August 30, 1994,
among Lehman Brothers Holdings Inc., Citibank, N.A., as Index Warrant Agent and
Lehman Brothers Inc., as Calculation Agent.
Dated: , 19
CITIBANK, N.A., as Warrant
Agent,
by
------------------------------
Authorized Signature
<PAGE> 73
Annex 1
Defined Terms
<TABLE>
<CAPTION>
Page
----
<S> <C>
Alternative Settlement Amount . . . . . . . . . . . . . . . . . . . . . . . . . 18
Alternative Settlement Date . . . . . . . . . . . . . . . . . . . . . . . . . . 23
AMEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Applicable Hong Kong Business Day . . . . . . . . . . . . . . . . . . . . . . . 4
Automatic Settlement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Book-Entry Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Calculation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Cancellation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Cash Settlement Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Certificated Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Contingently Tendered Warrants . . . . . . . . . . . . . . . . . . . . . . . . 11
Conversion Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Conversion Option Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Delisting Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exercise Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exercise Limitation Event . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Exercise Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exercised Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Extraordinary Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Global Warrant Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 2
HK Futures Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
HKSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Index Calculation Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Index Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Index Warrant Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Index Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Index Warrant Agent's Office . . . . . . . . . . . . . . . . . . . . . . . . . 4
Index Warrant Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Index Warrant Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Index Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
New York Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Remaining Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Settlement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Strike Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Successor Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Third Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Underlying Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Warrant Agent's Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Warrantholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
<PAGE> 74
EXHIBIT 4
================================================================================
LEHMAN BROTHERS HOLDINGS INC.
and
CITIBANK, N.A.,
as Index Warrant Agent
and
LEHMAN BROTHERS INC.,
as Calculation Agent
------------------------------
INDEX WARRANT AGREEMENT
dated as of August 30, 1994
AMEX Hong Kong 30 Index Call Warrants
Expiring February 26, 1996
================================================================================
<PAGE> 75
TABLE OF CONTENTS(1)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
ISSUANCE, FORM, EXECUTION,
DELIVERY AND REGISTRATION OF INDEX WARRANTS . . . . . . . . . . . . . 1
SECTION 1.1 Issuance of Index Warrants; Conversion of
Index Warrants to Book-Entry . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Form, Execution and Delivery of Warrant Certificates . . . . . . . 3
SECTION 1.3 Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.4 Registration of Transfers and Exchanges . . . . . . . . . . . . . . . 4
SECTION 1.5 Mutilated or Missing Warrant Certificates . . . . . . . . . . . . . . 5
SECTION 1.6 Registered Holders . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.7 Global Warrant Certificate . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
DURATION AND EXERCISE OF INDEX WARRANTS . . . . . . . . . . . . . . . 9
SECTION 2.1 Duration of Index Warrants; Minimum and Maximum
Exercise Amounts; Notice of Exercise 9
SECTION 2.2 Exercise and Delivery of Index Warrants . . . . . . . . . . . . . . . 10
SECTION 2.3 Automatic Exercise of Warrants . . . . . . . . . . . . . . . . . . . 16
SECTION 2.4 Limitation of Number of Exercisable Warrants . . . . . . . . . . . . 18
SECTION 2.5 Discontinuance or Modification of the Index . . . . . . . . . . . . . 19
SECTION 2.6 Covenant of the Company . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.7 Return of the Global Warrant Certificate . . . . . . . . . . . . . . 20
SECTION 2.8 Return of Moneys Held Unclaimed for Two Years . . . . . . . . . . . . 20
SECTION 2.9 Designation of Agent for Receipt of Notice . . . . . . . . . . . . . 21
SECTION 2.10 Extraordinary Events and Exercise
</TABLE>
- - --------------------
(1) The Table of Contents is not a part of the Index
Warrant Agreement
- i -
<PAGE> 76
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Limitation Events . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANTHOLDERS . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.1 Holders of Index Warrants May Enforce Rights . . . . . . . . . . . . 24
SECTION 3.2 Consolidation, Merger or Other Disposition . . . . . . . . . . . . . 24
ARTICLE IV
CANCELLATION OF INDEX WARRANTS . . . . . . . . . . . . . . . . . . . 25
SECTION 4.1 Cancellation of Index Warrants . . . . . . . . . . . . . . . . . . . 25
SECTION 4.2 Treatment of Warrantholders . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.3 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
CONCERNING THE INDEX WARRANT AGENT . . . . . . . . . . . . . . . . 26
SECTION 5.1 Index Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.2 Conditions of Index Warrant Agent's Obligations . . . . . . . . . . . 26
SECTION 5.3 Compliance With Applicable Laws . . . . . . . . . . . . . . . . . . . 28
SECTION 5.4 Resignation and Appointment of Successor . . . . . . . . . . . . . . 29
ARTICLE VI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.1 Modification, Supplementation or Amendment . . . . . . . . . . . . . 30
SECTION 6.2 Notices and Demands to the Company and Index Warrant Agent . . . . . 31
SECTION 6.3 Addresses for Notices . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.4 Notices to Warrantholders . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.6 Obtaining of Governmental Approvals . . . . . . . . . . . . . . . . . 32
</TABLE>
- ii -
<PAGE> 77
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 6.7 Persons Having Rights Under the Index Warrant Agreement . . . . . . . 32
SECTION 6.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 6.10 Inspection of Agreement . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
- iii -
<PAGE> 1
EXHIBIT 8
August 30, 1994
Re: Lehman Brothers Holdings Inc.
AMEX Hong Kong 30 Index Call Warrants
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
Dear Sirs:
We have acted as special counsel to Lehman Brothers Holdings Inc. (the
"Company"), in connection with the issuance by the Company of 1,000,000 AMEX
Hong Kong 30 Index Call Warrants Expiring February 26, 1994 (the "Warrants").
We are of the opinion that the description of certain United States
federal income tax consequences appearing under the heading "Certain United
States Federal Income Tax Considerations" in the prospectus supplement relating
to the Warrants dated August 23, 1994 (the "Prospectus Supplement") is accurate
in all material respects.
We hereby consent to the filing of this letter as an exhibit to the
8-K filed with respect to the Warrants and to the use of our name in the
section entitled "Certain United States Federal Income Tax Considerations" in
the Prospectus Supplement.
We are members of the Bar of the State of New York and we do not
express any opinion herein concerning any law other than the law of the State
of New York and the federal law of the United States.
Very truly yours,
SIMPSON THACHER &
BARTLETT
