<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 1997
REGISTRATION STATEMENT NO.
POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 333-14791
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
and Post Effective Amendment
UNDER
THE SECURITIES ACT OF 1933
---------------------
LEHMAN BROTHERS HOLDINGS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
Delaware 13-3216325
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
------------------------------
<TABLE>
<S> <C>
3 World Financial Center Thomas A. Russo, Esq.
New York, New York 10285 3 World Financial Center
(212) 526-7000 New York, New York 10285
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (212) 526-7000
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
Raymond W. Wagner, Esq. Jennifer Marre, Esq.
Simpson Thacher & Bartlett Lehman Brothers Holdings Inc.
425 Lexington Avenue 3 World Financial Center
New York, New York 10017 New York, New York 10285
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- --------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- --------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM AGGREGATE MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PRICE OFFERING
TO BE REGISTERED REGISTERED(1)(2)(3)(4) PER UNIT PRICE(2)(3)(5)
<S> <C> <C> <C>
Debt Securities, Preferred Stock, par value $1.00 per
share and Depositary Shares(7) $3,500,000,000 (3) $3,500,000,000
<CAPTION>
AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES REGISTRATION
TO BE REGISTERED FEE(4)(6)
<S> <C>
Debt Securities, Preferred Stock, par value $1.00 per
share and Depositary Shares(7) U.S. $1,060,606
</TABLE>
(1) This Registration Statement also relates to offers and sales of Securities
in connection with market-making transactions by and through Lehman Brothers
Inc., a wholly-owned subsidiary of the Registrant.
(2) Or, if any Debt Securities are issued (i) with an initial offering price
denominated in a foreign currency or a foreign currency unit, such amount as
shall result in aggregate gross proceeds equivalent to U.S. $3,500,000,000
to the Registrant at the time of initial offering, or (ii) at an original
issue discount, such greater amount as shall result in aggregate gross
proceeds of U.S. $3,500,000,000 to the Registrant.
(3) Pursuant to General Instruction II.D to Form S-3, the Amount to be
Registered, Proposed Maximum Aggregate Price Per Unit and Proposed Maximum
Aggregate Offering Price has been omitted for each class of securities.
(4) Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus herein
also relates to $764,175,000 of debt securities and preferred stock of the
Registrant registered under Registration Statement No. 333-14791. A filing
fee of $231,568 in respect of such securities was paid on October 24, 1996
upon the filing of such Registration Statement.
(5) Estimated solely for calculating the registration fee.
(6) Calculated in accordance with Rule 457(a) under the Securities Act of 1933.
(7) Such indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts issued pursuant to a Deposit Agreement. In the event the Registrant
elects to offer to the public fractional interests in shares of the
Preferred Stock registered hereunder, Depositary Receipts will be
distributed to those persons purchasing such fractional interests and such
shares will be issued to the Depositary under the Deposit Agreement.
--------------------------
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS HEREIN
IS A COMBINED PROSPECTUS AND ALSO RELATES TO REGISTRATION STATEMENT NO.
333-14791 PREVIOUSLY FILED WITH THE COMMISSION ON FORM S-3 AND DECLARED
EFFECTIVE OCTOBER 31, 1996. THIS REGISTRATION STATEMENT ALSO CONSTITUTES
POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 333-14791.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 20, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
LEHMAN BROTHERS HOLDINGS INC.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
--------------
Lehman Brothers Holdings Inc. ("Holdings") may offer from time to time (i)
unsecured debt securities (the "Debt Securities") consisting of debentures,
notes and/or other evidences of indebtedness, or (ii) shares of preferred stock,
par value $1.00 per share (the "Offered Preferred Stock"), which may be issued
in the form of depositary shares evidenced by depositary receipts (the
"Depositary Shares" and together with the Debt Securities and the Offered
Preferred Stock, the "Securities") in one or more series at an aggregate initial
offering price not to exceed U.S. $3,500,000,000 (or the equivalent thereof if
any of the Securities are denominated in a foreign currency or currency unit),
in each case at prices and on terms to be determined at the time of sale.
Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an applicable Prospectus Supplement
("Prospectus Supplement"), together with the terms of the offering of the
Securities, the initial offering price, the net proceeds to the Company from the
sale thereof and any listing on a securities exchange. The Prospectus Supplement
will also set forth, among other matters, the following with respect to the
particular Securities: (i) in the case of Debt Securities, the title, priority,
aggregate principal amount, the currency or currency unit for which the Debt
Securities may be purchased, the currency or currency unit in which the
principal and interest, if any, is payable, the rate (or method of calculation)
and time of payment of interest, if any, authorized denominations, maturity, any
redemption or sinking fund provisions and any conversion or exchange rights and
(ii) in the case of Offered Preferred Stock, the designation, number of shares,
liquidation preference, dividend rate (or method of calculation thereof), dates
on which dividends shall be payable and dates from which dividends shall accrue,
any redemption or sinking fund provisions and any conversion or exchange rights
and whether interests in the Offered Preferred Stock will be represented by
Depositary Shares.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
The Securities will be sold either through underwriters, dealers or agents,
or directly by Holdings. The applicable Prospectus Supplement sets forth the
names of any underwriters or agents (which may include Lehman Brothers Inc., a
subsidiary of Holdings ("Lehman Brothers")) involved in the sale of the
Securities in respect of which this Prospectus is being delivered, the proposed
amounts or number of shares, if any, to be purchased by underwriters and the
compensation, if any, of such underwriters or agents.
This Prospectus together with the applicable Prospectus Supplement may also
be used by Lehman Brothers in connection with offers and sales of Securities
related to market making transactions, by and through Lehman Brothers, at
negotiated prices related to prevailing market prices at the time of sale or
otherwise. Lehman Brothers may act as principal or agent in such transactions.
------------------------
, 1997
<PAGE>
AVAILABLE INFORMATION
Holdings is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"SEC"). Such reports and information may be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the SEC: New
York Regional Office, 7 World Trade Center, New York, New York 10048; and
Chicago Regional Office, Suite 1400, 500 W. Madison Street, Chicago, Illinois
60661-2511; and copies of such material can be obtained from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The SEC also maintains a Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrations that file electronically with the SEC. Holdings' Common
Stock is listed on the New York Stock Exchange, Inc. (the "Exchange") and the
Pacific Stock Exchange Inc. (the "PSE"). Holdings' 8 3/4% Notes Due 2002 and
8.30% Quarterly Income Capital Securities Due 2035 are listed on the Exchange.
Holdings' $55 Million Serial Zero Coupon Senior Notes Due May 16, 1998, Global
Telecommunications Stock Upside Note Securities SM Due 2000, AMEX Hong Kong 30
Index Call Warrants expiring January 23, 1998 and Select Technology Index Call
Warrants Expiring 1998 are listed on the American Stock Exchange, Inc. (the
"ASE"). Reports and other information concerning Holdings may also be inspected
at the offices of the Exchange at 20 Broad Street, New York, New York 10005, at
the offices of the ASE, 86 Trinity Place, New York, New York 10006 and at the
offices of the PSE, 301 Pine Street, San Francisco, California 94104.
Holdings has filed with the SEC registration statements on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statements") under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus does not contain all of the information set forth in the
Registration Statements, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. For further information, reference is
hereby made to the Registration Statements.
------------------------
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by Holdings with the SEC pursuant
to the Exchange Act are hereby incorporated by reference in this Prospectus:
(1) Holdings' Annual Report on Form 10-K for the fiscal year ended
November 30, 1996.
(2) Holdings' Quarterly Reports on Form 10-Q for the fiscal quarters
ended February 28, 1997, May 31, 1997, and August 31, 1997.
(3) Holdings' Current Reports on Form 8-K dated January 7, 1997, March
24, 1997, June 26, 1997, September 4, 1997 and September 30, 1997.
Each document filed by Holdings pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities offered by an applicable
Prospectus Supplement shall be deemed to be incorporated by reference into this
Prospectus from the date of filing of such document. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of the Registration
Statements and this Prospectus to the extent that a statement contained herein,
in an applicable Prospectus Supplement or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statements or this Prospectus.
Holdings will provide without charge to each person, including any
beneficial owner of any of the Securities, to whom a copy of this Prospectus is
delivered, upon the written or oral request of any such person, a copy of any or
all of the documents which are incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to Mary Jo Capko,
the Controller's Office, Lehman Brothers Holdings Inc., 3 World Financial
Center, 8th Floor, New York, New York 10285 (telephone (212) 526-0660).
2
<PAGE>
THE COMPANY
Lehman Brothers Holdings Inc. (together with its consolidated subsidiaries,
hereinafter referred to as the "Company" unless the context otherwise requires)
is one of the leading global investment banks serving institutional, corporate,
government and high net worth individual clients and customers. The Company's
worldwide headquarters in New York and regional headquarters in London and Tokyo
are complemented by offices in additional locations in the United States,
Europe, the Middle East, Latin and South America and the Asia Pacific region.
The Company's business includes capital raising for clients through
securities underwriting and direct placements; corporate finance and strategic
advisory services; merchant banking; securities sales and trading; asset
management; research; and the trading of foreign exchange, derivative products
and certain commodities. The Company acts as a market marker in all major equity
and fixed income products in both the domestic and international markets. The
Company is a member of all principal securities and commodities exchanges in the
United States, as well as the National Association of Securities Dealers, Inc.
("NASD"), and holds memberships or associate memberships on several principal
international securities and commodities exchanges, including the London, Tokyo,
Hong Kong, Frankfurt and Milan stock exchanges.
Holdings was incorporated in Delaware on December 29, 1983. Holdings'
principal executive offices are located at 3 World Financial Center, New York,
New York 10285 (telephone (212) 526-7000).
USE OF PROCEEDS
Except as otherwise may be set forth in an applicable Prospectus Supplement
accompanying this Prospectus, Holdings intends to apply the net proceeds from
the sale of the Securities for general corporate purposes.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Company for each of the two years in the period ended December 31, 1993, the
eleven months ended November 30, 1994, the two years ended November 30, 1996 and
the nine months ended August 31, 1997 :
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 ELEVEN MONTHS YEAR ENDED NINE MONTHS
ENDED NOVEMBER 30 ENDED
- ---------------------- NOVEMBER 30, ---------------------- AUGUST 31,
1992 1993 1994 1995 1996 1997
----- --------- ----------------- ----- --------- ---------------
<S> <C> <C> <C> <C> <C>
* 1.00 1.03 1.03 1.06 1.07
</TABLE>
- ------------------------
* Earnings were inadequate to cover fixed charges and would have had to
increase approximately $247 million in 1992 in order to cover the
deficiency.
In computing the ratio of earnings to fixed charges, "earnings" consist of
earnings from continuing operations before income taxes and fixed charges.
"Fixed charges" consist principally of interest expense and one-third of office
rentals and one-fifth of equipment rentals, which are deemed to be
representative of the interest factor.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends of the Company for each of the two years
in the period ended December 31, 1993, the eleven months ended November 30,
1994, the two years ended November 30, 1996 and the nine months ended August 31,
1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 ELEVEN MONTHS YEAR ENDED
ENDED NOVEMBER 30 NINE MONTHS
- ------------------------ NOVEMBER 30, ---------------------- ENDED
1992 1993 1994 1995 1996 AUGUST 31, 1997
----- ----- ----------------- ----- --------- ---------------
<S> <C> <C> <C> <C> <C>
* * 1.02 1.03 1.05 1.06
</TABLE>
- ------------------------
* Earnings were inadequate to cover fixed charges and preferred dividends
and would have had to increase approximately $295 million in 1992 and $27
million in 1993 in order to cover the deficiencies for the respective
periods.
In computing the ratio of earnings to combined fixed charges and preferred
stock dividends, "earnings" consist of earnings from continuing operations
before income taxes and fixed charges. "Fixed charges" consist principally of
interest expense and one-third of office rentals and one-fifth of equipment
rentals, which are deemed to be representative of the interest factor.
4
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either Senior Debt (as defined below) or
Subordinated Debt (as defined below) of Holdings. The Debt Securities
constituting Senior Debt will be issued under an indenture, dated as of
September 1, 1987, between Holdings and Citibank, N.A., Trustee, as supplemented
and amended by Supplemental Indentures dated as of November 25, 1987, as of
November 27, 1990, as of September 13, 1991, as of October 4, 1993, as of
October 1, 1995 and as of June 26, 1997 (the "Senior Indenture"), and the Debt
Securities constituting Subordinated Debt will be issued under an indenture,
dated as of February 1, 1996, between Holdings and The Chase Manhattan Bank, as
successor to Chemical Bank, Trustees as amended and supplemented by the
Supplemental Indenture dated as of February 1, 1996 (the "Subordinated
Indenture"). The Senior Indenture and the Subordinated Indenture are hereinafter
collectively referred to as the "Indentures" and, individually, as an
"Indenture". Each Indenture will incorporate by reference certain Standard
Multiple-Series Indenture Provisions, filed with the SEC on July 30, 1987 and as
amended and refiled with the SEC on November 16, 1987. This Prospectus contains
descriptions of all material provisions of the Indentures. The summary of such
provisions of the Indentures does not purport to be complete; copies of such
Indentures are filed as exhibits to the Registration Statements of which this
Prospectus is a part. All articles and sections of the applicable Indenture, and
all capitalized terms set forth below, have the meanings specified in the
applicable Indenture.
GENERAL
Neither Indenture limits the amount of debentures, notes or other evidences
of indebtedness which may be issued thereunder. Each Indenture provides that
Debt Securities may be issued from time to time in one or more series. Since, as
a holding company, Holdings' assets primarily consist of the equity securities
of its subsidiaries, its cash flow and consequent ability to service its debt,
including the Debt Securities, are dependent upon the earnings of its
subsidiaries and the distribution of those earnings to Holdings, or upon loans
or other payments of funds by those subsidiaries to Holdings. Holdings'
subsidiaries, including Lehman Brothers, are separate and distinct legal
entities and will have no obligation, contingent or otherwise, to pay any
interest or principal on the Debt Securities or to make any funds available
therefor, whether by dividends, loans or other payments. Dividends, loans and
other payments by Lehman Brothers are restricted by net capital and other rules
of various regulatory bodies. See "Capital Requirements." The payment of
dividends by Holdings' subsidiaries is contingent upon the earnings of those
subsidiaries and is subject to various business considerations in addition to
net capital requirements and contractual restrictions. Except as described under
"Limitations on Liens" and "Consolidation, Merger and Sale of Assets", neither
Indenture affords holders of Debt Securities protection in the event of a highly
leveraged transaction, reorganization, restructuring, merger or other similar
transaction involving the Company that may adversely affect holders of Debt
Securities.
Since the Debt Securities will be obligations of a holding company, the
ability of holders of the Debt Securities to benefit from any distribution of
assets of any subsidiary upon the liquidation or reorganization of such
subsidiary is subordinate to the prior claims of present and future creditors of
such subsidiary.
Reference is made to the applicable Prospectus Supplement for the following
terms and other information with respect to the Debt Securities being offered
thereby: (1) the title of such Debt Securities and whether such Debt Securities
will be Senior Debt or Subordinated Debt; (2) any limit on the aggregate
principal amount of such Debt Securities; (3) whether the Debt Securities are to
be issuable as Registered Securities or Bearer Securities or both, and if Bearer
Securities are issued, whether Bearer Securities may be exchanged for Registered
Securities and the circumstances and places for such exchange, if permitted; (4)
whether the Debt Securities are to be issued in whole or in part in the form of
one or more temporary or permanent global Debt Securities ("Global Securities")
in registered or bearer form and, if so, the identity of the depositary, if any,
for such Global Security or Securities; (5) the date or dates (or manner of
determining the same) on which such Debt Securities will mature; (6) the rate or
rates (or manner of determining the same) at which such Debt Securities will
bear interest, if any, and the date or dates from
5
<PAGE>
which such interest will accrue; (7) the dates (or manner of determining the
same) on which such interest will be payable and the Regular Record Dates for
such Interest Payment Dates for Debt Securities which are Registered Securities,
and the extent to which, or the manner in which, any interest payable on a
temporary or permanent global Debt Security on an Interest Payment Date will be
paid if other than in the manner described under "Global Securities" below; (8)
any mandatory or optional sinking fund or analogous provisions; (9) each office
or agency where, subject to the terms of the applicable Indenture as described
below under "Payment and Paying Agents", the principal of and premium, if any,
and interest, if any, on the Debt Securities will be payable and each office or
agency where, subject to the terms of the applicable Indenture as described
below under "Denominations, Registration and Transfer," the Debt Securities may
be presented for registration of transfer or exchange; (10) the date, if any,
after which, and the price or prices in the currency or currency unit in which,
such Debt Securities are payable pursuant to any optional or mandatory
redemption provision; (11) any provisions for payment of additional amounts for
taxes and any provision for redemption, in the event Holdings must comply with
reporting requirements in respect of a Debt Security or must pay such additional
amounts in respect of any Debt Security; (12) the terms and conditions, if any,
upon which the Debt Securities of such series may be repayable prior to maturity
at the option of the holder thereof (which option may be conditional) and the
price or prices in the currency or currency unit in which such Debt Securities
are payable; (13) the denominations in which any Debt Securities which are
Registered Securities will be issuable if other than denominations of $1,000 and
any integral multiple thereof, and the denomination or denominations in which
any Debt Securities which are Bearer Securities will be issuable if other than
the denomination of $5,000; (14) the currency, currencies or currency units for
which such Debt Securities may be purchased and the currency, currencies or
currency units in which the principal of and interest, if any, on such Debt
Securities may be payable; (15) any index used to determine the amount of
payments of principal of and premium, if any, and interest, if any, on such Debt
Securities; (16) the terms and conditions, if any, pursuant to which such Debt
Securities may be converted or exchanged for other securities of Holdings or any
other person; (17) the terms and conditions, if any, pursuant to which the
principal of and premium, if any, and interest, if any, on such Debt Securities
are payable at the election of Holdings or the holder thereof, in securities or
other property; and (18) other terms of the Debt Securities.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of or interest, if any, on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Debt Securities and such currencies or currency
units will be set forth in an applicable Prospectus Supplement relating thereto.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable to any such series are
described under "United States Taxation" and may be further described in an
applicable Prospectus Supplement.
SENIOR DEBT
The Debt Securities constituting part of the senior debt of Holdings (the
"Senior Debt") will rank equally with all other unsecured debt of Holdings
except Subordinated Debt.
SUBORDINATED DEBT
The Debt Securities constituting part of the subordinated debt of Holdings
(the "Subordinated Debt") will be subordinate and junior in the right of
payment, to the extent and in the manner set forth in the Subordinated
Indenture, to all present or future Senior Debt. "Senior Debt" is defined to
mean (a) any indebtedness for money borrowed or evidenced by bonds, notes,
debentures or similar instruments, (b) indebtedness under capitalized leases,
(c) any indebtedness representing the deferred and unpaid
6
<PAGE>
purchase price of any property or business, and (d) all deferrals, renewals,
extensions and refundings of any such indebtedness or obligation; except that
the following does not constitute Senior Debt: (i) indebtedness evidenced by the
Subordinated Debt, (ii) indebtedness which is expressly made equal in right of
payment with the Subordinated Debt or subordinate and subject in right of
payment to the Subordinated Debt, (iii) indebtedness for goods or materials
purchased in the ordinary course of business or for services obtained in the
ordinary course of business or indebtedness consisting of trade payables or (iv)
indebtedness which is subordinated to any obligation of Holdings of the type
specified in clauses (a) through (d) above. The effect of clause (iv) is that
Holdings may not issue, assume or guaranty any indebtedness for money borrowed
which is junior to the Senior Debt and senior to the Subordinated Debt.
(Subordinated Indenture Section 1401). The Prospectus Supplement related to a
particular series of Subordinated Debt will set forth the amount of Senior Debt
then outstanding. The Subordinated Indenture does not limit the amount of Senior
Debt or other indebtedness that may be issued.
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of Holdings or a substantial part of its property, (b) that (i) a
default shall have occurred with respect to the payment of principal of or
interest on or other monetary amounts due and payable on any Senior Debt or (ii)
there shall have occurred an event of default (other than a default in the
payment of principal of or interest or other monetary amounts due and payable)
with respect to any Senior Debt, as defined therein or in the instrument under
which the same is outstanding, permitting the holder or holders thereof to
accelerate the maturity thereof (with notice or lapse of time, or both), and
such event of default shall have continued beyond the period of grace, if any,
in respect thereof, and such default or event of default shall not have been
cured or waived or shall not have ceased to exist, or (c) that the principal of
and accrued interest on the Subordinated Debt shall have been declared due and
payable upon an Event of Default under the Subordinated Indenture and such
declaration shall not have been rescinded and annulled as provided therein, then
the holders of all Senior Debt shall first be entitled to receive payment of the
full amount unpaid thereon in cash before the holders of any of the Subordinated
Debt are entitled to receive a payment on account of the principal, premium, if
any, or interest, if any, on such Subordinated Debt.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Debt Securities will be issuable as Registered Securities without
coupons and in denominations of $1,000 or any integral multiple thereof, unless
an applicable Prospectus Supplement provides with respect to a series of Debt
Securities that such series of Debt Securities will be issued in whole or in
part as Bearer Securities and/or in different denominations. Debt Securities of
a series may be issuable in whole or in part in the form of one or more Global
Securities, as described below under "Global Securities." One or more Global
Securities will be issued in a denomination or aggregate denominations equal to
the aggregate principal amount of Debt Securities of the series to be
represented by such Global Security or Securities. If so provided with respect
to a series of Debt Securities, Debt Securities of such series will be issuable
solely as Bearer Securities with coupons attached or as both Registered
Securities and Bearer Securities. (Section 201).
In connection with the sale during the "restricted period" as defined in
Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury Regulations
(generally, the first 40 days after the closing date and, with respect to unsold
allotments, until sold) no Bearer Security shall be mailed or otherwise
delivered to any location in the United States (as defined under "Limitations on
Issuance of Bearer Securities"). A Bearer Security in definitive form (including
interests in a permanent Global Security) may be delivered only if the Person
entitled to receive such Bearer Security furnishes written certification, in the
form required by the applicable Indenture, to the effect that such Bearer
Security is not owned by or on behalf of a United States person (as defined
under "Limitations on Issuance of Bearer Securities"), or, if a beneficial
interest in such Bearer Security is owned by or on behalf of a United States
person, that such United States person (i) acquired and holds the Bearer
Security through a foreign branch of a United States financial institution, (ii)
is a foreign branch of a United States financial institution
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purchasing for its own account or resale (and in either case, (i) or (ii), such
financial institution agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder) or (iii) is a financial institution
purchasing for resale during the restricted period only to non-United States
persons outside the United States. (Sections 303, 304). See "Global
Securities--Bearer Debt Securities" and "Limitations on Issuance of Bearer
Securities."
Registered Securities of any series (other than a Global Security) will be
exchangeable for other Registered Securities of the same series and of a like
aggregate principal amount and tenor of different authorized denominations. In
addition, if Debt Securities of any series are issuable as both Registered
Securities and as Bearer Securities, at the option of the Holder upon request
confirmed in writing, and subject to the terms of the applicable Indenture,
definitive Bearer Securities (with all unmatured coupons, except as provided
below, and all matured coupons in default) of such series will be exchangeable
into definitive Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor. Any definitive
Bearer Security surrendered in exchange for a definitive Registered Security
between a Regular Record Date or a Special Record Date and the relevant date for
payment of interest shall be surrendered without the coupon relating to such
date for payment of interest and interest will not be payable in respect of the
definitive Registered Security issued in exchange for such definitive Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the terms of the applicable Indenture. (Section 305). Except as
provided in an applicable Prospectus Supplement, Bearer Securities will not be
issued in exchange for Registered Securities.
Debt Securities may be presented for exchange as provided above, and
Registered Securities (other than a Global Security) may be presented for
registration of transfer (with the form of transfer endorsed thereon duly
executed), at the office of the Security Registrar or at the office of any
transfer agent designated by Holdings for such purpose with respect to any
series of Debt Securities and referred to in an applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in each Indenture. Such transfer or exchange
will be effected upon the Security Registrar or such transfer agent, as the case
may be, being satisfied with the documents of title and identity of the person
making the request. Holdings has appointed each Trustee as Security Registrar
under the applicable Indenture. (Section 305). If a Prospectus Supplement refers
to any transfer agents (in addition to the Security Registrar) initially
designated by Holdings with respect to any series of Debt Securities, Holdings
may at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that,
if Debt Securities of a series are issuable only as Registered Securities,
Holdings will be required to maintain a transfer agent in each Place of Payment
for such series and, if Debt Securities of a series are issuable as Bearer
Securities, Holdings will be required to maintain (in addition to the Security
Registrar) a transfer agent in a Place of Payment for such series located
outside the United States. Holdings may at any time designate additional
transfer agents with respect to any series of Debt Securities. (Section 1002).
In the event of any redemption in part, Holdings shall not be required to
(i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before any
selection of Debt Securities of that series to be redeemed and ending at the
close of business on (A) if Debt Securities of the series are issuable only as
Registered Securities, the day of mailing of the relevant notice of redemption
and (B) if Debt Securities of the series are issuable as Bearer Securities, the
day of the first publication of the relevant notice of redemption or, if Debt
Securities of the series are also issuable as Registered Securities and there is
no publication, the mailing of the relevant notice of redemption; (ii) register
the transfer of or exchange any Registered Security, or portion thereof, called
for redemption, except the unredeemed portion of any Registered Security being
redeemed in part; or (iii) exchange any Bearer Security called for redemption,
except to exchange such Bearer Security for a Registered Security of that series
and like tenor which is immediately surrendered for redemption. (Section 305).
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PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Bearer Securities will
be payable, subject to any applicable laws and regulations, at the offices of
such Paying Agents outside the United States as Holdings may designate from time
to time, at the option of the Holder, by check or by transfer to an account
maintained by the payee with a bank located outside the United States. (Sections
307 and 1002). Unless otherwise indicated in an applicable Prospectus
Supplement, payment of interest on Bearer Securities on any Interest Payment
Date will be made only against surrender of the coupon relating to such Interest
Payment Date. (Section 1001). No payment of interest on a Bearer Security will
be made unless on the earlier of the date of the first such payment by Holdings
or the delivery by Holdings of the Bearer Security in definitive form (including
interests in a permanent Global Security) (the "Certification Date"), a written
certificate in the form and to the effect described under "Denominations,
Registration and Transfer" is provided to Holdings. No payment with respect to
any Bearer Security will be made at any office or agency of Holdings in the
United States or by check mailed to any address in the United States or by
transfer to an account maintained with a bank located in the United States.
Notwithstanding the foregoing, payment of principal of (and premium, if any) and
interest on Bearer Securities denominated and payable in U.S. dollars will be
made at the office of Holdings' Paying Agent in the Borough of Manhattan, The
City of New York if, and only if, payment of the full amount thereof in U.S.
dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
(Section 1002).
Unless otherwise indicated in an applicable Prospectus Supplement, as
contemplated under "Description of Securities--General", payment of principal of
(and premium, if any) and any interest on Registered Securities (other than a
Global Security) will be made in U.S. dollars at the office of such Paying Agent
or Paying Agents as Holdings may designate from time to time, except that at the
option of Holdings payment of any interest may be made (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register or (ii) by wire transfer to an account maintained by the
Person entitled thereto as specified in the Security Register. (Sections 307,
1002). Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on Registered Securities will be made to
the Person in whose name such Registered Security is registered at the close of
business on the Regular Record Date for such interest payment. (Section 307).
The principal office of each Trustee under the applicable Indenture in The
City of New York will be designated as Holdings' sole Paying Agent for payments
with respect to Debt Securities which are issuable solely as Registered
Securities and as Holdings' Paying Agent in the Borough of Manhattan, The City
of New York, for payments with respect to Debt Securities (subject to the
limitations described above in the case of Bearer Securities) which may be
issuable as Bearer Securities. Any Paying Agents outside the United States and
any other Paying Agents in the United States initially designated by Holdings
for the Debt Securities will be named in an applicable Prospectus Supplement.
Holdings may at any time designate additional Paying Agents or rescind the
designation of any Paying Agents or approve a change in the office through which
any Paying Agent acts, except that, if Debt Securities of a series are issuable
only as Registered Securities, Holdings will be required to maintain a Paying
Agent in each Place of Payment for such series, and if Debt Securities of a
series may be issuable as Bearer Securities, Holdings will be required to
maintain (i) a Paying Agent in the Borough of Manhattan, The City of New York
for payments with respect to any Registered Securities of the series (and for
payments with respect to Bearer Securities of the series in the circumstances
described above, but not otherwise), and (ii) a Paying Agent in a Place of
Payment located outside the United States where Debt Securities of such series
and any coupons appertaining thereto may be presented and surrendered for
payment; provided that if the Debt Securities of such series are listed on The
Luxembourg Stock Exchange (the "Stock Exchange") or any other stock exchange
located outside the United States and such stock exchange shall so require,
Holdings will maintain a Paying Agent in Luxembourg or any other required city
located outside the United States, as the case may be, for the Debt Securities
of such series. (Section 1002).
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All moneys paid by Holdings to a Paying Agent for the payment of principal
of (and premium, if any) or interest on any Debt Security which remain unclaimed
at the end of two years after such principal, premium or interest shall have
become due and payable will be repaid to Holdings and the Holder of such Debt
Security or any coupon will thereafter look only to Holdings for payment
thereof. (Section 1003).
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with or on behalf
of a depository (a "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued in either registered or
bearer form and in either temporary or permanent form.
The specific terms of the depository arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depository arrangements.
Debt Securities which are to be represented by a Global Security in
registered form to be deposited with or on behalf of a Depositary will be
registered in the name of such Depositary or its nominee. Upon the issuance of a
Global Security in registered form, the Depositary for such Global Security will
credit the respective principal amounts of the Debt Securities represented by
such Global Security to the accounts of institutions that have accounts with
such depository or its nominee ("participants"). The accounts to be credited
shall be designated by the underwriters or agents of such Debt Securities or by
Holdings, if such Debt Securities are offered and sold directly by Holdings.
Ownership of beneficial interests in such Global Securities will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests by participants in such Global Securities will be shown
on, and the transfer of that ownership interest will be effected only through,
records maintained by the Depositary or its nominee for such Global Security.
Ownership of beneficial interests in Global Securities by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security in registered form, or its
nominee, is the registered owner of such Global Security, such depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture governing such Debt Securities. Except as set forth below, owners
of beneficial interests in such Global Securities will not be entitled to have
Debt Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture.
Payment of principal of, premium, if any, and any interest on Debt
Securities registered in the name of or held by a Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the registered
owner or the holder of the Global Security. None of the Company, the Trustee,
any Paying Agent or the Security Registrar for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. (Section 308).
The Company expects that the Depositary for a permanent Global Security in
registered form, upon receipt of any payment of principal, premium or interest
in respect of a permanent Global Security, will credit immediately participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Security as shown on the
records of such Depositary. The Company also expects that payments by
participants to owners of beneficial interests in
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such Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants.
A Global Security in registered form may not be transferred except as a
whole by the Depositary for such Global Security to a nominee of such depository
or by a nominee of such depository to such depository or another nominee of such
depository or by such depository or any such nominee to a successor of such
depository or a nominee of such successor. If a Depositary for a permanent
Global Security in registered form is at any time unwilling or unable to
continue as depository and a successor depository is not appointed by the
Company within 90 days, the Company will issue Debt Securities in definitive
registered form in exchange for all of the Global Securities representing such
Debt Securities. In addition, the Company may at any time and in its sole
discretion determine not to have any Debt Securities in registered form
represented by one or more Global Securities and, in such event, will issue Debt
Securities in definitive form in exchange for all of the Global Securities
representing such Debt Securities. (Section 305). Further, if the Company so
specifies with respect to the Debt Securities of a series in registered form, an
owner of a beneficial interest in a Global Security representing Debt Securities
of such series may, on terms acceptable to the Company and the Depositary for
such Global Security, receive Registered Debt Securities of such series in
definitive form. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery in definitive form of
Registered Securities of the series represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name. (Section 305). Debt Securities of such series so issued
in definitive form will be issued (a) as Registered Securities in denominations,
unless otherwise specified by the Company, of $1,000 and integral multiples
thereof if the Debt Securities of such series are issuable as Registered
Securities, (b) as Bearer Securities in the denomination, unless otherwise
specified by the Company, of $5,000 if the Debt Securities of such series are
issuable as Bearer Securities or (c) as either Registered or Bearer Securities
if the Debt Securities of such series are issuable in either form. See, however,
"Limitations on Issuance of Bearer Securities" below for a description of
certain restrictions on the issuance of a Bearer Security in definitive form in
exchange for an interest in a Global Security.
BEARER DEBT SECURITIES
If so specified in an applicable Prospectus Supplement, pending the
availability of a permanent Global Security, all or any portion of the Debt
Securities of a series which may be issuable as Bearer Securities will initially
be represented by one or more temporary Global Securities, without interest
coupons, to be deposited with a common depositary in London for Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of the Euroclear System
("Euroclear") and Cedel Bank, societe anonyme ("Cedel") for credit to the
designated accounts. The interests of the beneficial owner or owners in a
temporary Global Security in bearer form will be exchangeable for: (i) in whole,
definitive Bearer Securities, (ii) in whole, Senior Debt Securities to be
represented thereafter by one or more permanent Global Securities in bearer
form, without interest coupons, and/or (iii) in whole or in part, definitive
Registered Securities, (the date of such exchange, the "Exchange Date");
provided, however, that if definitive Bearer Securities have previously been
issued in exchange for an interest in a permanent Global Security in bearer form
representing Senior Debt Securities of the same series, then interests in such
Senior Debt Securities (with certain exceptions) shall only thereafter be
exchangeable, in whole, for definitive Bearer Securities, definitive Registered
Securities, or any combination thereof (with certain exceptions) representing
Debt Securities having the same interest rate and Stated Maturity, but only upon
written certification in the form and to the effect described under
"Denominations, Registration and Transfer" unless such certification has been
provided on an earlier interest payment date. The beneficial owner of a Debt
Security represented by a permanent Global Security in bearer form may, on the
applicable Exchange Date and upon 30 days' notice to the applicable Trustee
given through Euroclear or Cedel, exchange its interest in whole for definitive
Bearer Securities or, if specified in an applicable Prospectus Supplement, in
whole or in part, for definitive Registered Securities of any authorized
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denomination, provided, however, that if definitive Bearer Securities are issued
in partial exchange for Senior Debt Securities represented by such permanent
Global Security or by a temporary Global Security in bearer form of the same
series, such issuance (with certain exceptions) shall give rise to the exchange
of such permanent Global Security in whole for, at the option of the Holders,
definitive Bearer Securities, definitive Registered Securities, or any
combination thereof. No Bearer Security delivered in exchange for a portion of a
permanent Global Security shall be mailed or otherwise delivered to any location
in the United States in connection with such exchange. (Sections 303 and 304).
Unless otherwise specified in an applicable Prospectus Supplement, interest
in respect of any portion of a temporary Global Security in bearer form payable
in respect of an Interest Payment Date occurring prior to the issuance of a
permanent Global Security in bearer form will be paid to each of Euroclear and
Cedel with respect to the portion of the temporary Global Security in bearer
form held for its account. Each of Euroclear and Cedel will undertake in such
circumstances to credit such interest received by it in respect of a temporary
Global Security in bearer form to the respective accounts for which it holds
such temporary Global Security in bearer form as of the relevant Interest
Payment Date, but only upon receipt in each case of written certification, in
the form and to the effect described under "Denomination, Registration and
Transfer."
LIMITATION ON LIENS
So long as any Debt Securities remain outstanding, unless an applicable
Prospectus Supplement relating thereto provides otherwise, Holdings will not,
and will not permit any Designated Subsidiary (as defined below), directly or
indirectly, to create, issue, assume, incur or guarantee any indebtedness for
money borrowed which is secured by a mortgage, pledge, lien, security interest
or other encumbrance of any nature on any of the present or future common stock
of a Designated Subsidiary unless the Debt Securities and, if Holdings so
elects, any other indebtedness of Holdings ranking at least PARI PASSU with the
Debt Securities, shall be secured equally and ratably with (or prior to) such
other secured indebtedness for money borrowed so long as it is outstanding.
(Section 1005).
The term "Designated Subsidiary" means any present or future consolidated
subsidiary of Holdings, the consolidated net worth of which constitutes at least
5% of the consolidated net worth of Holdings. As of August 31, 1997, Holdings'
Designated Subsidiaries were Lehman Brothers, Lehman Brothers Holdings PLC,
Lehman Brothers UK Holdings Limited, Lehman Brothers International (Europe),
Lehman Brothers Special Financing Inc., Lehman Brothers U.K. Holdings (Delaware)
Inc., Lehman Brothers Commercial Paper Inc., Lehman Brothers Finance S.A.
(Geneva) and Lehman Brothers Financial Products Inc.
EVENTS OF DEFAULT
The following are Events of Default under each Indenture: (a) failure to pay
principal of or premium, if any, on any Debt Security of that series when due;
(b) failure to pay interest, if any, on any Debt Security of that series and any
related coupons when due, continued for 30 days; (c) failure to deposit any
sinking fund payment or analogous obligation, when due, continued for 30 days,
in respect of any Debt Security of that series; (d) failure to perform any other
covenant of Holdings in the Indenture (other than a covenant included in the
applicable Indenture solely for the benefit of a series of Debt Securities other
than that series), continued for 90 days after written notice as provided in the
Indenture; and (e) certain events in bankruptcy, insolvency or reorganization in
respect of Holdings. (Section 501). Each Indenture may be amended without the
consent of Holders to provide for additional Events of Default with respect to
any series of Debt Securities then outstanding. In addition, prior to the
issuance of any series of Debt Securities, there may be additions to or
modifications or deletions of the Events of Default described above with respect
to such series of Debt Securities. Any such additions, modifications or
deletions will be specified in an applicable Prospectus Supplement. An Event of
Default with respect to a particular series of Debt Securities does not
necessarily constitute an Event of Default with respect to any other series of
Debt Securities issued under the same or another Indenture. The Trustee may
withhold notice to the
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Holders of any series of Debt Securities of any default with respect to such
series (except in the payment of principal, premium or interest, if any) if it
considers such withholding to be in the interests of such Holders. (Section
602).
If an Event of Default with respect to Debt Securities of any series at the
time outstanding occurs and is continuing, unless the principal of all of the
Debt Securities of such series shall have already become due and payable, either
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Debt Securities of that series may declare the principal amount (or,
if the Debt Securities of that series are (i) Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of the series, or (ii) Indexed Securities or Dual Currency Securities, the
amount determined in accordance with the specified terms of the series) of all
the Debt Securities of that series to be due and payable immediately. At any
time after a declaration of acceleration with respect to Debt Securities of any
series has been made, but before a judgment or decree based on acceleration has
been obtained and entered, the Holders of a majority in principal amount of the
outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration. (Section 502). For information as to waiver
of defaults, see "Meetings, Modification and Waiver." Each Indenture provides
that the Trustee will be under no obligation, subject to the duty of the Trustee
during default to act with the required standard of care, to exercise any of its
rights or powers under such Indenture at the request or direction of any of the
Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. (Section 603). Subject to such provisions for indemnification of the
Trustee, the Holders of a majority in principal amount of the outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the Debt
Securities of that series. (Section 512). Holdings will be required to furnish
to each Trustee annually a statement as to the performance by Holdings of
certain of its obligations under the applicable Indenture and as to any default
in such performance. (Section 1006).
SATISFACTION AND DISCHARGE
Except as may otherwise be set forth in an applicable Prospectus Supplement
relating to a series of Debt Securities, each Indenture provides that Holdings
shall be discharged from its obligations under the Debt Securities of such
series (with certain exceptions) at any time prior to the Stated Maturity or
redemption thereof when (a) Holdings has irrevocably deposited with the
applicable Trustee, in trust, (i) sufficient funds in the currency or currency
unit in which the Debt Securities of such series are payable to pay the
principal of (and premium, if any), and interest, if any, to Stated Maturity (or
redemption) on, the Debt Securities of such series, or (ii) such amount of
direct obligations of, or obligations the principal of and interest, if any, on
which are fully guaranteed by, the government which issued the currency in which
the Debt Securities of such series are payable, and which are not subject to
prepayment, redemption or call, as will, together with the predetermined and
certain income to accrue thereon without consideration of any reinvestment
thereof, be sufficient to pay when due the principal of (and premium, if any),
and interest, if any, to Stated Maturity (or redemption) on, the Debt Securities
of such series, or (iii) such combination of such funds and securities as
described in (i) and (ii), respectively, as will, together with the
predetermined and certain income to accrue on any such securities as described
in (ii), be sufficient to pay when due the principal of (and premium, if any),
and interest, if any, to Stated Maturity (or redemption) on, the Debt Securities
of such series and (b) Holdings has paid all other sums payable with respect to
the Debt Securities of such series and (c) certain other conditions are met.
Upon such discharge, the Holders of the Debt Securities of such series shall no
longer be entitled to the benefits of the Indenture, except for certain rights,
including registration of transfer and exchange of the Debt Securities of such
series and replacement of lost, stolen or mutilated Debt Securities, and shall
look only to such deposited funds or obligations for payment. (Sections 401 and
403).
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DEFEASANCE OF CERTAIN OBLIGATIONS
If the terms of the Debt Securities of any series so provide, Holdings may
omit to comply with the restrictive covenants in Section 801 ("Company May
Consolidate, Etc., Only on Certain Terms"), Section 1005 ("Limitations on Liens
on Common Stock of Designated Subsidiaries") and any other specified covenant
and any such omission with respect to such Sections shall not be an Event of
Default with respect to the Debt Securities of such series, if (a) Holdings has
irrevocably deposited with the applicable Trustee, in trust, (i) sufficient
funds in the currency or currency unit in which the Debt Securities of such
series are payable to pay the principal of (and premium, if any), and interest,
if any, to Stated Maturity (or redemption) on, the Debt Securities of such
series, or (ii) such amount of direct obligations of, or obligations the
principal of and interest, if any, on which are fully guaranteed by, the
government which issued the currency in which the Debt Securities of such series
are payable and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay when due
the principal of (and premium, if any), and interest, if any, to Stated Maturity
(or redemption) on, the Debt Securities of such series or, (iii) such
combination of such funds and securities as described in (i) and (ii),
respectively, as will, together with the predetermined and certain income to
accrue on any such securities as described in (ii), be sufficient to pay when
due the principal of (and premium, if any), and interest, if any, to Stated
Maturity (or redemption) on, the Debt Securities of such series and (b) certain
other conditions are met. The obligations of Holdings under the Indenture with
respect to the Debt Securities of such series, other than with respect to the
covenants referred to above shall remain in full force and effect. (Section
1009).
MEETINGS, MODIFICATION AND WAIVER
Modifications and amendments of either Indenture may be made by Holdings and
the applicable Trustee with the consent of the Holders of not less than 66 2/3%
in principal amount of the Outstanding Debt Securities of each series issued
under such Indenture affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest, if
any, on, any Debt Security, (b) reduce the principal amount of, or the premium,
if any, or interest, if any, on, any Debt Security, (c) change any obligation of
Holdings to pay additional amounts, (d) reduce the amount of principal of an
Original Issue Discount Security payable upon acceleration of the Maturity
thereof, (e) adversely affect the right of repayment or repurchase, if any, at
the option of the Holder, (f) reduce the amount, or postpone the date fixed for,
any payment under any sinking fund or analogous provision, (g) change the place
or currency or currency unit of payment of principal of or premium, if any, or
interest, if any, on any Debt Security, (h) change or eliminate the right, if
any, to elect payment in a coin or currency or currency unit other than that in
which Debt Securities which are Registered Securities are denominated or stated
to be payable, (i) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security, (j) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
the Holders of which is required for modification or amendment of the applicable
Indenture or for waiver of compliance with certain provisions of the applicable
Indenture or for waiver of certain defaults, (k) reduce the requirements
contained in either Indenture for quorum or voting, or (l) change any obligation
of Holdings to maintain an office or agency in the places and for the purposes
required in the applicable Indenture. (Section 902).
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of that series waive, insofar as that series is concerned,
compliance by Holdings with certain restrictive provisions of the applicable
Indenture. (Section 1007). The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series may on behalf of the
Holders of all Debt Securities of that series and any coupons appertaining
thereto waive any past default under the applicable Indenture with respect to
that series, except a default in the payment of the principal of or premium, if
any, or interest, if any, on any Debt Security of that series
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or in the payment of any sinking fund installment or analogous obligation or in
respect of a provision which under the applicable Indenture cannot be modified
or amended without the consent of the Holder of each Outstanding Debt Security
of that series affected. (Section 513).
Each Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series if Debt Securities of that series are issuable as
Bearer Securities. A meeting may be called at any time by the applicable
Trustee, and also, upon request, by Holdings or Holders of at least 10% in
principal amount of the Outstanding Debt Securities of such series, in any such
case upon notice given in accordance with "Notices" below. (Section 1302).
Except as limited by the proviso in the second preceding paragraph, any
resolution presented at a meeting or adjourned meeting at which a quorum is
present may be adopted by the affirmative vote of the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series; provided,
however, that, except as limited by the proviso in the second preceding
paragraph, any resolution with respect to any consent or waiver which may be
given by the Holders of not less than 66 2/3% in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or an
adjourned meeting at which a quorum is present only by the affirmative vote of
66 2/3% in principal amount of the Outstanding Debt Securities of that series;
and provided, further, that, except as limited by the proviso in the second
preceding paragraph, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of Outstanding Debt Securities of a series
may be adopted at a meeting or adjourned meeting duly reconvened at which a
quorum is present by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the applicable
Indenture will be binding on all Holders of Debt Securities of that series and
the related coupons. The quorum at any meeting called to adopt a resolution, and
at any reconvened meeting, will be persons holding or representing a majority in
principal amount of the Outstanding Debt Securities of a series; provided,
however, that if any action is to be taken at such meeting with respect to a
consent or waiver which may be given by the Holders of not less than 66 2/3% in
principal amount of the Outstanding Debt Securities of a series, the persons
holding or representing 66 2/3% in principal amount of the Outstanding Debt
Securities of such series will constitute a quorum (Section 1304).
CONSOLIDATION, MERGER AND SALE OF ASSETS
Holdings may, without the consent of any Holders of Outstanding Debt
Securities, consolidate or merge with or into, or transfer or lease its assets
substantially as an entirety to, any Person, and any other Person may
consolidate or merge with or into, or transfer or lease its assets substantially
as an entirety to, Holdings, provided that (i) the Person (if other than
Holdings) formed by such consolidation or into which Holdings is merged or which
acquires or leases the assets of Holdings substantially as an entirety is
organized under the laws of any United States jurisdiction and assumes Holdings'
obligations on the Debt Securities and under the Indenture, (ii) after giving
effect to the transaction, no Event of Default, and no event which, after notice
or lapse of time or both, would become an Event of Default, shall have happened
and be continuing, and (iii) certain other conditions are met. (Section 801).
NOTICES
Except as may otherwise be set forth in an applicable Prospectus Supplement
relating to a series of Debt Securities, notices to Holders of Bearer Securities
will be given by publication in a daily newspaper in the English language of
general circulation in The City of New York and in London, and so long as such
Bearer Securities are listed on the Stock Exchange and the Stock Exchange shall
so require, in a daily newspaper of general circulation in Luxembourg or, if not
practical, elsewhere in Western Europe. Such publication is expected to be made
in THE WALL STREET JOURNAL, the FINANCIAL TIMES and the LUXEMBURGER
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WORT. Notices to Holders of Registered Securities will be given by mail to the
addresses of such Holders as they appear in the Security Register. (Sections 101
and 106).
TITLE
Title to any temporary global Debt Security, any permanent global Debt
Security, any Bearer Securities and any coupons appertaining thereto will pass
by delivery. Holdings, each Trustee and any agent of Holdings or the applicable
Trustee may treat the bearer of any Bearer Security and the bearer of any coupon
and the registered owner of any Registered Security as the absolute owner
thereof (whether or not such Debt Security or coupon shall be overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all other purposes. (Section 308).
REPLACEMENT OF DEBT SECURITIES AND COUPONS
Any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining thereto will be replaced by Holdings at the expense of the Holder
upon surrender of such Debt Security to the applicable Trustee. Debt Securities
or coupons that become destroyed, stolen or lost will be replaced by Holdings at
the expense of the Holder upon delivery to the applicable Trustee of the Debt
Security and coupons or evidence of the destruction, loss or theft thereof
satisfactory to Holdings and the applicable Trustee; in the case of any coupon
which becomes destroyed, stolen or lost, such coupon will be replaced by
issuance of a new Debt Security in exchange for the Debt Security to which such
coupon appertains. In the case of a destroyed, lost or stolen Debt Security or
coupon an indemnity satisfactory to the applicable Trustee and Holdings may be
required at the expense of the Holder of such Debt Security or coupon before a
replacement Debt Security will be issued. (Section 306).
CONCERNING THE TRUSTEES
Business and other relationships (including other trusteeships) between, on
the one hand, Holdings and its affiliates and, on the other hand, the Trustee
under the Indenture pursuant to which any of the Debt Securities to which an
applicable Prospectus Supplement accompanying this Prospectus relates are
described in such Prospectus Supplement.
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DESCRIPTION OF OFFERED PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Offered Preferred Stock. The particular terms of any series of any such
Offered Preferred Stock will be described in an applicable Prospectus
Supplement. If so indicated in such a Prospectus Supplement, the terms of any
such series may differ from the terms set forth below.
The summary of terms of any Offered Preferred Stock contained in this
Prospectus and in an applicable Prospectus Supplement does not purport to be
complete and is subject to, and qualified in its entirety by, the provisions of
Holdings' Restated Certificate of Incorporation (the "Restated Certificate of
Incorporation"), filed as an exhibit to the Registration Statements of which
this Prospectus is a part, and the certificate of designations relating to such
series of Preferred Stock (the "Certificate of Designation"), the form of which
is filed as an exhibit to the Registration Statement and which will be filed
with the Secretary of State of Delaware, at or prior to the time of issuance of
such series of Preferred Stock.
GENERAL
The Restated Certificate of Incorporation authorizes the issuance of
38,000,000 shares of Preferred Stock, $1.00 par value per share. As of July 31,
1997, there were 33,050 shares of Cumulative Convertible Voting Preferred Stock,
Series A (the "Series A Preferred Stock"), 12,966,950 shares of Cumulative
Convertible Voting Preferred Stock, Series B (the "Series B Preferred Stock")
and 1,000 shares of Redeemable Voting Preferred Stock (the "Redeemable Preferred
Stock") issued and outstanding.
SERIES A PREFERRED STOCK. The shares of Series A Preferred Stock are
entitled to receive preferential dividends, as and when declared by the Board of
Directors out of funds legally available therefor, in an amount equal to $1.955
per share per annum, payable quarterly on a cumulative basis. The liquidation
preference of the Series A Preferred Stock is equal to $39.10 plus accumulated
and unpaid dividends. Holdings may redeem shares of Series A Preferred Stock in
cumulative annual increments of 10,400,000 shares, subject to adjustment for
shares theretofore converted, at a price per share equal to $39.10, but only if
there is a public market for the Holdings' common stock and the average market
price of shares of Holdings' common stock exceeds the conversion price on the
date notice of redemption is given.
Each share of Series A Preferred Stock is convertible, at any time prior to
the date of redemption, into 0.3178313, subject to adjustment, of a share of
Holdings' common stock, provided that at least 250,000 shares of Series A
Preferred Stock (or such lesser number of shares then outstanding) must be
converted each time. Holders of Series A Preferred Stock are entitled to vote,
together with the holders of Holdings' common stock as one class (except as
otherwise required by law), on all matters to be voted on by stockholders of
Holdings. Each share of Series A Preferred Stock is entitled to the number of
votes per share equal to the quotient obtained by dividing $39.10 by the
conversion price then in effect. In addition, the holders of the Series A
Preferred Stock have voting rights in certain other circumstances.
Nippon Life Insurance Company ("Nippon Life") has the non-transferable right
to exchange the Series A Preferred Stock for common shares of American Express
Company ("American Express"). In addition, Holdings has the right to redeem the
Series A Preferred Stock if the average market price of American Express' common
shares exceeds the exchange price on the date notice of redemption is given.
SERIES B PREFERRED STOCK. The terms of the Series B Preferred Stock
(including dividend rate, voting rights and liquidation preference) are
identical in all material respects to the terms of the Series A Preferred Stock,
except that conversion of the Series B Preferred Stock is not subject to the
restriction in the terms of the Series A Preferred Stock requiring that at least
250,000 shares thereof be converted at any one time.
REDEEMABLE PREFERRED STOCK. As of the date of this Prospectus, American
Express and Nippon Life together own all of the issued and outstanding shares of
Redeemable Preferred Stock.
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The shares of Redeemable Preferred Stock are entitled to receive
preferential dividends, as and when declared by the Board of Directors out of
funds legally available therefor, on a cumulative basis. Beginning on December
1, 1994, the holders of Redeemable Preferred Stock are entitled to receive
annual dividends in an amount equal to, in the aggregate, 50% of the amount, if
any, by which the Company's net income for the applicable dividend period for
the fiscal year exceeds $400 million, up to a maximum of $50 million for any
such period (pro rated for the last dividend period which runs from December 1,
2001 to May 31, 2002) (the "Dividend Formula"). The liquidation preference per
share of the Redeemable Preferred Stock is $1.00 plus accumulated and unpaid
dividends and accrued interest, if any, thereon at a specified rate.
Subject to funds being legally available therefor, Holdings is required to
redeem all of the Redeemable Preferred Stock on the final dividend payment date
therefor, or as soon as practicable thereafter when funds become legally
available, at a price per share equal to the liquidation preference referred to
above. In addition, if a Designated Event (as defined in the Restated
Certificate of Incorporation) occurs, the holders of the Redeemable Preferred
Stock have the right to require Holdings to redeem, out of funds legally
available therefor, all of the Redeemable Preferred Stock for an aggregate
redemption price equal to $250 million if such Designated Event takes place
prior to November 30, 1997, declining $50 million per year thereafter.
Holders of Redeemable Preferred Stock are entitled to vote, together with
the holders of Holdings' common stock as one class, on all matters to be voted
on by stockholders of Holdings. Notwithstanding the foregoing, American Express
has agreed that so long as it or any of its subsidiaries holds any shares of the
Redeemable Preferred Stock, it will vote such shares in the same proportion as
the votes cast by the holders of shares of Holdings' common stock on matters to
be voted on by stockholders of Holdings generally. Each share of Redeemable
Preferred Stock is entitled to 1,059 votes. In addition, if the equivalent of
six quarterly dividends (whether or not consecutive) to which the holders of the
Redeemable Preferred Stock are entitled in accordance with the Dividend Formula,
or to which the holders of any Parity Preferred Stock are entitled pursuant to
the terms of such Parity Preferred Stock, are in arrears, then the authorized
number of directors of Holdings shall be increased by two and the holders of the
Redeemable Preferred Stock will have the right (voting as a class with the
holders of any other Parity Preferred Stock of Holdings upon which like voting
rights have been conferred and are exercisable) to elect such two directors
until such time as all accumulated dividends have been paid. In addition, the
holders of Redeemable Preferred Stock have voting rights in certain other
circumstances.
------------------------
Subject to the Restated Certificate of Incorporation and to any limitations
contained in then outstanding Preferred Stock, Holdings may issue additional
classes or series of Preferred Stock, at any time or from time to time, with
such powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, as the Board of
Directors or any duly authorized committee thereof shall determine, all without
further action of the stockholders, including holders of then outstanding
Preferred Stock, of Holdings.
The Offered Preferred Stock will have the dividend, liquidation, redemption
and voting rights set forth below unless otherwise provided in an applicable
Prospectus Supplement. Reference is made to such Prospectus Supplement for
specific terms, including (1) the designation of such Offered Preferred Stock;
(2) the number of shares of such Offered Preferred Stock, the liquidation
preference per share and the initial offering price of such Offered Preferred
Stock; (3) the dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Offered Preferred Stock; (4) the date
from which dividends on such Offered Preferred Stock shall accumulate, if
applicable; (5) the procedures for any auction and remarketing, if any, of such
Offered Preferred Stock; (6) the provision of a sinking fund, if any, for such
Offered Preferred Stock; (7) the provision for redemption, if applicable, of
such Offered Preferred Stock; (8) any listing of such Offered Preferred Stock on
any securities exchange; (9) the terms and conditions, if applicable, upon which
such Offered Preferred Stock will be convertible into or exchangeable for
Holdings' common stock or other securities, and whether at the option of the
holder
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thereof or the Company; (10) whether such Offered Preferred Stock will rank
senior or junior to or on a parity with any other class or series of Offered
Preferred Stock; (11) the voting rights, if any, of such Offered Preferred
Stock; (12) any conversion or exchange rights of such Offered Preferred Stock;
(13) whether Holdings has elected to offer Depositary Shares with respect to
such Offered Preferred Stock as described below under "Depositary Shares"; (14)
any other specific terms, preferences, rights limitations or restrictions of
such Offered Preferred Stock; and (15) a discussion of Federal income tax
considerations applicable to such Offered Preferred Stock.
The Offered Preferred Stock will, when issued, be fully paid and
non-assessable.
RANK
Each series of Offered Preferred Stock will, with respect to dividends or
upon liquidation, dissolution or winding up, rank (i) senior to all common stock
of Holdings, and to all equity securities issued by Holdings the terms of which
specifically provide that such equity securities rank junior to such Offered
Preferred Stock (collectively referred to as "Junior Securities"); (ii) on a
parity with all equity securities issued by Holdings the terms of which
specifically provide that such equity securities rank on a parity with such
Preferred Stock (collectively referred to as "Parity Preferred Stock"); and
(iii) junior to all equity securities issued by Holdings the terms of which
specifically provide that such equity securities rank senior to such Offered
Preferred Stock (collectively referred to as "Senior Securities").
Each series of Offered Preferred Stock will rank on a parity with the Series
A Preferred Stock, the Cumulative Preferred Stock and the Redeemable Preferred
Stock as to dividends and upon liquidation, dissolution or winding up.
DIVIDENDS
Holders of shares of Offered Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available therefor, dividends payable on such dates and at such rates per share
per annum as set forth in an applicable Prospectus Supplement. Each such
dividend will be payable to the holders of record as they appear on the stock
books of Holdings (or, if applicable, the records of the Depositary referred to
below under "Depositary Shares") on such record dates as will be fixed by the
Board of Directors or a duly authorized committee thereof, or specified in such
Prospectus Supplement. No dividends may be declared or paid or set apart for
payment on any Parity Preferred Stock with regard to the payment of dividends
unless there shall also be or have been declared and paid or set apart for
payment on the Offered Preferred Stock, dividends for all dividend payment
periods of such Offered Preferred Stock ending on or before the dividend payment
date of such Parity Preferred Stock, ratably in proportion to the respective
amounts of dividends (x) accumulated and unpaid or payable on such Parity
Preferred Stock, on the one hand, and (y) accumulated and unpaid through the
dividend payment period or periods of Offered Preferred Stock next preceding
such dividend payment date, on the other hand.
Except as set forth in the preceding sentence, unless full cumulative
dividends on the Offered Preferred Stock have been paid through the most
recently completed dividend period for such Offered Preferred Stock, no
dividends (other than in Holdings' common stock) may be paid or declared and set
aside for payment or other distribution made upon such common stock or on any
other stock of Holdings that are Junior Securities or Parity Preferred Stock as
to dividends, nor may any Holdings' common stock or shares of any other stock of
Holdings that are Junior Securities or Parity Preferred Stock as to dividends be
redeemed, purchased or otherwise acquired for any consideration (or any payment
be made to or available for a sinking fund for the redemption of any shares of
such stock; provided, however, that any moneys theretofore deposited in any
sinking fund with respect to any preferred stock of Holdings in compliance with
the provisions of such sinking fund may thereafter be applied to the purchase or
redemption of such preferred stock in accordance with the terms of such sinking
fund, regardless of whether at the time of such application full cumulative
dividends upon shares of such Offered Preferred
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Stock outstanding to the last dividend payment date shall have been paid or
declared and set apart for payment), provided that any such Junior Securities or
Parity Preferred Stock or Holdings' common stock may be converted into or
exchanged for shares of stock that are Junior Securities as to dividends.
Payment of dividends on any series of Offered Preferred Stock may be
restricted by loan agreements, indentures or other transactions entered into by
Holdings.
CONVERTIBILITY
No series of Offered Preferred Stock offered hereby will be convertible
into, or exchangeable for, other securities or property except as set forth in
an applicable Prospectus Supplement.
REDEMPTION AND SINKING FUND
No series of Offered Preferred Stock offered hereby will be redeemable or
receive the benefit of a sinking fund except as set forth in an applicable
Prospectus Supplement.
LIQUIDATION
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Holdings, holders of any series of Offered Preferred Stock then outstanding
shall be entitled to receive out of the assets of Holdings available for
distribution to its stockholders, after any distribution is made to or set aside
for holders of Senior Securities and before any distribution is made to holders
of Junior Securities, the liquidation preference per share specified in an
applicable Prospectus Supplement, if any, in each case together with any
accumulated and unpaid dividends. After payment of the full amount of the
liquidation preference and such dividends, the holders of shares of Offered
Preferred Stock will not be entitled to any further participation in any
distribution of assets by Holdings. If, upon any liquidation, dissolution or
winding up of the assets of Holdings, the assets of Holdings, or proceeds
thereof, distributable among the holders of shares of Parity Preferred Stock
shall be insufficient to pay in full the preferential amount aforesaid, then
such assets, or the proceeds thereof, shall be distributable among such holders
ratably in accordance with the respective amounts which would be payable on such
shares if all amounts payable thereon were paid in full. Neither a consolidation
or merger of Holdings with or into any other corporation, nor a merger of any
other corporation with or into Holdings, nor a sale or transfer of all or any
part of Holdings' assets shall be considered a liquidation, dissolution or
winding up of Holdings.
The Restated Certificate of Incorporation does not contain any language
requiring funds to be set aside to protect the liquidation preference of the
Offered Preferred Stock, although such liquidation preference may be
substantially in excess of the par value of the Offered Preferred Stock. In
addition, Holdings is not aware of any provision of Delaware law or any
controlling decision of the courts of the State of Delaware (the state of
incorporation of Holdings) that requires a restriction upon the surplus of
Holdings solely because the liquidation preference of Offered Preferred Stock
will exceed its par value. Consequently, there will be no restriction upon
surplus of Holdings solely because the liquidation preference of Offered
Preferred Stock will exceed the par value and there will be no remedies
available to holders of Offered Preferred Stock before or after the payment of
any dividend, other than in connection with the liquidation of Holdings, solely
by reason of the fact that such dividend would reduce the surplus of Holdings to
an amount less than the difference between the liquidation preference of Offered
Preferred Stock and its par value.
VOTING
Except as provided by Delaware law, no series of Offered Preferred Stock
will be entitled to vote except as provided in an applicable Prospectus
Supplement.
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MISCELLANEOUS
The holders of Offered Preferred Stock will have no preemptive rights.
Shares of Offered Preferred Stock redeemed or otherwise reacquired by Holdings
shall be retired and, upon the taking of any action required by applicable law,
resume the status of authorized and unissued shares of Offered Preferred Stock
undesignated as to series, and shall be available for subsequent issuance. The
shares of a series of Offered Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in an applicable Prospectus Supplement, the
Restated Certificate of Incorporation or the related Certificate of Designation
or as otherwise required by law. Neither the par value nor the liquidation
preference is indicative of the price at which the Offered Preferred Stock will
actually trade on or after the date of issuance.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Offered Preferred Stock
will be described in an applicable Prospectus Supplement.
DEPOSITARY SHARES
GENERAL. Holdings may, at its option, elect to offer fractional shares of
Offered Preferred Stock, rather than full shares of Offered Preferred Stock. In
the event such option is exercised, Holdings will issue to the public receipts
for Depositary Shares, each of which will represent a fraction (to be set forth
in the Prospectus Supplement relating to a particular series of Offered
Preferred Stock) of a share of a particular series of Offered Preferred Stock as
described below.
The shares of any series of Offered Preferred Stock represented by
Depositary Shares will be deposited under a Deposit Agreement (the "Deposit
Agreement") between Holdings and a bank or trust company selected by Holdings
having its principal office in the United States and having a combined capital
and surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Offered Preferred Stock
represented by such Depositary Share, to all the rights and preferences of the
Offered Preferred Stock represented thereby (including dividend, voting,
redemption and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of Offered
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of Holdings, issue temporary Depositary
Receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive Depositary Receipts but not in
definitive form. Definitive Depositary Receipts will be prepared thereafter
without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at Holdings' expense. In
addition, subject to the terms of the Deposit Agreement, holders of Depositary
Shares are entitled to withdraw and receive, upon surrender of Depositary
Receipts, certificates evidencing the fractional number of shares of Offered
Preferred Stock represented by such Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the Offered
Preferred Stock to the record holders of Depositary Shares relating to such
Offered Preferred Stock in proportion to the number of such Depositary Shares
owned by such holders.
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In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
Holdings, sell such property and distribute the net proceeds from such sale to
such holders.
REDEMPTION OF DEPOSITARY SHARES. If a series of Offered Preferred Stock
represented by Depositary Shares is subject to redemption, the Depositary Shares
will be redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of such series of Offered Preferred Stock held
by the Depositary. The redemption price per Depositary Share will be equal to
the applicable fraction of the redemption price per share payable with respect
to such series of the Offered Preferred Stock. Whenever Holdings redeems shares
of Offered Preferred Stock held by the Depositary, the Depositary will redeem as
of the same redemption date the number of Depositary Shares representing the
shares of Offered Preferred Stock so redeemed. If fewer than all the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be selected
by lot or pro rata as may be determined by the Depositary.
VOTING THE OFFERED PREFERRED STOCK. Upon receipt of notice of any meeting
at which the holders of the Offered Preferred Stock are entitled to vote, the
Depositary will mail the information contained in such notice of meeting to the
record holders of the Depositary Shares relating to such Offered Preferred
Stock. Each record holder of such Depositary Shares on the record date (which
will be the same date as the record date for the Offered Preferred Stock) will
be entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of the Offered Preferred Stock represented by such
holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the amount of the Offered Preferred Stock represented by
such Depositary Shares in accordance with such instructions, and Holdings will
agree to take all action which may be deemed necessary by the Depositary in
order to enable the Depositary to do so. The Depositary will abstain from voting
shares of the Offered Preferred Stock to the extent it does not receive specific
instructions from the holders of Depositary Shares representing such Offered
Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between Holdings and
the Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
Holdings or the Depositary only if (i) all outstanding Depositary Shares have
been redeemed or (ii) there has been a final distribution in respect of the
Offered Preferred Stock in connection with any liquidation, dissolution or
winding up of Holdings and such distribution has been distributed to the holders
of Depositary Receipts.
CHARGES OF DEPOSITARY. Holdings will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. Holdings will pay charges of the Depositary in connection with the
initial deposit of the Offered Preferred Stock and any redemption of the Offered
Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges, including a fee for
the withdrawal of shares of Offered Preferred Stock upon surrender of Depositary
Receipts, as are expressly provided in the Deposit Agreement to be for their
accounts.
MISCELLANEOUS. The Depositary will forward to holders of Depositary
Receipts all reports and communications from Holdings that are delivered to the
Depositary and which Holdings is required to furnish to the holders of the
Offered Preferred Stock.
Neither the Depositary nor Holdings will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Holdings and the
Depositary under the Deposit Agreement will be limited to performance in good
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faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Offered
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting Offered Preferred Stock for deposit, holders of Depositary
Receipts or other persons believed to be competent and on documents believed to
be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may resign at any
time by delivering to Holdings notice of its election to do so, and Holdings may
at any time remove the Depositary, any such resignation or removal to take
effect upon the appointment of a successor Depositary and its acceptance of such
appointment. Such successor Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered or sold during the restricted period (as defined
under "Description of Debt Securities--Denominations, Registration and
Transfer"), or delivered in definitive form in connection with a sale during the
restricted period, in the United States or to United States persons other than
to (a) the United States office of (i) an international organization (as defined
in Section 7701(a)(18) of the Code), (ii) a foreign central bank (as defined in
Section 895 of the Code), or (iii) any underwriter, agent, or dealer offering or
selling Bearer Securities during the restricted period (a "Distributor")
pursuant to a written contract with the issuer or with another Distributor, that
purchases Bearer Securities for resale or for its own account and agrees to
comply with the requirements of Section 165(j)(3)(A), (B), or (C) of the Code,
or (b) the foreign branch of a United States financial institution purchasing
for its own account or for resale, which institution agrees to comply with the
requirements of Section 165(j)(3)(A), (B), or (C) of the Code. In addition, a
sale of a Bearer Security may be made during the restricted period to a United
States person who acquired and holds the Bearer Security on the Certification
Date through a foreign branch of a United States financial institution that
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the Code. Any Distributor (including an affiliate of a Distributor) offering or
selling Bearer Securities during the restricted period must agree not to offer
or sell Bearer Securities in the United States or to United States persons
(except as discussed above) and must employ procedures reasonably designed to
ensure that its employees or agents directly engaged in selling Bearer
Securities are aware of these restrictions.
Bearer Securities and their interest coupons will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Section 165(j) and 1287(a) of the
Internal Revenue Code."
Purchasers of Bearer Securities may be affected by certain limitations under
United States tax laws. See "United States Taxation--Backup Withholding." As
used herein, a "United States person" means a citizen or resident of the United
States, a corporation or partnership created or organized in or under the laws
of the United States or any political subdivision thereof, an estate the income
of which is subject to United States federal income taxation regardless of its
source or a trust that is subject to the supervision of a court within the
United States and the control of a United States person as described in section
7701(a)(30) of the Code, and "United States" means the United States of America
(including the States and the District of Columbia) and its possessions
including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island and the Northern Mariana Islands. The term "Non-United States Holder"
means any Holder which is not a United States person.
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UNITED STATES TAXATION
In the opinion of Simpson Thacher & Bartlett, special United States tax
counsel to the Company, the following discussion is an accurate summary of the
material United States federal income tax consequences of the purchase,
ownership and disposition of Debt Securities and Depositary Shares as of the
date hereof. Except where noted, it deals only with Debt Securities and
Depositary Shares held as capital assets by United States Holders and does not
deal with special situations, such as those of dealers in securities or
currencies, financial institutions, tax-exempt entities, life insurance
companies, persons holding Debt Securities or Depositary Shares as a part of a
hedging, conversion or constructive sale transaction or a straddle or United
States Holders whose "functional currency" is not the U.S. dollar. Furthermore,
the discussion below is based upon the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations, rulings and judicial
decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified so as to result in federal income tax consequences
different from those discussed below. Any special United States federal income
tax considerations relevant to a particular issue of Debt Securities or
Depositary Shares will be provided in the applicable Prospectus Supplement.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF DEBT SECURITIES OR
DEPOSITARY SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL
INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
PAYMENTS OF INTEREST
Except as set forth below, interest on a Debt Security will generally be
taxable to a United States Holder as ordinary income at the time it is paid or
accrued in accordance with the United States Holder's method of accounting for
tax purposes. As used herein, a "United States Holder" of a Debt Security means
a holder that is a citizen or resident of the United States, a corporation or
partnership created or organized in or under the laws of the United States or
any political subdivision thereof, an estate the income of which is subject to
United States federal income taxation regardless of its source or a trust that
is subject to the supervision of a court within the United States and the
control of a United States person as described in section 7701(a)(30) of the
Code. A "Non-United States Holder" is a holder that is not a United States
Holder.
ORIGINAL ISSUE DISCOUNT
United States Holders of Debt Securities issued with original issue discount
("OID") will be subject to special tax accounting rules, as described in greater
detail below. United States Holders of such Debt Securities should be aware that
they generally must include OID in gross income in advance of the receipt of
cash attributable to that income. However, United States Holders of such Debt
Securities generally will not be required to include separately in income cash
payments received on the Debt Securities, even if denominated as interest, to
the extent such payments do not constitute qualified stated interest (as defined
below). Debt Securities issued with OID will be referred to as "Original Issue
Discount Debt Securities." Notice will be given in the applicable Prospectus
Supplement when the Company determines that a particular Debt Security will be
an Original Issue Discount Debt Security. This summary is based upon Treasury
regulations applicable to debt instruments issued with OID (the "OID
Regulations").
A Debt Security with an "issue price" that is less than its stated
redemption price at maturity (the sum of all payments to be made on the Debt
Security other than "qualified stated interest") will be issued with OID if such
difference is at least 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity. The "issue price" of
each Debt Security in a particular offering will be the first price at which a
substantial amount of that particular offering is sold (other than to an
underwriter, placement agent or wholesaler). The term "qualified stated
interest" means stated interest that is unconditionally payable in cash or in
property (other than debt instruments of the issuer) at least annually at a
single fixed rate or, subject to certain conditions, based on one or more
indices. Interest is payable at a single fixed rate only if the rate
appropriately takes into account the length of the interval
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between payments. Notice will be given in the applicable Prospectus Supplement
when the Company determines that a particular Debt Security will bear interest
that is not qualified stated interest.
In the case of a Debt Security issued with de minimis OID (I.E., discount
that is not OID because it is less than 0.25 percent of the stated redemption
price at maturity multiplied by the number of complete years to maturity), the
United States Holder generally must include such de minimis OID in income as
principal payments on the Debt Securities are made in proportion to the stated
principal amount of the Debt Security. Any amount of de minimis OID that has
been included in income shall be treated as capital gain.
Original Issue Discount Debt Securities that may be redeemed prior to their
stated maturity at the option of the Company and/or at the option of the Holder
may be subject to rules that differ from the general rules discussed herein.
Persons considering the purchase of Original Issue Discount Debt Securities with
such features should carefully examine the applicable Prospectus Supplement and
should consult their own tax advisors with respect to such features since the
tax consequences with respect to OID will depend, in part, on the particular
terms and features of the Debt Securities.
United States Holders of Original Issue Discount Debt Securities with a
maturity upon issuance of more than one year must, in general, include OID in
income in advance of the receipt of some or all of the related cash payments.
The amount of OID includible in income by the initial United States Holder of an
Original Issue Discount Debt Security is the sum of the "daily portions" of OID
with respect to the Debt Security for each day during the taxable year or
portion of the taxable year in which such United States Holder held such Debt
Security ("accrued OID"). The daily portion is determined by allocating to each
day in any "accrual period" a pro rata portion of the OID allocable to that
accrual period. The "accrual period" for an Original Issue Discount Debt
Security may be of any length and may vary in length over the term of the Debt
Security, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs on the first day or the final
day of an accrual period. The amount of OID allocable to any accrual period is
an amount equal to the excess, if any, of (a) the product of the Debt Security's
adjusted issue price at the beginning of such accrual period and its yield to
maturity (determined on the basis of compounding at the close of each accrual
period and properly adjusted for the length of the accrual period) over (b) the
sum of any qualified stated interest allocable to the accrual period. OID
allocable to a final accrual period is the difference between the amount payable
at maturity (other than a payment of qualified stated interest) and the adjusted
issue price at the beginning of the final accrual period. Special rules will
apply for calculating OID for an initial short accrual period. The "adjusted
issue price" of a Debt Security at the beginning of any accrual period is equal
to its issue price increased by the accrued OID for each prior accrual period
(determined without regard to the amortization of any acquisition or bond
premium, as described below) and reduced by any payments made on such Debt
Security (other than qualified stated interest) on or before the first day of
the accrual period. Under these rules, a United States Holder will have to
include in income increasingly greater amounts of OID in successive accrual
periods. The Company is required to provide information returns stating the
amount of OID accrued on Debt Securities held of record by persons other than
corporations and other exempt Holders.
In the case of certain Original Issue Discount Debt Securities that are
floating rate Debt Securities, both the "yield to maturity" and "qualified
stated interest" will be determined solely for purposes of calculating the
accrual of OID as though the Debt Security will bear interest in all periods at
a fixed rate generally equal to the rate that would be applicable to interest
payments on the Debt Security on its date of issue or, in the case of certain
floating rate Debt Securities, the rate that reflects the yield to maturity that
is reasonably expected for the Debt Security. Additional rules may apply if
interest on a floating rate Debt Security is based on more than one interest
index. Persons considering the purchase of floating rate Debt Securities should
carefully examine the applicable Prospectus Supplement and should consult their
own tax advisors regarding the United States federal income tax consequences of
the holding and disposition of such Debt Securities.
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United States Holders may elect to treat all interest on any Debt Security
as OID and calculate the amount includible in gross income under the constant
yield method described above. For the purposes of this election, interest
includes stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. The election is to be made for
the taxable year in which the United States Holder acquired the Debt Security,
and may not be revoked without the consent of the IRS. UNITED STATES HOLDERS
SHOULD CONSULT WITH THEIR OWN TAX ADVISORS ABOUT THIS ELECTION.
SHORT-TERM DEBT SECURITIES
In the case of Original Issue Discount Debt Securities having a term of one
year or less ("Short-Term Debt Securities"), under the OID Regulations all
payments (including all stated interest) will be included in the stated
redemption price at maturity and, thus, United States Holders will generally be
taxable on the discount in lieu of stated interest. The discount will be equal
to the excess of the stated redemption price at maturity over the issue price of
a Short-Term Debt Security, unless the United States Holder elects to compute
this discount using tax basis instead of issue price. In general, individuals
and certain other cash method United States Holders of a Short-Term Debt
Security are not required to include accrued discount in their income currently
unless they elect to do so (but may be required to include any stated interest
in income as it is received). United States Holders that report income for
federal income tax purposes on the accrual method and certain other United
States Holders are required to accrue discount on such Short-Term Debt
Securities (as ordinary income) on a straight-line basis, unless an election is
made to accrue the discount according to a constant yield method based on daily
compounding. In the case of a United States Holder that is not required, and
does not elect, to include discount in income currently, any gain realized on
the sale, exchange or retirement of the Short-Term Debt Security will generally
be ordinary income to the extent of the discount accrued through the date of
sale, exchange or retirement. In addition, a United States Holder that does not
elect to include currently accrued discount in income may be required to defer
deductions for a portion of the United States Holder's interest expense with
respect to any indebtedness incurred or continued to purchase or carry such Debt
Securities.
MARKET DISCOUNT
If a United States Holder purchases a Debt Security (other than an Original
Issue Discount Debt Security) for an amount that is less than its stated
redemption price at maturity or, in the case of an Original Issue Discount Debt
Security, its adjusted issue price, the amount of the difference will be treated
as "market discount" for United States federal income tax purposes, unless such
difference is less than a specified de minimis amount. Under the market discount
rules, a United States Holder will be required to treat any principal payment
on, or any gain on the sale, exchange, retirement or other disposition of, a
Debt Security as ordinary income to the extent of the market discount which has
not previously been included in income and is treated as having accrued on such
Debt Security at the time of such payment or disposition. In addition, the
United States Holder may be required to defer, until the maturity of the Debt
Security or its earlier disposition in a taxable transaction, the deduction of
all or a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry such Debt Security.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Debt Security, unless
the United States Holder elects to accrue on a constant interest method. A
United States Holder of a Debt Security may elect to include market discount in
income currently as it accrues (on either a ratable or constant interest
method), in which case the rule described above regarding deferral of interest
deductions will not apply. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired on or
after the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
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ACQUISITION PREMIUM; AMORTIZABLE BOND PREMIUM
A United States Holder that purchases a Debt Security for an amount that is
greater than its adjusted issue price but equal to or less than the sum of all
amounts payable on the Debt Security after the purchase date other than payments
of qualified stated interest will be considered to have purchased such Debt
Security at an "acquisition premium." Under the acquisition premium rules, the
amount of OID which such holder must include in its gross income with respect to
such Debt Security for any taxable year will be reduced by the portion of such
acquisition premium properly allocable to such year.
A United States Holder that purchases a Debt Security for an amount in
excess of the sum of all amounts payable on the Debt Security after the purchase
date other than qualified stated interest will be considered to have purchased
such Debt Security at a "premium" and will not be required to include any OID in
income. A United States Holder generally may elect to amortize the premium over
the remaining term of the Debt Security (or over a shorter period in certain
instances) on a constant yield method. The amount amortized in any year will be
treated as a reduction of the United States Holder's interest income from the
Debt Security. Bond premium on a Debt Security held by a United States Holder
that does not make such an election will decrease the gain or increase the loss
otherwise recognized on disposition of the Debt Security. The election to
amortize premium on a constant yield method once made applies to all debt
obligations held or subsequently acquired by the electing United States Holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
Proposed Treasury regulations issued on June 27, 1996 would clarify the
treatment of bond premium. Among the provisions contained in the proposed
regulations is a provision that generally provides that premium may be amortized
to offset interest income only as a United States Holder takes the qualified
stated interest into account under the holder's regular accounting method.
Moreover, the proposed Treasury regulations generally provide that in the case
of instruments that provide for alternative payment schedules, bond premium is
calculated by assuming that both the issuer and the holder will exercise or not
exercise options in a manner that maximizes the holder's yield. If adopted, the
regulations would be effective for debt instruments acquired on or after the
date 60 days after the date final regulations are published in the Federal
Register. However, if a United States Holder elects to amortize bond premium for
the taxable year containing such effective date, the proposed Treasury
regulations would apply to all the United States Holder's debt instruments held
on or after the first day of that taxable year.
SALE, EXCHANGE AND RETIREMENT OF DEBT SECURITIES
A United States Holder's tax basis in a Debt Security will, in general, be
the United States Holder's cost therefor, increased by OID, market discount or
any discount with respect to a Short-Term Debt Security previously included in
income by the United States Holder and reduced by any amortized premium and any
cash payments on the Debt Security other than qualified stated interest. Upon
the sale, exchange or retirement of a Debt Security, a United States Holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange or retirement (less any accrued qualified stated interest,
which will be taxable as such) and the adjusted tax basis of the Debt Security.
Except as described above with respect to certain Short-Term Debt Securities or
with respect to market discount, such gain or loss will be capital gain or loss
and will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Debt Security has been held for more than one year. Long-term
capital gains of individuals are eligible for reduced rates of taxation, with
additional rate reductions applicable to gains from capital assets held for more
than 18 months. The deductibility of capital losses is subject to limitations.
Prospective investors should consult their own tax advisors with respect to the
treatment of capital gains and losses.
TAX CONSEQUENCES OF SATISFACTION AND DISCHARGE
The Company may discharge its obligations under the Debt Securities as more
fully described under "Description of Debt Securities--Satisfaction and
Discharge" above. Such a discharge would generally for
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federal income tax purposes constitute the retirement of the Debt Securities and
the issuance of new obligations with the result that Holders of the Debt
Securities would realize gain or loss (if any) on such exchange, which would be
recognized depending upon, for example, whether the exchange qualified as a
tax-free recapitalization for federal income tax purposes or whether the wash
sale loss disallowance rules applied. Any such gain would generally not be
taxable to Non-United States Holders under the circumstances outlined below.
Furthermore, following discharge, the Debt Securities might be subject to
withholding, backup withholding and/or information reporting and might be issued
with OID. Similar results might occur if the Company defeases certain
obligations as described under "Description of Debt Securities--Defeasance of
Certain Obligations".
EXTENDIBLE DEBT SECURITIES, RENEWABLE DEBT SECURITIES AND RESET DEBT SECURITIES
If so specified in an applicable Prospectus Supplement relating to a Debt
Security, the Company may have the option to extend the maturity of a Debt
Security (an "Extendible Debt Security" or a "Renewable Debt Security"). In
addition, the Company may have the option to reset the interest rate, the Spread
or the Spread Multiplier (a "Reset Debt Security"). The treatment of a United
States Holder of Debt Securities with respect to which such an option has been
exercised is unclear and will depend, in part, on the terms established for such
Debt Securities by the Company pursuant to the exercise of such option (the
"Revised Terms"). Such United States Holder may be treated for federal income
tax purposes as having exchanged such Debt Securities (the "Old Debt
Securities") for new Debt Securities with Revised Terms (the "New Debt
Securities"). If the exercise of the option by the Company is not treated as an
exchange of Old Debt Securities for New Debt Securities, no gain or loss will be
recognized by a United States Holder as a result thereof. If the exercise of the
option is treated as a taxable exchange of Old Debt Securities for New Debt
Securities, a United States Holder would recognize gain or loss equal to the
difference between the issue price of the New Debt Securities and the holder's
tax basis in the Old Debt Securities.
The presence of such options may also affect the calculation of OID, among
other things. The OID Regulations provide that, solely for purposes of the
accrual of OID, an issuer of a debt instrument having an option or combination
of options to extend the term of the debt instrument will be presumed to
exercise such option or options in a manner that minimizes the yield on the debt
instrument. Conversely, if a holder is treated as having a put option, such an
option will be presumed to be exercised in a manner that maximizes the yield on
the debt instrument. If the exercise of such option or options to extend the
term of the debt instrument actually occurs or the option to put does not occur,
contrary to the presumption made under the OID Regulations (a "change in
circumstances"), then, solely for purposes of the accrual of OID, the debt
instrument is treated as reissued on the date of the change in circumstances for
an amount equal to its adjusted issue price on the date. Persons considering the
purchase of Extendible Debt Securities, Renewable Debt Securities or Reset Debt
Securities should carefully examine the applicable Prospectus Supplement and
should consult their own tax advisors regarding the United States federal income
tax consequences of the holding and disposition of such Debt Securities.
FOREIGN CURRENCY DEBT SECURITIES
The following is a summary of the principal United States federal income tax
consequences to a United States Holder of the ownership of a Debt Security
denominated in a Specified Currency other than the U.S. dollar (a "Foreign
Currency Debt Security"). If interest payments are made in a Foreign Currency to
a United States Holder that is not required to accrue such interest prior to its
receipt, such holder will be required to include in income the U.S. dollar value
of the amount received (determined by translating the Foreign Currency received
at the "spot rate" for such Foreign Currency on the date such payment is
received), regardless of whether the payment is in fact converted into U.S.
dollars. No exchange gain or loss is recognized with respect to the receipt of
such payment.
A United States Holder that is required to accrue interest on a Foreign
Currency Debt Security prior to the receipt of such interest will be required to
include in income for each taxable year the U.S. dollar value of the interest
that has accrued during such year, determined by translating such interest at
the
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average rate of exchange for the period or periods during which such interest
accrued. The average rate of exchange for an interest accrual period is the
simple average of the exchange rates for each business day of such period (or
such other average that is reasonably derived and consistently applied by the
holder). An accrual basis holder may elect to translate interest income at the
spot rate on the last day of the accrual period (or last day of the taxable year
in the case of an accrual period that straddles the holder's taxable year) or on
the date the interest payment is received if such date is within five days of
the end of the accrual period. Upon receipt of an interest payment on such Debt
Security, such United States Holder will recognize ordinary income or loss in an
amount equal to the difference between the U.S. dollar value of such payment
(determined by translating any Foreign Currency received at the "spot rate" for
such Foreign Currency on the date received) and the U.S. dollar value of the
interest income that such United States Holder has previously included in income
with respect to such payment.
OID on a Debt Security that is also a Foreign Currency Debt Security will be
determined for any accrual period in the applicable Foreign Currency and then
translated into U.S. dollars in the same manner as interest income accrued by a
holder on the accrual basis, as described above. Likewise, a United States
Holder will recognize exchange gain or loss when the OID is paid to the extent
of the difference between the U.S. dollar value of the accrued OID (determined
in the same manner as for accrued interest) and the U.S. dollar value of such
payment (determined by translating any Foreign Currency received at the spot
rate for such Foreign Currency on the date of payment). For this purpose, all
receipts on a Debt Security will be viewed first as the receipt of any stated
interest payments called for under the terms of the Debt Security, second as
receipts of previously accrued OID (to the extent thereof), with payments
considered made for the earliest accrual periods first, and thereafter as the
receipt of principal.
The amount of market discount on Foreign Currency Debt Securities includible
in income will generally be determined by translating the market discount
determined in the Foreign Currency into U.S. dollars at the spot rate on the
date the Foreign Currency Debt Security is retired or otherwise disposed of. If
the United States Holder has elected to accrue market discount currently, then
the amount which accrues is determined in the Foreign Currency and then
translated into U.S. dollars on the basis of the average exchange rate in effect
during such accrual period. A United States Holder will recognize exchange gain
or loss with respect to market discount which is accrued currently using the
approach applicable to the accrual of interest income as described above.
Bond premium on a Foreign Currency Debt Security will be computed in the
applicable Foreign Currency. With respect to a United States Holder that elects
to amortize the premium, the amortizable bond premium will reduce interest
income in the applicable Foreign Currency. At the time bond premium is
amortized, exchange gain or loss (which is generally ordinary income or loss)
will be realized based on the difference between spot rates at such time and at
the time of acquisition of the Foreign Currency Debt Security. A United States
Holder that does not elect to amortize bond premium will translate the bond
premium, computed in the applicable Foreign Currency, into U.S. dollars at the
spot rate on the maturity date and such bond premium will constitute a capital
loss which may be offset or eliminated by exchange gain.
A United States Holder's tax basis in a Foreign Currency Debt Security will
be the U.S. dollar value of the Foreign Currency amount paid for such Foreign
Currency Debt Security determined at the time of such purchase. A United States
Holder that purchases a Debt Security with previously owned Foreign Currency
will recognize exchange gain or loss at the time of purchase attributable to the
difference at the time of purchase, if any, between his tax basis in such
Foreign Currency and the fair market value of the Debt Security in U.S. dollars
on the date of purchase. Such gain or loss will be ordinary income or loss.
For purposes of determining the amount of any gain or loss recognized by a
United States Holder on the sale, exchange, retirement or other disposition of a
Foreign Currency Debt Security, the amount realized upon such sale, exchange,
retirement or other disposition will be the U.S. dollar value of the amount
realized in Foreign Currency (other than amounts attributable to accrued but
unpaid interest not
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previously included in the holder's income), determined at the time of the sale,
exchange, retirement or other disposition.
A United States Holder will recognize exchange gain or loss attributable to
the movement in exchange rates between the time of purchase and the time of
disposition (including the sale, exchange, retirement or other disposition) of a
Foreign Currency Debt Security. Such gain or loss will be treated as ordinary
income or loss. The realization of such gain or loss will be limited to the
amount of overall gain or loss realized on the disposition of a Foreign Currency
Debt Security. Under proposed Treasury Regulations issued on March 17, 1992, if
a Foreign Currency Debt Security is denominated in one of certain
hyperinflationary currencies, generally (i) exchange gain or loss would be
realized with respect to movements in the exchange rate between the beginning
and end of each taxable year (or such shorter period) that such Debt Security
was held and (ii) such exchange gain or loss would be treated as an addition or
offset, respectively, to the accrued interest income on (and an adjustment to
the holder's tax basis in) the Foreign Currency Debt Security.
A United States Holder's tax basis in Foreign Currency received as interest
on (or OID with respect to), or received on the sale, exchange, retirement or
other disposition of, a Foreign Currency Debt Security will be the U.S. dollar
value thereof at the spot rate at the time the holder received such Foreign
Currency. Any gain or loss recognized by a United States Holder on a sale,
exchange, retirement or other disposition of Foreign Currency will be ordinary
income or loss and will not be treated as interest income or expense, except to
the extent provided in Treasury Regulations or administrative pronouncements of
the IRS.
DUAL CURRENCY DEBT SECURITIES
If so specified in an applicable Prospectus Supplement relating to a Foreign
Currency Debt Security, the Company may have the option to make all payments of
principal and interest scheduled after the exercise of such option in a currency
(the "Optional Payment Currency") other than the Specified Currency. The United
States federal income tax treatment of Dual Currency Debt Securities is
uncertain. Treasury Regulations currently in effect do not address the tax
treatment of Dual Currency Debt Securities. Under the approach of proposed
Treasury Regulations issued on March 17, 1992, a Dual Currency Debt Security
would be bifurcated into two hypothetical instruments: (i) a zero coupon bond
denominated in the currency of the stated redemption price at maturity, and (ii)
an installment obligation denominated in the currency of the qualified stated
interest payments. The proposed regulations are effective only for Debt
Securities issued or transactions occurring after final regulations are
published. Persons considering the purchase of Dual Currency Debt Securities
should carefully examine the applicable Prospectus Supplement and should consult
their own tax advisors regarding the United States federal income tax
consequences of the holding and disposition of such Debt Securities.
A United States Holder of a Dual Currency Debt Security with respect to
which the Company's option has been exercised may be considered to have
exchanged a Debt Security denominated in the Specified Currency for a Debt
Security denominated in the Optional Payment Currency. If the exercise of the
option by the Company is not treated as a deemed exchange, a United States
Holder of a Dual Currency Debt Security will not recognize gain or loss and the
Holder's basis in the Debt Security will be unchanged. If the exercise of the
option is treated as a taxable exchange, a United States Holder will recognize
gain or loss, if any, equal to the difference between the holder's basis in the
Debt Security denominated in the Specified Currency and the value of the Debt
Security denominated in the Optional Payment Currency.
CONTINGENT PAYMENT DEBT SECURITIES
The OID Regulations contain special rules for determining the timing and
amount of OID to be accrued with respect to certain Debt Securities providing
for one or more contingent payments ("Contingent Payment Debt Security"). Under
these rules, United States Holders will accrue OID each year based on the
"comparable yield" of the Debt Securities. The comparable yield of the Debt
Securities will generally be the rate at which the Company would issue a fixed
rate debt instrument with terms and
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conditions similar to the Debt Securities. The Company is required to provide
the comparable yield to the United States Holders and, solely for tax purposes,
is also required to provide a projected payment schedule that includes the
actual interest payments on the Debt Securities and estimates the amount and
timing of contingent payments on the Debt Securities. Notice will be given in
the applicable Prospectus Supplement when the Company determines that a
particular Debt Security will be treated as a Contingent Payment Debt Security.
The amount of OID on a Contingent Payment Debt Security for each accrual
period will be determined by multiplying the comparable yield of the Contingent
Payment Debt Security (adjusted for the length of the accrual period) by the
Debt Security's adjusted issue price at the beginning of the accrual period
(determined in accordance with the rules set forth in the OID Regulations
relating to contingent payment debt instruments). The amount of OID so
determined will then be allocated on a ratable basis to each day in the accrual
period that the United States Holder holds the Contingent Payment Debt Security.
If the actual payments made on the Contingent Payment Debt Securities in a
taxable year differ from the projected contingent payments, the OID Regulations
require that adjustments be made for such differences. A positive adjustment
(i.e., the amount by which an actual payment exceeds a projected contingent
payment) will be treated as additional interest. A negative adjustment will
first reduce the amount of interest required to be accrued in the current year.
Any negative adjustments that exceed the amount of interest accrued in the
current year will be treated as ordinary loss to the extent that the United
States Holder's total interest inclusions on the Contingent Payment Debt
Security exceed the total amount of the United States Holder's net negative
adjustments treated as ordinary loss on the Contingent Payment Debt Security in
prior taxable years. Any excess negative adjustments will be carried forward to
offset future income or amount realized on disposition of the Contingent Payment
Debt Securities.
Gain on the sale, exchange, or retirement of a Contingent Payment Debt
Security generally will be treated as ordinary income. Loss from the disposition
of a Contingent Payment Debt Security will be treated as ordinary loss to the
extent of the United States Holder's prior net interest inclusions (reduced by
the total net negative adjustments previously allowed to the United States
Holder as ordinary loss). Any loss in excess of such amount will be treated as
capital loss.
A United States Holder is generally bound by the comparable yield and
projected payment schedule provided by the Company. However, if a United States
Holder believes that the Company's projected payment schedule is unreasonable, a
United States Holder may set its own projected payment schedule so long as such
United States Holder explicitly discloses the use of such schedule and the
reason therefor. Unless otherwise prescribed by the Commissioner of the IRS,
such disclosure must be made in a statement attached to the United States
Holder's timely filed federal income tax return for the taxable year in which
the Debt Security is acquired.
For special treatment of Foreign Currency Debt Securities or Dual Currency
Debt Securities that are also Contingent Payment Debt Securities see the
applicable Prospectus Supplement.
The rules regarding Contingent Payment Debt Securities are complex.
Investors considering the purchase of Debt Securities providing for one or more
contingent payments should carefully examine the applicable Prospectus
Supplement and consult their own tax advisors regarding the United States
federal income tax consequences of the holding and disposition of such Debt
Securities.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be required
with respect to the payment by the Company or any Paying Agent of principal,
premium, if any, or interest (which for purposes of this discussion includes
OID) on a Debt Security owned by a Non-United States Holder,
31
<PAGE>
provided (i) that the beneficial owner does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of the Company entitled to vote within the meaning of section 871(h)(3) of
the Code and the regulations thereunder, (ii) the beneficial owner is not a
controlled foreign corporation that is related to the Company through stock
ownership, (iii) the beneficial owner is not a bank whose receipt of
interest on a Debt Security is described in section 881(c)(3)(A) of the
Code, (iv) in the case of a Registered Security, the beneficial owner
satisfies the statement requirement (described generally below) set forth in
section 871(h) and section 881(c) of the Code and the regulations thereunder
and (v) such interest is not considered contingent interest under Section
871(h)(4) of the Code and the regulations thereunder;
(b) no withholding of United States federal income tax will be required
with respect to any gain or income realized by a Non-United States Holder
upon the sale, exchange or retirement of a Debt Security; and
(c) a Debt Security beneficially owned by an individual who at the time
of death is a Non-United States Holder will not be subject to United States
federal estate tax as a result of such individual's death, provided that
such individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the company entitled
to vote within the meaning of section 871(h)(3) of the Code and provided
that the interest payments with respect to such Debt Security would not have
been, if received at the time of such individual's death, effectively
connected with the conduct of a United States trade or business by such
individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Debt Security, or a financial institution holding the Debt
Security on behalf of such owner, must provide, in accordance with specified
procedures, a paying agent of the Company with a statement to the effect that
the beneficial owner is not a U.S. person, citizen or resident. Pursuant to
current temporary Treasury regulations, these requirements will be met if (1)
the beneficial owner provides his name and address, and certifies, under
penalties of perjury, that he is not a U.S. person, citizen or resident (which
certification may be made on an Internal Revenue Service Form W-8 (or successor
form)) or (2) a financial institution holding the Debt Security on behalf of the
beneficial owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy thereof. The
statement requirement referred to in (a)(iv) above may be satisfied with other
documentary evidence for interest paid after December 31, 1998 with respect to
an offshore account or through certain foreign intermediaries.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, as might be the case with
a Contingent Payment Debt Security, payments of premium, if any, and interest
(including OID) made to such Non-United States Holder will be subject to a 30%
withholding tax unless the beneficial owner of the Debt Security provides the
Company or its paying agent, as the case may be, with a properly executed (1)
Internal Revenue Service Form 1001 (or successor form) claiming an exemption or
reduced rate from withholding under the benefit of a tax treaty or (2) Internal
Revenue Service Form 4224 (or successor form) stating that interest paid on the
Note is not subject to withholding tax because it is effectively connected with
the beneficial owner's conduct of a trade or business in the United States.
If a Non-United States Holder is engaged in a trade or business in the
United States and premium, if any, or interest (including OID) on the Debt
Security is effectively connected with the conduct of such trade or business,
the Non-United States Holder, although exempt from the withholding tax discussed
above, will be subject to United States federal income tax on such premium, if
any, and interest (including OID) on a net income basis in the same manner as if
it were a United States Holder. In addition, if such holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% of its
effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, such premium, if any, and interest (including
OID) on a Debt Security will be included in such foreign corporation's earnings
and profits.
32
<PAGE>
Any gain or income realized upon the sale, exchange or retirement of a Debt
Security will generally not be subject to United States federal income tax if
(i) such gain or income is not effectively connected with a trade or business in
the United States of the Non-United States Holder, and (ii) in the case of a
Non-United States Holder who is an individual, such individual is not present in
the United States for 183 days or more in the taxable year of such sale,
exchange or retirement, and certain other conditions are not met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on Debt Securities and to
the proceeds of sale of a Debt Security made to United States Holders other than
certain exempt recipients (such as corporations). A 31% backup withholding tax
will apply to such payments if the United States Holder fails to provide a
taxpayer identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income.
No information reporting on IRS Form 1099 or backup withholding will be
required with respect to payments made by the Company or any paying agent to
Non-United States Holders (1) if those payments are made outside of the United
States on Bearer Securities or (2) on Registered Securities with respect to
which a statement described in (a)(iv) under "Non-United States Holders" has
been received and the payor does not have actual knowledge that the beneficial
owner is a United States person. However, interest (including OID) paid to a
Non-United States Holder on a Registered Security will be required to be
reported annually on IRS Form 1042-S.
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on a Debt Security are paid
or collected by a foreign office of a custodian, nominee or other foreign agent
on behalf of the beneficial owner of such Debt Security, or if a foreign office
of a broker (as defined in applicable Treasury regulations) pays the proceeds of
the sale of a Debt Security to the owner thereof. If, however, such nominee,
custodian, agent or broker is, for United States federal income tax purposes, a
U.S. person, a controlled foreign corporation or a foreign person that derives
50% or more of its gross income for certain periods from the conduct of a trade
or business in the United States, such payments will not be subject to backup
withholding but will be subject to information reporting, unless (1) such
custodian, nominee, agent or broker has documentary evidence in its records that
the beneficial owner is not a U.S. person and certain other conditions are met
or (2) the beneficial owner otherwise establishes an exemption. Temporary
Treasury regulations provide that the Treasury is considering whether backup
withholding will apply with respect to such payments of principal, interest or
the proceeds of a sale that are not subject to backup withholding under the
current regulations.
Payments of principal, interest, OID and premium on a Debt Security paid to
the beneficial owner of a Debt Security by a United States office of a
custodian, nominee or agent, or the payment by the United States office of a
broker of the proceeds of sale of a Debt Security, will be subject to both
backup withholding and information reporting unless the beneficial owner
provides the statement referred to in (a)(iv) above and the payor does not have
actual knowledge that the beneficial owner is a United States person or
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS.
DEPOSITARY SHARES
In general, for United States federal income tax purposes, United States
Holders of Depositary Shares will be treated as the owners of the underlying
Offered Preferred Stock that is represented by such Depositary Shares. Deposits
or withdrawals of Offered Preferred Stock by United States Holders will not be
subject to United States federal income tax.
33
<PAGE>
CAPITAL REQUIREMENTS
As registered broker-dealers, Lehman Brothers and certain of Holdings' other
subsidiaries (the "Regulated Subsidiaries") are subject to the SEC's net capital
rule (Rule 15c3-1, the "Net Capital Rule"), promulgated under the Exchange Act.
The Exchange monitors the application of the Net Capital Rule by Lehman
Brothers. The Exchange or the National Association of Securities Dealers, Inc.
(the "NASD"), as the case may be, monitors the application of the Net Capital
Rule by the Regulated Subsidiaries. Lehman Brothers and such Regulated
Subsidiaries compute net capital under the alternative method of the Net Capital
Rule which requires the maintenance of minimum net capital, as defined. A
broker-dealer may be required to reduce its business if its net capital is less
than 4% of aggregate debit balances and may also be prohibited from expanding
its business or paying cash dividends if resulting net capital would be less
than 5% of aggregate debit balances. In addition, the Net Capital Rule does not
allow withdrawal of subordinated capital if net capital would be less than 5% of
such debit balances.
The Net Capital Rule also limits the ability of broker-dealers to transfer
large amounts of capital to parent companies and other affiliates. Under the Net
Capital Rule equity capital cannot be withdrawn from a broker-dealer without the
prior approval of the SEC when net capital after the withdrawal would be less
than 25% of its securities positions haircuts (which are deductions from capital
of certain specified percentages of the market value of securities to reflect
the possibility of a market decline prior to disposition). In addition, the Net
Capital Rule requires broker-dealers to notify the SEC and the appropriate
self-regulatory organization two business days before a withdrawal of excess net
capital if the withdrawal would exceed the greater of $500,000 or 30% of the
broker-dealer's excess net capital, and two business days after a withdrawal
that exceeds the greater of $500,000 or 20% of excess net capital. Finally, the
Net Capital Rule authorizes the SEC to order a freeze on the transfer of capital
if a broker-dealer plans a withdrawal of more than 30% of its excess net capital
and the SEC believes that such a withdrawal would be detrimental to the
financial integrity of the firm or would jeopardize the broker-dealer's ability
to pay its customers.
Compliance with the Net Capital Rule could limit those operations of Lehman
Brothers and the Regulated Subsidiaries that require the intensive use of
capital, such as underwriting and trading activities and the financing of
customer account balances, and also could restrict Holdings' ability to withdraw
capital from Lehman Brothers and the Regulated Subsidiaries which in turn could
limit Holdings' ability to pay dividends, repay debt and redeem or purchase
shares of its outstanding capital stock. The Company is subject to other
domestic and international regulatory requirements with which it is required to
comply.
34
<PAGE>
PLAN OF DISTRIBUTION
Holdings may sell the Securities in any one or more of the following ways:
(i) through, or through underwriting syndicates managed by, Lehman Brothers
alone or with one or more other underwriters; (ii) through one or more dealers
or agents (which may include Lehman Brothers); or (iii) directly to one or more
purchasers. The specific managing underwriter or underwriters or agent or agents
with respect to the offer and sale of Securities are set forth on the cover of
the Prospectus Supplement relating to such Securities and the members of the
underwriting syndicate, if any, are named in such Prospectus Supplement. Only
the underwriters or agents so named in such Prospectus Supplement are
underwriters or agents, respectively, in connection with such Securities. The
applicable Prospectus Supplement also describes the discounts and commissions to
be allowed or paid to the underwriters or agents, all other items constituting
underwriting or agency compensation, the discounts and commissions to be allowed
or paid to dealers, if any, and the exchanges, if any, on which such Securities
will be listed. Securities acquired by any underwriter will be acquired for its
own account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The obligations of the
underwriters to purchase such Securities will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all such
Securities if any of such Securities are purchased. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time. To the extent, if any, that Securities to be
purchased by Lehman Brothers, as underwriter, are not resold by it or are not
resold at the public offering price set forth in an applicable Prospectus
Supplement, the funds derived from such offering by the Company on a
consolidated basis may be reduced.
If so indicated in an applicable Prospectus Supplement, Holdings will
authorize the underwriters named therein to solicit offers by certain
institutional investors to purchase Debt Securities providing for payment and
delivery on a future date specified in such Prospectus Supplement. There may be
limitations on the minimum amount which may be purchased by any such
institutional investor or on the portion of the aggregate principal amount of
the particular Debt Securities which may be sold pursuant to such arrangements.
Institutional investors to which such offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
educational charitable institutions and such other institutions as may be
approved by Holdings. The obligations of any such purchasers pursuant to such
delayed delivery and payment arrangements will not be subject to any conditions
except (i) the purchase by an institution of the particular Debt Securities
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (ii)
Holdings shall have sold to such underwriters the total principal amount of such
Debt Securities less the principal amount thereof covered by such arrangements.
Underwriters named therein will not have any responsibility in respect of the
validity of such arrangements or the performance of Holdings or such
institutional investors thereunder.
Each distributor of Bearer Securities will agree that it will not offer or
sell during the restricted period, directly or indirectly, Bearer Securities in
the United States or to United States persons (other than as discussed under
"Limitations on Issuance of Bearer Securities") and in connection with the sale
of Bearer Securities during the restricted period, will not deliver definitive
Bearer Securities within the United States. See "Limitations on Issuance of
Bearer Securities."
Each underwriter or agent will represent and agree that (i) it has not
offered or sold and, prior to the expiration of six months from the issue date
thereof, will not offer or sell any Securities to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purpose of
their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995 (the "Regulations"); (ii) it
complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Regulations with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United
35
<PAGE>
Kingdom; and (iii) it has only issued or passed on and will only issue or pass
on to any person in the United Kingdom any document received by it in connection
with the issue of the Securities if that person is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1997 or is a person to whom such document may otherwise
lawfully be issued or passed on.
This Prospectus together with an applicable Prospectus Supplement may also
be used by Lehman Brothers in connection with offers and sales of Securities
related to market making transactions, by and through Lehman Brothers, at
negotiated prices related to prevailing market prices at the time of sale or
otherwise. Lehman Brothers may act as principal or agent in such transactions.
The underwriting and agency arrangements for any offering of the Securities
will comply with the requirements of Rule 2720 of the NASD regarding an NASD
member firm's participating in distributing its affiliate's securities.
ERISA MATTERS
Each of Holdings and Lehman Brothers may be considered a "party in interest"
within the meaning of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and a "disqualified person" under corresponding provisions of
the Code, with respect to certain employee benefit plans. Certain transactions
between an employee benefit plan and a party in interest or disqualified person
may result in "prohibited transactions" within the meaning of ERISA and the
Code. ANY EMPLOYEE BENEFIT PLAN PROPOSING TO INVEST IN THE DEBT SECURITIES
SHOULD CONSULT WITH ITS LEGAL COUNSEL.
LEGAL OPINIONS
Unless otherwise indicated in an applicable Prospectus Supplement, the
validity of the Securities offered hereby will be passed upon for Holdings by
Karen M. Muller, Esq., Deputy General Counsel of Holdings and for the
underwriters or agents by Simpson Thacher & Bartlett (a partnership which
includes professional corporations), 425 Lexington Avenue, New York, New York
10017. Simpson Thacher & Bartlett acts as counsel in various matters for
Holdings, Lehman Brothers and certain of their subsidiaries.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and schedules of the Company for the
year ended November 30, 1996, the year ended November 30, 1995 and the eleven
months ended November 30, 1994 appearing in the Company's Annual Report on Form
10-K for the year ended November 30, 1996, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements and
schedules are, and audited financial statements included in subsequently filed
documents will be, incorporated herein by reference in reliance upon the reports
of Ernst & Young LLP pertaining to such financial statements (to the extent
covered by consents filed with the Securities and Exchange Commission) given
upon the authority of such firm as experts in accounting and auditing.
36
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY HOLDINGS OR ANY AGENT OR UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HOLDINGS SINCE
THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Documents Incorporated by Reference....................................... 2
The Company............................................................... 3
Use of Proceeds........................................................... 3
Ratio of Earnings to Fixed Charges........................................ 4
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends............................................................... 4
Description of Debt Securities............................................ 5
Description of Offered Preferred Stock.................................... 17
Limitations on Issuance of Bearer Securities.............................. 23
United States Taxation.................................................... 24
Capital Requirements...................................................... 34
Plan of Distribution...................................................... 35
ERISA Matters............................................................. 36
Legal Opinions............................................................ 36
Independent Accountants................................................... 36
</TABLE>
LEHMAN BROTHERS
HOLDINGS INC.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
-----------------
PROSPECTUS
, 1997
-----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses to be incurred and paid by the
Registrant in connection with the offering described in this Registration
Statement (other than underwriting discounts and commissions).
<TABLE>
<S> <C>
SEC registration fee............................................ $1,060,606
NASD Fee........................................................ 30,500
New York Stock Exchange Listing Fee............................. 7,500*
Legal fees and expenses......................................... 50,000*
Accounting fees and expenses.................................... 50,000*
Fees and expenses of Transfer Agent............................. 25,000*
Blue Sky qualification fees and expenses........................ 10,000*
Printing and engraving fees..................................... 40,000*
Miscellaneous................................................... 5,394*
---------
Total....................................................... $1,279,000
---------
---------
</TABLE>
- ------------------------
* Estimated and subject to future contingencies.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Certificate of Incorporation of the Registrant requires the
Registrant to indemnify its directors and officers to the fullest extent
permitted by Delaware General Corporation Law. In addition, the directors of the
Registrant are insured under officers' and directors' liability insurance
policies purchased by the Company. The directors, officers and employees of the
Registrant are also insured against fiduciary liabilities under the Employee
Retirement Income Security Act of 1974.
Any underwriting agreement or agency agreement with respect to an offering
of securities registered hereunder will provide for indemnification of the
Registrant and its officers and directors by the underwriters or agents, as the
case may be, against certain liabilities including liabilities under the
Securities Act of 1933.
ITEM 16. EXHIBITS
The Exhibit Index beginning on page E-1 is hereby incorporated by reference.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which has registered) and any
II-1
<PAGE>
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purposes of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial BONA FIDE
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
That, for purposes of determining any liability under the Act, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and had duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 17th day of
October, 1997.
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ KAREN M. MULLER
-----------------------------------------
Name: Karen M. Muller
TITLE: VICE PRESIDENT
II-3
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chief Executive Officer
* and Chairman of the
- ------------------------------ Board of Directors October 17, 1997
Richard S. Fuld, Jr. (principal executive
officer)
* Chief Financial Officer
- ------------------------------ (principal financial and October 17, 1997
Charles B. Hintz accounting officer)
*
- ------------------------------ Director October 17, 1997
Michael L. Ainslie
*
- ------------------------------ Director October 17, 1997
John F. Akers
*
- ------------------------------ Director October 17, 1997
Roger S. Berlind
*
- ------------------------------ Director October 17, 1997
Thomas H. Cruikshank
*
- ------------------------------ Director October 17, 1997
Henry Kaufman
*
- ------------------------------ Director October 17, 1997
Hideichiro Kobayashi
*
- ------------------------------ Director October 17, 1997
John D. Macomber
*
- ------------------------------ Director October 17, 1997
Dina Merrill
*
- ------------------------------ Director October 17, 1997
Masahiro Yamada
*By: /s/ KAREN M. MULLER
-------------------------
Karen M. Muller
VICE PRESIDENT
October 17, 1997
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
FILED HEREWITH(--);
TO BE FILED BY
AMENDMENT OR PAGE NUMBER
BY FORM 8-K(*) IN SEQUENTIAL
EXHIBIT OR INCORPORATED BY NUMBERING
NUMBER DESCRIPTION REFERENCE TO SYSTEM
- ----------- --------------------------------------------- -------------------------------------- ---------------
<C> <S> <C> <C> <C>
1(a) -- Form of Agency Agreement Exhibit 1(a) to Registration Statement
No. 33-65674 filed July 7, 1993
1(b) -- Form of Underwriting Agreement (including --
Delayed Delivery Contract) for Debt
Securities
1(c) -- Form of Placement Agency Agreement Exhibit 1(c) to Post-Effective
Amendment No. 1 to Registration
Statement No. 33-16141 filed
November 16, 1987
1(d) -- Form of Underwriting Agreement for Preferred --
Stock
1(e) -- Form of Underwriting Agreement for Depositary --
Shares
4(a) -- Holdings Standard Multiple Series Indenture Exhibit 4(a) to Post-Effective
Provisions dated July 30, 1987 and as amended Amendment No. 1 to Registration
November 16, 1987 Statement No. 33-16141 filed
November 16, 1987
4(b) -- Indenture dated as of September 1, 1987 Exhibit 4(b) to Post-Effective
between Holdings and Citibank, N.A., as Amendment No. 1 to Registration
Trustee, with respect to the Senior Debt Statement No. 33-16141 filed on
Securities November 16, 1987
4(c) -- Supplemental Indenture, dated as of November Exhibit 4(m) to Registration Statement
25, 1987, between Holdings and Citibank, No. 33-25797 filed on November 25,
N.A., as Trustee, with respect to the Senior 1988
Debt Securities
4(d) -- Second Supplemental Indenture, dated as of Exhibit 4(e) to Registration Statement
November 27, 1990 between Holdings and No. 33-49062 filed on June 30, 1992
Citibank, N.A., as Trustee, with respect to
the Senior Debt Securities
4(e) -- Third Supplemental Indenture dated as of Exhibit 4(f) to Registration Statement
September 13, 1991, between Holdings and No. 33-46146 filed on March 10, 1992
Citibank, N.A., as Trustee, with respect to
the Senior Debt Securities
4(f) -- Fourth Supplemental Indenture dated as of Exhibit 4(f) to Form 8-A filed October
October 4, 1993, between Holdings and 7, 1993
Citibank, N.A., as Trustee, with respect to
Senior Debt Securities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FILED HEREWITH(--);
TO BE FILED BY
AMENDMENT OR PAGE NUMBER
BY FORM 8-K(*) IN SEQUENTIAL
EXHIBIT OR INCORPORATED BY NUMBERING
NUMBER DESCRIPTION REFERENCE TO SYSTEM
- ----------- --------------------------------------------- -------------------------------------- ---------------
<C> <S> <C> <C> <C>
4(g) -- Fifth Supplemental Indenture dated as of Exhibit 4(h) to Post-Effective
August 1, 1995 between Holdings and Citibank, Amendment No. 1 to Registration
N.A., as Trustee, with respect to Senior Debt Statement No. 33-56615 filed August
Securities 24, 1995
4(h) -- Sixth Supplemental Indenture dated as of June --
26, 1997 between Holdings and Citibank, N.A.,
as Trustee, with respect to Senior Debt
Securities
4(i) -- Form of Fixed Rate Note Exhibit 4(d) to Registration Statement
No. 33-40990 filed May 31, 1991
4(j) -- Form of Variable Rate Note Exhibit 4(e) to Registration Statement
No. 33-40990 filed May 31, 1991
4(k) -- Form of Medium-Term Note (Fixed-Rate) Exhibit 4(f) to Registration Statement
No. 33-16141 filed July 30, 1987
4(l) -- Form of Medium-Term Note (Floating Rate) Exhibit 4(g) to Registration Statement
No. 33-16141 filed July 30, 1987
4(m) -- Form of Bearer Security for Fixed-Rate Note Exhibit 4(h) to Post-Effective
and Form of Related Coupon Amendment No. 1 to Registration
Statement 33-16141 filed November
16, 1987
4(n) -- Form of Bearer Security for Variable Rate Exhibit 4(i) to Post-Effective
Note and Form of Related Coupon Amendment No. 1 to Registration
Statement 33-16141 filed November
16, 1987
4(o) -- Form of Bearer Security for Medium-Term Note Exhibit 4(j) to Post-Effective
(Fixed Rate) and Form of Related Coupon Amendment No. 1 to Registration
Statement No. 33-16141 filed
November 16, 1987
4(p) -- Form of Bearer Security for Medium-Term Note Exhibit 4(k) to Post-Effective
(Floating Rate) and Form of Related Coupon Amendment No. 1 to Registration
Statement 33-16141 filed November
16, 1987
4(q) -- Form of Serial Zero Coupon Senior Note Exhibit 4.1 to Holdings' Current
Report on Form 8-K dated April 27,
1988
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FILED HEREWITH(--);
TO BE FILED BY
AMENDMENT OR PAGE NUMBER
BY FORM 8-K(*) IN SEQUENTIAL
EXHIBIT OR INCORPORATED BY NUMBERING
NUMBER DESCRIPTION REFERENCE TO SYSTEM
- ----------- --------------------------------------------- -------------------------------------- ---------------
<C> <S> <C> <C> <C>
4(r) -- Form of Medium-Term Note, Series B (Fixed Exhibit 4(o) to Registration Statement
Rate) No. 33-37226 filed October 16, 1990
4(s) -- Form of Medium-Term Note, Series B (Floating Exhibit 4(p) to Registration Statement
Rate) No. 33-37226 filed October 16, 1990
4(t) -- Indenture, dated as of May 1, 1986, between Exhibit 4.1 to the E.F. Hutton Group
the E.F. Hutton Group Inc. ("Group") and Inc.'s Registration Statement on
United States Trust Company of New York Form S-3 (Reg. No. 33-3663)
("U.S. Trust"), as trustee with respect to
the Guaranteed Notes
4(u) -- Supplemental Indenture, dated as of June 15, Exhibit 4(r) to Registration Statement
1988 between Group and U.S. Trust, with No. 33-37226 filed October 16, 1990
respect to the Guaranteed Notes
4(v) -- Form of Medium-Term Note, Series C (Fixed Exhibit 4(t) to Registration Statement
Rate) No. 33-40990 filed May 31, 1991
4(w) -- Form of Medium-Term Note, Series C (Floating Exhibit 4(u) to Registration Statement
Rate) No. 33-40990 filed May 31, 1991
4(x) -- Form of Medium-Term Note, Series D (Fixed Exhibit 4(v) to Registration Statement
Rate) No. 33-49062 filed June 30, 1992
4(y) -- Form of Medium-Term Note, Series D (Floating Exhibit 4(w) to Registration Statement
Rate) No. 33-49062 filed June 30, 1992
4(z) -- Form of Medium-Term Note, Series E (Fixed Exhibit 4(y) to Registration Statement
Rate) No. 33-56615 filed November 23, 1994
4(aa) -- Form of Medium-Term Note, Series E (Floating Exhibit 4(z) to Registration Statement
Rate) No. 33-56615 filed November 23, 1994
4(bb) -- Form of Medium-Term Note, Series E (Currency Exhibit 4(aa) to Registration
Indexed) Statement No. 33-56615 filed
November 23, 1994
4(cc) -- Indenture dated as of February 1, 1996 Exhibit 2 to Form 8-A filed February
between Holdings and Chemical Bank, as 8, 1996
Trustee, with respect to the Subordinated
Debt Securities
4(dd) -- Supplemental Indenture, dated as of February Exhibit 3 to Form 8-A filed February
1, 1996, between Holdings and Chemical Bank, 8, 1996
as Trustee, with respect to the Subordinated
Debt Securities
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FILED HEREWITH(--);
TO BE FILED BY
AMENDMENT OR PAGE NUMBER
BY FORM 8-K(*) IN SEQUENTIAL
EXHIBIT OR INCORPORATED BY NUMBERING
NUMBER DESCRIPTION REFERENCE TO SYSTEM
- ----------- --------------------------------------------- -------------------------------------- ---------------
<C> <S> <C> <C> <C>
4(ee) -- Form of Certificate of Designations Exhibit 4(cc) to Post Effective
Amendment No. 1 to Registration
Statement No. 33-56615 filed August
24, 1995
4(ff) -- Form of Deposit Agreement --
4(gg) -- Form of Depositary Receipt (included in --
Exhibit 4(ff))
5 -- Opinion and consent of Karen M. Muller, Esq. --
8 -- Opinion and consent of Simpson Thacher & --
Bartlett regarding certain tax matters
12(a) -- Computation of ratio of earnings to fixed Exhibit 12(a) to Holdings' Quarterly
charges Report on Form 10-Q for the nine
months ended August 31, 1997
12(b) -- Computation of ratio of earnings to combined Exhibit 12(b) to Holdings' Quarterly
fixed charges and preferred dividends Report on Form 10-Q for the nine
months ended August 31, 1997
23(a) -- Consent of Karen M. Muller, Esq. (included in --
Exhibit 5)
23(b) -- Consent of Ernst & Young LLP, Independent --
Auditors
23(c) -- Consent of Simpson Thacher & Bartlett --
(included in Exhibit 8)
24 -- Power of Attorney --
25(a) -- Form T-1 Statement of Eligibility and --
Qualification under Trust Indenture Act of
1939 of Citibank, N.A.
25(b) -- Form T-1 Statement of Eligibility and --
Qualification under Trust Indenture Act of
1939 of The Chase Manhattan Bank
</TABLE>
<PAGE>
EXHIBIT 1.B
Debt Securities
LEHMAN BROTHERS HOLDINGS INC.
UNDERWRITING AGREEMENT
New York, New York
Dated the date set forth
In Schedule I hereto
To the Representative(s)
named in Schedule I
hereto, of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
Lehman Brothers Holdings Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to you and the other underwriters named in Schedule
II hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its debt securities identified in
Schedule I hereto (the "Securities") to be issued under the indenture (the
"Indenture") identified in such Schedule I, between the Company and the trustee
(the "Trustee") identified therein. If the firm or firms listed in Schedule II
hereto include only the firm or firms listed in Schedule I hereto, then the
terms "Underwriters" and "Representatives" shall each be deemed to refer to such
firm or firms.
1. Representations and Warranties. The Company
represents and warrants to each Underwriter that:
(a) The Company meets the requirements for the use of Form S-3 under
the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations promulgated thereunder (the "Rules"), and has
carefully prepared and filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (the file number of
which is set forth in Schedule I hereto), which has become effective, for
the registration of the Securities under the Securities Act. The
registration statement, as amended at the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(x) under the Securities Act and
complies in all other material respects with such rule. The Company
proposes to file with the Commission pursuant to Rule 424 under the
Securities Act ("Rule 424") a supplement to the form of prospectus included
in the registration statement relating to the initial
<PAGE>
offering of the Securities and the plan of distribution thereof and has
previously advised you of all further information (financial and other)
with respect to the Company to be set forth therein. The term
"Registration Statement" means the registration statement, as amended at
the date of this Agreement, including the exhibits thereto, financial
statements, and all documents incorporated therein by reference pursuant to
Item 12 of Form S-3 (the "Incorporated Documents"), and such prospectus as
then amended, including the Incorporated Documents, is hereinafter referred
to as the "Basic Prospectus"; and such supplemented form of prospectus, in
the form in which it shall be filed with the Commission pursuant to
Rule 424 (including the Basic Prospectus as so supplemented), is
hereinafter called the "Final Prospectus". Any preliminary form of the
Basic Prospectus which has heretofore been filed pursuant to Rule 424 is
hereinafter called the "Interim Prospectus". Any reference herein to the
Registration Statement, the Basic Prospectus, any Interim Prospectus or the
Final Prospectus shall be deemed to refer to and include the Incorporated
Documents which were filed under the Securities Exchange Act of 1934 (the
"Exchange Act"), on or before the date of this Agreement or the issue date
of the Basic Prospectus, any Interim Prospectus or the Final Prospectus, as
the case may be; and any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Registration Statement, the Basic
Prospectus, any Interim Prospectus or the Final Prospectus shall be deemed
to refer to and include the filing of any Incorporated Documents under the
Exchange Act after the date of this Agreement or the issue date of the
Basic Prospectus, any Interim Prospectus or the Final Prospectus, as the
case may be, and deemed to be incorporated therein by reference.
(b) As of the date hereof, when the Final Prospectus is first filed
with the Commission pursuant to Rule 424, when, before the Closing Date
(hereinafter defined), any amendment to the Registration Statement becomes
effective, when, before the Closing Date, any Incorporated Document is
filed with the Commission, when any supplement to the Final Prospectus is
filed with the Commission and at the Closing Date, the Registration
Statement, the Final Prospectus and any such amendment or supplement will
comply in all material respects with the applicable requirements of the
Securities Act and the Rules, and the Incorporated Documents will comply in
all material respects with the requirements of the Exchange Act or the
Securities Act, as applicable, and the rules and regulations adopted by the
Commission thereunder; on the date hereof and on the Closing Date, the
Indenture shall have been qualified under and will comply in all material
respects with the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"); on the date it became effective, the Registration
Statement did not, and, on the date that any post-effective amendment to
the Registration
2
<PAGE>
Statement becomes effective, the Registration Statement as amended by such
post-effective amendment did not or will not, as the case may be, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; on the date the Final Prospectus is filed with the
Commission pursuant to Rule 424 and on the Closing Date, the Final
Prospectus, as it may be amended or supplemented, will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; and on said dates,
the Incorporated Documents will comply in all material respects with the
applicable provisions of the Exchange Act and rules and regulations of the
Commission thereunder, and, when read together with the Final Prospectus,
or the Final Prospectus as it may be then amended or supplemented, will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided that the foregoing representations and warranties in
this paragraph (b) shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives on behalf of any Underwriter
specifically for use in connection with the preparation of the Registration
Statement or the Final Prospectus, as they may be amended or supplemented,
or to any statements in or omissions from the statement of eligibility and
qualification on Form T-1 of the Trustee under the Trust Indenture Act
("Form T-1").
(c) The Basic Prospectus and any Interim Prospectus, as of their
respective dates, complied in all material respects with the requirements
of the Securities Act and of the Rules and did not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Commission has not issued
an order preventing or suspending the use of the Basic Prospectus or any
Interim Prospectus.
(d) The nationally recognized firm of independent public accountants
whose report appears in the Company's most recent Annual Report on
Form 10-K, which is incorporated by reference in the Final Prospectus, are
independent public accountants as required by the Securities Act and the
Rules.
(e) In the event that a report of a nationally recognized firm of
independent public accountants regarding
3
<PAGE>
historical financial information with respect to any entity acquired by the
Company is required to be incorporated by reference in the Final
Prospectus, such independent public accountants were independent public
accountants, as required by the Securities Act and the Rules, during the
period of their engagement to examine the financial statements being
reported on and at the date of their report.
(f) The audited consolidated financial statements of the Company in
the Final Prospectus and the Registration Statement present fairly on a
consolidated basis the financial position, the results of operations,
changes in common stock and other stockholder's equity and cash flows of
the Company and its subsidiaries, as of the respective dates and for the
respective periods indicated, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. The unaudited consolidated financial statements of the Company,
if any, included in the Final Prospectus and the Registration Statement and
the related notes are true, complete and correct, subject to normally
recurring changes resulting from year-end audit adjustments, and have been
prepared in accordance with the instructions to Form 10-Q.
(g) Except as described in or contemplated by the Registration
Statement and the Final Prospectus, there has not been any material adverse
change in or any adverse development which materially affects the business,
properties, financial condition or results of the Company or the Company
and its subsidiaries taken as whole, from the dates as of which information
is given in the Registration Statement and Final Prospectus.
(h) The Securities conform to the description thereof contained in
the Final Prospectus, are duly and validly authorized, and, when validly
authenticated, issued and delivered in accordance with the Indenture and
sold to the Underwriters as provided in this Agreement, will be validly
issued and outstanding obligations of the Company entitled to the benefits
of the Indenture.
(i) The Company does not have any subsidiaries having business or
properties that are material to the business and properties of the Company
and its subsidiaries taken as a whole with the exception of Lehman Brothers
Inc. ("Lehman") and the possible exception of Lehman Commercial Paper Inc.
(the "Named Subsidiary"). Neither the Company nor any of the Named
Subsidiary is in violation of its corporate charter or by-laws or in
default under any agreement, indenture or instrument, the effect of which
violation or default would be material to the Company and its subsidiaries
taken as a whole. The execution, delivery and performance of this
Agreement will not conflict with, result in the creation or imposition of
any material lien, charge
4
<PAGE>
or encumbrance upon any of the assets of the Company or any of its
subsidiaries pursuant to the terms of, or constitute a default under, any
material agreement, indenture or instrument, or result in a violation of
the corporate charter or by-laws of the Company or any of its subsidiaries
or any order, rule or regulation of any court or governmental agency having
jurisdiction over the Company, the Named Subsidiary or their property.
Except as set forth in the Final Prospectus or as required by the
Securities Act, the Exchange Act, the Trust Indenture Act and applicable
state securities laws, no consent, authorization or order of, or filing or
registration with, any court or governmental agency is required for the
execution, delivery and performance of this Agreement.
(j) The Company and the Named Subsidiary have been duly organized,
are validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified to do
business and in good standing as foreign corporations and are fully
registered as a broker-dealer, broker, dealer or investment advisor, as the
case may be, in each jurisdiction in which their respective ownership of
property or the conduct of their respective businesses requires such
qualification or registration and in which the failure to qualify or
register would be reasonably likely, individually or in the aggregate, to
have a material adverse effect on the business, condition or properties of
the Company and its subsidiaries taken as a whole. Each of the Company and
its Named Subsidiary holds all material licenses, permits, and certificates
from governmental authorities necessary for the conduct of its business and
owns, or possesses adequate rights to use, all material rights necessary
for the conduct of such business and has not received any notice of
conflict with the asserted rights of others in respect thereof; and each of
the Company and its Named Subsidiary has the corporate power and authority
necessary to own or hold its properties and to conduct the businesses in
which it is engaged. Except as may be disclosed in the Registration
Statement and the Final Prospectus, all outstanding shares of capital stock
of the Named Subsidiary are owned by the Company, directly or indirectly
through subsidiaries, free and clear of any lien, pledge and encumbrance or
any claim of any third party and are duly authorized, validly issued and
outstanding, fully paid and non-assessable.
(k) Except as described in the Registration Statement and the Final
Prospectus, there is no material litigation or governmental proceeding
pending or, to the knowledge of the Company, threatened against the Company
or any of its subsidiaries which might reasonably be expected to result in
any material adverse change in the business, properties, financial
condition or results of operations of the Company and its subsidiaries
taken as a whole or which is required
5
<PAGE>
to be disclosed in the Registration Statement and the Final Prospectus.
(l) The certificates delivered pursuant to paragraph (f) of Section 6
hereof and all other documents delivered by the Company or its
representatives in connection with the issuance and sale of the Securities
were on the dates on which they were delivered, or will be on the dates on
which they are to be delivered, in all material respects true and complete.
2. Sale and Purchase of the Securities. The Company agrees to sell
to each Underwriter, and each Underwriter, on the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein stated, agrees to purchase from the Company, at the purchase
price set forth in Schedule I hereto, the principal amount of Securities set
forth opposite the name of such Underwriter in Schedule II hereto, except that,
if Schedule I hereto provides for the sale of Securities pursuant to delayed
delivery arrangements, the respective principal amounts of Securities to be
purchased by the Underwriters shall be as set forth in Schedule II hereto, less
the respective amounts of Contract Securities determined as provided below.
Securities to be purchased by the Underwriters are herein sometimes called the
"Underwriters' Securities" and Securities to be purchased pursuant to Delayed
Delivery Contracts (as hereinafter defined) are herein called "Contract
Securities". The obligations of the Underwriters under this Agreement are
several and not joint.
If so provided in Schedule I hereto, the Underwriters are authorized
to solicit offers to purchase Securities, or a portion thereof, from the Company
pursuant to delayed delivery contracts ("Delayed Delivery Contracts"),
substantially in the form of Schedule III hereto but with such changes therein
as the Company may authorize or approve, and the Underwriters will endeavor to
make such arrangements. Delayed Delivery Contracts are to be with institutional
investors, including commercial and savings banks, insurance companies, pension
funds and educational and charitable institutions. The Company will make
Delayed Delivery Contracts in all cases where sales of Contract Securities
arranged by the Underwriters have been approved by the Company but, except as
the Company may otherwise agree, each such Delayed Delivery Contract must be for
not less than the minimum principal amount set forth in Schedule I hereto and
the total principal amount of Contract Securities may not exceed the maximum
principal amount set forth in Schedule I hereto. The Underwriters will not have
any responsibility in respect of the validity or performance of Delayed Delivery
Contracts. The principal amount of Securities to be purchased by each
Underwriter as set forth in Schedule II hereto shall be reduced by an amount
which bears the same proportion to the total principal amount of Contract
Securities as the principal amount of Securities set forth opposite the name of
such Underwriter
6
<PAGE>
bears to the total principal amount of Securities set forth in Schedule II
hereto, except to the extent that the Representatives determine that such
reduction shall be otherwise than in such proportion and so advise the Company
in writing; provided, however, that the total principal amount of Securities to
be purchased by all Underwriters shall be the total principal amount set forth
in Schedule II hereto less the total principal amount of Contract Securities.
3. Delivery and Payment. Delivery by the Company of the
Underwriters' Securities to the Representatives for the respective accounts of
the several Underwriters and payment by the Underwriters therefor by certified
or official bank check or checks payable in, or by wire transfer of, immediately
available (federal) funds to or upon the order of the Company shall take place
at the office, on the date and at the time specified in Schedule I hereto, which
date and time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the Underwriters' Securities being herein called the "Closing
Date").
Concurrently with the delivery of any payment for Underwriters'
Securities as provided in this Section 3, the Company will deliver to the
Representatives for the respective accounts of the several Underwriters a check
in an amount equal to the fee set forth in Schedule I hereto with respect to the
principal amount of Securities for which Delayed Delivery Contracts are made.
The Underwriters' Securities will be registered in such names and in
such authorized denominations as the Representatives may request no less than
two full business days in advance of the Closing Date. The Company agrees to
have the Underwriters' Securities available for inspection, checking and
packaging by the Representatives at such place as is designated by the
Representatives, not later than 1:00 p.m., New York City time, on the business
day prior to the Closing Date.
4. Offering by Underwriters. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed any Interim Prospectus and are authorized to distribute the Final
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters). The
Representatives agree that, as soon as the Representatives believe the offering
of the Securities has been terminated, the Representatives will so advise the
Company.
5. Agreements. The Company agrees with the several Underwriters
that:
(a) The Company will cause the Final Prospectus to be filed with the
Commission pursuant to Rule 424 as required
7
<PAGE>
thereby and will promptly advise the Representatives (A) when the Final
Prospectus shall have been filed with the Commission pursuant to Rule 424,
(B) when any amendment to the Registration Statement relating to the
Securities shall have become effective, (C) of any request by the
Commission for any amendment of the Registration Statement, the Final
Prospectus, the Basic Prospectus or any Interim Prospectus, or for any
additional information, (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
qualification of the Indenture or the institution or threatening of any
proceedings for that purpose and (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. After the date of this Agreement and
prior to the termination of the offering of these Securities the Company
will not file any amendment of the Registration Statement or amendment or
supplement to the Final Prospectus (except an amendment or supplement to
the Final Prospectus that is deemed to be incorporated by reference in the
Final Prospectus pursuant to Item 12 of Form S-3) without the consent of
the Representatives and will use its best efforts to prevent the issuance
of any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof. Prior to receipt of the advice to be given by the
Representatives pursuant to Section 4, the Company will not file any
document that would be deemed to be incorporated by reference in the Final
Prospectus pursuant to Item 12 of Form S-3 without delivering to the
Representatives a copy of the document proposed to be so filed, such
delivery to be made at least twenty-four hours prior to such filing, and
the Company will consult with the Representatives as to any comments which
the Representatives make in a timely manner with respect to the document so
delivered.
(b) Subject to the last sentence of the immediately preceding
paragraph, if, at any time during which a prospectus relating to the
Securities is required to be delivered under the Securities Act, any event
occurs as a result of which the Final Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it shall be necessary at any time to amend or supplement
the Final Prospectus to comply with the Securities Act or the Rules, the
Company promptly will prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance and will use its best efforts to cause
any amendment of the Registration Statement containing an
8
<PAGE>
amended Final Prospectus to be made effective as soon as possible.
(c) The Company will deliver to the Representatives, without charge,
(i) signed copies of the Registration Statement relating to the Securities
and of any amendments thereto (including all exhibits filed with, or
incorporated by reference in, any such document) and (ii) as many conformed
copies of the Registration Statement and of any amendments thereto which
shall become effective on or before the Closing Date (excluding exhibits)
as the Representatives may reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an Underwriter or dealer, the Company will deliver, without
charge to the Representatives and to Underwriters and dealers, at such
office or offices as the Representatives may designate, as many copies of
the Basic Prospectus, any Interim Prospectus and the Final Prospectus as
the Representatives may reasonably request.
(e) The Company will make generally available to its security holders
and to the Representatives as soon as practicable an earnings statement
(which need not be audited) of the Company and its subsidiaries, covering a
period of at least 12 months beginning after the date the Final Prospectus
is filed with the Commission pursuant to Rule 424, which will satisfy the
provisions of Section 11(a) of the Securities Act.
(f) The Company will furnish such information, execute such
instruments and take such actions as may be required to qualify the
Securities for offering and sale under the laws of such jurisdictions as
the Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities;
provided, however, that the Company shall not be required to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action which would subject it to general or unlimited service of
process in any jurisdiction where it is not now so subject.
(g) So long as any Securities are outstanding, the Company will
furnish or cause to be furnished to the Representatives copies of all
annual reports and current reports filed with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission.
(h) If the Company has applied for the listing of the Securities on
the New York Stock Exchange Inc. (the "NYSE"), it will use its best efforts
to cause such listing to be approved as soon as possible.
9
<PAGE>
(i) For a period beginning at the time of execution of this Agreement
and ending on the later of the business day following the Closing Date or
following the date on which any price restrictions on the sale of the
Securities are terminated, without the prior consent of the
Representatives, the Company will not offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company covered by the
Registration Statement or any other registration statement filed under the
Securities Act.
(j) The Company will use its best efforts to do and perform all
things to be done and performed hereunder prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Securities to be
purchased hereunder.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy in all material respects of the representations and warranties on
the part of the Company contained herein as of the date hereof and the Closing
Date, to the accuracy of any material statements made in any certificates,
opinions, affidavits, written statements or letters furnished to the
Representatives or to Simpson Thacher & Bartlett ("Underwriters' Counsel")
pursuant to this Section 6, to the performance by the Company of its respective
obligations hereunder and to the following additional conditions:
(a) The Final Prospectus shall have been filed with the Commission
pursuant to Rule 424 not later than 5:00 p.m., New York City time, on the
second business day following the date of this Agreement or such later date
and time as shall be consented to in writing by the Representatives.
(b) No order suspending the effectiveness of the Registration
Statement, as amended from time to time, or suspending the qualification of
the Indenture, shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission and any requests for
additional information on the part of the Commission (to be included in the
Registration Statement or the Final Prospectus or otherwise) shall have
been complied with to the reasonable satisfaction of the Representatives.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Final Prospectus, there shall not have
been any change or decrease specified in the letter referred to in
paragraph (g) of this Section 6 which, in the judgment of the
Representatives, makes it impracticable or inadvisable to proceed with the
offering and delivery of the Securities as contemplated by the Registration
Statement and the Final Prospectus.
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(d) The Company shall have furnished to the Representatives the
opinion of a Deputy General Counsel or the Chief Legal Officer for the
Company, dated the day of the Closing Date, to the effect that:
(i) The Company has been duly organized and is validly existing
and in good standing under the laws of the jurisdiction of its
incorporation with all requisite corporate power and authority to own
and operate its properties and to conduct its business as described in
the Final Prospectus.
(ii) The Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Final
Prospectus.
(iii) The Indenture has been duly authorized, executed and
delivered by the Company, has been duly qualified under the Trust
Indenture Act and constitutes a legal, valid and binding instrument
enforceable against the Company in accordance with its terms; and the
Securities have been duly authorized, executed and issued by the
Company, and assuming due authentication by the Trustee and upon
payment and delivery in accordance with the Underwriting Agreement,
will constitute legal, valid and binding obligations of the Company
entitled to the benefits of the Indenture; provided however, that the
foregoing is subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and by an implied covenant of good faith and fair dealing.
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated in this Agreement, except for (1) such
consents, approvals, authorizations or orders as have been obtained
under the Securities Act and such as may be required under the
Exchange Act and the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters, and (2) the qualification of the Indenture under the
Trust Indenture Act, which has been obtained.
(v) Such counsel does not know of any contracts or other
documents which are required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which
have not been filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules.
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(vi) To the best of such counsel's knowledge, neither the Company
nor its Named Subsidiary is in violation of its corporate charter or
by-laws, or in default under any material agreement, indenture or
instrument known to such counsel, the effect of which violation or
default would be material to the Company and its subsidiaries taken as
a whole.
(vii) This Agreement and, to the extent applicable, the Delayed
Delivery Contracts have been duly authorized, executed and delivered
by the Company; the execution, delivery and performance of this
Agreement and any Delayed Delivery Contracts by the Company will not
conflict with, or result in the creation or imposition of any material
lien, charge or encumbrance upon any of the assets of the Company or
its Named Subsidiary pursuant to the terms of, or constitute a default
under, any material agreement, indenture or instrument known to such
counsel and to which the Company or its Named Subsidiary is a party or
is bound, or result in a violation of the corporate charter or by-laws
of the Company or its Named Subsidiary or any order, rule or
regulation known to such counsel of any court or governmental agency
having jurisdiction over the Company, its Named Subsidiary or any of
their respective properties, the effect of which would be material to
the Company and its subsidiaries taken as a whole.
(viii) The Registration Statement has become effective under the
Securities Act, and, to the best of the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose is pending or
threatened by the Commission.
(ix) The Registration Statement, the Final Prospectus and each
amendment thereof or supplement thereto (except that no opinion need
be expressed as to the financial statements or other financial or
statistical data or the Form T-1 of the Trustee under the Trust
Indenture Act included or incorporated by reference therein) comply as
to form in all material respects with the requirements of the
Securities Act and the Rules.
(x) If the Securities are to be listed on the NYSE,
authorization therefor has been given, subject to official notice of
issuance and evidence of satisfactory distribution, or the Company has
filed a preliminary listing application and all required supporting
documents with respect to the Securities with the NYSE, and such
counsel has no reason to believe that the Securities will not be
authorized for
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listing, subject to official notice of issuance and evidence of
satisfactory distribution.
(xi) The Named Subsidiary is a duly organized and validly
existing corporation in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate power
and authority to own and operate its properties and to conduct its
business as described in the Final Prospectus. Each of the Company
and its Named Subsidiary is duly qualified to do business as a foreign
corporation, is in good standing and is duly registered as a
broker-dealer, broker, dealer or investment advisor, as the case may
be, in each jurisdiction in which the nature of the business conducted
by it or in which the ownership or holding by lease of the properties
owned or held by it require such qualification or registration and
where the failure to so qualify or register would have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xii) All the outstanding shares of capital stock of the
Company's Named Subsidiary have been duly and validly authorized and
issued and are fully paid and non-assessable and, except for
directors' qualifying shares, are owned by the Company or a subsidiary
of the Company free and clear of any claims, liens, encumbrances and
security interests.
(xiii) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company or
any of its subsidiaries which would affect the subject matter of this
Agreement or is required to be disclosed in the Final Prospectus which
is not disclosed and correctly summarized therein.
Such opinion shall also contain a statement that although such counsel
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Final Prospectus (except as to those matters stated in
paragraph (ii) of such opinion), such counsel has no reason to believe that (i)
the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading or (ii) the Final Prospectus contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (except that no opinion need be expressed as to the
financial statements or other financial or statistical data or the Form T-1
included or incorporated by reference therein).
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In rendering such opinion, such counsel may rely upon opinions of
local counsel satisfactory to the Representatives for matters not governed by
New York law and may rely as to matters of fact, to the extent he deems proper,
upon certificates or affidavits of officers of the Company, the Trustee and
public officials. Such counsel may rely on a certificate of the Trustee with
respect to the execution of the Securities by the Company and the authentication
thereof by the Trustee.
(e) The Representatives shall have received from Underwriters'
Counsel such opinion or opinions, dated the day of the Closing Date, with
respect to the issuance and sale of the Securities, the Registration Statement,
the Final Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.
(f) The Company shall have furnished to the Representatives a
certificate of its Chief Executive Officer, its President or any Managing
Director or Vice President and its Chief Financial Officer or its Treasurer,
dated the day of the Closing Date, to the effect that, to the best of their
knowledge after due inquiry:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date,
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened.
(iii)(x) The Registration Statement does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (y) the Final Prospectus does not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and (z) since the effective date of the
Registration Statement there has not occurred any event required to be
set forth in an amended or supplemented prospectus which has not been
so set forth.
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(g) At the Closing Date, a nationally recognized firm of
independent public accountants shall have furnished to the Representatives a
letter, dated the day of the Closing Date, confirming that they are
independent auditors with respect to the Company within the meaning of the
Securities Act and in form and substance satisfactory to the Representatives,
stating in effect that:
(i) In their opinion, the consolidated financial statements of
the Company and its subsidiaries, and the supporting schedules,
included in the Registration Statement and the Final Prospectus and
audited by them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder.
(ii) On the basis of a reading of the unaudited consolidated
financial statements of the Company and its subsidiaries, if any,
included in the Registration Statement and the Final Prospectus and of
the latest unaudited consolidated financial statements made available
by the Company and Lehman, carrying out certain specified procedures
(but not an audit in accordance with generally accepted auditing
standards), a reading of the minutes of the meetings of the directors
of the Company and Lehman, and inquiries of certain officials of the
Company and its subsidiaries, who have responsibility for financial
and accounting matters of the Company and its subsidiaries, as to
transactions and events subsequent to the date of the most recent
audited consolidated financial statements included in the Registration
Statement and the Final Prospectus, nothing came to their attention
that caused them to believe that:
(A) any material modifications should be made to the
unaudited consolidated financial statements of the Company and
its subsidiaries, if any, included in the Registration Statement
and the Final Prospectus, for them to be in conformity with
generally accepted accounting principles; and such financial
statements do not comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and
the published instructions, rules and regulations thereunder.
(B) the unaudited capsule information of the Company and its
subsidiaries, if any, included in the Registration Statement and
the Final Prospectus does not agree with the amounts set forth in
the unaudited consolidated financial statements of the Company
from which it was
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<PAGE>
derived or was not determined on a basis substantially consistent
with that of the corresponding financial information in the
latest audited financial statements of the Company included in
the Registration Statement and the Final Prospectus.
(C)(I) as of the latest date as of which the Company and its
subsidiaries have monthly financial statements, there was any
decrease in the capital stock, additional paid-in capital or
related earnings, or increase in long-term indebtedness of the
Company and its subsidiaries, as compared with the amounts shown
in the most recent consolidated statement of financial condition
of the Company and its subsidiaries included in the Registration
Statement and the Final Prospectus, (II) with respect to the
period subsequent to the date of the most recent financial
statements included in the Registration Statement and the Final
Prospectus and extending through the latest date as of which the
Company and its subsidiaries have monthly financial statements,
there was a consolidated net loss or (III) with respect to the
amounts of net capital or excess net capital of Lehman determined
pursuant to Commission Rule 15c3-1 and shown in the most recent
financial statement of Lehman filed pursuant to Commission Rule
17a-5, there has been any decrease in such amounts as compared
with the amounts shown in the most recent consolidated financial
statements included in the Registration Statement and the Final
Prospectus;
(D) as of a specified date not more than three business
days prior to the date of the letter, there was any decrease in
the capital stock or additional paid-in capital, or increase in
long-term indebtedness of the Company and its subsidiaries, as
compared with the amounts shown in the most recent consolidated
statement of financial condition of the Company and its
subsidiaries included in the Registration Statement and the Final
Prospectus;
except in all instances for increases or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof, unless said
explanation is not deemed necessary by the Representatives.
(iii) If pro forma financial statements are included in the
Registration Statement or the Final Prospectus,
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<PAGE>
(x) they have read such pro forma financial statements, (y) they have
made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company as
to the basis for their determination of the pro forma adjustments and
whether such pro forma financial statements comply as to form in all
material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X and (z) they have proved the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts; and as a result thereof, nothing came to their
attention that caused them to believe that such pro forma financial
statements do not so comply with Rule 11-02 of Regulation S-X and that
such pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements.
(iv) They have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is expressed in
dollars, or percentages derived from dollar amounts, and has been
obtained from the general accounting records of the Company) set forth
in the Registration Statement, as amended, and the Final Prospectus,
as amended or supplemented, and in Exhibit 12 to the Registration
Statement, including specified information, if any, included or
incorporated from the Company's Annual Report on Form 10-K
incorporated therein or specified information, if any, included or
incorporated from any of the Company's Quarterly Reports on Form 10-Q
or its Current Reports on Form 8-K incorporated therein, agrees with
the accounting records of the Company and its subsidiaries or
computations made therefrom, excluding any questions of legal
interpretation.
(h) Subsequent to the execution of this Agreement, there shall not
have been any decrease in the ratings of any of the Company's debt securities by
Moody's Investors Service, Inc. or Standard & Poor's Corporation.
(i) The Company shall have accepted Delayed Delivery Contracts in any
case where sales of Contract Securities arranged by the Underwriters have been
approved by the Company.
(j) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as the
Representatives or Underwriters' Counsel may reasonably request.
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If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates or opinions furnished to the Representatives or Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and to
Underwriters' Counsel, this Agreement and all obligations of the Underwriters
hereunder may be cancelled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing, or by telegraph confirmed in writing.
7. Expenses. (a) Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company will
pay all costs and expenses incident to the performance of the obligations of the
Company hereunder, including, without limiting the generality of the foregoing,
all costs, taxes and expenses incident to the issuance, sale and delivery of the
Securities to the Underwriters, all fees and expenses of the Company's counsel
and accountants, all costs and expenses incident to the preparing, printing and
filing of the Registration Statement (including all exhibits thereto), any
Interim Prospectus, the Basic Prospectus, the Final Prospectus and any
amendments thereof or supplements thereto and the Indenture, and the rating of
the Securities by one or more rating agencies, all costs and expenses (including
fees of Underwriters' Counsel and their disbursements) incurred in connection
with blue sky qualifications, advising on the legality of the Securities for
investment, the filing requirements, if any, of the National Association of
Securities Dealers, Inc. in connection with its review of corporate financings,
the fee for listing the Securities on the NYSE, the fees and expenses of the
Trustee and all costs and expenses of the printing and distribution of all
documents in connection with such offering. Except as provided in this Section
7, the Company will have no responsibility to the Underwriters for the
Underwriters' own costs and expenses, including the fees of Underwriters'
Counsel and any advertising expenses in connection with any offer the
Underwriters may make.
(b) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied or because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will, subject to demand by the
Representatives, reimburse the Underwriters for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
8. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person who controls such Underwriter within
the meaning of the Securities
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Act against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or in any amendment thereof, or in
any Interim Prospectus, the Basic Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i) the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company as herein stated by the Representatives on behalf of any Underwriter
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to the Basic Prospectus or any Interim Prospectus shall
not inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim, damage or
liability purchased the Securities which are the subject thereof if such person
did not receive a copy of the Final Prospectus at or prior to the confirmation
of the sale of such Securities to such person in any case where such delivery is
required by the Securities Act and the untrue statement or omission of a
material fact contained in the Basic Prospectus or any Interim Prospectus was
corrected in the Final Prospectus, unless such failure to deliver the Final
Prospectus was a result of noncompliance by the Company with Section 5(d)
hereof. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person, if any, who controls the Company within
the meaning of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Basic Prospectus, any Interim
Prospectus or the Final Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or
19
<PAGE>
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that the
same was made therein in reliance upon and in conformity with written
information furnished to the Company as herein stated by the Representatives on
behalf of such Underwriter specifically for use in the preparation thereof, and
agrees to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which any Underwriter may otherwise have. The
statements set forth in the last paragraph of the cover page and under the
heading "Underwriting" in the Final Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in the Registration Statement and the Final Prospectus, as the case may be, and
you, as the Representatives, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and either (i) the indemnifying party or parties and
the indemnified party or parties mutually agree or (ii) representation of both
the indemnifying party or parties and the indemnified party or parties by the
same counsel is inappropriate under applicable standards of professional conduct
due to actual or potential differing interests between them, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed
20
<PAGE>
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of subparagraph
(a) representing the indemnified parties under subparagraph (a), as the case may
be, who are parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subparagraph (a) of
this Section 8 is due in accordance with its terms but is for any reason held by
a court to be unavailable from the Company on grounds of policy or other similar
grounds, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to which
the Company and one or more of the Underwriters may be subject in such
proportion so that the Underwriters are responsible for that portion represented
by the percentage that the underwriting discounts appearing on the cover page of
the Final Prospectus bear to the public offering prices appearing thereon and
the Company is responsible for the balance; provided, however, that (i) in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters) be responsible for any amount in excess of the underwriting
discounts applicable to the Securities purchased by such Underwriter hereunder
and (ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
the Securities Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this subparagraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be
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sought from any other obligation it or they may have hereunder or otherwise than
under this subparagraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for all of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule II hereto bear to the
aggregate principal amount of Securities set opposite the names of the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate principal amount of Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
principal amount of the Securities, the remaining Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such non-defaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any
non-defaulting Underwriters or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Final Prospectus or in any other documents or arrangements may be effected.
Nothing herein contained shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any non-defaulting Underwriter for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
at or prior to delivery of and payment for all the Securities, if, prior to such
time (i) trading in securities generally on the NYSE or the over-the-counter
market shall have been suspended or limited or minimum prices shall have been
established on the NYSE or the over-the-counter market, (ii) a banking
moratorium shall have been declared either by federal or New York State
authorities, (iii) any new restriction materially affecting the distribution of
the Securities shall have become effective; trading in any securities of the
Company shall have been suspended or halted by any national securities exchange,
the National Association of Securities Dealers, Inc. or the Commission, (iv) the
United States becomes engaged in hostilities or there is an escalation in
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States, or (v) there shall have been such a
material adverse change in national or international political, financial or
economic conditions, national or international equity markets or currency
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<PAGE>
exchange rates or controls as to make it, in the judgment of the
Representatives, inadvisable or impracticable to proceed with the payment for
and delivery of the Securities.
11. Representations and Indemnities to Survive Delivery. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers (as such officers) and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its officers or directors or any
controlling person within the meaning of the Securities Act, and will survive
delivery of the payment for the Securities.
12. Notices. All communications hereunder will be in writing, and,
if sent to the Representatives will be mailed, delivered, telegraphed or telexed
and confirmed to them, at the address specified in Schedule I hereto; or, if
sent to the Company will be mailed, delivered, telegraphed or telexed and
confirmed to it at 3 World Financial Center, New York, New York 10285,
Attention: Chief Financial Officer.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their successors and, to the extent and only
to the extent stated in Section 8 hereof, the officers and directors and
controlling persons referred to in Section 8 hereof, and except as provided in
Section 8 hereof, no person other than the parties hereto and their respective
successors will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
LEHMAN BROTHERS HOLDINGS INC.
By
-----------------------------------
Title:
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The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
LEHMAN BROTHERS INC.
By
-----------------------------
Title:
Acting on behalf of the Representatives named in Schedule I annexed hereto
and the several Underwriters named in Schedule II annexed hereto.
24
<PAGE>
SCHEDULE I
Date of Underwriting Agreement:
Registration Statement No. 333-14791
Representative and Address: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Indenture, Title, Purchase Price and Description of Securities:
Indenture:
Title:
Principal amount:
Price to public:
Purchase price:
Interest rate:
Time of payment of
interest:
Maturity:
Sinking fund
provisions:
Redemption
provisions:
Repayment:
Closing Date, Time and Location:
Date:
Time:
Location: Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
Delayed Delivery
Arrangements:
<PAGE>
SCHEDULE II
Principal
Amount of
Securities
to be
Underwriters Purchased
------------
Lehman Brothers Inc. .............................................$
Total.......................................................$
------------
<PAGE>
SCHEDULE III
Delayed Delivery Contract
, 19
[Insert name and address of lead Representative]
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from Lehman Brothers Holdings
Inc. (the "Company"), and the Company agrees to sell to the undersigned, on
, 19 (the "Delivery Date"), $ principal amount of the Company's %
due (the "Securities") offered by the Company's Prospectus dated
, 19 , and related Prospectus Supplement dated , 19 , receipt of a
copy of which is hereby acknowledged, at a purchase price of % of the
principal amount thereof, plus accrued interest or amortization of original
issue discount, if any, thereon from , 19 , to the date of payment
and delivery, and on the further terms and conditions set forth in this
contract.
Payment for the Securities to be purchased by the undersigned shall be made
on or before 11:00 a.m., New York City time, on the Delivery Date to or upon the
order of the Company in New York Clearing House (next day) funds, at your office
or at such other place as shall be agreed between the Company and the
undersigned upon delivery to the undersigned of the Securities in definitive
fully registered form and in such authorized denominations and registered in
such names as the undersigned may request by written or telegraphic
communication addressed to the Company not less than five full business days
prior to the Delivery Date. If no request is received, the Securities will be
registered in the name of the undersigned and issued in a denomination equal to
the aggregate principal amount of Securities to be purchased by the undersigned
on the Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Securities on the Delivery Date, and the obligation of the Company to sell and
deliver Securities on the Delivery Date, shall be subject to the conditions (and
neither party shall incur any liability by reason of the failure thereof) that
(1) the purchase of Securities to be made by the undersigned, which purchase the
undersigned represents is not prohibited on the date hereof, shall not on the
Delivery Date be prohibited under the laws of the jurisdiction to which the
undersigned is subject, and (2) the Company, on or before the Delivery Date,
shall have sold to certain underwriters (the "Underwriters") such principal
amount of the Securities as is to be sold to them pursuant to the Underwriting
Agreement referred to in the Prospectus and Prospectus Supplement mentioned
above. Promptly after completion of such sale to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith. The
<PAGE>
obligation of the undersigned to take delivery of and make payment for the
Securities, and the obligation of the Company to cause the Securities to be sold
and delivered, shall not be affected by the failure of any purchaser to take
delivery of and make payment for the Securities pursuant to other contracts
similar to this contract.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that acceptance of this contract and other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first come, first served basis. If this contract is
acceptable to the Company, it is required that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned, as of the date first above written,
when such counterpart is so mailed or delivered.
This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
_________________________________________
(Name of Purchaser)
By_________________________________
(Signature and Title of Officer)
_________________________________________
(Address)
Accepted:
Lehman Brothers Holdings Inc.
By___________________________________
(Authorized Signature)
2
<PAGE>
EXHIBIT 1.D
Preferred Stock
LEHMAN BROTHERS HOLDING INC.
UNDERWRITING AGREEMENT
New York, New York
Dated the date set forth
In Schedule I hereto
To the Representative(s)
named in Schedule I
hereto, of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
Lehman Brothers Holdings Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to you and the other underwriters named in Schedule
II hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the number of shares identified in Schedule I hereto (the
"Firm Stock") of the Company's preferred stock, par value $1.00 per share (the
"Preferred Stock"). In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional number of shares of the
Preferred Stock identified in Schedule I hereto on the terms and for the
purposes set forth in Section 2 (the "Option Stock"). The Firm Stock and the
Option Stock, if purchased, are hereinafter collectively called the "Stock". If
the firm or firms listed in Schedule II hereto include only the firm or firms
listed in Schedule I hereto, then the terms "Underwriters" and "Representatives"
shall each be deemed to refer to such firm or firms. This is to confirm the
agreement concerning the purchase of the Stock from the Company by the
Underwriters named in Schedule II hereto.
1. Representation and Warranties. The Company represents and
warrants to each Underwriter that:
(a) The Company meets the requirements for the use of Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations promulgated thereunder (the "Rules"),
and has carefully prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(the file number of which is set forth in Schedule I hereto), which
has become effective, for the registration of the Stock under the
Securities Act. The registration statement, as amended at the date of
this Agreement, meets the requirements set forth in Rule 415(a)(1)(x)
under the Securities Act and complies in all other material respects
with such rule. The Company proposes to file with the Commission
pursuant to Rule 424 under the
<PAGE>
Securities Act ("Rule 424") a supplement to the form of prospectus
included in the registration statement relating to the initial
offering of the Stock and the plan of distribution thereof and has
previously advised you of all further information (financial and
other) with respect to the Company to be set forth therein. The term
"Registration Statement" means the registration statement, as amended
at the date of this Agreement, including the exhibits thereto,
financial statements, and all documents incorporated therein by
reference pursuant to Item 12 of Form S-3 (the "Incorporated
Documents"), and such prospectus as then amended, including the
Incorporated Documents, is hereinafter referred to as the "Basic
Prospectus"; and such supplemented form of prospectus, in the form in
which it shall be filed with the Commission pursuant to Rule 424
(including the Basic Prospectus as so supplemented), is hereinafter
called the "Final Prospectus". Any preliminary form of the Basic
Prospectus which has heretofore been filed pursuant to Rule 424 is
hereinafter called the "Interim Prospectus". Any reference herein to
the Registration Statement, the Basic Prospectus, any Interim
Prospectus or the Final Prospectus shall be deemed to refer to and
include the Incorporated Documents which were filed under the
Securities Exchange Act of 1934 (the "Exchange Act"), on or before the
date of this Agreement or the issue date of the Basic Prospectus, any
Interim Prospectus or the Final Prospectus, as the case may be; and
any reference herein to the terms "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus, any
Interim Prospectus or the Final Prospectus shall be deemed to refer to
and include the filing of any Incorporated Documents under the
Exchange Act after the date of this Agreement or the issue date of the
Basic Prospectus, any Interim Prospectus or the Final Prospectus, as
the case may be, and deemed to be incorporated therein by reference.
(b) As of the date hereof, when the Final Prospectus is first
filed with the Commission pursuant to Rule 424, when, before either
Delivery Date (hereinafter defined), any amendment to the Registration
Statement becomes effective, when, before either Delivery Date, any
Incorporated Document is filed with the Commission, when any
supplement to the Final Prospectus is filed with the Commission and at
each Delivery Date, the Registration Statement, the Final Prospectus
and any such amendment or supplement will comply in all material
respects with the applicable requirements of the Securities Act and
the Rules, and the Incorporated Documents will comply in all material
respects with the requirements of the
2
<PAGE>
Exchange Act or the Securities Act, as applicable, and the rules and
regulations adopted by the Commission thereunder, on the date it
became effective, the Registration Statement did not, and, on the date
that any post-effective amendment to the Registration Statement
becomes effective, the Registration Statement as amended by such
post-effective amendment did not or will not, as the case may be,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statement therein not misleading; on the date the Final Prospectus is
filed with the Commission pursuant to Rule 424 and on each Delivery
Date, the Final Prospectus, as it may be amended or supplemented, will
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not
misleading; and on said dates, the Incorporated Documents will comply
in all material respects with the applicable provisions of the
Exchange Act and rules and regulations of the Commission thereunder,
and, when read together with the Final Prospectus, or the Final
Prospectus as it may be then amended or supplemented, will not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided that the foregoing representations and warranties
in this paragraph (b) shall not apply to statements or omissions made
in reliance upon and in conformity with written information furnished
to the Company by or through the Representatives on behalf of any
Underwriter specifically for use in connection with the preparation of
the Registration Statement or the Final Prospectus, as they may be
amended or supplemented.
(c) The Basic Prospectus and any Interim Prospectus, as of their
respective dates, complied in all material respects with the
requirements of the Securities Act and of the Rules and did not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The Commission has not issued an order preventing or
suspending the use of the Basic Prospectus or any Interim Prospectus.
(d) The nationally recognized firm of independent public
accountants whose report appears in the Company's most recent Annual
Report on Form 10-K, which is incorporated by reference in the Final
Prospectus,
3
<PAGE>
are independent public accountants as required by the Securities Act
and the Rules.
(e) In the event that a report of a nationally recognized firm
of independent public accounts regarding historical financial
information with respect to any entity acquired by the Company is
required to be incorporated by reference in the Final Prospectus, such
independent public accountants were independent public accountants, as
required by the Securities Act and the Rules, during the period of
their engagement to examine the financial statements being reported on
and at the date of their report.
(f) The audited consolidated financial statements of the Company
in the Final Prospectus and the Registration Statement present fairly
on a consolidated basis the financial position, the results of
operations, changes in common stock and other stockholder's equity and
cash flows of the Company and its subsidiaries, as of the respective
dates and for the respective periods indicated, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The unaudited consolidated financial
statements of the Company, if any, included in the Final Prospectus
and the Registration Statement and the related notes are true,
complete and correct, subject to normally recurring changes resulting
from year-end audit adjustments, and have been prepared in accordance
with the instructions to Form 10-Q.
(g) Except as described in or contemplated by the Registration
Statement and the Final Prospectus, there has not been any material
adverse change in or any adverse development which materially affects
the business, properties, financial condition or results of the
Company or the Company and its subsidiaries taken as whole, from the
dates as of which information is given in the Registration Statement
and Final Prospectus.
(h) The Stock conforms to the description thereof contained in
the Final Prospectus, is duly and validly authorized, and, when issued
and delivered against payment therefor as provided in this Agreement,
will be validly issued, fully paid and non-assessable.
(i) The Company does not have any subsidiaries having business
or properties that are material to the business and properties of the
Company and its subsidiaries taken as a whole with the exception of
Lehman Brothers Inc. ("Lehman") and the possible exception of Lehman
Commercial Paper Inc. (the "Named
4
<PAGE>
Subsidiaries"). Neither the Company nor any of the Named Subsidiaries
is in violation of its corporate charter or by-laws or in default
under any agreement, indenture or instrument, the effect of which
violation or default would be material to the Company and its
subsidiaries taken as a whole. The execution, delivery and
performance of this Agreement will not constitute a breach of, result
in the creation or imposition of any material lien, charge or
encumbrance upon any of the assets of the Company or any of its
subsidiaries pursuant to the terms of, or constitute a default under,
any material agreement, indenture or instrument, or result in a
violation of the corporate charter or by-laws of the Company or any of
its subsidiaries or any order, rule or regulation of any court or
governmental agency having jurisdiction over the Company, any of the
Named Subsidiaries or their property. Except as set forth in the
Final Prospectus or as required by the Securities Act, the Exchange
Act and applicable state securities laws, no consent, authorization or
order of, or filing or registration with, any court or governmental
agency is required for the execution, deliver and performance of this
Agreement.
(j) The Company and each of the Named Subsidiaries have been
duly organized, are validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, are duly
qualified to do business and in good standing as foreign corporations
and are fully registered as a broker-dealer, broker, dealer or
investment advisor, as the case may be, in each jurisdiction in which
their respective ownership of property or the conduct of their
respective businesses requires such qualification or registration and
in which the failure to qualify or register would be reasonably
likely, individually or in the aggregate, to have a material adverse
effect on the business, condition or properties of the Company and its
subsidiaries taken as a whole. Each of the Company and its Named
Subsidiaries holds all material licenses, permits, and certificates
from governmental authorities necessary for the conduct of its
business and owns, or possesses adequate rights to use, all material
rights necessary for the conduct of such business and has not received
any notice of conflict with the asserted rights of others in respect
thereof; and each of the Company and its Named Subsidiaries has the
corporate power and authority necessary to own or hold its properties
and to conduct the businesses in which it is engaged. Except as may
be disclosed in the Registration Statement and the Final Prospectus,
all outstanding shares of capital stock of the Named Subsidiaries are
owned by the Company, directly or
5
<PAGE>
indirectly through subsidiaries, free and clear of any lien, pledge
and encumbrance or any claim of any third party and are duly
authorized, validly issued and outstanding, fully paid and
non-assessable.
(k) Except as described in the Registration Statement and the
Final Prospectus, there is no material litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries which might reasonably
be expected to result in any material adverse change in the business,
properties, financial condition or results of operations of the
Company and its subsidiaries taken as a whole or which is required to
be disclosed in the Registration Statement and the Final Prospectus.
(l) The certificates delivered pursuant to paragraph (f) of
Section 6 hereof and all other documents delivered by the Company or
its representatives in connection with the issuance and sale of the
Stock were on the dates on which they were delivered, or will be on
the dates on which they are to be delivered, in all material respects
true and complete.
2. Sale and Purchase of the Stock. The Company agrees to sell to
each Underwriter, and each Underwriter, on the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein stated, agrees to purchase from the Company the number of
shares of Firm Stock set forth opposite the name of Underwriter in Schedule II
hereto. The obligations of the Underwriters under this Agreement are several
and not joint.
In addition, the Company grants to the Underwriters an option to
purchase up to an additional number of shares of Option Stock indicated in
Schedule I hereto. Such option is granted solely for the purpose of covering
over-allotments in the sale of Firm Stock and is exercisable as provided in
Section 3 hereof. Shares of Option Stock shall be purchased severally for the
account of the Underwriters in proportion to the number of shares of Firm Stock
set forth opposite the name of such Underwriters in Schedule II hereto. The
respective purchase obligations of each Underwriter with respect to the Option
Stock shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Stock other than in 100 share amounts. The price
of both the Firm Stock and any Option Stock shall be the price per share
indicated in Schedule I hereto.
3. Delivery and Payment. Delivery by the Company of the Firm Stock
to the Representatives for the respective accounts of the several Underwriters
and payment by the Underwriters therefor by certified or official bank check or
checks payable
6
<PAGE>
in, or by wire transfer of, immediately available (federal) funds to or upon the
order of the Company shall take place at the office, on the date and at the time
specified in Schedule I hereto, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
9 hereof (such date and time of delivery and payment for the Firm Stock being
herein called the "First Delivery Date").
The Firm Stock will be registered in such names and in such authorized
denominations as the Representatives may request no less than two full business
days in advance of the First Delivery Date. The Company agrees to have the Firm
Stock available for inspection, checking and packaging by the Representatives at
such place as is designated by the Representatives, not later than 1:00 p.m.,
New York City time, on the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date as of which
the Registration Statement is declared effective by the Commission, the option
granted in Section 2 may be exercised by written notice being given to the
Company by the Representatives. Such notice shall set forth the aggregate
number of shares of Option Stock as to which the option is being exercised, the
names in which the shares of Option Stock are to be registered, the
denominations in which the shares of Option Stock are to be issued and the date
and time, as determined by the Representatives, when the shares of Option Stock
are to be delivered provided, however, that this date and time shall not be
earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes referred to as a "Delivery Date".
Delivery by the Company of the Option Stock to the Representatives for
the respective accounts of the several Underwriters and payment by the
Underwriters therefor by certified or official bank check or checks payable in,
or by wire transfer of, immediately available (federal) funds to or upon the
order of the Company shall take place at the office and at the time specified in
Schedule I hereto, on the Second Delivery Date, which date and time may be
postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof.
The Option Stock will be registered in such names and in such
authorized denominations as the Representatives may request in the aforesaid
written notice. The Company agrees to have the Option Stock available for
inspection, checking and packaging by the Representatives at such place as is
designated
7
<PAGE>
by the Representatives, not later than 1:00 p.m., New York City time, on the
business day prior to the Second Delivery Date.
4. Offering by Underwriters. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed any Interim Prospectus and are authorized to distribute the Final
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters). The
Representatives agree that, as soon as the Representatives believe the offering
of the Stock has been terminated, the Representatives will so advise the
Company.
5. Agreement. The Company agrees with the several Underwriters
that:
(a) The Company will cause the Final Prospectus to be filed with the
Commission pursuant to Rule 424 not later than 10:00 a.m., New York City
time, on the business day following the date of this Agreement and will
promptly advise the Representatives (A) when the Final Prospectus shall
have been filed with the Commission pursuant to Rule 424, (B) when any
amendment to the Registration Statement relating to the Stock shall have
become effective, (C) of any request by the Commission for any amendment of
the Registration Statement, the Final Prospectus, the Basic Prospectus or
any Interim Prospectus, or for any additional information, (D) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threatening of any
proceedings for that purpose and (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. After the date of this Agreement and prior to
the termination of the offering of the Stock, the Company will not file any
amendment of the Registration Statement or amendment or supplement to the
Final Prospectus (except an amendment to the Final Prospectus that is
deemed to be incorporated by reference in the Final Prospectus pursuant to
Item 12 of Form S-3) without the consent of the Representatives and will
use its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof. Prior to
receipt of the advice to be given by the Representatives pursuant to
Section 4, the Company will not file any document that would be deemed to
be incorporated by reference in the Final Prospectus pursuant to Item 12 of
Form S-3 without delivering to the Representatives a copy of the document
proposed to be so filed, such delivery to be made at least twenty-four
hours prior to such filing, and the Company will consult with the
Representatives as to any comments which the Representatives make in a
timely manner with respect to the document so delivered.
8
<PAGE>
(b) Subject to the last sentence of the immediately preceding
paragraph, if, at any time during which a prospectus relating to the Stock
is required to be delivered under the Securities Act, any event occurs as a
result of which the Final Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it shall be necessary at any time to amend or supplement the Final
Prospectus to comply with the Securities Act or the Rules, the Company
promptly will prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance and will use its best efforts to cause
any amendment of the Registration Statement containing an amended Final
Prospectus to be made effective as soon as possible.
(c) The Company will deliver to the Representatives, without charge,
(i) signed copies of the Registration Statement relating to the Stock and
of any amendments thereto (including all exhibits filed with, or
incorporated by reference in, any such document) and (ii) as many conformed
copies of the Registration Statement and of any amendments thereto which
shall become effective on or before the First Delivery Date (excluding
exhibits) as the Representatives may reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an Underwriter or dealer, the Company will deliver, without
charge to the Representatives and to Underwriters and dealers, at such
office or offices as the Representatives may designate, as many copies of
the Basic Prospectus, any Interim Prospectus and the Final Prospectus as
the Representatives may reasonably request.
(e) The Company will make generally available to its security holders
and to the Representatives as soon as practicable an earnings statement
(which need not be audited) of the Company and its subsidiaries, covering a
period of at least 12 months beginning after the date the Final Prospectus
is filed with the Commission pursuant to Rule 424, which will satisfy the
provisions of Section 11(a) of the Securities Act.
(f) The Company will furnish such information, execute such
instruments and take such actions as may be required to qualify the Stock
for offering and sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Stock; provided,
however, that the Company shall not be required to qualify to do business
in any jurisdiction where it is not now so
9
<PAGE>
qualified or to take any action which would subject it to general or
unlimited service of process in any jurisdiction where it is not now so
subject.
(g) So long as any Stock is outstanding, the Company will furnish or
cause to be furnished to the Representatives copies of all annual reports
and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K,
or such other similar forms as may be designated by the Commission.
(h) If the Company has applied for the listing of the Stock on the
New York Stock Exchange Inc. (the "NYSE"), it will use its best efforts to
cause such listing to be approved as soon as possible.
(i) For a period beginning at the time of execution of this Agreement
and ending on the later of the business day following either the Second
Delivery Date or following the date on which any price restrictions on the
sale of the Stock are terminated, without the prior consent of the
Representatives, the Company will not offer, sell, contract to sell or
otherwise dispose of any shares of Preferred Stock (other than the Stock),
or sell or grant options, rights or warrants with respect to any shares of
registration statement filed under the Securities Act.
(j) The Company will use its best efforts to do and perform all
things to be done and performed hereunder prior to each Delivery Date and
to satisfy all conditions precedent to the delivery of the Stock to be
purchased hereunder.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Stock shall be subject to the
accuracy in all material respects of the representations and warranties on the
part of the Company contained herein as of the date hereof and each Delivery
Date, to the accuracy of any material statements made in any certificates,
opinions, affidavits, written statements or letters furnished to the
Representatives or to Simpson Thacher & Bartlett ("Underwriters' Counsel")
pursuant to this Section 6, to the performance by the Company of its respective
obligations hereunder and to the following additional conditions:
(a) The Final Prospectus shall have been filed with the Commission
pursuant to Rule 424 not later than 10:00 a.m., New York City time, on the
business day following the date of this Agreement or such later date and
time as shall be consented to in writing by the Representatives.
(b) No order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the
Commission and any
10
<PAGE>
requests for additional information on the part of the Commission (to be
included in the Registration Statement or the Final Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of
the Representatives.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Final Prospectus, there shall not have
been any change or decrease specified in the letter referred to in
paragraph (g) of this Section 6 which, in the judgment of the
Representatives, makes it impracticable or inadvisable to proceed with the
offering and delivery of the Stock as contemplated by the Registration
Statement and the Final Prospectus.
(d) The Company shall have furnished to the Representatives the
opinion of a Deputy General Counsel or the Chief Legal Officer for the
Company, dated the day of each Delivery Date to the effect that:
(i) The Company has been duly organized and is validly existing
and in good standing under the laws of the jurisdiction of its
incorporation with all requisite corporate power and authority to own
and operate its properties and to conduct its business as described in
the Final Prospectus.
(ii) The Stock conforms in all material respects to the
descriptions thereof contained in the Final Prospectus.
(iii) The Company has an authorized capitalization as set forth
in the Final Prospectus, and all of the issued shares of capital stock
of the Company (including the shares of Stock being delivered on such
Delivery Date) have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus;
(iv) There are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer of, any
shares of the Stock pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such counsel;
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated in this Agreement, except for such consents,
approvals, authorizations or orders as have been obtained under the
Securities Act and such as may be required under the Exchange Act and
the blue sky laws of any
11
<PAGE>
jurisdiction in connection with the purchase and distribution of the
Stock by the Underwriters.
(vi) Such counsel does not know of any contracts or other
documents which are required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which
have not been filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules.
(vii) To the best of such counsel's knowledge, neither the
Company nor any of its Named Subsidiaries is in violation of its
corporate charter or by-laws, or in default under any material
agreement, indenture or instrument known to such counsel, the effect
of which violation or default would be material to the Company and its
subsidiaries taken as a whole.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company; the execution, delivery and performance of
this Agreement by the Company will not constitute a breach of, or
result in the creation or imposition of any material lien, charge or
encumbrance upon any of the assets of the Company or any of its Named
Subsidiaries pursuant to the terms of, or constitute a default under,
any material agreement, indenture or instrument known to such counsel
and to which the Company or any of its Named Subsidiaries is a party
of is bound, or result in a violation of the corporate charter or
by-laws of the Company or any of its Named Subsidiaries or any order,
rule or regulation known to such counsel of any court or governmental
agency having jurisdiction over the Company, any of its Named
Subsidiaries or any of their respective properties, the effect of
which would be material to the Company and its subsidiaries taken as a
whole.
(ix) The Registrations Statement has become effective under the
Securities Act, and, to the best of the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose is pending or
threatened by the Commission.
(x) The Registration Statement, the Final Prospectus and each
amendment thereof or supplement thereto (except that no opinion need
be expressed as to the financial statements or other financial or
statistical data included or incorporated by reference therein) comply
as to form in all material respects with the requirements of the
Securities Act and the Rules.
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<PAGE>
(xi) If the Stock is to be listed on the NYSE, authorization
therefor has been given, subject to official notice of issuance and
evidence of satisfactory distribution, or the Company has filed a
preliminary listing application and all required supporting documents
with respect to the Stock with the NYSE, and such counsel has no
reason to believe that the Stock will not be authorized for listing,
subject to official notice of issuance and evidence of satisfactory
distribution.
(xii) Each of the Named Subsidiaries is a duly organized and
validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate power
and authority to own and operate its properties and to conduct its
business as described in the Final Prospectus. Each of the Company
and its Named Subsidiaries is duly qualified to do business as a
foreign corporation, is in good standing and is duly registered as a
broker-dealer, broker, dealer or investment advisor, as the case may
be, in each jurisdiction in which the nature of the business conducted
by it or in which the ownership or holding by lease of the properties
owned or held by it require such qualification or registration and
where the failure to so qualify or register would have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xiii) All the outstanding shares of capital stock of each of the
Company's Named Subsidiaries have been duly and validly authorized and
issued and are fully paid and non-assessable and, except for
directors' qualifying shares, are owned by the Company or a subsidiary
of the Company free and clear of any claims, liens, encumbrances and
security interests.
(xiv) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company or
any of its subsidiaries which would affect the subject matter of this
Agreement or is required to be disclosed in the Final Prospectus which
is not disclosed and correctly summarized therein.
Such opinion shall also contain a statement that although such counsel
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Final Prospectus (except as to those matters stated in
paragraph (ii) of such opinion), such counsel has no reason to believe that (i)
the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any
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<PAGE>
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) the Final Prospectus contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that no opinion
need be expressed as to the financial statements or other financial or
statistical data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely upon opinions of
local counsel satisfactory to the Representatives for matters not governed by
New York law and may rely as to matters of fact, to the extent such counsel
deems proper, upon certificates or affidavits of officers of the Company and
public officials.
(e) The Representatives shall have received from Underwriters' Counsel
such opinion or opinions, dated the day of such Delivery Date, with respect to
the issuance and sale of the Stock, the Registration Statement, the Final
Prospectus and other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Representatives a
certificate of its Chief Executive Officer, its President or any Managing
Director or Vice President and its Chief Financial Officer or its Treasurer,
dated the day of each Delivery Date, to the effect that, to the best of their
knowledge after due inquiry:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
such Delivery Date with the same effect as if made on such Delivery
Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to such Delivery Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened.
(iii) (x) The Registration Statement does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (y) the Final Prospectus does not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in
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<PAGE>
the light of the circumstances under which they were made, not
misleading, and (z) since the effective date of the Registration
Statement there has not occurred any event required to be set forth in
an amended or supplemented prospectus which has not been so set forth.
(g) At each Delivery Date, a nationally recognized firm of
independent public accountants shall have furnished to the Representatives a
letter, dated the day of such Delivery Date, confirming that they are
independent auditors to the Company within the meaning of the Securities Act
and in form and substance satisfactory to the Representatives, stating in
effect that:
(i) In their opinion, the consolidated financial statements of
the Company and its subsidiaries, and the supporting schedules,
included in the Registration Statement and the Final Prospectus and
audited by them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder.
(ii) On the basis of a reading of the unaudited consolidated
financial statements of the Company and its subsidiaries, if any,
included in the Registration Statement and the Final Prospectus and
of the latest unaudited consolidated financial statements made
available by the Company and Lehman, carrying out certain specified
procedures (but not an audit in accordance with generally accepted
auditing standards), a reading of the minutes of the meetings of the
directors of the Company and Lehman, and inquiries of certain
officials of the Company and its subsidiaries, who have
responsibility for financial and accounting matters of the Company
and its subsidiaries, as to transactions and events subsequent to
the date of the most recent audited consolidated financial
statements included in the Registration Statement and the Final
Prospectus, nothing came to their attention that caused them to
believe that:
(A) any material modifications should be made to the unaudited
consolidated financial statements of the Company and its subsidiaries,
if any, included in the Registration Statement and the Final
Prospectus, for them to be in conformity with generally accepted
accounting principles; and such financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the published instructions,
rules and regulations thereunder.
(B) the unaudited capsule information of the Company and its
subsidiaries, if any, included in the
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<PAGE>
Registration Statement and the Final Prospectus does not agree with
the amounts set forth in the unaudited consolidated financial
statements of the Company from which it was derived or was not
determined on a basis substantially consistent with that of the
corresponding financial information in the latest audited financial
statements of the Company included in the Registration Statement and
the Final Prospectus.
(C)(I) as of the latest date as of which the Company and its
subsidiaries have monthly financial statements, there was any decrease
in the capital stock, additional paid-in capital or retained earnings,
or increase in long-term indebtedness of the Company and its
subsidiaries, as compared with the amounts shown in the most recent
consolidated statement of financial condition of the Company and its
subsidiaries included in the Registration Statement and the Final
Prospectus, (II) with respect to the period subsequent to the date of
the most recent financial statements included in the Registration
Statement and the Final Prospectus and extending through the latest
date as of which the Company and its subsidiaries have monthly
financial statements, there was a consolidated net loss or (III) with
respect to the amounts of net capital or excess net capital of Lehman
determined pursuant to Commission Rule 15c3-1 and shown in the most
recent financial statement of Lehman filed pursuant to Commission Rule
17a-5, there has been any decrease in such amounts as compared with
the amounts shown in the most recent consolidated financial statements
included in the Registration Statement and the Final Prospectus;
(D) as of a specified date not more than three business days
prior to the date of the letter, there was any decrease in the capital
stock or additional paid-in capital, or increase in long-term
indebtedness of the Company and its subsidiaries, as compared with the
amounts shown in the most recent consolidated statement of financial
condition of the Company and its subsidiaries included in the
Registration Statement and the Final Prospectus;
except in all instances for increase or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by the Company as
to the significance thereof, unless said explanation is not deemed necessary by
the Representatives.
(iii) If pro forma financial statements are included in the
Registration Statement or the Final Prospectus, (x) they have read such
pro forma financial statements, (y) they have made inquiries of certain
officials of the Company who have responsibility for
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<PAGE>
financial and accounting matters of the Company as to the basis for their
determination of the pro forma adjustments and whether such pro forma
financial statements comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X and (z)
they have proved in the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts; and as a result thereof,
nothing came to their attention that caused them to believe that such pro
forma financial statements do not so comply with Rule 11-02 of Regulation
S-X and that such pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements.
(iv) They have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is expressed in dollars, or
percentages derived from dollar amounts, and has been obtained from the
general accounting records of the Company) set forth in the Registration
Statement, as amended, and the Final Prospectus, as amended or supplemented,
and in Exhibit 12 to the Registration Statement, including specified
information, if any, included or incorporated from the Company's Annual
Report on Form 10-K incorporated therein or specified information, if any,
included or incorporated from any of the Company's Quarterly Reports on
Form 10-Q or its Current Reports on Form 8-K incorporated therein, agrees
with the accounting records of the Company and its subsidiaries or
computations made therefrom, excluding any questions of legal
interpretation.
(h) Subsequent to the execution of this Agreement, there shall not
have been any decrease in the ratings of any of the Company's debt securities by
Moody's Investors Service, Inc. or Standard & Poor's Corporation.
Prior to each Delivery Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives or Underwriters' Counsel may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates or opinions furnished to the Representatives or Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and to
Underwriters' Counsel, this Agreement and all obligations of the Underwriters
hereunder may be cancelled at, or at any time prior to, each Delivery Date by
the Representatives. Notice of such cancellation shall be given to the Company
in writing, or by telegraph confirmed in writing.
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<PAGE>
7. Expenses.(a) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company will pay
all costs and expenses incident to the performance of the obligations of the
Company hereunder, including, without limiting the generality of the foregoing,
all costs, taxes and expenses incident to the issuance, sale and delivery of the
Stock to the Underwriters, all fees and expenses of the Company's counsel and
accountants, all costs and expenses incident to the preparing, printing and
filing of the Registration Statement (including all exhibits thereto), any
Interim Prospectus, the Basic Prospectus, the Final Prospectus and any
amendments thereof or supplements thereto, and the rating of the Stock by one or
more rating agencies, all costs and expenses (including fees of Underwriters'
Counsel and their disbursements) incurred in connection with blue sky
qualifications, advising on the legality of the Stock for investment, the filing
requirements, if any, of the National Association of Securities Dealers, Inc. in
connection with its review of corporate financings, the fee for listing the
Stock on the NYSE and all costs and expenses of the printing and distribution of
all documents in connection with such offering. Except as provided in this
Section 7, the Company will have no responsibility to the Underwriters for the
Underwriters' own costs and expenses, including the fees of Underwriters'
Counsel and any advertising expenses in connection with any offer the
Underwriters may make.
(b)If the sale of the Stock provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 6 hereof is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will, subject to demand by the
Representatives, reimburse the Underwriters for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the Stock.
8. Indemnification.(a) The Company agrees to indemnify and hold
harmless each Underwriter and each person who controls such Underwriter within
the meaning of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, as originally filed or in any amendment
thereof, or in any Interim Prospectus, the Basic Prospectus or the Final
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
18
<PAGE>
therein not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company as herein stated by the Representatives on
behalf of any Underwriter specifically for use in connection with the
preparation thereof, and (ii) such indemnity with respect to the Basic
Prospectus or any Interim Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Stock which is
the subject thereof if such person did not receive a copy of the Final
Prospectus at or prior to the confirmation of the sale of such Stock to such
person in any case where such delivery is required by the Securities Act and the
untrue statement or omission of a material fact contained in the Basic
Prospectus or any Interim Prospectus was corrected in the Final Prospectus,
unless such failure to deliver the Final Prospectus was a result of
noncompliance by the Company with Section 5(d) hereof. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b)Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person, if any, who controls the Company within
the meaning of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Basic Prospectus, any Interim
Prospectus or the Final Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that the same was made therein in reliance upon and in conformity
with written information furnished to the Company as herein stated by the
Representatives on behalf of such Underwriter specifically for use in the
preparation thereof, and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The statements set forth in
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<PAGE>
the last paragraph of the cover page and under the heading "Underwriting" in the
Final Prospectus constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in the Registration Statement
and the Final Prospectus, as the case may be, and you, as the Representatives,
confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and either (i) the indemnifying party or parties and
the indemnified party or parties mutually agree or (ii) representation of both
the indemnifying party or parties and the indemnified party or parties by the
same counsel is inappropriate under applicable standards of professional conduct
due to actual or potential differing interests between them, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed counsel in connection with the assumption
of legal defenses in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel, approved by the
Representatives in the case of subparagraph (a) representing the indemnified
parties under subparagraph (a), as the case may be, who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
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(d)In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subparagraph (a) of
this Section 8 is due in accordance with its terms but is for any reason held by
a court to be unavailable from the Company on grounds of policy or other similar
grounds, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to which
the Company and one or more of the Underwriters may be subject in such
proportion so that the Underwriters are responsible for that portion represented
by the percentage that the underwriting discounts appearing on the cover page of
the Final Prospectus bear to the public offering prices appearing thereon and
the Company is responsible for the balance; provided, however, that (i) in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters) be responsible for any amount in excess of the underwriting
discounts applicable to the Stock purchased by such Underwriter hereunder and
(ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(i) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
the Securities Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this subparagraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this
subparagraph (d).
9. Default by an Underwriter. If, on either Delivery Date, any one or
more Underwriters shall fail to purchase and pay for all of the Stock agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the number
of shares of Firm Stock set forth opposite their names in Schedule II hereto
bear to the aggregate number of shares of Firm Stock set opposite the names of
the remaining Underwriters) the Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date; provided,
however, that in the event that the
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<PAGE>
aggregate number of shares of Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date shall exceed
10% of the aggregate number of shares of the Stock, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Stock, and if such non-defaulting Underwriters do not
purchase all the Stock, this Agreement (or, with respect to the Second Delivery
Date, the obligation of the Underwriters to purchase, and of the Company to
sell, the Option Stock) will terminate without liability to any non-defaulting
Underwriters or the Company. In the event of a default by any Underwriter as
set forth in this Section 9, the particular Delivery Date shall be postponed for
such period, not exceeding seven days, as the Representatives shall determine in
order that the required changes in the Registration Statement and the Final
Prospectus or in any other documents or arrangements may be effected. Nothing
herein contained shall relieve any defaulting Underwriter of its liability, if
any, to the Company and any non-defaulting Underwriter for damages occasioned by
its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
at or prior to delivery of and payment for all the Firm Stock, if, prior to such
time (i) trading in securities generally on the NYSE or the over-the-counter
market shall have been suspended or limited or minimum prices shall have been
established on the NYSE or the over-the-counter market, (ii) a banking
moratorium shall have been declared either by federal or New York State
authorities, (iii) any new restriction materially affecting the distribution of
the Stock shall have become effective or trading in any securities of the
Company shall have been suspended or halted by any national securities exchange,
the National Association of Securities Dealers, Inc. or the Commission, (iv) the
United States becomes engaged in hostilities or there is an escalation in
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States, or (v) there shall have been such a
material adverse change in national or international political, financial or
economic conditions, national or international equity markets or currency
exchange rates or controls as to make it, in the judgment of the
Representatives, inadvisable or impracticable to proceed with the payment for
and delivery of the Stock.
11. Representation and Indemnities to Survive Delivery. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers (as such officers) and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its officers or directors or any
controlling person within the meaning of the Securities Act, and will survive
delivery of the payment for the Stock.
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<PAGE>
12. Notices. All communications hereunder will be in writing, and, if
sent to the Representatives will be mailed, delivered, telegraphed or telexed
and confirmed to them, at the address specified in Schedule I hereto; or, if
sent to the Company will be mailed, delivered, telegraphed or telexed and
confirmed to it at 3 World Financial Center, New York, New York 10285,
Attention: Chief Financial Officer.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their successors and, to the extent and only
to the extent stated in Section 8 hereof, the officers and directors and
controlling persons referred to in Section 8 hereof, and except as provided in
Section 8 hereof, no person other than the parties hereto and their respective
successors will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
LEHMAN BROTHERS HOLDINGS INC.
By: _________________________
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
By: ___________________________
Title:
Acting on behalf of the Representatives
named in Schedule I annexed hereto and
the several Underwriters named in
Schedule II annexed hereto.
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SCHEDULE I
Date of Underwriting Agreement:
Registration Statement No. 333-
Representative and Address: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Description of Stock:
Title:
Number of shares of Firm Stock: _________shares
Maximum number of shares of Option Stock: _________shares
Price per share: $
Price to public:
Time of payment of dividends:
Sinking fund provisions:
Redemption provisions:
Repayment provisions:
Other provisions:
First Delivery Date, Time and Location:
Date:
Time:
Location:
<PAGE>
SCHEDULE II
NUMBER OF
SHARES OF FIRM
STOCK TO BE
UNDERWRITERS PURCHASED
------------ ----------------
Lehman Brothers Inc...........................................................
Total......................................................................
<PAGE>
EXHIBIT 1.E
Depositary Shares
Each Representing a Fraction
of a Share of Preferred Stock
LEHMAN BROTHERS HOLDING INC.
UNDERWRITING AGREEMENT
New York, New York
Dated the date set forth
In Schedule I hereto
To the Representative(s)
named in Schedule I
hereto, of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
Lehman Brothers Holdings Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to you and the other underwriters
named in Schedule II hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), the number of shares identified in
Schedule I hereto (the "Firm Shares") of the Company's preferred stock, par
value $1.00 per share (the "Preferred Stock") identified in Schedule I
hereto. In addition, if so indicated in Schedule I the Company proposes to
grant to the Underwriters an option to purchase up to an additional number of
shares of the Preferred Stock identified in Schedule I hereto on the terms
and for the purposes set forth in Section 2 (the "Option Shares"). The Firm
Shares and the Option Shares, if purchased, are hereinafter collectively
called the "Shares". The Shares are to be deposited by you or on your behalf
against delivery of Depositary Receipts (the "Depositary Receipts") to be
issued by _____________, as Depositary (the "Depositary"), under a Deposit
Agreement, dated as of ___________, 19__ (the "Deposit Agreement"), among the
Company, the Depositary and holders from time to time of the Depositary
Receipts issued thereunder. The Depositary Receipts will evidence Depositary
Shares (the "Depositary Shares"), and each Depositary Share will represent
the fraction of a share of Preferred Stock identified in Schedule I. The
number of Depositary Shares in respect of Firm Shares to be purchased by each
Underwriter is also identified in Schedule I. If the firm or firms listed in
Schedule II hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives" shall each be
deemed to refer to such firm or firms. This is to confirm the agreement
concerning the purchase of the Shares from the Company by the Underwriters
named in Schedule II hereto.
1. REPRESENTATION AND WARRANTIES. The Company represents and
warrants to each Underwriter that:
<PAGE>
(a) The Company meets the requirements for the use of Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations promulgated thereunder (the "Rules"),
and has carefully prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form S-3 (the file number of which is set forth in Schedule I
hereto), which has become effective, for the registration of the
Shares and the Depositary Shares under the Securities Act. The
registration statement, as amended at the date of this Agreement,
meets the requirements set forth in Rule 415(a)(1)(x) under the
Securities Act and complies in all other material respects with such
rule. The Company proposes to file with the Commission pursuant to
Rule 424 under the Securities Act ("Rule 424") a supplement to the
form of prospectus included in the registration statement relating
to the initial offering of the Shares and the Depositary Shares and
the plan of distribution thereof and has previously advised you of
all further information (financial and other) with respect to the
Company to be set forth therein. The term "Registration Statement"
means the registration statement, as amended at the date of this
Agreement, including the exhibits thereto, financial statements, and
all documents incorporated therein by reference pursuant to Item 12
of Form S-3 (the "Incorporated Documents"), and such prospectus as
then amended, including the Incorporated Documents, is hereinafter
referred to as the "Basic Prospectus"; and such supplemented form of
prospectus, in the form in which it shall be filed with the
Commission pursuant to Rule 424 (including the Basic Prospectus as
so supplemented), is hereinafter called the "Final Prospectus". Any
preliminary form of the Basic Prospectus which has heretofore been
filed pursuant to Rule 424 is hereinafter called the "Interim
Prospectus". Any reference herein to the Registration Statement,
the Basic Prospectus, any Interim Prospectus or the Final Prospectus
shall be deemed to refer to and include the Incorporated Documents
which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the date of this
Agreement or the issue date of the Basic Prospectus, any Interim
Prospectus or the Final Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus,
any Interim Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any Incorporated Documents under
the Exchange Act after the date of this Agreement or the issue date
of the Basic Prospectus, any Interim Prospectus or the Final
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Prospectus, as the case may be, and deemed to be incorporated
therein by reference.
(b) As of the date hereof, when the Final Prospectus is first
filed with the Commission pursuant to Rule 424, when, before either
Delivery Date (hereinafter defined), any amendment to the
Registration Statement becomes effective, when, before either
Delivery Date, any Incorporated Document is filed with the
Commission, when any supplement to the Final Prospectus is filed
with the Commission and at each Delivery Date, the Registration
Statement, the Final Prospectus and any such amendment or supplement
will comply in all material respects with the applicable
requirements of the Securities Act and the Rules, and the
Incorporated Documents will comply in all material respects with the
requirements of the Exchange Act or the Securities Act, as
applicable, and the rules and regulations adopted by the Commission
thereunder, on the date it became effective, the Registration
Statement did not, and, on the date that any post-effective
amendment to the Registration Statement becomes effective, the
Registration Statement as amended by such post-effective amendment
did not or will not, as the case may be, contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein not
misleading; on the date the Final Prospectus is filed with the
Commission pursuant to Rule 424 and on each Delivery Date, the Final
Prospectus, as it may be amended or supplemented, will not include
an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading; and
on said dates, the Incorporated Documents will comply in all
material respects with the applicable provisions of the Exchange Act
and rules and regulations of the Commission thereunder, and, when
read together with the Final Prospectus, or the Final Prospectus as
it may be then amended or supplemented, will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading; provided that the foregoing representations and
warranties in this paragraph (b) shall not apply to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company by or through the
Representatives on behalf of any Underwriter specifically for use in
connection with the preparation of the Registration Statement or the
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Final Prospectus, as they may be amended or supplemented.
(c) The Basic Prospectus and any Interim Prospectus, as of
their respective dates, complied in all material respects with the
requirements of the Securities Act and of the Rules and did not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The Commission has not issued an order preventing or
suspending the use of the Basic Prospectus or any Interim Prospectus.
(d) The nationally recognized firm of independent public
accountants whose report appears in the Company's most recent Annual
Report on Form 10-K, which is incorporated by reference in the Final
Prospectus, are independent public accountants as required by the
Securities Act and the Rules.
(e) In the event that a report of a nationally recognized firm
of independent public accounts regarding historical financial
information with respect to any entity acquired by the Company is
required to be incorporated by reference in the Final Prospectus,
such independent public accountants were independent public
accountants, as required by the Securities Act and the Rules, during
the period of their engagement to examine the financial statements
being reported on and at the date of their report.
(f) The audited consolidated financial statements of the
Company in the Final Prospectus and the Registration Statement
present fairly on a consolidated basis the financial position, the
results of operations, changes in common stock and other
stockholder's equity and cash flows of the Company and its
subsidiaries, as of the respective dates and for the respective
periods indicated, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods involved. The unaudited consolidated financial statements
of the Company, if any, included in the Final Prospectus and the
Registration Statement and the related notes are true, complete and
correct, subject to normally recurring changes resulting from
year-end audit adjustments, and have been prepared in accordance
with the instructions to Form 10-Q.
(g) Except as described in or contemplated by the Registration
Statement and the Final Prospectus, there has not been any material
adverse change in or any adverse development which materially
affects the
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business, properties, financial condition or results of the Company
or the Company and its subsidiaries taken as whole, from the dates as
of which information is given in the Registration Statement and Final
Prospectus.
(h) The Shares conform to the description thereof contained in
the Final Prospectus, are duly and validly authorized, and, when
issued and delivered against payment therefor as provided in this
Agreement, will be validly issued, fully paid and non-assessable. The
Depositary Shares representing the Shares have been duly and validly
authorized by the Company; and assuming the due execution by the
Depositary of the Deposit Agreement and the due execution by the
Depositary and, if required by the Deposit Agreement, the Registrar
of the Depositary Receipts in accordance with the terms of the Deposit
Agreement and upon the deposit by or on behalf of the Underwriters of
the Shares with the Depositary pursuant to the Deposit Agreement, the
Depositary Shares will represent legal and valid interests in the
Shares and the Depositary Receipts will constitute valid evidence of
such interests in the Shares and will be entitled to the benefits of
the Deposit Agreement.
(i) The Company does not have any subsidiaries having business
or properties that are material to the business and properties of
the Company and its subsidiaries taken as a whole with the exception
of Lehman Brothers Inc. ("Lehman") and the possible exception of
Lehman Commercial Paper Inc. (the "Named Subsidiaries"). Neither
the Company nor any of the Named Subsidiaries is in violation of its
corporate charter or by-laws or in default under any agreement,
indenture or instrument, the effect of which violation or default
would be material to the Company and its subsidiaries taken as a
whole. The execution, delivery and performance of this Agreement or
the Deposit Agreement will not constitute a breach of, result in the
creation or imposition of any material lien, charge or encumbrance
upon any of the assets of the Company or any of its subsidiaries
pursuant to the terms of, or constitute a default under, any
material agreement, indenture or instrument, or result in a
violation of the corporate charter or by-laws of the Company or any
of its subsidiaries or any order, rule or regulation of any court or
governmental agency having jurisdiction over the Company, any of the
Named Subsidiaries or their property. Except as set forth in the
Final Prospectus or as required by the Securities Act, the Exchange
Act and applicable state securities laws, no consent, authorization
or order of, or filing or registration with, any court or
governmental agency is required for the execution, deliver and
performance of this Agreement or the Deposit Agreement.
(j) The Company and each of the Named Subsidiaries have been
duly organized, are validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, are duly
qualified to do business and in good standing as foreign
corporations and are fully registered as a broker-dealer, broker,
dealer or investment advisor, as the case may be, in each
jurisdiction in which their respective ownership of property or the
conduct of their respective businesses requires such qualification
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<PAGE>
or registration and in which the failure to qualify or register
would be reasonably likely, individually or in the aggregate, to
have a material adverse effect on the business, condition or
properties of the Company and its subsidiaries taken as a whole.
Each of the Company and its Named Subsidiaries holds all material
licenses, permits, and certificates from governmental authorities
necessary for the conduct of its business and owns, or possesses
adequate rights to use, all material rights necessary for the
conduct of such business and has not received any notice of conflict
with the asserted rights of others in respect thereof; and each of
the Company and its Named Subsidiaries has the corporate power and
authority necessary to own or hold its properties and to conduct the
businesses in which it is engaged. Except as may be disclosed in the
Registration Statement and the Final Prospectus, all outstanding
shares of capital stock of the Named Subsidiaries are owned by the
Company, directly or indirectly through subsidiaries, free and clear
of any lien, pledge and encumbrance or any claim of any third party
and are duly authorized, validly issued and outstanding, fully paid
and non-assessable.
(k) Except as described in the Registration Statement and the
Final Prospectus, there is no material litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries which might
reasonably be expected to result in any material adverse change in
the business, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole or
which is required to be disclosed in the Registration Statement and
the Final Prospectus.
(l) The certificates delivered pursuant to paragraph (g) of
Section 6 hereof and all other documents delivered by the Company
or its representatives in connection with the issuance and sale
of the Shares and the Depositary Shares were on the dates on
which they were delivered, or will be on the dates on which they
are to be delivered, in all material respects true and complete.
2. SALE AND PURCHASE OF THE SHARES. The Company agrees to sell to
each Underwriter, and each Underwriter, on the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein stated, agrees to purchase from the Company the number of
Firm Shares set forth opposite the name of Underwriter in Schedule II hereto.
The obligations of the Underwriters under this Agreement are several and not
joint.
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In addition, the Company grants to the Underwriters an option to
purchase up to an additional number of Option Shares indicated in Schedule I
hereto. Such option is granted solely for the purpose of covering
over-allotments in the sale of Firm Shares and is exercisable as provided in
Section 3 hereof. Option Shares shall be purchased severally for the account
of the Underwriters in proportion to the number of Firm Shares set forth
opposite the name of such Underwriters in Schedule II hereto. The respective
purchase obligations of each Underwriter with respect to the Option Shares
shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Shares other than in 100 share amounts. The
price of both the Firm Shares and any Option Shares shall be the price per
share indicated in Schedule I hereto.
3. DELIVERY AND PAYMENT. Delivery by the Company of the Firm
Shares to the Representatives for the respective accounts of the several
Underwriters and payment by the Underwriters therefor by certified or
official bank check or checks payable in, or by wire transfer of, immediately
available (federal) funds to or upon the order of the Company shall take
place at the office, on the date and at the time specified in Schedule I
hereto, which date and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the Firm Shares being herein called the
"First Delivery Date").
The Firm Shares will be registered in such names and in such
authorized denominations as the Representatives may request no less than two
full business days in advance of the First Delivery Date. The Company agrees
to have the Firm Shares available for inspection, checking and packaging by
the Representatives at such place as is designated by the Representatives,
not later than 1:00 p.m., New York City time, on the business day prior to
the First Delivery Date.
The certificates representing the Firm Shares will be delivered by
the Representatives to, and deposited with, the Depositary against delivery
of Depositary Receipts representing Depositary Shares issued in respect of
such Firm Shares. Such Depositary Receipts shall be issued in such
denominations and registered in such names as the Representatives shall
request, and will be made available for checking and packaging at the above
office of the Company at least twenty-four hours prior to the First Delivery
Date.
At any time on or before the thirtieth day after the date as of
which the Registration Statement is declared effective by the Commission, the
option granted in Section 2 may be exercised by written notice being given to
the Company by the Representatives. Such notice shall set forth the
aggregate number of Option Shares as to which the option is being exercised,
the names in which the Option Shares are to be
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<PAGE>
registered, the denominations in which the Option Shares are to be issued and
the date and time, as determined by the Representatives, when the Option
Shares are to be delivered provided, however, that this date and time shall
not be earlier than the First Delivery Date nor earlier than the second
business day after the date on which the option shall have been exercised nor
later than the fifth business day after the date on which the option shall
have been exercised. The date and time the Option Shares are delivered are
sometimes referred to as the "Second Delivery Date" and the First Delivery
Date and the Second Delivery Date are sometimes referred to as a "Delivery
Date".
Delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the several Underwriters and payment by the
Underwriters therefor by certified or official bank check or checks payable
in, or by wire transfer of, immediately available (federal) funds to or upon
the order of the Company shall take place at the office and at the time
specified in Schedule I hereto, on the Second Delivery Date, which date and
time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof.
The Option Shares will be registered in such names and in such
authorized denominations as the Representatives may request in the aforesaid
written notice. The Company agrees to have the Option Shares available for
inspection, checking and packaging by the Representatives at such place as is
designated by the Representatives, not later than 1:00 p.m., New York City
time, on the business day prior to the Second Delivery Date.
The certificates representing the Option Shares will be delivered by
the Representatives to, and deposited with, the Depositary against delivery
of Depositary Receipts representing Depositary Shares issued in respect of
such Option Shares. Such Depositary Receipts shall be issued in such
denominations and registered in such names as the Representatives shall
request, and will be made available for checking and packaging at the above
office of the Company at least twenty-four hours prior to the Second Delivery
Date.
4. OFFERING BY UNDERWRITERS. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed any Interim Prospectus and are authorized to distribute the Final
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters). The
Representatives agree that, as soon as the Representatives believe the
offering of the Depositary Shares has been terminated, the Representatives
will so advise the Company.
5. AGREEMENT. The Company agrees with the several Underwriters
that:
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<PAGE>
(a) The Company will cause the Final Prospectus to be filed with
the Commission pursuant to Rule 424 not later than 10:00 a.m., New York
City time, on the business day following the date of this Agreement and
will promptly advise the Representatives (A) when the Final Prospectus
shall have been filed with the Commission pursuant to Rule 424, (B) when
any amendment to the Registration Statement relating to the Shares and
the Depositary Shares shall have become effective, (C) of any request by
the Commission for any amendment of the Registration Statement, the Final
Prospectus, the Basic Prospectus or any Interim Prospectus, or for any
additional information, (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceedings for that purpose and (E) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares and the Depositary Shares
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. After the date of this Agreement and prior
to the termination of the offering of the Shares and the Depositary
Shares, the Company will not file any amendment of the Registration
Statement or amendment or supplement to the Final Prospectus (except an
amendment to the Final Prospectus that is deemed to be incorporated by
reference in the Final Prospectus pursuant to Item 12 of Form S-3)
without the consent of the Representatives and will use its best efforts
to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof. Prior to receipt of the
advice to be given by the Representatives pursuant to Section 4, the
Company will not file any document that would be deemed to be
incorporated by reference in the Final Prospectus pursuant to Item 12 of
Form S-3 without delivering to the Representatives a copy of the document
proposed to be so filed, such delivery to be made at least twenty-four
hours prior to such filing, and the Company will consult with the
Representatives as to any comments which the Representatives make in a
timely manner with respect to the document so delivered.
(b) Subject to the last sentence of the immediately preceding
paragraph, if, at any time during which a prospectus relating to the
Shares and the Depositary Shares is required to be delivered under the
Securities Act, any event occurs as a result of which the Final
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall
be necessary at any time to amend or supplement the Final Prospectus to
comply with the Securities Act or the Rules, the Company promptly will
prepare and file with the Commission an amendment or
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<PAGE>
supplement which will correct such statement or omission or an amendment
which will effect such compliance and will use its best efforts to cause
any amendment of the Registration Statement containing an amended Final
Prospectus to be made effective as soon as possible.
(c) The Company will deliver to the Representatives, without
charge, (i) signed copies of the Registration Statement relating to the
Shares and the Depositary Shares and of any amendments thereto (including
all exhibits filed with, or incorporated by reference in, any such
document) and (ii) as many conformed copies of the Registration Statement
and of any amendments thereto which shall become effective on or before
the First Delivery Date (excluding exhibits) as the Representatives may
reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an Underwriter or dealer, the Company will deliver, without
charge to the Representatives and to Underwriters and dealers, at such
office or offices as the Representatives may designate, as many copies of
the Basic Prospectus, any Interim Prospectus and the Final Prospectus as
the Representatives may reasonably request.
(e) The Company will make generally available to its security
holders and to the Representatives as soon as practicable an earnings
statement (which need not be audited) of the Company and its
subsidiaries, covering a period of at least 12 months beginning after the
date the Final Prospectus is filed with the Commission pursuant to Rule
424, which will satisfy the provisions of Section 11(a) of the Securities
Act.
(f) The Company will furnish such information, execute such
instruments and take such actions as may be required to qualify the
Shares and the Depositary Shares for offering and sale under the laws of
such jurisdictions as the Representatives may designate and will maintain
such qualifications in effect so long as required for the distribution of
the Shares and the Depositary Shares; provided, however, that the Company
shall not be required to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action which would subject it
to general or unlimited service of process in any jurisdiction where it
is not now so subject.
(g) So long as any Depositary Shares are outstanding, the Company
will furnish or cause to be furnished to the Representatives copies of
all annual reports and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission.
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(h) If the Company has applied for the listing of the Shares or
Depositary Shares on the New York Stock Exchange Inc. (the "NYSE"), it
will use its best efforts to cause such listing to be approved as soon as
possible.
(i) For a period beginning at the time of execution of this
Agreement and ending on the later of the business day following either
the Second Delivery Date or following the date on which any price
restrictions on the sale of the Shares or the Depositary Shares are
terminated, without the prior consent of the Representatives, the Company
will not offer, sell, contract to sell or otherwise dispose of any shares
of Preferred Stock (other than the Shares and the Depositary Shares), or
sell or grant options, rights or warrants with respect to any shares of
Preferred Stock covered by the Registration Statement or any other
registration statement filed under the Securities Act.
(j) The Company will use its best efforts to do and perform all
things to be done and performed hereunder prior to each Delivery Date and
to satisfy all conditions precedent to the delivery of the Shares and the
Depositary Shares.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Shares shall be subject to
the accuracy in all material respects of the representations and warranties
on the part of the Company contained herein as of the date hereof and each
Delivery Date, to the accuracy of any material statements made in any
certificates, opinions, affidavits, written statements or letters furnished
to the Representatives or to Simpson Thacher & Bartlett ("Underwriters'
Counsel") pursuant to this Section 6, to the performance by the Company of
its respective obligations hereunder and to the following additional
conditions:
(a) The Final Prospectus shall have been filed with the
Commission pursuant to Rule 424 not later than 10:00 a.m., New York
City time, on the business day following the date of this Agreement or
such later date and time as shall be consented to in writing by the
Representatives.
(b) No order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall be in effect and no
proceedings for such purpose shall be pending before or threatened by
the Commission and any requests for additional information on the part
of the Commission (to be included in the Registration Statement or the
Final Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Representatives.
(c) Since the respective dates as of which information is given
in the Registration Statement and the Final Prospectus, there shall
not have been any change or decrease
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specified in the letter referred to in paragraph (h) of this Section 6
which, in the judgment of the Representatives, makes it impracticable or
inadvisable to proceed with the offering and delivery of the Depositary
Shares representing such Shares as contemplated by the Registration
Statement and the Final Prospectus.
(d) The Company shall have furnished to the Representatives the
opinion of a Deputy General Counsel or the Chief Legal Officer for the
Company, dated the day of each Delivery Date to the effect that:
(i) The Company has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of
its incorporation with all requisite corporate power and authority
to own and operate its properties and to conduct its business as
described in the Final Prospectus.
(ii) The Deposit Agreement, the Shares, the Depositary Shares
and the Depositary Receipts conform in all material respects to the
descriptions thereof contained in the Final Prospectus.
(iii) The Company has an authorized capitalization as set
forth in the Final Prospectus, and all of the issued shares of
capital stock of the Company (including the Shares being delivered on
such Delivery Date) have been duly and validly authorized and issued,
are fully paid and non-assessable and conform to the description
thereof contained in the Prospectus; the Depositary Shares representing
the Shares delivered on such Delivery Date have been duly and validly
authorized by the Company; and assuming the due execution by the
Depositary of the Deposit Agreement and the due execution by the
Depositary and, if required by the Deposit Agreement, the Registrar
of the Depositary Receipts in accordance with the terms of the
Deposit Agreement and upon the deposit by or on behalf of the
Underwriters of the Shares with the Depositary pursuant to the
Deposit Agreement, such Depositary Shares will represent legal and
valid interests in the Shares delivered on such Delivery Date and the
Depositary Receipts will constitute valid evidence of such interests
in such Shares and will be entitled to the benefits of the Deposit
Agreement.
(iv) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of,
any Shares pursuant to the Company's charter or by-laws or any
agreement or other instrument known to such counsel;
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(v) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated in this Agreement or
the compliance by the Company with the provisions of the Deposit
Agreement, except for such consents, approvals, authorizations or
orders as have been obtained under the Securities Act and such as
may be required under the Exchange Act and the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Shares and the Depositary Shares by the Underwriters.
(vi) Such counsel does not know of any contracts or other
documents which are required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which
have not been filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules.
(vii) To the best of such counsel's knowledge, neither the
Company nor any of its Named Subsidiaries is in violation of its
corporate charter or by-laws, or in default under any material
agreement, indenture or instrument known to such counsel, the
effect of which violation or default would be material to the
Company and its subsidiaries taken as a whole.
(viii) This Agreement and the Deposit Agreement have been duly
authorized, executed and delivered by the Company; the execution,
delivery and performance of this Agreement and the Deposit Agreement
by the Company will not constitute a breach of, or result in the
creation or imposition of any material lien, charge or encumbrance
upon any of the assets of the Company or any of its Named
Subsidiaries pursuant to the terms of, or constitute a default
under, any material agreement, indenture or instrument known to such
counsel and to which the Company or any of its Named Subsidiaries is
a party of is bound, or result in a violation of the corporate
charter or by-laws of the Company or any of its Named Subsidiaries
or any order, rule or regulation known to such counsel of any court
or governmental agency having jurisdiction over the Company, any of
its Named Subsidiaries or any of their respective properties, the
effect of which would be material to the Company and its
subsidiaries taken as a whole.
(ix) Assuming due authorization, execution and delivery by
the Depositary, the Deposit Agreement constitutes a valid and
binding agreement, enforceable in accordance with its terms subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws
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relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and by an implied covenant of good faith
and fair dealing.
(x) The Registrations Statement has become effective under
the Securities Act, and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose is pending or threatened by the Commission.
(xi) The Registration Statement, the Final Prospectus and
each amendment thereof or supplement thereto (except that no opinion
need be expressed as to the financial statements or other financial
or statistical data included or incorporated by reference therein)
comply as to form in all material respects with the requirements of
the Securities Act and the Rules.
(xii) If the Shares or the Depositary Shares, as the case may
be, are to be listed on the NYSE, authorization therefor has been
given, subject to official notice of issuance and evidence of
satisfactory distribution, or the Company has filed a preliminary
listing application and all required supporting documents with
respect to the Shares or the Depositary Shares, as the case may be,
with the NYSE, and such counsel has no reason to believe that the
Shares or the Depositary Shares, as the case may be, will not be
authorized for listing, subject to official notice of issuance and
evidence of satisfactory distribution.
(xiii) Each of the Named Subsidiaries is a duly organized and
validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate power
and authority to own and operate its properties and to conduct its
business as described in the Final Prospectus. Each of the Company
and its Named Subsidiaries is duly qualified to do business as a
foreign corporation, is in good standing and is duly registered as a
broker-dealer, broker, dealer or investment advisor, as the case may
be, in each jurisdiction in which the nature of the business
conducted by it or in which the ownership or holding by lease of the
properties owned or held by it require such qualification or
registration and where the failure to so qualify or register would
have a material adverse effect on the Company and its subsidiaries
taken as a whole.
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(xiv) All the outstanding shares of capital stock of each of
the Company's Named Subsidiaries have been duly and validly
authorized and issued and are fully paid and non-assessable and,
except for directors' qualifying shares, are owned by the Company or
a subsidiary of the Company free and clear of any claims, liens,
encumbrances and security interests.
(xv) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company
or any of its subsidiaries which would affect the subject matter
of this Agreement or the Deposit Agreement or is required to be
disclosed in the Final Prospectus which is not disclosed and
correctly summarized therein.
Such opinion shall also contain a statement that although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Final Prospectus (except as to those matters
stated in paragraph (ii) of such opinion), such counsel has no reason to
believe that (i) the Registration Statement, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) the Final Prospectus contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that no
opinion need be expressed as to the financial statements or other financial
or statistical data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely upon opinions of
local counsel satisfactory to the Representatives for matters not governed by
New York law and may rely as to matters of fact, to the extent such counsel
deems proper, upon certificates or affidavits of officers of the Company and
public officials.
(e) The Representatives shall have received from Underwriters'
Counsel such opinion or opinions, dated the day of such Delivery Date, with
respect to the issuance and sale of the Shares and the Depositary Shares, the
Depositary Agreement, the Registration Statement, the Final Prospectus and
other related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(f) You shall have received an opinion of _________, counsel for
the Depositary, dated the day of such Delivery Date, to the effect that:
15
<PAGE>
(i) The Deposit Agreement has been duly authorized, executed and
delivered by the Depositary and is a valid and binding agreement of the
Depositary; and
(ii) The Depositary Receipts, when issued in accordance with the
provisions of the Deposit Agreement against the deposit of duly and
validly authorized and issued, fully paid and non-assessable Shares, will
be validly issued and will entitle the holders thereof to the rights
specified therein and in the Deposit Agreement.
(g) The Company shall have furnished to the Representatives a
certificate of its Chief Executive Officer, its President or any Managing
Director or Vice President and its Chief Financial Officer or its Treasurer,
dated the day of each Delivery Date, to the effect that, to the best of their
knowledge after due inquiry:
(i) The representations and warranties of the Company in
this Agreement are true and correct in all material respects on and
as of such Delivery Date with the same effect as if made on such
Delivery Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Delivery Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened.
(iii) (x) The Registration Statement does not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, (y) the Final Prospectus does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (z) since the effective
date of the Registration Statement there has not occurred any event
required to be set forth in an amended or supplemented prospectus
which has not been so set forth.
(h) At each Delivery Date, a nationally recognized firm of
independent public accountants shall have furnished to the Representatives a
letter, dated the day of such Delivery Date, in form and substance
satisfactory to the Representatives, confirming that they are independent
auditors with respect to the Company within the meaning of the Securities Act
and stating in effect that:
16
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(i) In their opinion, the consolidated financial statements
of the Company and its subsidiaries, and the supporting schedules,
included in the Registration Statement and the Final Prospectus and
audited by them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder.
(ii) On the basis of a reading of the unaudited consolidated
financial statements of the Company and its subsidiaries, if any,
included in the Registration Statement and the Final Prospectus and
of the latest unaudited consolidated financial statements made
available by the Company and Lehman, carrying out certain specified
procedures (but not an audit in accordance with generally accepted
auditing standards), a reading of the minutes of the meetings of the
directors of the Company and Lehman, and inquiries of certain
officials of the Company and its subsidiaries, who have responsibility
for financial and accounting matters of the Company and its
subsidiaries, as to transactions and events subsequent to the date of
the most recent audited consolidated financial statements included in
the Registration Statement and the Final Prospectus, nothing came to
their attention that caused them to believe that:
(A) any material modifications should be made to the
unaudited consolidated financial statements of the Company and its
subsidiaries, if any, included in the Registration Statement and the
Final Prospectus for them to be in conformity with generally accepted
accounting principles; and such financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the published instructions,
rules and regulations thereunder.
(B) the unaudited capsule information of the Company and its
subsidiaries, if any, included in the Registration Statement and the
Final Prospectus does not agree with the amounts set forth in the
unaudited consolidated financial statements of the Company from
which it was derived or was not determined on a basis substantially
consistent with that of the corresponding financial information in
the latest audited financial statements of the Company included in
the Registration Statement and the Final Prospectus.
(C)(I) as of the latest date as of which the Company and its
subsidiaries have monthly financial statements, there was any
decrease in the capital stock, additional paid-in capital or
retained earnings,
17
<PAGE>
or increase in long-term indebtedness of the Company and its
subsidiaries, as compared with the amounts shown in the most recent
consolidated statement of financial condition of the Company and its
subsidiaries included in the Registration Statement and the Final
Prospectus, (II) with respect to the period subsequent to the date
of the most recent financial statements included in the Registration
Statement and the Final Prospectus and extending through the latest
date as of which the Company and its subsidiaries have monthly
financial statements, there was a consolidated net loss or (III)
with respect to the amounts of net capital or excess net capital of
Lehman determined pursuant to Commission Rule 15c3-1 and shown in
the most recent financial statement of Lehman filed pursuant to
Commission Rule 17a-5, there has been any decrease in such amounts
as compared with the amounts shown in the most recent consolidated
financial statements included in the Registration Statement and the
Final Prospectus;
(D) as of a specified date not more than three business
days prior to the date of the letter, there was any decrease in
the capital stock or additional paid-in capital, or increase in
long-term indebtedness of the Company and its subsidiaries, as
compared with the amounts shown in the most recent consolidated
statement of financial condition of the Company and its
subsidiaries included in the Registration Statement and the Final
Prospectus;
except in all instances for increase or decreases set forth in such letter,
in which case the letter shall be accompanied by an explanation by the
Company as to the significance thereof, unless said explanation is not deemed
necessary by the Representatives.
(iii) If pro forma financial statements are included in the
Registration Statement or the Final Prospectus, (x) they have read such
pro forma financial statements, (y) they have made inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company as to the basis for their determination
of the pro forma adjustments and whether such pro forma financial
statements comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X and (z) they have
proved in the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts; and as a result thereof, nothing
came to their attention that caused them to believe that such pro forma
financial statements do not so comply with Rule 11-02 of Regulation S-X and
that such pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements.
18
<PAGE>
(iv) They have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is expressed in dollars, or
percentages derived from dollar amounts, and has been obtained from the
general accounting records of the Company) set forth in the Registration
Statement, as amended, and the Final Prospectus, as amended or
supplemented, and in Exhibit 12 to the Registration Statement, including
specified information, if any, included or incorporated from the Company's
Annual Report on Form 10-K incorporated therein or specified information,
if any, included or incorporated from any of the Company's Quarterly
Reports on Form 10-Q or its Current Reports on Form 8-K incorporated
therein, agrees with the accounting records of the Company and its
subsidiaries or computations made therefrom, excluding any questions of
legal interpretation.
(i) Subsequent to the execution of this Agreement, there shall not
have been any decrease in the ratings of any of the Company's debt securities
by Moody's Investors Service, Inc. or Standard & Poor's Corporation.
Prior to each Delivery Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives or Underwriters' Counsel may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates or opinions furnished to the Representatives or Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and to
Underwriters' Counsel, this Agreement and all obligations of the Underwriters
hereunder may be cancelled at, or at any time prior to, each Delivery Date by
the Representatives. Notice of such cancellation shall be given to the
Company in writing, or by telegraph confirmed in writing.
7. EXPENSES. (a) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company will
pay all costs and expenses incident to the performance of the obligations of
the Company hereunder, including, without limiting the generality of the
foregoing, all costs, taxes and expenses incident to the issuance, sale and
delivery of the Shares to the Underwriters, all fees and expenses of the
Company's counsel and accountants, all costs and expenses incident to the
preparing, printing and filing of the Registration Statement (including all
exhibits thereto), any Interim Prospectus, the Basic Prospectus, the Final
Prospectus and any amendments thereof or supplements thereto, and the rating
of the Shares or the Depositary Shares by one or more
19
<PAGE>
rating agencies, all costs and expenses (including fees of Underwriters'
Counsel and their disbursements) incurred in connection with blue sky
qualifications, advising on the legality of the Shares or the Depositary
Shares for investment, the filing requirements, if any, of the National
Association of Securities Dealers, Inc. in connection with its review of
corporate financings, the fee for listing the Shares or the Depositary Shares
on the NYSE, all fees of the Depositary, for all taxes in connection with the
deposit of the Shares with the Depositary and the issuance of the Depositary
Receipts as provided in Section 3 hereof and all costs and expenses of the
printing and distribution of all documents in connection with such offering.
Except as provided in this Section 7, the Company will have no responsibility
to the Underwriters for the Underwriters' own costs and expenses, including
the fees of Underwriters' Counsel and any advertising expenses in connection
with any offer the Underwriters may make.
(b) If the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement
herein or comply with any provision hereof, the Company will, subject to
demand by the Representatives, reimburse the Underwriters for all
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Shares.
8. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person who controls such Underwriter
within the meaning of the Securities Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or in any amendment thereof, or in any Interim Prospectus,
the Basic Prospectus or the Final Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i)
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written
20
<PAGE>
information furnished to the Company as herein stated by the Representatives
on behalf of any Underwriter specifically for use in connection with the
preparation thereof, and (ii) such indemnity with respect to the Basic
Prospectus or any Interim Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Depositary
Shares which is the subject thereof if such person did not receive a copy of
the Final Prospectus at or prior to the confirmation of the sale of such
Depositary Shares to such person in any case where such delivery is required
by the Securities Act and the untrue statement or omission of a material fact
contained in the Basic Prospectus or any Interim Prospectus was corrected in
the Final Prospectus, unless such failure to deliver the Final Prospectus was
a result of noncompliance by the Company with Section 5(d) hereof. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person, if any, who controls the Company
within the meaning of the Securities Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Basic Prospectus, any Interim Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that the same
was made therein in reliance upon and in conformity with written information
furnished to the Company as herein stated by the Representatives on behalf of
such Underwriter specifically for use in the preparation thereof, and agrees
to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have.
The statements set forth in the last paragraph of the cover page and under
the heading "Underwriting" in the Final Prospectus constitute the only
information furnished in writing by or on behalf of the several Underwriters
for inclusion in the Registration Statement and the Final Prospectus, as the
case may be, and you, as the Representatives, confirm that such statements
are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action,
21
<PAGE>
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 8. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent that it may elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
party and the indemnifying party and either (i) the indemnifying party or
parties and the indemnified party or parties mutually agree or (ii)
representation of both the indemnifying party or parties and the indemnified
party or parties by the same counsel is inappropriate under applicable
standards of professional conduct due to actual or potential differing
interests between them, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Representatives in the case
of subparagraph (a) representing the indemnified parties under subparagraph
(a), as the case may be, who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subparagraph (a)
of this Section 8 is due in accordance with its terms but is for any reason
held by a court to be unavailable from the Company on grounds of policy or
other similar grounds, the Company and the Underwriters shall contribute to
the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or
defending same) to
22
<PAGE>
which the Company and one or more of the Underwriters may be subject in such
proportion so that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discounts appearing on
the cover page of the Final Prospectus bear to the public offering prices
appearing thereon and the Company is responsible for the balance; provided,
however, that (i) in no case shall any Underwriter (except as may be provided
in any agreement among underwriters) be responsible for any amount in excess
of the underwriting discounts applicable to the Shares purchased by such
Underwriter hereunder and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(i) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person
who controls an Underwriter within the meaning of the Securities Act shall
have the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Securities Act or the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i)
and (ii) of this subparagraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution
may be made against another party or parties under this subparagraph (d),
notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this subparagraph (d).
9. DEFAULT BY AN UNDERWRITER. If, on either Delivery Date, any one
or more Underwriters shall fail to purchase and pay for all of the Shares
agreed to be purchased by such Underwriter or Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions
which the number of Firm Shares set forth opposite their names in Schedule II
hereto bear to the aggregate number of Firm Shares set opposite the names of
the remaining Underwriters) the Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date; provided,
however, that in the event that the aggregate number of Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date shall exceed 10% of the aggregate number of the Shares, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Shares, and if such
non-defaulting Underwriters do not purchase all the Shares, this Agreement
(or, with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option Shares) will
terminate without liability to any
23
<PAGE>
non-defaulting Underwriters or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the particular Delivery Date
shall be postponed for such period, not exceeding seven days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the Final Prospectus or in any other documents or
arrangements may be effected. Nothing herein contained shall relieve any
defaulting Underwriter of its liability, if any, to the Company and any
non-defaulting Underwriter for damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the
Company at or prior to delivery of and payment for all the Firm Shares, if,
prior to such time (i) trading in securities generally on the NYSE or the
over-the-counter market shall have been suspended or limited or minimum
prices shall have been established on the NYSE or the over-the-counter
market, (ii) a banking moratorium shall have been declared either by federal
or New York State authorities, (iii) any new restriction materially affecting
the distribution of the Shares shall have become effective or trading in any
securities of the Company shall have been suspended or halted by any national
securities exchange, the National Association of Securities Dealers, Inc. or
the Commission, (iv) the United States becomes engaged in hostilities or
there is an escalation in hostilities involving the United States or there is
a declaration of a national emergency or war by the United States, or (v)
there shall have been such a material adverse change in national or
international political, financial or economic conditions, national or
international equity markets or currency exchange rates or controls as to
make it, in the judgment of the Representatives, inadvisable or impracticable
to proceed with the payment for and delivery of the Shares.
11. REPRESENTATION AND INDEMNITIES TO SURVIVE DELIVERY. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers (as such officers) and of the
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of its officers or directors or any
controlling person within the meaning of the Securities Act, and will survive
delivery of the payment for the Shares.
12. NOTICES. All communications hereunder will be in writing, and,
if sent to the Representatives will be mailed, delivered, telegraphed or
telexed and confirmed to them, at the address specified in Schedule I hereto;
or, if sent to the Company will be mailed, delivered, telegraphed or telexed
and confirmed to it at 3 World Financial Center, New York, New York 10285,
Attention: Chief Financial Officer.
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<PAGE>
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their successors and, to the extent and
only to the extent stated in Section 8 hereof, the officers and directors and
controlling persons referred to in Section 8 hereof, and except as provided
in Section 8 hereof, no person other than the parties hereto and their
respective successors will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
LEHMAN BROTHERS HOLDINGS INC.
By:______________________________
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
By:
_____________________________
Title:
Acting on behalf of the Representatives
named in Schedule I annexed hereto and
the several Underwriters named in
Schedule II annexed hereto.
25
<PAGE>
SCHEDULE I
Date of Underwriting Agreement:
Registration Statement No. 333-
Representative and Address: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Description of Shares:
Title:
Number of shares of Firm Shares: _________shares
Maximum number of shares of Option Shares: _________shares
Price per share: $
Time of payment of dividends:
Sinking fund provisions:
Redemption provisions:
Repayment provisions:
Other provisions:
Listing:
Depositary Shares Each Representing One - _________ of a Share of _________.
Price to Public:
First Delivery Date, Time and Location:
Date:
Time:
Location:
<PAGE>
SCHEDULE II
NUMBER DEPOSITARY
OF FIRM SHARES IN
SHARES TO BE RESPECT OF SUCH
PURCHASED FIRM SHARES
------------ ---------------
UNDERWRITERS
Lehman Brothers Inc.................................
<PAGE>
Exhibit 4(h)
- --------------------------------------------------------------------------------
LEHMAN BROTHERS HOLDINGS INC., Issuer
AND
CITIBANK, N.A., Trustee
--------------------
SIXTH SUPPLEMENTAL INDENTURE
Dated as of June 26, 1997
--------------------
Supplemental to Indenture dated as of September 1, 1987
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.
CERTAIN PROVISIONS OF GENERAL APPLICATION................... 3
Section 1.01 Definitions............................................... 3
Section 1.02 Effect of Headings........................................ 6
Section 1.03 Successors and Assigns.................................... 6
Section 1.04 Separability.............................................. 6
Section 1.05 Conflict with Trust Indenture Act......................... 6
Section 1.06 Benefits of Supplemental Indenture........................ 6
Section 1.07 Application of Supplemental Indenture..................... 6
Section 1.08 Governing Law............................................. 7
ARTICLE II.
THE NOTES............................... 7
Section 2.01 Title and Terms........................................... 7
Section 2.02 Exchange Rights........................................... 8
Section 2.03 Procedure for Exchange.................................... 8
Section 2.04 No Fractional Shares...................................... 8
Section 2.05 Adjustment of Exchange Rate............................... 9
Section 2.06 Notice of Adjustments and Certain other Events............ 13
Section 2.07 Taxes..................................................... 15
Section 2.08 Delivery of Securities upon Maturity...................... 15
ARTICLE III.
COVENANTS............................... 15
Section 3.01 Shares Free and Clear..................................... 15
Section 3.02 Discharge of Indenture.................................... 16
ARTICLE IV.
MISCELLANEOUS............................. 16
Section 4.01 Confirmation of Indenture................................. 16
Section 4.02 Concerning the Trustee.................................... 16
i
<PAGE>
This Sixth Supplemental Indenture (the "Supplemental Indenture") dated
as of June 26, 1997 is between LEHMAN BROTHERS HOLDINGS INC., a corporation duly
organized and existing under the laws of the State of Delaware (the "Company" or
"Issuer"), and CITIBANK, N.A., a national banking association duly organized and
existing under the laws of the United States of America (the "Trustee"), as
Trustee under the Original Indenture referred to below.
WHEREAS, the Company has duly authorized the execution and delivery of
an Indenture dated as of September 1, 1987 (the "Original Indenture") to provide
for the issuance from time to time of its unsecured notes or other evidences of
indebtedness to be issued in one or more series (the "Securities"), as in the
Original Indenture provided, up to such principal amount or amounts as may from
time to time be authorized in or pursuant to one or more resolutions of the
Board of Directors;
WHEREAS, the Company has duly authorized the execution and delivery of
a Supplemental Indenture dated as of November 25, 1987 to incorporate by
reference Articles One through Thirteen of the Lehman Brothers Holdings Inc.
Standard Multiple Series Indenture Provisions dated and filed with the
Securities and Exchange Commission (the "Commission") on July 30, 1987 and as
amended and refiled with the Commission on November 16, 1987 (the "Standard
Provisions");
WHEREAS, the Company has duly authorized the execution and delivery of
a Second Supplemental Indenture dated as of November 27, 1990 to provide for the
issuance of global Securities in either registered or bearer form or in either
temporary or global form and for the defeasance of certain obligations;
WHEREAS, the Company has duly authorized the execution and delivery of
a Third Supplemental Indenture dated as of September 13, 1991 to provide for the
conformity of Section 602 of the Standard Provisions to Section 315(b) of the
Trust Indenture Act of 1939, as amended;
WHEREAS, the Company has duly authorized the execution and delivery of
the Fourth Supplemental Indenture dated as of October 4, 1993 in order to
provide for the issuance of, and clarify the treatment of Indexed Securities and
Dual Currency Securities (as each such terms are defined in the Indenture);
<PAGE>
WHEREAS, the Company has duly authorized the execution and delivery of
the Fifth Supplemental Indenture dated as of October 1, 1995 in order to provide
for the new Euroclear and Cedel rules with respect to the exchange of Bearer
Securities in global form (as each such terms are defined herein and in the
Indenture);
WHEREAS, the Original Indenture, as amended by the Supplemental
Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture,
the Fourth Supplemental Indenture and the Fifth Supplemental Indenture, is
hereinafter referred to as the "Indenture";
WHEREAS, Section 901(11) of the Indenture provides that a supplemental
indenture may be entered into by the Company and the Trustee, without the
consent of any Holders of Securities, to make provisions with respect to matters
or questions arising under the Indenture, provided such action shall not
adversely affect the Interests of the Holders of Securities of any series in any
material respect;
WHEREAS, the Company has duly authorized the creation of a series of
its Securities denominated its "2.75% Exchangeable Notes Due July 1, 2002" (the
"Notes"). The Notes are exchangeable at the option of the holder at any time
after July 1, 1998 and prior to maturity, unless previously redeemed, for shares
of common stock, par value $.16 per share ("General Electric Common Stock"), of
General Electric Company ("General Electric") owned by the Company at an
exchange rate of 12.5078 shares of General Electric Common Stock per $1,000
principal amount of Notes (the equivalent of $79.95 per share of General
Electric Common Stock), subject to adjustment in certain events (the "Exchange
Rate") or, at the option of the Company, cash equal to the Market Price (as
defined herein) of the General Electric Common Stock for which such Notes are
exchangeable; and
WHEREAS, the Company has duly authorized the execution and delivery of
this Supplemental Indenture in order to provide for the issuance of the Notes;
WHEREAS, the Company has determined that this Supplemental Indenture
complies with said Section 901(11) and does not require the consent of any
Holders of Securities. On
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the basis of the foregoing, the Trustee has determined that this Supplemental
Indenture is in form satisfactory to it; and
WHEREAS the Company has duly authorized the execution and delivery of
this Supplemental Indenture, and all things necessary have been done to make the
Notes, when executed by the Company and authenticated and delivered hereunder
and duly issued by the Company, the valid obligations of the Company, and to
make this Supplemental Indenture a valid agreement of the Company, in accordance
with their and its terms.
NOW, THEREFORE:
For and in consideration of the premises and purchase of the Notes by
the holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all holders of the Securities of such series, as
follows:
ARTICLE I.
CERTAIN PROVISIONS OF GENERAL APPLICATION
Section 1.01 Definitions.
For all purposes of the Indenture and this Supplemental Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article;
(2) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to the Indenture and this Supplemental Indenture as a whole
and not to any particular Article, Section or other subdivision; and
(3) capitalized terms used herein but not defined herein are used
herein as they are defined in the Indenture.
"Adjustment Event" means (i) any dividend or distribution by General
Electric to all Holders of General Electric Common Stock of evidences of its
indebtedness or other assets (other than (1) dividends or distributions referred
to in Section 2.05(a)(i)(A) hereof, (2) any common shares issued
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pursuant to a reclassification referred to in Section 2.05(a)(i)(D) hereof and
(3) any Ordinary Cash Dividends) or any issuance by General Electric to all
holders of General Electric Common Stock of rights or warrants (other than
rights or warrants for which adjustment is required pursuant to Section 2.05(a)
(ii) hereof or for which an adjustment is then or may be later required as set
forth in Section 2.05(a)(iii) hereof), (ii) any consolidation or merger of
General Electric with or into another entity (other than a merger or
consolidation in which General Electric is the continuing corporation and in
which the shares of General Electric Common Stock outstanding immediately prior
to the merger or consolidation are not exchanged for cash, securities or other
property of General Electric or another corporation), (iii) any sale, transfer,
lease or conveyance to another corporation of the property of General Electric
as an entirety or substantially as an entirety, (iv) any statutory exchange of
securities of General Electric with another corporation (other than in
connection with a merger or acquisition) or (v) any liquidation, dissolution or
winding up of General Electric.
"Business Day" means, solely for the purposes of this Supplemental
Indenture, any day that is not a Saturday, a Sunday or a day on which the NYSE
or banking institutions or trust companies in The City of New York are
authorized or obligated by law or executive order to close.
"Closing Price" of any security on any date of determination means (a)
the closing sale price (or, if no closing sale price is reported, the last
reported sale price) of such security (regular way) on the NYSE on such date,
(b) if such security is not listed for trading on the NYSE on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which such security is so listed, (c) if such security is
not so listed on a United States national or regional securities exchange, as
reported by the NASDAQ Stock Market, (d) if such security is not so reported,
the last quoted bid price for such security in the over-the-counter market as
reported by the National Quotation Bureau or similar organization or (e) if such
security is not so quoted, the average of the mid-point of the last bid and ask
prices for such security from each of at least three nationally recognized
investment banking firms selected by the Company for such purpose.
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"Dilution Event" has the meaning set forth in Section 2.05(a).
"Exchange Rate" means a rate of 12.5078 shares of General Electric
Common Stock per $1,000 principal amount of Notes; subject to adjustment from
time to time pursuant to Section 2.05.
"General Electric Common Stock" has the meaning set forth in the
recitals to this sixth Supplemental Indenture and includes any other common
stock of General Electric issued in a reclassification of any shares of such
General Electric Common Stock.
"Market Price" means, as of any date of determination, the average
Closing Price per share of General Electric Common Stock for the 20 Trading Days
immediately prior to the date of determination; provided, however, that if there
are not 20 Trading Days for the General Electric Common Stock occurring later
than the 60th calendar day immediately prior to, but not including, such date,
the Market Price shall be determined as the market value per share of General
Electric Common Stock as of such date as determined by a nationally recognized
investment banking firm retained for such purpose by the Company.
"Notes" has the meaning set forth in the recitals to this Supplemental
Indenture.
"NYSE" means the New York Stock Exchange, Inc.
"Ordinary Cash Dividend" has the meaning set forth in Section
2.05(b)(5).
"Reported Securities" means securities received in an Adjustment Event
(A) (i) that are listed on a United States national securities exchange, (ii)
that are reported on a United States national securities system subject to last
sale reporting, (iii) that are traded in the over-the-counter market and
reported on the National Quotation Bureau or similar organization or (iv) for
which bid and ask prices are available from at least three nationally recognized
investment banking firms and (B) that are either (x) perpetual equity securities
or (y) non-perpetual equity securities or debt securities with a stated maturity
after the maturity of the Notes.
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"Trading Day" means a Business Day on which the security, the Closing
Price of which is being determined, (a) is not suspended from trading on any
national or regional securities exchange or association or over-the-counter
market at the close of business and (b) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of such security.
"Transaction Value" means (a) for any cash received in any Adjustment
Event, the amount of cash received per share of General Electric Common Stock,
(b) for any Reported Securities received in any Adjustment Event, an amount
equal to (x) the average Closing Price per security of such Reported Securities
for the 20 Trading Days immediately prior to exchange of the Notes multiplied by
(y) the number of such Reported Securities (as adjusted pursuant to Section
2.05(b)(3)) received per share of General Electric Common Stock and (c) for any
property received in any Adjustment Event other than cash or such Reported
Securities, an amount equal to the fair market value of the property received
per share of General Electric Common Stock on the date such property is
received, as determined by a nationally recognized investment banking firm
retained for this purpose by the Company; provided, however, that in the case of
clause (b), (i) with respect to securities that are Reported Securities by
virtue of only clause (A) (iv) of the definition of Reported Securities,
Transaction Value with respect to any such Reported Security means the average
of the mid-point of the last bid and ask prices for such Reported Security as of
the exchange of the Notes from each of at least three nationally recognized
investment banking firms retained for such purpose by the Company multiplied by
the number of such Reported Securities (as adjusted pursuant to Section
2.05(b)(3)) received per share General Electric Common Stock and (ii) with
respect to all other Reported Securities, if there are not 20 Trading Days for
any particular Reported Security occurring later than the 60th calendar day
immediately prior to, but not including, the date of exchange of the Notes,
Transaction Value with respect to such Reported Security means the market value
per security of such Reported Security as of the exchange of the Notes as
determined by a nationally recognized investment banking firm retained for such
purpose by the Company multiplied by the number of such Reported Securities (as
adjusted pursuant to Section 2.05(b)(3)) received per share of General Electric
Common Stock. For purposes of
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calculating Transaction Value, any cash, Reported Securities or other property
receivable in an Adjustment Event shall be deemed to have been received
immediately prior to the close of business on the record date for such
Adjustment Event or, if there is no record date for such Adjustment Event,
immediately prior to the close of business on the effective date of such
Adjustment Event.
"Trigger Event" has the meaning set forth in Section 2.05(a)(iii).
Section 1.02 Effect of Headings.
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
Section 1.03 Successors and Assigns.
All covenants and agreements in this Supplemental Indenture by the
Company shall bind its successors and assigns, whether so expressed or not.
Section 1.04 Separability.
In case any provision in this Supplemental Indenture or the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 1.05 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Supplemental Indenture
by any of the provisions of the Trust Indenture Act, such required provision
shall control.
Section 1.06 Benefits of Supplemental Indenture.
Nothing in this Supplemental Indenture, expressed or implied, shall
give to any person, other than the parties hereto and their successors
hereunder, and the holders of the Notes any benefit or any legal or equitable
right, remedy or claim under this Supplemental Indenture.
Section 1.07 Application of Supplemental Indenture.
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This Supplemental Indenture shall take effect on the date hereof, and
shall apply only to the Notes. This Supplemental Indenture shall have no effect
on any other Securities, whether originally issued prior to the date hereof or
thereafter.
Section 1.08 Governing Law.
THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND THIS SUPPLEMENTAL
INDENTURE AND EACH SUCH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ARTICLE II.
THE NOTES
Section 2.01 Title and Terms.
There is hereby created under the Indenture a series of Securities
known and designated as the "2.75% Exchangeable Notes Due July 1, 2002" of the
Company. The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is limited to $5,548,000 except for Notes
authenticated and delivered upon reregistration of, transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Sections 304, 305 or 306 of the
Indenture.
The Notes shall mature on July 1, 2002 and shall bear interest on the
principal amount at the rate of 2.75% per annum, from the date of original
issuance or the most recent interest payment date to which interest has been
paid or duly provided for, payable semiannually in arrears on January 1 and July
1 of each year (commencing January 1, 1998), to the persons in whose names the
Notes (or any predecessor securities) are registered at the close of business on
the 15th day of the calendar month immediately preceding such interest payment
date (the "Record Date"), provided that interest payable at maturity shall be
payable to the person to whom the principal is payable. Holders of Notes who
exchange such Notes during the period from a Record Date to the next succeeding
interest payment date will be entitled to payment of interest on such interest
payment date.
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The Notes shall be issuable in denominations of $200,000 and any
integral multiples of $1,000 in excess.
The Notes shall be evidenced by certificates in fully registered form
(each, a "Certificate"). The Trustee will maintain a register (the "Security
Register") for registering the ownership of and transfers of Notes represented
by Certificates.
The Notes shall not be redeemable prior to July 1, 2000. The Notes
shall not be subject to any sinking fund.
The Company shall not be obligated to pay any additional amount on the
Notes in respect of taxes, except as otherwise provided in Sections 2.07 and
3.01 hereof.
The form of Note attached hereto as Exhibit A is hereby adopted,
pursuant to Sections 201, 203 and 901(7) of the Indenture, as a form of
Securities of a series that consists of Notes.
The Notes shall be exchangeable as provided in Section 2.02 hereof.
Section 2.02 Exchange Rights. The Notes are exchangeable at the
option of the holder at any time after July 1, 1998 and prior to maturity,
unless previously redeemed, for General Electric Common Stock owned by the
Company at the Exchange Rate; provided, however, that, pursuant to Section 2.04,
no fractional shares of General Electric Common Stock shall be issued. The
holders of the Notes shall be responsible for the payment of any and all
brokerage costs upon the subsequent sale of such shares.
In lieu of delivering certificates representing shares of General
Electric Common Stock in exchange for any Notes, the Company may, at the
Company's option, pay to the Holder surrendering such Notes an amount in cash
equal to the Market Price of the General Electric Common Stock for which such
Notes are exchangeable, determined as of the date of receipt by the Company of
the notice of exchange relating to such Notes (or, if such date is not a
Business Day, on the Business Day next preceding such date), except where such
delivery would violate applicable state law. Prior to so directing the exchange
agent for the holders of the Notes (the "Exchange Agent") to make any such cash
payment, the Company shall deposit with the Exchange
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Agent the cash so payable. If the Company elects not to exercise its cash
payment option, the Company shall deposit with the Exchange Agent the number of
shares of General Electric Common Stock for which the delivered Notes are
exchangeable.
Section 2.03 Procedure for Exchange. In order to exercise the right
of exchange, the holder of any Note must surrender such Note to the Exchange
Agent, at its office maintained for such purpose in New York, New York. Each
Note to be surrendered must be accompanied by written notice to the Company and
the Exchange Agent that the Holder elects to exchange such Note. Delivery of
the certificates and of any check for any cash may be delayed for a reasonable
period of time at the request of the Company in order to effectuate the
calculation of the adjustments of the General Electric Common Stock, to obtain
any certificate representing securities to be delivered, or to complete any
reapportionment of the shares of General Electric Common Stock which is required
by the Indenture or this Supplemental Indenture or to comply with any applicable
law.
Section 2.04 No Fractional Shares.
If more than one Note shall be surrendered for exchange pursuant to
Section 2.02 at one time by the same holder, the number of full shares of
General Electric Common Stock or Reported Securities which shall be delivered
upon such exchange, in whole or in part, as the case may be, shall be computed
on the basis of the aggregate number of Notes surrendered. No fractional shares
or scrip representing fractional shares of General Electric Common Stock or
Reported Securities shall be issued or delivered upon any exchange pursuant to
Section 2.02 of any Notes. In lieu of any fractional shares of General Electric
Common Stock or Reported Securities which, but for the immediately preceding
sentence, would otherwise be deliverable upon such exchange, the Company,
through the Exchange Agent, shall make a cash adjustment. The Company shall,
upon such exchange of any Notes, provide cash to the Exchange Agent in an amount
equal to the cash payable with respect to any fractional shares of General
Electric Common Stock or Reported Security deliverable upon such exchange, and
the Company shall retain such fractional shares of General Electric Common Stock
or Reported Securities.
Section 2.05 Adjustment of Exchange Rate.
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(a) Adjustment for Distributions, Reclassifications, etc. The
Exchange Rate shall be subject to adjustment from time to time as follows:
(i) If General Electric shall, after the date hereof:
(A) pay a stock dividend or make a distribution, in each case,
with respect to General Electric Common Stock in shares of General
Electric Common Stock;
(B) subdivide or split the outstanding shares of General Electric
Common Stock into a greater number of shares;
(C) combine the outstanding shares of General Electric Common
Stock into a smaller number of shares; or
(D) issue by reclassification (other than a reclassification
pursuant to clause (ii), (iii), (iv) or (v) of the definition of
Adjustment Event) of the outstanding shares of General Electric Common
Stock any shares of common stock of General Electric;
(each of the foregoing, together with the event described in paragraph
(a)(ii) of this Section, a "Dilution Event") then, in any such event, the
Exchange Rate shall be adjusted so that a holder of any Notes shall be
entitled to receive, upon exchange of any Notes the number of shares of
General Electric Common Stock (or, in the case of a reclassification
referred to in clause (D) of this sentence, such number of shares and/or
the number of other common shares of General Electric issued pursuant to
such reclassification) which such holder of such Notes would have owned or
been entitled to receive immediately following such event had such Notes
been exchanged immediately prior to such event or any record date with
respect thereto. Each such adjustment shall become effective at the
opening of business on the Business Day next following the record date for
determination of holders of General Electric Common Stock entitled to
receive such dividend or distribution in the case of a dividend or
distribution and shall become effective immediately after the effective
date in the case of a subdivision, split,
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combination or reclassification. Each such adjustment shall be made
successively.
(ii) If General Electric shall, after the date hereof, issue rights or
warrants to all holders of General Electric Common Stock entitling them to
subscribe for or purchase shares of General Electric Common Stock (other
than rights or warrants described in clause (iii) below) at a price per
share less than the Market Price of General Electric Common Stock on the
Business Day next following the record date for the determination of
holders of General Electric Common Stock entitled to receive such rights or
warrants, then in each case the Exchange Rate shall be adjusted by
multiplying the Exchange Rate in effect on the record date for the issuance
of such rights or warrants by a fraction, of which the numerator shall be
(A) the number of shares of General Electric Common Stock outstanding on
the record date for the issuance of such rights or warrants, plus (B) the
number of additional shares of General Electric Common Stock offered for
subscription or purchase pursuant to such rights or warrants, and of which
the denominator shall be (x) the number of shares of General Electric
Common Stock outstanding on the record date for the issuance of such rights
or warrants, plus (y) the number of additional shares of General Electric
Common Stock which the aggregate offering price of the total number of
shares of General Electric Common Stock so offered for subscription or
purchase pursuant to such rights or warrants would purchase at the Market
Price of the General Electric Common Stock on the Business Day next
following the record date for the determination of holders of General
Electric Common Stock entitled to receive such rights or warrants, which
number of additional shares shall be determined by multiplying such total
number of shares by the exercise price of such rights or warrants and
dividing the product so obtained by such Market Price. Such adjustment
shall become effective at the opening of business on the Business Day next
following the record date for the determination of holders of General
Electric Common Stock entitled to receive such rights or warrants.
(iii) Notwithstanding the provisions of clause (ii) above, no
adjustment of the Exchange Rate shall be required in the event that General
Electric shall (A) issue rights to
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purchase shares of General Electric Common Stock pursuant to a plan for the
reinvestment of dividends or (B) distribute to all holders of General
Electric Common Stock rights or warrants which, upon the occurrence of a
specified event or events ("Trigger Event"), entitle such holders to
subscribe for or purchase shares of General Electric Common Stock at a price
per share less than the Market Price of the General Electric Common Stock at
the time of distribution, provided, however, that such adjustment of the
Exchange Rate shall be made if, upon the occurrence of a Trigger Event, such
holders acquire the right to subscribe for or purchase shares of General
Electric Common Stock at a price per share less than the Market Price of the
General Electric Common Stock on the Business Day next following the date of
the occurrence of the Trigger Event.
(iv) To the extent that any of the rights or warrants described in
clause (ii) or (iii) above expire prior to the maturity of the Notes and
shares of General Electric Common Stock are not delivered pursuant to such
rights or warrants prior to such expiration, the Exchange Rate shall be
readjusted to the Exchange Rate which would then be in effect had such
adjustments for the issuance of such rights or warrants been made upon the
basis of delivery of only the number of shares of General Electric Common
Stock actually delivered pursuant to such rights or warrants. Each such
adjustment shall be made successively.
(v) Any shares of General Electric Common Stock issuable in payment
of a dividend shall be deemed to have been issued immediately prior to the
close of business on the record date for such dividend for purposes of
calculating the number of outstanding shares of General Electric Common
Stock under paragraph (a)(ii) of this Section.
(vi) All adjustments to the Exchange Rate shall be calculated to the
nearest 1/10,000th of a share of General Electric Common Stock (or if there
is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a
share). No adjustment in the Exchange Rate shall be required unless such
adjustment would require an increase or decrease of at least one percent
therein; provided, however, that any adjustments which by reason of this
paragraph
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(a)(vi) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(b) Other Adjustment Events. If an Adjustment Event occurs, the
property receivable by holders of Notes upon exchange shall be subject to
adjustment from time to time as follows:
(1) Each holder of Notes will receive upon exchange, in lieu of or (in
the case of an Adjustment Event described in clause (i) of the definition
thereof) in addition to, each share of General Electric Common Stock that
it would otherwise receive as required by Section 2.02, cash in an amount
equal to the Transaction Value of the cash, Reported Security or other
property that would be receivable by a holder of General Electric Common
Stock as a result of such Adjustment Event.
(2) Notwithstanding the foregoing, with respect to any Reported
Securities received in such Adjustment Event, the Company may, at its
option, in lieu of delivering the amount of cash deliverable in respect of
Reported Securities received in an Adjustment Event, determined in
accordance with subparagraph (b)(l), deliver a number of such Reported
Securities with a value equal to such cash amount, as determined in
accordance with clause (b) of the definition of Transaction Value, as
applicable; provided, however, that (i) if such option is exercised, the
Company shall deliver Reported Securities in respect of all, but not less
than all, cash amounts that would otherwise be deliverable in respect of
Reported Securities received in an Adjustment Event, (ii) the Company may
not exercise such option if the Company has elected to deliver cash in lieu
of the shares of General Electric Common Stock, if any, deliverable upon
exchange or if such Reported Securities have not yet been delivered to the
holders entitled thereto following such Adjustment Event or any record date
with respect thereto and (iii) subject to clause (ii) of this proviso, the
Company must exercise such option if the Company does not elect to deliver
cash in lieu of the shares of General Electric Common Stock, if any,
deliverable upon exchange. If the Company elects to deliver Reported
Securities, each holder of Notes will be responsible for the payment of any
and all brokerage and other transaction costs upon the sale of such
Reported Securities. If, following any Adjustment Event,
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any Reported Security ceases to qualify as a Reported Security, then (x) the
Company may no longer elect to deliver such Reported Security in lieu of an
equivalent amount of cash and (y) notwithstanding clause (b) of the
definition of Transaction Value, the Transaction Value of such Reported
Security shall mean the fair market value of such Reported Security on the
date such security ceases to qualify as a Reported Security, as determined
by a nationally recognized investment banking firm retained for this purpose
by the Company.
(3) The amount of cash and/or the kind and number of securities into
which the Notes shall be exchangeable after an Adjustment Event shall be
subject to adjustment following the date of such Adjustment Event in the
same manner and upon the occurrence of the same type of events as described
in paragraphs (a) and (b) of this Section with respect to shares of General
Electric Common Stock and General Electric.
(4) For purposes of the foregoing, the term "Ordinary Cash Dividend"
means, with respect to any consecutive 365-day period, any dividend with
respect to General Electric Common Stock paid in cash to the extent that
the amount of such dividend, together with the aggregate amount of all
other dividends on the General Electric Common Stock paid in cash during
such 365-day period, does not exceed on a per share basis 10% of the
average of the Closing Prices per share of General Electric Common Stock
over such 365-day period.
Section 2.06 Notice of Adjustments and Certain other Events.
(a) Whenever the Exchange Rate is adjusted as herein provided or an
Adjustment Event occurs, the Company shall:
(i) forthwith compute the adjusted Exchange Rate (or Transaction
Value) in accordance with Section 2.05 and prepare a certificate signed by
an officer of the Company setting forth the adjusted Exchange Rate (or
Transaction Value), the method of calculation thereof in reasonable detail
and the facts requiring such adjustment and upon which such adjustment is
based, which certificate shall be
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conclusive, final and binding evidence of the correctness of the adjustment,
and file such certificate forthwith with the Trustee; and
(ii) within ten Business Days following the occurrence of a Dilution
Event or an Adjustment Event that permits or requires a change in the
consideration to be received by holders pursuant to Section 2.05(b) (or, in
either case, if the Company is not aware of such occurrence, as soon as
practicable after becoming so aware), provide written notice to the Trustee
and to the holders of the outstanding Notes of the occurrence of such
Dilution Event or Adjustment Event, including a statement in reasonable
detail setting forth the method by which any adjustment to the Exchange
Rate or change in the consideration to be received was determined and
setting forth the revised Exchange Rate or consideration, as the case may
be, per Note.
(b) In case at any time while any of the Notes are outstanding the
Company receives notice that:
(i) General Electric shall declare a dividend (or any other
distribution) on or in respect of the General Electric Common Stock to
which Section 2.05(a)(i) or (ii) shall apply (other than any cash dividends
and distributions, if any, paid from time to time by General Electric that
constitute Ordinary Cash Dividends);
(ii) General Electric shall authorize the issuance to all holders of
General Electric Common Stock of rights or warrants to subscribe for or
purchase shares of General Electric Common Stock or of any other
subscription rights or warrants (other than rights or warrants described in
Section 2.05(a)(iii));
(iii) there shall occur any conversion or reclassification of General
Electric Common Stock (other than a subdivision or combination of such
outstanding shares of General Electric Common Stock) or any consolidation,
merger or reorganization to which General Electric is a party and for which
approval of any stockholders of General Electric is required, or the sale
or transfer of all or substantially all of the assets of General Electric;
or
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(iv) there shall occur the voluntary or involuntary dissolution,
liquidation or winding up of General Electric;
then the Company shall promptly cause to be delivered to the Trustee and the
Exchange Agent and filed at the office or agency maintained for the purpose of
exchange of Notes at, and shall promptly cause to be mailed to the holders of
Notes at their last addresses as they shall appear upon the registration books
of the Securities registrar, at least ten days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event that
more than one is specified), a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution or grant of rights or
warrants or, if a record is not to be taken, the date as of which the holders of
General Electric Common Stock of record to be entitled to such dividend,
distribution or grant of rights or warrants are to be determined, or (y) the
date, if known by the Company, on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective. Following any Adjustment Event, the provisions of this
paragraph (b) shall apply with respect to any Reported Securities in the same
manner as with respect to General Electric and the General Electric Common
Stock.
(c) On or prior to the fourth Business Day preceding the maturity of
the Notes, the Company shall provide notice to the holders of record of the
Notes and to the Trustee and will publish a notice in a daily newspaper of
national circulation stating whether the Company will deliver, in accordance
with Section 2.02, shares of General Electric Common Stock or cash (and/or, in
accordance with Section 2.05(b), cash or Reported Securities) upon the exchange
of the principal amount of the Notes; provided, however, in the event the
Company intends to deliver cash, the Company shall have the right to require
certification as to the domicile and residency of each beneficial holder of
Notes, as a condition to delivery of such cash. After the close of business on
the Business Day immediately preceding the maturity of the Notes, the Company
shall notify the Trustee in writing of the number of shares of General Electric
Common Stock and/or Reported Securities, or the amount of cash to be paid per
Note.
Section 2.07 Taxes.
17
<PAGE>
The Company will pay any and all documentary, stamp, transfer or
similar taxes that may be payable in respect of the transfer and delivery of
General Electric Common Stock (or Reported Securities) pursuant hereto;
provided, however, that the Company shall not be required to pay any such tax
which may be payable in respect of any transfer involved in the delivery of
General Electric Common Stock (or Reported Securities) in a name other than that
in which the Notes so exchanged were registered, and no such transfer or
delivery shall be made unless and until the person requesting such transfer has
paid to the Company the amount of any such tax, or has established, to the
satisfaction of the Company, that such tax has been paid.
Section 2.08 Delivery of Securities upon Maturity.
All shares of General Electric Common Stock and Reported Securities
deliverable to holders upon exchange of the Notes shall be delivered to such
holders, whenever practicable, in such manner (such as by book-entry transfer)
so as to assure same-day transfer of such securities to holders and otherwise in
the manner customary at such time for delivery of such securities and securities
of the same type.
ARTICLE III.
COVENANTS
Section 3.01 Shares Free and Clear.
With respect to the Notes only and for the benefit of only the holders
thereof, the Company covenants and warrants, unless the Company elects to
deliver cash in lieu of General Electric Common Stock, that upon exchange of any
Notes pursuant to the Indenture and this Supplemental Indenture, the holder of
such Notes shall receive good and valid title to the General Electric Common
Stock and, in the event an Adjustment Event has occurred, the Reported
Securities (unless the Company elects to deliver cash in lieu of Reported
Securities) for which such Notes are at such time exchangeable pursuant to this
Indenture, free and clear of all liens, encumbrances, equities and claims
whatsoever. Except as otherwise provided in Section 2.07, the Company shall pay
all taxes and charges with respect to the delivery of General Electric Common
Stock (and Reported Securities) delivered in exchange for Notes hereunder. In
18
<PAGE>
addition, the Company further warrants that any shares of General Electric
Common Stock (and Reported Securities) delivered in exchange for Notes hereunder
shall be free of any transfer restrictions (other than such as are solely
attributable to any holder's status as an affiliate of General Electric or the
issuer of such Reported Securities).
Section 3.02 Discharge of Indenture.
The provisions of Section 13.2 of the Indenture with respect to
defeasance shall not be applicable to the Notes.
ARTICLE IV.
MISCELLANEOUS
Section 4.01 Confirmation of Indenture.
The Indenture, as supplemented and amended by this Supplemental
Indenture and all other indentures supplemental thereto, is in all respects
ratified and confirmed, and the Indenture, this Supplemental Indenture and all
indentures supplemental thereto shall be read, taken and construed as one and
the same instrument.
Section 4.02 Concerning the Trustee.
The Trustee assumes no duties, responsibilities or liabilities by
reason of this Supplemental Indenture other than as set forth in the Indenture.
Neither the Trustee nor the Exchange Agent shall at any time be under any duty
or responsibility to the Holders of Notes to determine whether any facts exist
that may require an adjustment of the number of shares of General Electric
Common Stock or other consideration to be delivered upon the exchange of the
Notes or with respect to the nature or extent of any adjustment when made or
with respect to the method employed.
---------------------
This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
19
<PAGE>
20
<PAGE>
Citibank, N.A. hereby accepts the trusts in this Sixth Supplemental
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this
Sixth Supplemental Indenture to be signed, and acknowledged by its President,
its Chairman of the Board, one of its Vice Presidents, its Chief Financial
Officer or its Treasurer, and its corporate seal to be affixed hereunto, and the
same to be attested by its Secretary, its Assistant Secretary or one of its
Attesting Secretaries, and Citibank, N.A., as Trustee, has caused this Sixth
Supplemental Indenture to be signed and acknowledged by one of its authorized
officers, and its corporate seal to be affixed hereunto, and the same to be
attested by one of its authorized officers, as of the day and year first above
written.
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Jennifer Marre
-------------------------
[Corporate Seal]
Attest:
- ---------------------------
CITIBANK, N.A., as Trustee
By: /s/ Arthur Aslanian
-------------------------
[Corporate Seal]
21
<PAGE>
Attest:
- ---------------------------
22
<PAGE>
Exhibit A
NO. CUSIP NO. 524908BM1
[Form of Face of Security]
LEHMAN BROTHERS HOLDINGS INC.
2.75% Exchangeable Note Due July 1, 2002
Lehman Brothers Holdings Inc., a corporation duly organized and
existing under the laws of Delaware (hereinafter called the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ___________, or registered
assigns, the principal sum of _________ Dollars on July 1, 2002, and to pay
interest thereon from July 1, 1997, or (computed on the basis of a 360-day year
of twelve 30-day months) or from the most recent Interest Payment Date (as
defined below) to which interest has been paid or duly provided for,
semi-annually on January 1 and July 1 in each year (each, an "Interest Payment
Date" and, collectively, the "Interest Payment Dates"), commencing January 1,
1998, at the rate of 2.75% per annum, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
(as defined below) for interest payable on such Interest Payment Date. The
Regular Record Date for any interest payment is the close of business on the
15th day of the calendar month immediately preceding the relevant Interest
Payment Date, whether or not a Business Day (as defined below), provided that
interest payable at maturity shall be payable to the person to whom the
principal hereof is payable. In any case where such Interest Payment Date falls
on a day which is not a business day or which is a legal holiday on which the
corporate trust office of the Trustee or banking institutions in the place of
payment are authorized or required to close (notwithstanding any other provision
of said Indenture or this Security) payment of such interest need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such Interest Payment Date, and, if such payment
is so made, no interest shall accrue for the period from and after such Interest
Payment Date. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the holder on such Regular Record Date,
and may either be paid to the person in whose name this Security (or one or more
<PAGE>
Predecessor Securities) is registered at the close of business on a special
record date as described in Section 307 of the Indenture for the payment of such
defaulted interest to be fixed by the Trustee, notice whereof shall be given to
holders of Securities of this series not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, New York, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; provided, however, that at
the option of the Company payment is legal tender for payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture, or be valid or obligatory for any purpose.
2
<PAGE>
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this
instrument to be duly executed under its corporate seal.
Dated: LEHMAN BROTHERS HOLDINGS INC.
By:
--------------------------
Name:
Title:
Attest:
Name:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CITIBANK, N.A., as Trustee
By:
--------------------------
Authorized Officer
3
<PAGE>
[Form of Reverse of Security]
LEHMAN BROTHERS HOLDINGS INC.
2.75% Exchangeable Note Due July 1, 2002
This Security is one of a duly authorized issue of securities of the
Company (hereinafter called the "Securities") issued and to be issued in one or
more series under an Indenture, dated as of September 1, 1987, between the
Company and Citibank, N.A., as Trustee (herein called the "Trustee" which term
includes any successor trustee under the Indenture), as supplemented and amended
by Supplemental Indentures dated as of November 25, 1987, as of November 27,
1990, as of September 13, 1991, as of October 4, 1993, as of October 1, 1995 and
as of June 26, 1997 (as so supplemented and as may be further supplemented from
time to time, the "Indenture"), to which Indenture and all other indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitation of rights, duties and immunities thereunder of the Company,
the Trustee and the holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is
one of a series of the Securities designated on the face hereof, limited in
aggregate principal amount to $5,548,000.
If an Event of Default with respect to the Securities of this series
shall occur and be continuing, the principal of the Securities of this series
may be declared due and payable in the manner and with the effect provided in
the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of not less than 66 2/3% in principal amount of all
Securities at the time Outstanding to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities at the time Outstanding, on behalf of the Holders of all
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
<PAGE>
The Indenture provides that no Holder of any Securities may enforce
any remedy under the Indenture except in the case of refusal or neglect of the
Trustee to act after notice of default and request by the Holders of 25% in
principal amount of Outstanding Securities in the series for which a remedy is
sought to be enforced and the offer to the Trustee of reasonable indemnity.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall, without the consent of the Holder, alter or impair
the right of the Holder, which is absolute and unconditional, to receive payment
of principal of (and premium, if any) and interest on this Security at the
times, place and rate, and in the manner, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, this Security is transferable in the Security Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company in any place where the principal of (and premium, if any) and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this Series,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities will not be redeemable prior to July 1, 2000.
Thereafter, the Securities may be redeemed at any time, in whole or in part, at
the election of the Company, upon no less than 30 nor more than 60 days' notice
at a price equal to the principal amount of the Securities together with accrued
interest to the date of redemption.
Subject to the terms of the Sixth Supplemental Indenture dated as of
June 26, 1997 (the "Supplemental Indenture") between the Company and the
Trustee, the Securities (or portions thereof in integral multiples of $1,000)
are exchangeable for shares of common stock of General Electric Company
("General Electric") at any time after July 1, 1998 and prior to maturity at an
exchange rate of $79.95 per share (equivalent to an exchange rate of 12.5078
shares of General Electric Common Stock per $1,000 principal amount of
Securities), subject to adjustment as described in the Supplemental Indenture.
2
<PAGE>
In the event the Securities are called for redemption, the exchange rights will
terminate at the close of business on the date immediately prior to the date of
redemption.
In order to exercise the right of exchange, the holder of any Security
in registered form must surrender such Security to the Exchange Agent (as
defined in the Supplemental Indenture) in New York, New York. Each Security to
be surrendered must be accompanied by written notice to the Company and the
Exchange Agent that the Holder elects to exchange such Security. Delivery of
the certificates for General Electric Common Stock, in accordance with the
adjustment provisions of the Supplemental Indenture may be delayed at the
request of the Company in order to effectuate the calculation of the adjustments
of the General Electric Common Stock, to obtain any certificate representing
securities to be delivered, to complete any reapportionment of the General
Electric Common Stock which is required by the Indenture or Supplemental
Indenture or to comply with any applicable law. No fractional shares will be
delivered on any exchange of Securities and in lieu thereof a cash adjustment
based on the Market Price (as defined in the Supplemental Indenture) of the
General Electric Common Stock will be paid.
In lieu of delivering certificates representing General Electric
Common Stock in exchange for any Securities, the Company may pay to the Holder
surrendering such Securities an amount in cash equal to the Market Price of the
General Electric Common Stock for which such Securities are exchangeable,
determined as of the date of receipt by the Company of the notice of exchange
relating to such Securities (or, if such date is not a business day, on the
business day next preceding such date).
The Securities of this series are issuable in register form without
coupons in denominations of $200,000 and integral multiples of $1,000 in excess
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
3
<PAGE>
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
THIS SECURITY SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
4
<PAGE>
ABBREVIATIONS
________________________________
The following abbreviations, when used in the inscription on the face
of the within Security, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ________ Custodian ________
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right of Act _________________________
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Name and Address of Assignee, including zip code, must be printed or
typewritten.)
- --------------------------------------------------------------------------------
the within Security, and all rights thereunder, hereby irrevocably constituting
and appointing
- --------------------------------------------------------------------------------
to transfer the said Security on the books of the Company, with full power of
substitution in the premises.
Dated:
---------------------------------
NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Security in every particular, without
alteration or enlargement or any change whatever.
Signature(s) Guaranteed:
- -----------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY A MEMBER OF AN APPROVED SIGNATURE
GUARANTY MEDALLION PROGRAM.
<PAGE>
Exhibit 4(ff)
- --------------------------------------------------------------------------
LEHMAN BROTHERS HOLDINGS INC.,
___________________, As Depositary
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
---------------------
Deposit Agreement
[Insert designation of preferred stock]
---------------------
Dated
----------------
- --------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
ARTICLE II
Form of Receipts, Deposit of Stock, Execution and Delivery, Transfer,
Surrender and Redemption of Receipts
Page
SECTION 2.01. Form and Transfer of Receipts............................ 2
SECTION 2.02. Deposit of Stock; Execution and Delivery of Receipts
in Respect Thereof.................................. 3
SECTION 2.03. Redemption of Stock...................................... 4
SECTION 2.04. Registration of Transfer of Receipts..................... 5
SECTION 2.05. Split-ups and Combinations of Receipts;
Surrender of Receipts and Withdrawal of Stock....... 6
SECTION 2.06. Limitations on Execution and Delivery,
Transfer, Surrender and Exchange of Receipts........ 7
SECTION 2.07. Lost Receipts, etc....................................... 8
SECTION 2.08. Cancellation and Destruction of
Surrendered Receipts................................ 8
ARTICLE III
Certain Obligations of Holders
of Receipts and the Company
SECTION 3.01. Filing Proofs, Certificates and Other
Information......................................... 8
SECTION 3.02. Payment of Taxes or Other Governmental
Charges............................................. 9
SECTION 3.03. Warranty as to Stock..................................... 9
ARTICLE IV
The Deposited Securities; Notices
SECTION 4.01. Cash Distributions....................................... 9
SECTION 4.02. Distributions Other than Cash, Rights,
Preferences or Privileges........................... 9
i
<PAGE>
SECTION 4.03. Subscription Rights, Preferences or
Privileges.......................................... 10
SECTION 4.05. Voting Rights............................................ 12
SECTION 4.06. Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations,
etc................................................. 12
SECTION 4.07. Inspection of Reports.................................... 13
SECTION 4.08. Lists of Record Holders of Receipts...................... 13
ARTICLE V
The Depositary, the Depositary's Agents,
the Registrar and the Company
SECTION 5.01. Maintenance of Offices, Agencies and Transfer
Books by the Depositary; Registrar.................. 13
SECTION 5.02. Prevention of or Delay in Performance by
the Depositary, the Depositary's Agents,
the Registrar, the Transfer Agent or the
Company............................................. 14
SECTION 5.03. Obligations of the Depositary, the
Depositary's Agents, the Registrar, the
Transfer Agent and the Company...................... 15
SECTION 5.04. Resignation and Removal of the
Depositary; Appointment of Successor
Depositary.......................................... 15
SECTION 5.05. Corporate Notices and Reports............................ 16
SECTION 5.06. Indemnification by the Company........................... 17
SECTION 5.07. Charges and Expenses..................................... 17
ARTICLE VI
Amendment and Termination
SECTION 6.01. Amendment................................................ 17
SECTION 6.02. Termination.............................................. 18
ARTICLE VII
Miscellaneous
SECTION 7.01. Counterparts............................................. 18
SECTION 7.02. Exclusive Benefit of Parties............................. 18
SECTION 7.03. Invalidity of Provisions................................. 18
SECTION 7.04. Notices.................................................. 19
ii
<PAGE>
SECTION 7.05. Depositary's Agents...................................... 19
SECTION 7.06. Holders of Receipts Are Parties.......................... 20
SECTION 7.07. GOVERNING LAW............................................ 20
SECTION 7.08. Inspection of Deposit Agreement.......................... 20
SECTION 7.09. Headings................................................. 20
iii
<PAGE>
DEPOSIT AGREEMENT dated as of ____________, among LEHMAN
BROTHERS HOLDINGS INC., a Delaware corporation, ___________, a
________ corporation, and the holders from time to time of the
Receipts described herein.
WHEREAS it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of [insert designation of preferred
stock], par value $1.00 per share, of LEHMAN BROTHERS HOLDINGS INC. with the
Depositary for the purposes set forth in this Deposit Agreement and for the
issuance hereunder of Receipts evidencing Depositary Shares in respect of the
Stock so deposited; and
WHEREAS the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
Definitions
The following definitions shall for all purposes, unless otherwise
indicated, apply to the respective capitalized terms used in this Deposit
Agreement:
"Certificate" shall mean the Certificate of Designations filed with
the Secretary of State of Delaware establishing the Stock as a series of
preferred stock of the Company.
"Company" shall mean Lehman Brothers Holdings Inc., a Delaware
corporation, and its successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time in accordance with the terms hereof.
"Depositary" shall mean ____________, and any successor as Depositary
hereunder.
<PAGE>
"Depositary Shares" shall mean Depositary Shares, each representing
one _________ of a share of Stock and evidenced by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 7.05.
"Depositary's Office" shall mean the principal office of the
Depositary in New York City, at which at any particular time its depositary
receipt business shall be administered.
"Receipt" shall mean one of the Depositary Receipts issued hereunder,
whether in definitive or temporary form.
"record holder" as applied to a Receipt shall mean the person in whose
name a Receipt is registered on the books of the Depositary maintained for such
purpose.
"Registrar" shall mean any bank or trust company which shall be
appointed pursuant to Section 7.05 to register ownership and transfers of
Receipts as herein provided.
"Stock" shall mean shares of the Company's [insert designation of
preferred stock], par value $1.00 per share.
"Transfer Agent" shall be as defined in Section 7.05.
ARTICLE II
Form of Receipts, Deposit of Stock, Execution and Delivery, Transfer, Surrender
and Redemption of Receipts
SECTION 2.01. Form and Transfer of Receipts. Definitive Receipts
shall be engraved or printed or lithographed on steel-engraved borders and shall
be substantially in the form set forth in Exhibit A annexed to this Deposit
Agreement, with appropriate insertions, modifications and omissions, as
hereinafter provided. Pending the preparation of definitive Receipts, the
Depositary, upon the written order of the Company or any holder of Stock, as the
case may be, delivered in compliance with Section 2.02, shall execute and
deliver temporary Receipts which are printed, lithographed, typewritten,
mimeographed or otherwise substantially of the tenor of the definitive Receipts
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the persons executing such
Receipts may determine,
2
<PAGE>
as evidenced by their execution of such Receipts. If temporary Receipts are
issued, the Company and the Depositary will cause definitive Receipts to be
prepared without unreasonable delay. After the preparation of definitive
Receipts, the temporary Receipts shall be exchangeable for definitive
Receipts upon surrender of the temporary Receipts at any office described in
the third paragraph of Section 2.02, without charge to the holder. Upon
surrender for cancellation of any one or more temporary Receipts, the
Depositary shall execute and deliver in exchange therefor definitive Receipts
representing the same number of Depositary Shares as represented by the
surrendered temporary Receipt or Receipts. Such exchange shall be made at
the Company's expense and without any charge therefor. Until so exchanged,
the temporary Receipts shall in all respects be entitled to the same benefits
under this Agreement, and with respect to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual signature
of a duly authorized officer of the Depositary; provided, that such signature
may be a facsimile if a Registrar for the Receipts (other than the Depositary)
shall have been appointed and such Receipts are countersigned by manual
signature of a duly authorized officer of the Registrar. No Receipt shall be
entitled to any benefits under this Deposit Agreement or be valid or obligatory
for any purpose unless it shall have been executed manually by a duly authorized
officer of the Depositary or, if a Registrar for the Receipts (other than the
Depositary) shall have been appointed, by manual or facsimile signature of a
duly authorized officer of the Depositary and countersigned manually by a duly
authorized officer of such Registrar. The Depositary shall record on its books
each Receipt so signed and delivered as hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange upon which the Stock, the Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special
3
<PAGE>
limitations or restrictions to which any particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt which is properly
endorsed, or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.04, the
Depositary may, notwithstanding any notice to the contrary, treat the record
holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions or to any notice provided for in this Deposit Agreement and for
all other purposes.
SECTION 2.02. Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
the Company or any holder of Stock may from time to time deposit shares of Stock
by delivery to the Depositary of a certificate or certificates representing the
Stock to be deposited, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement, in form
satisfactory to the Depositary, together with all such certifications as may be
required by the Depositary in accordance with the provisions of this Deposit
Agreement, and together with a written order of the Company or such holder, as
the case may be, directing the Depositary to execute and deliver to, or upon the
written order of, the person or persons stated in such order a Receipt or
Receipts for the number of Depositary Shares representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary's Office or at
such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates
representing the Stock to be deposited in accordance with the provisions of this
Section, together with the other documents required as above specified, and upon
recordation of such Stock on the books of the registrar for the Stock in the
name of the Depositary or its nominee, the Depositary, subject to the terms and
conditions of this Deposit Agreement, shall execute and deliver, to or upon the
order of the person or persons named in the written order delivered to the
Depositary referred to in
4
<PAGE>
the first paragraph of this Section, a Receipt or Receipts for the number of
Depositary Shares representing the Stock so deposited and registered in such
name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt or Receipts at
the Depositary's Office or such other offices, if any, as the Depositary may
designate. Delivery at other offices shall be at the risk and expense of the
person requesting such delivery.
SECTION 2.03. Redemption of Stock. Whenever the Company shall elect
to redeem shares of Stock in accordance with the provisions of the Certificate,
it shall (unless otherwise agreed in writing with the Depositary) give the
Depositary not less than 40 nor more than 70 days' notice of the date of such
proposed redemption of Stock, which notice shall be accompanied by a certificate
from the Company stating that such redemption of Stock is in accordance with the
provisions of the Certificate. Such notice, if given more than 60 days prior to
the redemption date, shall be in addition to the notice required to be given for
redemption pursuant to the Certificate. On the date of such redemption,
provided that the Company shall then have paid in full to the Depositary the
redemption price of the Stock held by the Depositary to be redeemed, plus any
accrued and unpaid dividends thereon, the Depositary shall redeem the number of
Depositary Shares representing such Stock. The Depositary shall mail notice of
such redemption and the proposed simultaneous redemption of the number of
Depositary Shares representing the Stock to be redeemed, first-class postage
prepaid, not less than 30 and not more than 60 days prior to the date fixed for
redemption of such Stock and Depositary Shares (the "Redemption Date"), to the
record holders of the Receipts evidencing the Depositary Shares to be so
redeemed, at the addresses of such holders as they appear on the records of the
Depositary; but neither failure to mail any such notice to one or more such
holders nor any defect in any notice to one or more such holders shall affect
the sufficiency of the proceedings for redemption as to other holders. Each
such notice shall state: (i) the Redemption Date; (ii) the number of Depositary
Shares to be redeemed and, if less than all the Depositary Shares held by any
such holder are to be redeemed, the number of such Depositary Shares held by
such holder to be so redeemed; (iii) the redemption price; (iv) the place or
places where Receipts
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evidencing Depositary Shares are to be surrendered for payment of the
redemption price; and (v) that dividends in respect of the Stock represented
by the Depositary Shares to be redeemed will cease to accumulate on such
Redemption Date. In case less than all the outstanding Depositary Shares are
to be redeemed, the Depositary Shares to be so redeemed shall be selected by
lot or pro rata (subject to rounding to avoid fractions of the Depositary
Shares) as may be determined by the Depositary to be equitable.
Notice having been mailed by the Depositary as aforesaid, from and
after the Redemption Date (unless the Company shall have failed to redeem the
shares of Stock to be redeemed by it as set forth in the Company's notice
provided for in the preceding paragraph) all dividends in respect of the shares
of Stock so called for redemption shall cease to accumulate, the Depositary
Shares being redeemed from such proceeds shall be deemed no longer to be
outstanding, all rights of the holders of Receipts evidencing such Depositary
Shares (except the right to receive the redemption price, including any accrued
and unpaid dividends thereon) shall, to the extent of such Depositary Shares,
cease and terminate and, upon surrender of the Receipts evidencing any such
Depositary Shares (properly endorsed or assigned for transfer, if the Depositary
shall so require) in accordance with such notice, such Depositary Shares shall
be redeemed by the Depositary at a redemption price per Depositary Share equal
to one _________ of the redemption price per share paid in respect of the shares
of Stock, plus accrued and unpaid dividends thereon to the date fixed for
redemption.
If less than all the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with the redemption payment, a
new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption.
SECTION 2.04. Registration of Transfer of Receipts. Subject to the
terms and conditions of this Deposit Agreement, the Depositary shall register on
its books from time to time transfers of Receipts upon any surrender thereof by
the holder in person or by duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer. Thereupon the
Depositary and the Registrar shall execute a new
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Receipt or Receipts evidencing the same aggregate number of Depositary Shares
as those evidenced by the Receipt or Receipts surrendered and deliver such
new Receipt or Receipts to or upon the order of the person entitled thereto.
SECTION 2.05. Split-ups and Combinations of Receipts; Surrender of
Receipts and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at
the Depositary's Office or at such other offices as it may designate for the
purpose of effecting a split-up or combination of such Receipt or Receipts, and
subject to the terms and conditions of this Deposit Agreement, the Depositary
shall execute and deliver a new Receipt or Receipts in the authorized
denomination or denominations requested, evidencing the aggregate number of
Depositary Shares evidenced by the Receipt or Receipts surrendered.
Any holder of a Receipt or Receipts representing any number of whole
shares of Stock may withdraw the Stock by surrendering such Receipt or Receipts,
at the Depositary's Office or at such other offices as the Depositary may
designate for such withdrawals. Thereafter, without unreasonable delay, the
Depositary shall deliver to such holder, or to the person or persons designated
by such holder as hereinafter provided, the number of whole shares of Stock
represented by the Receipt or Receipts so surrendered for withdrawal, but
holders of such whole shares of Stock will not thereafter be entitled to deposit
such Stock hereunder or to receive Depositary Shares therefor; provided,
however, that a record holder who withdraws Stock in order to demand appraisal
rights available under Delaware General Corporation Law ("DGCL"), will, subject
to certain conditions described below, be entitled to redeposit such Stock with
the Depositary and to receive Receipts evidencing Depositary Shares therefor in
the event (i) such record holder subsequently withdraws such demand for
appraisal pursuant to Section 262(e) of the DGCL, (ii) appraisal rights are not
available for such Stock pursuant to Section 262 of the DGCL or (iii) such
record holder loses or otherwise fails to perfect his rights to appraisal. In
order to redeposit Stock with the Depositary, such a record holder must deliver
the certificates for such Stock, properly endorsed or accompanied, if required
by the Depositary, by a duly executed instrument of transfer or endorsement, in
form satisfactory to the Depositary, together with instructions that such Stock
be so deposited, to the Depositary's office or to such other offices as the
Depositary may designate by not later than
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the 30th day after the earlier of (i) the withdrawal of such demand for
appraisal by such record holder, (ii) notice by the Company that appraisal
rights are not available for such Stock or (iii) the date on which such
record holder loses or otherwise fails to perfect his rights to appraisal.
The Company will notify any record holder of Receipts who so withdraws Stock
in the event appraisal rights in respect of Stock are not available. Any
shares so redeposited must be free and clear of any lien, security interest
or pledge and a holder may be required to provide certification of the
foregoing and such other certifications as may be required by the Depositary
in accordance with this Agreement. In addition, if required by the
Depositary, Stock presented for redeposit shall also be accompanied by (A) an
agreement or assignment, or other instrument satisfactory to the Depositary,
which will provide for the prompt transfer to the Depositary of any dividend
or right to subscribe for additional Stock or to receive other property which
such record holder may thereafter receive upon or in respect of such
redeposited Stock, or in lieu thereof, such agreement of indemnity or other
agreement as shall be satisfactory to the Depositary, and (B) a proxy or
proxies entitling the Depositary to vote such redeposited Stock for any and
all purposes until the Stock is transferred and recorded on the register of
stockholders of the Company in the name of the Depositary or its nominee. If
a Receipt delivered by the holder to the Depositary in connection with such
withdrawal shall evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of Stock
to be so withdrawn, the Depositary shall at the same time, in addition to
such number of whole shares of Stock to be so withdrawn, deliver to such
holder a new Receipt evidencing such excess number of Depositary Shares.
Delivery of the Stock being withdrawn may be made by the delivery of such
certificates, documents of title and other instruments as the Depositary may
deem appropriate.
If the Stock being withdrawn is to be delivered to a person or persons
other than the record holder of the Receipt or Receipts being surrendered for
withdrawal of Stock, such holder shall execute and deliver to the Depositary a
written order so directing the Depositary and the Depositary may require that
the Receipt or Receipts surrendered by such holder for withdrawal of such shares
of Stock be properly endorsed in blank or accompanied by a properly executed
instrument of transfer in blank.
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Delivery of the Stock represented by Receipts surrendered for
withdrawal shall be made by the Depositary at the Depositary's office or at
such other offices as the Depositary may designate, except that, at the
request, risk and expense of the holder surrendering such Receipt or Receipts
and for the account of the holder thereof, such delivery may be made at such
other place as may be designated by such holder.
SECTION 2.06. Limitations on Execution and Delivery, Transfer,
Surrender and Exchange of Receipts. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, any of the Depositary's Agents or the
Company may require (a) payment to it of a sum sufficient for the payment (or,
in the event that the Depositary or the Company shall have made such payment,
the reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Section 5.07, (b) the production of evidence satisfactory to
it as to the identity and genuineness of any signature and (c) compliance with
such regulations, if any, as the Depositary or the Company may establish
consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against
Stock may be suspended, the registration of transfer of Receipts may be refused
and the registration of transfer, surrender or exchange of outstanding Receipts
may be suspended (i) during any period when the register of stockholders of the
Company is closed or (ii) if any such action is deemed necessary or advisable by
the Depositary, any Depositary's Agents or the Company, at any time or from time
to time, because of any requirement of law or of any government or governmental
body or commission or under any provision of this Deposit Agreement.
SECTION 2.07. Lost Receipts, etc. In case any Receipt shall be
mutilated, destroyed, lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt, or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, upon (i) the filing by the holder
thereof with the Depositary of evidence satisfactory to the Depositary of such
destruction or loss or theft of such Receipt, of the authenticity thereof and of
his or her ownership thereof and (ii) the
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furnishing of the Depositary with reasonable indemnification satisfactory to
it.
SECTION 2.08. Cancellation and Destruction of Surrendered Receipts.
All Receipts surrendered to the Depositary or any Depositary's Agent shall be
canceled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all Receipts so canceled.
ARTICLE III
Certain Obligations of Holders
of Receipts and the Company
SECTION 3.01. Filing Proofs, Certificates and Other Information. Any
holder of a Receipt may be required from time to time to file such proof of
residence, or other matters or other information, to execute such certificates
and to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper. The Depositary or the Company may
withhold the delivery, or delay the registration of transfer, redemption or
exchange, of any Receipt or the withdrawal of the Stock represented by the
Depositary Shares evidenced by any Receipt or the distribution of any dividend
or other distribution or the sale of any rights or of the proceeds thereof until
such proof or other information is filed or such certificates are executed or
such representations and warranties are made.
SECTION 3.02. Payment of Taxes or Other Governmental Charges.
Holders of Receipts shall be obligated to make payments to the Depositary of
certain charges and expenses, as provided in Section 5.07. Registration of
transfer of any Receipt or any withdrawal of Stock represented by the Depositary
Shares evidenced by such Receipt may be refused until any such payment due is
made, and any dividends, interest payments or other distributions may be
withheld or any part of or all the Stock or other property represented by the
Depositary Shares evidenced by such Receipt and not theretofore sold may be sold
for the account of the holder thereof (after attempting by reasonable means to
notify such holder prior to such sale), and such dividends, interest payments or
other distributions or the proceeds of any such sale may be applied to any
payment of such charges or
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expenses, the holder of such Receipt remaining liable for any deficiency.
SECTION 3.03. Warranty as to Stock. The Company hereby represents
and warrants that the Stock, when issued, will be validly issued, fully paid and
nonassessable. Such representation and warranty shall survive the deposit of
the Stock and the issuance of Receipts.
ARTICLE IV
The Deposited Securities; Notices
SECTION 4.01. Cash Distributions. Whenever the Depositary shall
receive any cash dividend or other cash distribution on Stock, the Depositary
shall, subject to Sections 3.01 and 3.02, distribute to record holders of
Receipts on the applicable record date fixed pursuant to Section 4.04 such
amounts of such dividend or distribution as are, as nearly as practicable, in
proportion to the respective numbers of Depositary Shares evidenced by the
Receipts held by such holders; provided, however, that in case the Company or
the Depositary shall be required to withhold and shall withhold from any cash
dividend or other cash distribution in respect of the Stock an amount on account
of taxes, the amount made available for distribution or distributed in respect
of Depositary Shares shall be reduced accordingly. The Depositary shall
distribute or make available for distribution, as the case may be, only such
amount, however, as can be distributed without attributing to any holder of
Depositary Shares a fraction of one cent, and any balance not so distributable
shall be held by the Depositary (without liability for interest thereon) and
shall be added to and be treated as part of the next sum received by the
Depositary for distribution to record holders of Receipts then outstanding.
SECTION 4.02. Distributions Other than Cash, Rights, Preferences or
Privileges. Whenever the Depositary shall receive any distribution other than
cash and other than any rights, preferences or privileges described in Section
4.03, upon Stock, the Depositary shall, subject to Sections 3.01 and 3.02,
distribute to record holders of Receipts on the applicable record date fixed
pursuant to Section 4.04 such amounts of the securities or property received by
it as are, as nearly as
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practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such record holders, in any manner that the
Depositary may deem equitable and practicable for accomplishing such
distribution. If in the opinion of the Depositary such distribution cannot
be made proportionately among such record holders, or if for any other reason
(including any requirement that the Company or the Depositary withhold an
amount on account of taxes) the Depositary deems, after consultation with the
Company, such distribution not to be feasible, the Depositary may, with the
approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the
sale (at public or private sale) of the securities or property thus received,
or any part thereof, at such place or places and upon such terms as it may
deem proper. The net proceeds of any such sale shall be, subject to Sections
3.01 and 3.02, distributed or made available for distribution, as the case
may be, by the Depositary to record holders of Receipts as provided by
Section 4.01 in the case of a distribution received in cash.
The Depositary shall not make any distribution of securities received
in respect of the Stock unless the Company shall have provided an opinion of
counsel stating that such securities have been registered under the Securities
Act of 1933 or do not need to be so registered.
SECTION 4.03. Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts in such manner as the Depositary may determine,
either by the issue to such record holders of warrants representing such rights,
preferences or privileges or by such other method as may be approved by the
Depositary in its discretion with the approval of the Company; provided,
however, that in case either (i) the Depositary determines that it is not lawful
or (after consultation with the Company) not feasible to make such rights,
preferences or privileges available to holders of Receipts by the issue of
warrants or otherwise, or (ii) with respect to any portion of the rights,
preferences or privileges of a holder of
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Receipts, the Depositary is instructed that such holder does not desire to
exercise such rights, preferences or privileges, then the Depositary, in its
discretion (with the approval of the Company, in any case where the
Depositary has determined that it is not feasible to make such rights,
preferences or privileges available), may (if applicable laws and the terms
of such rights, preferences or privileges permit such transfer) sell such
rights, preferences or privileges at public or private sale, at such place or
places and upon such terms as it may deem proper. The net proceeds of any
such sale shall be, subject to Sections 3.01 and 3.02, distributed by the
Depositary to the record holders of Receipts entitled thereto as provided by
Section 4.01 in the case of a distribution received in cash. The Depositary
shall not make any distribution of any such rights, preferences or privileges
unless the Company shall have provided an opinion of counsel stating that
such rights, preferences or privileges have been registered under the
Securities Act of 1933 or do not need to be so registered.
If registration under the Securities Act of 1933, as amended, of the
securities to which any rights, preferences or privileges relate is required in
order for holders of Receipts to be offered or sold the securities to which such
rights, preferences or privileges relate, the Company agrees with the Depositary
that it will file promptly a registration statement pursuant to such Act with
respect to such rights, preferences or privileges and securities and use its
best efforts and take all steps available to it to cause such registration
statement to become effective sufficiently in advance of the expiration of such
rights, preferences or privileges to enable such holders to exercise such
rights, preferences or privileges. In no event shall the Depositary make
available to the holders of Receipts any right, preference or privilege to
subscribe for or to purchase any securities unless and until such a registration
statement shall have become effective, or unless the offering and sale of such
securities to such holders are exempt from registration under the provisions of
such Act.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to holders
of Receipts, the Company agrees with the Depositary that the Company will use
its best efforts to take such action or obtain such authorization,
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consent or permit sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise such rights,
preferences or privileges.
SECTION 4.04. Notice of Dividends, etc.; Fixing of Record Date for
Holders of Receipts. Whenever any cash dividend or other cash distribution
shall become payable or any distribution other than cash shall be made, or if
rights, preferences or privileges shall at any time be offered, with respect to
Stock, or whenever the Depositary shall receive notice of any meeting at which
record holders of Stock are entitled to vote or of which holders of Stock are
entitled to notice, or whenever the Depositary and the Company shall decide it
is appropriate, the Depositary shall in each such instance fix a record date
(which shall be the same date as the record date fixed by the Company with
respect to the Stock) for the determination of the record holders of Receipts
who shall be entitled to receive such dividend, distribution, rights,
preferences or privileges or the net proceeds of the sale thereof, or to give
instructions for the exercise of voting rights at any such meeting, or who shall
be entitled to notice of such meeting or for any other appropriate reasons.
SECTION 4.05. Voting Rights. Upon receipt of notice of any meeting
at which the record holders of Stock are entitled to vote, the Depositary shall,
as soon as practicable thereafter, mail to the record holders of Receipts a
notice which shall contain (i) such information as is contained in such notice
of meeting and (ii) a statement that the record holders may, subject to any
applicable restrictions, instruct the Depositary as to the exercise of the
voting rights pertaining to the amount of Stock represented by their respective
Depositary Shares (including an express indication that instructions may be
given to the Depositary to give a discretionary proxy to a person designated by
the Company) and a brief statement as to the manner in which such instructions
may be given. Upon the written request of the record holders of Receipts on the
relevant record date, the Depositary shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of whole shares of Stock represented by the
Depositary Shares evidenced by all Receipts as to which any particular voting
instructions are received. The Company hereby agrees to take all action which
may be deemed necessary by the Depositary in order to enable the Depositary to
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vote such Stock or cause such Stock to be voted. In the absence of specific
instructions from the record holder of a Receipt, the Depositary will abstain
from voting (but, at its discretion, not from appearing at any meeting with
respect to such Stock unless directed to the contrary by the holders of all the
Receipts) to the extent of the Stock represented by the Depositary Shares
evidenced by such Receipt.
SECTION 4.06. Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations, etc. Upon any change in par or stated
value, split-up, combination or any other reclassification of the Stock, or upon
any recapitalization, reorganization, merger, amalgamation or consolidation
affecting the Company or to which it is a party, the Depositary may in its
discretion with the approval of, and shall upon the instructions of, the
Company, and (in either case) in such manner as the Depositary may deem
equitable, (i) make such adjustments as are certified by the Company in (x) the
fraction of an interest represented by one Depositary Share in one share of
Stock and (y) the ratio of the redemption price per Depositary Share to the
redemption price of a share of Stock, in each case as may be necessary fully to
reflect the effects of such change in par or stated value, split-up, combination
or other reclassification of Stock, or of such recapitalization, reorganization,
merger, amalgamation or consolidation and (ii) treat any securities which shall
be received by the Depositary in exchange for or upon conversion of or in
respect of the Stock as new deposited securities so received in exchange for or
upon conversion or in respect of such Stock. In any such case the Depositary
may in its discretion, with the approval of the Company, execute and deliver
additional Receipts, or may call for the surrender of all outstanding Receipts
to be exchanged for new Receipts specifically describing such new deposited
securities. Anything to the contrary herein notwithstanding, holders of
Receipts shall have the right from and after the effective date of any such
change in par or stated value, split-up, combination or other reclassification
of the Stock or any such recapitalization, reorganization, merger, amalgamation
or consolidation to surrender such Receipts to the Depositary with instructions
to convert, exchange or surrender the Stock represented thereby only into or
for, as the case may be, the kind and amount of shares of stock and other
securities and property and cash into which the Stock represented by such
Receipts might have been converted or
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for which such Stock might have been exchanged or surrendered immediately
prior to the effective date of such transaction.
SECTION 4.07. Inspection of Reports. The Depositary shall make
available for inspection by record holders of Receipts at the Depositary's
Office, and at such other places as it may from time to time deem advisable, any
reports and communications received from the Company which are received by the
Depositary as the holder of Stock.
SECTION 4.08. Lists of Record Holders of Receipts. Promptly upon
request from time to time by the Company, the Depositary shall furnish to it a
list, as of a recent date, of the names, addresses and holdings of Depositary
Shares of all persons in whose names Receipts are registered on the books of the
Depositary.
ARTICLE V
The Depositary, the Depositary's Agents,
the Registrar and the Company
SECTION 5.01. Maintenance of Offices, Agencies and Transfer Books by
the Depositary; Registrar. The Depositary shall maintain at the Depositary's
Office facilities for the execution, delivery, registration and registration of
transfer, surrender and exchange of Receipts, and at the offices of the
Depositary's Agents, if any, facilities for the delivery, registration of
transfer, surrender and exchange of Receipts, all in accordance with the
provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, which books at all
reasonable times shall be open for inspection by the record holders of Receipts;
provided, that any such holder requesting to exercise such right shall certify
to the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may close such books, at any time or from time to time,
when deemed expedient by it in connection with the performance of its duties
hereunder.
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The Depositary may, with the approval of the Company, appoint a
Registrar for registration of the Receipts or the Depositary Shares evidenced
thereby. If the Receipts or the Depositary Shares evidenced thereby or the
Stock represented by such Depositary Shares shall be listed on the New York
Stock Exchange, the Depositary will appoint a Registrar (acceptable to the
Company) for registration of such Receipts or Depositary Shares in accordance
with any requirements of such Exchange. Such Registrar (which may be the
Depositary if so permitted by the requirements of such Exchange) may be removed
and a substitute registrar appointed by the Depositary upon the request or with
the approval of the Company. If the Receipts, such Depositary Shares or such
Stock are listed on one or more other stock exchanges, the Depositary will, at
the request of the Company, arrange such facilities for the delivery,
registration, registration of transfer, surrender and exchange of such Receipts,
such Depositary Shares or such Stock as may be required by law or applicable
stock exchange regulation.
SECTION 5.02. Prevention of or Delay in Performance by the
Depositary, the Depositary's Agents, the Registrar, the Transfer Agent or the
Company. Neither the Depositary nor any Depositary's Agent nor any Registrar
nor any Transfer Agent nor the Company shall incur any liability to any holder
of any Receipt if by reason of any provision of any present or future law, or
regulation thereunder, of the United States of America or of any other
governmental authority or, in the case of the Depositary, the Depositary's Agent
or the Registrar, by reason of any provision, present or future, of the
Company's Certificate of Incorporation (including the Certificate) or by reason
of any act of God or war or other circumstance beyond the control of the
relevant party, the Depositary, the Depositary's Agent, the Registrar, the
Transfer Agent or the Company shall be prevented or forbidden from, or subjected
to any penalty on account of, doing or performing any act or thing which the
terms of this Deposit Agreement provide shall be done or performed; nor shall
the Depositary, any Depositary's Agent, any Registrar, any Transfer Agent or the
Company incur any liability to any holder of a Receipt (i) by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing which the terms of this Deposit Agreement provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to exercise, any
discretion provided for in this Deposit Agreement except, in case of any such
exercise or failure to exercise
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discretion not caused as aforesaid, if caused by the negligence or willful
misconduct of the party charged with such exercise or failure to exercise.
SECTION 5.03. Obligations of the Depositary, the Depositary's Agents,
the Registrar, the Transfer Agent and the Company. Neither the Depositary nor
any Depositary's Agent nor any Registrar nor any Transfer Agent nor the Company
assumes any obligation or shall be subject to any liability under this Deposit
Agreement to holders of Receipts other than for its negligence or willful
misconduct.
Neither the Depositary nor any Depositary's Agent nor any Registrar
nor any Transfer Agent nor the Company shall be under any obligation to appear
in, prosecute or defend any action, suit or other proceeding in respect of the
Stock, the Depositary Shares or the Receipts which in its opinion may involve it
in expense or liability unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor any Registrar
nor any Transfer Agent nor the Company shall be liable for any action or any
failure to act by it in reliance upon the written advice of legal counsel or
accountants, or information from any person presenting Stock for deposit, any
holder of a Receipt or any other person believed by it in good faith to be
competent to give such information. The Depositary, any Depositary's Agent, any
Registrar, any Transfer Agent and the Company may each rely and shall each be
protected in acting upon any written notice, request, direction or other
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
The Depositary and any Depositary's Agent shall not be responsible for
any failure to carry out any instruction to vote any of the shares of Stock or
for the manner or effect of any such vote made, as long as any such action or
non-action is in good faith. The Depositary undertakes, and any Registrar and
Transfer Agent shall be required to undertake, to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the
Depositary, any Registrar or any Transfer Agent. The Depositary will indemnify
the Company
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against any liability which may arise out of acts performed or omitted by the
Depositary or its agents due to its or their negligence or bad faith. The
Depositary, the Depositary's Agents, any Registrar and any Transfer Agent may
own and deal in any class of securities of the Company and its affiliates and
in Receipts. The Depositary may also act as transfer agent or registrar of
any of the securities of the Company and its affiliates.
SECTION 5.04. Resignation and Removal of the Depositary; Appointment
of Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by notice of its election to do so delivered to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 60 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock to such successor, and
19
<PAGE>
shall deliver to such successor a list of the record holders of all
outstanding Receipts. Any successor Depositary shall promptly mail notice of
its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act, and notice thereof shall
not be required hereunder. Such successor Depositary may authenticate the
Receipts in the name of the predecessor Depositary or in the name of the
successor Depositary.
SECTION 5.05. Corporate Notices and Reports. The Company agrees that
it will transmit to the record holders of Receipts, in each case at the
addresses furnished to it pursuant to Section 4.08, all notices and reports
(including without limitation financial statements) required by law, by the
rules of any national securities exchange upon which the Stock, the Depositary
Shares or the Receipts are listed or by the Company's Certificate of
Incorporation (including the Certificate) to be furnished by the Company to
holders of Receipts. Such transmission will be at the Company's expense.
SECTION 5.06. Indemnification by the Company.
The Company shall indemnify the Depositary, any Depositary's Agent, any
Registrar and any Transfer Agent against, and hold each of them harmless from,
any loss, liability or expense (including the costs and expenses of defending
itself) which may arise out of (a) acts performed or omitted in connection with
this Agreement and the Receipts by (i) the Depositary, any Registrar, any
Transfer Agent or any of their respective agents (including any Depositary's
Agent), except for any liability arising out of negligence or bad faith on the
respective parts of any such person or persons, or (ii) the Company or any of
its agents, or (b) the offer, sale or registration of the Receipts or the Stock
pursuant to the provisions hereof. The obligations of the Company set forth in
this Section 5.06 shall survive any succession of any Depositary, Registrar,
Transfer Agent or Depositary's Agent.
SECTION 5.07. Charges and Expenses. The Company shall pay all
transfer and other taxes and governmental charges arising solely from the
existence of the depositary arrangements. The
20
<PAGE>
Company shall pay all charges of the Depositary in connection with the
initial deposit of the Stock and the initial issuance of the Depositary
Shares and any redemption of the Stock at the option of the Company. All
other transfer and other taxes and governmental charges and fees for the
withdrawal of Stock upon surrender of Receipts shall be at the expense of
holders of Depositary Shares. The Depositary's fee for the withdrawal of
Stock shall be at the rate of $_____ per 100 Depositary Receipts. If, at the
request of a holder of Receipts, the Depositary incurs charges or expenses
for which it is not otherwise liable hereunder, such holder will be liable
for such charges and expenses. All other charges and expenses of the
Depositary and any Depositary's Agent hereunder and of any Registrar and
Transfer Agent (including, in each case, fees and expenses of counsel)
incident to the performance of their respective obligations hereunder will be
paid upon consultation and agreement between the Depositary and the Company
as to the amount and nature of such charges and expenses. The Depositary
shall present its statement for charges and expenses to the Company once
every three months or at such other intervals as the Company and the
Depositary may agree.
ARTICLE VI
Amendment and Termination
SECTION 6.01. Amendment. The form of the Receipts and any provisions
of this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; provided, however, that no such amendment (other
than any change in the fees of any Depositary, Registrar or Transfer Agent,
which shall go into effect not sooner than three months after notice thereof to
the record holders of the Receipts) which shall materially and adversely alter
the rights of the holders of Receipts shall be effective unless such amendment
shall have been approved by the record holders of at least a majority of the
Depositary Shares then outstanding. Every holder of an outstanding Receipt at
the time any such amendment becomes effective shall be deemed, by continuing to
hold such Receipt, to consent and agree to such amendment and to be bound by the
Deposit Agreement as amended thereby.
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<PAGE>
SECTION 6.02. Termination. This Agreement may be terminated by the
Company or the Depositary only after (i) all outstanding Depositary Shares shall
have been redeemed pursuant to Section 2.03 or (ii) there shall have been made a
final distribution in respect of the Stock in connection with any liquidation,
dissolution or winding up of the Company and such distribution shall have been
distributed to the holders of Depositary Shares pursuant to Section 4.01 or
4.02, as applicable.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent, any Registrar and any
Transfer Agent under Sections 5.06 and 5.07.
ARTICLE VII
Miscellaneous
SECTION 7.01. Counterparts. This Deposit Agreement may be executed
in any number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 7.02. Exclusive Benefit of Parties. This Deposit Agreement
is for the exclusive benefit of the parties hereto, and their respective
successors hereunder, and shall not be deemed to give any legal or equitable
right, remedy or claim to any other person whatsoever.
SECTION 7.03. Invalidity of Provisions. In case any one or more of
the provisions contained in this Deposit Agreement or in the Receipts should be
or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04. Notices. Any and all notices to be given to the
Company hereunder or under the Receipts shall be in
22
<PAGE>
writing and shall be deemed to have been duly given if personally delivered
or sent by mail or telegram or telex confirmed by letter, addressed to the
Company at 3 World Financial Center, New York, New York 10285, to the
attention of the Secretary, or at any other address of which the Company
shall have notified the Depositary in writing.
Any and all notices to be given to the Depositary hereunder or under
the Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail or by telegram or telex confirmed by
letter, addressed to the Depositary at the Depositary's Office, at
_________________, or at any other address of which the Depositary shall have
notified the Company in writing.
Any and all notices to be given to any record holder of a Receipt
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail or by telegram or telex
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary, or if such holder
shall have filed with the Depositary a written request that notices intended for
such holder be mailed to some other address, at the address designated in such
request.
Delivery of a notice sent by mail or by telegram or telex shall be
deemed to be effected at the time when a duly addressed letter containing the
same (or a confirmation thereof in the case of a telegram or telex message) is
deposited, postage prepaid, in a post office letter box. The Depositary or the
Company may, however, act upon any telegram or telex message received by it from
the other or from any holder of a Receipt, notwithstanding that such telegram or
telex message shall not subsequently be confirmed by letter or as aforesaid.
SECTION 7.05. Depositary's Agents. Except as otherwise set forth
herein, the Depositary may from time to time appoint Depositary's Agents to act
in any respect for the Depositary for the purposes of this Deposit Agreement and
may at any time appoint additional Depositary's Agents and vary or terminate the
appointment of such Depositary's Agents. The Depositary will notify the Company
of any such action.
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<PAGE>
The Company has authorized the appointment of, and has requested the
Depositary to appoint hereunder, _________________, as transfer agent (the
"Transfer Agent") for the Depositary Shares. The Depositary hereby appoints
____________ as Transfer Agent and Registrar for the Depositary Shares and
delegates to _____________ the duties of the Depositary hereunder customarily
performed by a transfer agent, a registrar and a depositary. Without otherwise
affecting the liability of the Depositary hereunder, it is hereby agreed that if
_____________ shall have agreed in writing to be bound by all the terms and
conditions of this Deposit Agreement and to assume the obligations of the
Depositary hereunder to be performed by it, then in no event shall the
Depositary be liable for any acts or omissions of ____________ as Transfer
Agent, Registrar or Depositary's Agent with respect to the Depositary Shares.
SECTION 7.06. Holders of Receipts Are Parties. The holders of
Receipts from time to time shall be parties to this Deposit Agreement and shall
be bound by all of the terms and conditions hereof and of the Receipts by
acceptance of delivery thereof.
SECTION 7.07. GOVERNING LAW. THIS DEPOSIT AGREEMENT AND THE RECEIPTS
AND ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 7.08. Inspection of Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Depositary's office and
the respective offices of the Depositary's Agents, if any, by any holder of a
Receipt.
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<PAGE>
SECTION 7.09. Headings. The headings of articles and sections in
this Deposit Agreement and in the form of the Receipt set forth in Exhibit A
hereto have been inserted for convenience only and are not to be regarded as a
part of this Deposit Agreement or the Receipts or to have any bearing upon the
meaning or interpretation of any provision contained herein or in the Receipts.
IN WITNESS WHEREOF, the Company and the Depositary have duly executed
this Agreement as of the day and year first above set forth, and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
LEHMAN BROTHERS HOLDINGS INC.,
By:
---------------------------
_____________, as Depositary,
By:
---------------------------
25
<PAGE>
EXHIBIT 4(gg)
EXHIBIT A
[FORM OF DEPOSITARY RECEIPT]
DEPOSITARY RECEIPT
FOR
DEPOSITARY SHARES
EACH REPRESENTING A ONE-____ INTEREST
(SUBJECT TO ADJUSTMENT) IN A SHARE OF
________________, par value $1.00 per share
OF
LEHMAN BROTHERS HOLDINGS INC
(Incorporated under the laws of the State of Delaware)
______________________________
No. ____________________ EACH DEPOSITARY SHARE REPRESENTS
A ONE-________ INTEREST
(SUBJECT TO ADJUSTMENT) IN A
SHARE OF_________________,
_______________________________
_______________________________
1. _______________, a __________ corporation, as Depositary (the
"Depositary"), hereby certifies that
____________________________________________________ is the registered owner of
____________ Depositary Shares ("Depositary Shares"), each Depositary Share
representing a one-____ (as such fraction may from time to time be adjusted as
provided in the Deposit Agreement, as defined below) interest in a share of
__________ (the "Stock") of Lehman Brothers Holdings Inc, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company")
deposited with, and held by, the Depositary. The rights, preferences and
limitations of the Stock are set forth in the Certificate of Designations
adopted by the Company's Board of Directors (the "Authorizing Resolutions"),
copies of which are on file at the Depositary's office at ____________.
2. THE DEPOSIT AGREEMENT. Depositary Receipts (the "Receipts"), of
which this Receipt is one, are made available upon the terms and conditions set
forth in the Deposit Agreement, dated as of __________ (the "Deposit
Agreement"), among the Company, the Depositary and all holders from time to time
of Receipts. The Deposit Agreement (copies of which are on file at the
Depositary's Office) sets forth the rights of holders of Receipts and the rights
and duties of the Depositary in respect
<PAGE>
2
of the Stock deposited, and any and all money and other property from time to
time held thereunder. The statements made in this Receipt are summaries of
certain provisions of the Deposit Agreement and are subject to the detailed
provisions thereof, to which reference is hereby made. The holder of this
Receipt from time to time shall be deemed to be a party to the Deposit
Agreement and shall be bound by, and entitled to all of the rights and
benefits under, all the terms and conditions hereof and of the Deposit
Agreement by acceptance of delivery of this Receipt. Unless otherwise
expressly herein provided, all defined terms shall have the meanings ascribed
thereto in the Deposit Agreement.
3. REDEMPTION. Wherever the Company shall be permitted and shall
elect, under the Certificate of Designation relating to the Stock (the
"Certificate"), to redeem shares of the Stock, it shall give the Depositary not
less than 40 nor more then 70 days' notice thereof. The Depositary shall mail
notice of such redemption and the simultaneous redemption of the corresponding
Depositary Shares not less than 30 and not more than 60 days prior to the date
fixed for redemption to the holders of record of Receipts representing the
number of Depositary Shares to be redeemed. Each such notice shall state: (a)
the date of such proposed redemption; (b) the number of Depositary Shares to be
redeemed; (c) the redemption price (which shall include full cumulative
dividends thereon to the redemption date); (d) the place or places where
Receipts evidencing Depositary Shares are to be surrendered for payment of the
redemption price; and (e) that dividends in respect of the Stock represented by
the Depositary Shares to be redeemed will cease to accumulate at the close of
business on such redemption date. In case less than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be so redeemed
shall be selected by lot or pro rata as may be determined by the Depositary to
be equitable. From and after the date set for redemption, all dividends in
respect of the Depositary Shares so called for redemption shall cease to accrue,
such Depositary Shares shall no longer be deemed outstanding and all rights of
the holders of Receipts representing such Depositary Shares (except the right to
receive the redemption price) shall cease and terminate. From and after the
redemption date, upon surrender in accordance with the redemption notice of the
Receipts representing any such Depositary Shares (properly endorsed or assigned
for transfer, if the Depositary shall so require), such Depositary Share shall
be redeemed by the Depositary at the redemption price per share equal to one-
________ (1/__th) of the redemption price per share paid in respect of the
shares of Stock plus any money or other property represented thereby.
4. TRANSFERS, SPLIT-UPS, COMBINATIONS. This Receipt is transferable
on the books of the Depositary upon surrender of this Receipt to the Depositary,
properly endorsed or accompanied by a properly executed instrument of transfer,
and upon such
<PAGE>
3
transfer the Depositary shall execute a new Receipt to or upon the order of the
person entitled thereto, as provided in the Deposit Agreement. This Receipt may
be split into other Receipts or combined with other Receipts into one Receipt,
representing the same aggregate number of Depositary Shares as the Receipt or
Receipts surrendered.
5. SUSPENSION OF DELIVERY, TRANSFER, ETC. The transfer or surrender
of this Receipt may be suspended during any period when the register of
stockholders of the Company is closed or if any such action is deemed necessary
or advisable by the Depositary, any agent of the Depositary, or the Company at
any time or from time to time because of any requirement of law or of any
government or governmental body or commission, or under any provision of the
Deposit Agreement.
6. PAYMENT OF TAXES OR OTHER GOVERNMENTAL CHARGES. If any tax or
other government charge shall become payable by or on behalf of the Depositary
with respect to this Receipt, such tax (including transfer taxes, if any) or
governmental charge shall be payable by the holder hereof. Transfer of this
Receipt may be refused until such payment is made, and any dividends, interest
payments or other distributions may be withheld or any part of or all the Stock
or other property represented by this Receipt and not theretofore sold may be
sold for the account of the holder thereof (after attempting by reasonable means
to notify such holder prior to such sale), and such dividends, interest payments
or other distributions or the proceeds of any such sale may be applied to any
payment of such tax or charge, the holder of this Receipt remaining liable for
any deficiency.
7. WARRANTY BY COMPANY. The Company has warranted that the Stock,
when issued, will be validly issued, fully paid and nonassessable.
8. AMENDMENT. The form of the Receipts and any provisions of the
Deposit Agreement may at any time and from time to time be amended by agreement
between the Company and the Depositary in any respect which they may deem
necessary or desirable; PROVIDED, HOWEVER, that no such amendment which shall
materially and adversely alter the rights of the holders of Receipts shall be
effective unless such amendment shall have been approved by the holders of at
least a majority of the Depositary Shares then outstanding. A holder of a
Receipt at the time any such amendment so becomes effective shall be deemed, by
continuing to hold such Receipt, to consent and agree to such amendment and to
be bound by the Deposit Agreement as amended thereby.
9. CHARGES OF DEPOSITARY. The Company will pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements, and all charges of the Depositary in connection with
the initial deposit of the Stock and the initial issuance of the Depositary
Shares
<PAGE>
4
and redemption of the Stock at the option of the Company. All other transfer
and other taxes and other governmental charges shall be at the expense of
holders of Depositary Shares. All other charges and expenses of the Depositary
and any agent of the Depositary will be paid in consultation and agreement
between the Depositary and the Company.
10. TITLE OF RECEIPTS. This Receipt (and the Depositary Shares
evidenced hereby), when properly endorsed or accompanied by a properly executed
instrument of transfer, is transferable by delivery with the same effect as in
the case of a negotiable instrument; PROVIDED, HOWEVER, that until transfer of a
Receipt shall be registered on the books of the Depositary, the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the person
entitled to distributions of dividends or other distributions or to any notice
provided for in the Deposit Agreement, and for all other purposes.
11. DIVIDENDS AND DISTRIBUTIONS. Whenever the Depositary receives
any cash dividend or other cash distribution on the Stock, the Depositary will,
subject to the provisions of the Deposit Agreement, make such distribution to
the Receipt holders as nearly as practicable in proportion to the number of
Depositary Shares held by them; PROVIDED, HOWEVER, that the amount distributed
will be reduced by any amounts required to be withheld by the Company or the
Depositary on account of taxes. Other distributions received on the Stock may
be distributed to holders of Receipts as provided in the Deposit Agreement.
12. FIXING OF RECORD DATE. Whenever any cash dividend or other cash
distribution shall become payable or any distribution other than cash shall be
made, or if rights, preferences or privileges shall at any time be offered, with
respect to Stock, or whenever the Depositary shall receive notice of any meeting
at which holders of Stock are entitled to vote or of which holders of Stock are
entitled to notice, the Depositary shall in each instance fix a record date
(which shall be the record date fixed by the Company with respect to the Stock),
for the determination of the holders of Receipts who shall be entitled to
receive such dividend, distribution, rights, preferences or privileges or the
net proceeds of the sale thereof, or to give instructions for the exercise of
voting rights at any such meeting, or who shall be entitled to notice of such
meeting.
13. VOTING RIGHTS. Upon receipt of notice of any meeting at which
holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the record holders of Receipts a notice which
shall contain (i) such information as is contained in such notice of meeting and
(ii) a statement informing holders of Receipts that they may instruct the
Depositary as to the exercise of the voting rights pertaining
<PAGE>
5
to the amount of Stock represented by their respective Depositary Shares and a
brief statement as to the manner in which such instructions may be given. Upon
the written request of a holder of a Receipt on such record date, the Depositary
shall endeavor insofar as practicable to vote or cause to be voted the amount of
Stock represented by such Receipt in accordance with the instructions set forth
in such request. In the absence of specific instructions from the holder of a
Receipt, the Depositary will abstain from voting (but, at its discretion, not
from appearing at any meeting with respect to such Stock unless directed to the
contrary by the holders of Receipts) to the extent of the Stock represented by
the Depositary Shares evidenced by such Receipt.
14. CHANGES AFFECTING DEPOSITED SECURITIES. Upon any change in par
or stated value, split-up, combination or any other reclassification of the
Stock or upon any recapitalization, reorganization, merger, amalgamation or
consolidation affecting the Company or to which it is a party, or upon the sale
of all or substantially all the Company's assets, the Depositary may in its
discretion with the approval of the Company, and in such manner as the
Depositary may deem equitable, (i) make such adjustments in (x) the fraction of
an interest represented by one Depositary Share in one share of Stock and (y)
the ratio of the redemption price of a share of Stock, in each case as may be
necessary fully to reflect the effect of such change and (ii) treat any
securities which shall be received by the Depositary in exchange for or upon
conversion or in respect of the Stock as new deposited securities so received in
exchange for or upon conversion or in respect of such Stock. In any such case
the Depositary may in its discretion, with the approval of the Company, execute
and deliver additional Receipts, or may call for the surrender of outstanding
Receipts to be exchanged for new Receipts specifically describing such new
deposited securities.
15. LIABILITY AND OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S
AGENTS OR THE COMPANY. Neither the Depositary nor any Depositary's Agent nor
any Registrar nor the Company assumes any obligation or shall be subject to any
liability under this Deposit Agreement to any holder of any Receipt, other than
for its gross negligence or willful misconduct. Neither the Depositary nor any
Depositary's Agent nor any Registrar nor the Company shall incur any liability
to any holder of any Receipt if by reason of any provision of any present or
future law or regulation thereunder of the United States of America or any other
governmental authority or, in the case of the Depositary, the Depositary's Agent
or the Registrar, by reason of any provision, present or future, of the
Company's Certificate of Incorporation (including the Certificate) or by reason
of any act of God or war or other circumstances beyond their control, the
Depositary, the Depositary's Agent, the Registrar or the Company shall be
prevented or forbidden from doing or performing any act or thing which the terms
of this Deposit Agreement provide shall be done or performed; nor shall the
Depositary, any Depositary's
<PAGE>
6
Agent, any Registrar or the Company incur any liability to any holder of a
Receipt by reason of nonperformance or delay, caused as aforesaid, in
performance of any act or thing which by the terms of the Deposit Agreement it
is provided shall or may be done or performed, or by reason of any exercise of,
or failure to exercise, any discretion provided for in the Deposit Agreement,
other than for its gross negligence or willful misconduct. Neither the
Depositary nor any Depositary's Agent nor the Company assumes any obligation or
shall be subject to any liability under the Deposit Agreement to holders of
Receipts other than to use its best judgment and good faith in the performance
of such duties as are specifically set forth in the Deposit Agreement. Neither
the Depositary nor any Depositary's Agent nor any Registrar nor the Company
shall be under any obligation to appear in, prosecute or defend any action, suit
or other proceeding in respect of the Stock, the Depositary Shares or the
Receipts, which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished.
The Deposit Agreement contains various other exculpancy, indemnification and
related provisions, to which reference is hereby made.
16. RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may at
any time (a) resign by written notice of its election to do so delivered to the
Company, such resignation to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment, or (b) be removed by the
Company effective upon the appointment of a successor Depositary and its
acceptance of such appointment.
17. TERMINATION OF DEPOSIT AGREEMENT. The Deposit Agreement may be
terminated by the Company or the Depositary only upon or after the occurrence of
any of the following events: (i) all outstanding Depositary Shares shall have
been redeemed or (ii) there shall have been made a final distribution in respect
of the Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution shall have been distributed to the holders of
Receipts. Upon the termination of the Deposit Agreement, the Company shall be
discharged from all obligations thereunder except for its obligations to the
Depositary with respect to indemnification, charges and expenses.
18. GOVERNING LAW. This Receipt and the Deposit Agreement and all
rights hereunder and thereunder and provisions hereof and thereof shall be
governed by and construed in accordance with the laws of the State of New York.
This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose unless this Receipt shall
have been executed manually by a duly authorized signatory of the Depositary or,
if a Registrar for the Receipts (other than the Depositary) shall have been
appointed, by facsimile by the Depositary provided this Receipt
<PAGE>
7
is countersigned manually by the signature of a duly authorized signatory of
such Registrar.
The corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Dated: ___________________,
as Depositary and Registrar
By ______________________________
Authorized Officer
<PAGE>
EXHIBIT 5
LEHMAN BROTHERS HOLDINGS INC.
THREE WORLD FINANCIAL CENTER
NEW YORK, NY 10285
October 17, 1997
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Ladies and Gentlemen:
I am Deputy General Counsel of Lehman Brothers Holdings Inc., a Delaware
corporation ("Holdings"). A Registration Statement on Form S-3 (the
"Registration Statement"), under the Securities Act of 1933, as amended (the
"Act"), was filed by Holdings with the Securities and Exchange Commission on the
date hereof. The Registration Statement relates to the registration of up to
$3,500,000,000 of debt securities (the "Debt Securities") consisting of senior
debt (the "Senior Debt") and subordinated debt (the "Subordinated Debt") and
Preferred Stock, par value $1.00 per share (the "Preferred Stock") and
Depositary Shares (the "Depositary Shares" and together with the Preferred Stock
and Debt Securities, the "Securities") which Holdings may offer from time to
time in one or more series.
In that connection, I or members of my staff have examined and relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records, certificates and instruments relating to
Holdings as I have deemed relevant and necessary to the formation of the opinion
hereinafter set forth. In such examination, I have assumed the genuineness and
authenticity of all documents examined by me or members of my staff and all
signatures thereon, the legal capacity of all persons executing such documents,
the conformity to originals of all copies of documents submitted to us and the
truth and correctness of any representations and warranties contained therein.
Based upon the foregoing, I am of the opinion that:
(i) the Senior Debt is duly authorized, the indenture pursuant to which the
Senior Debt will be issued (the "Senior Indenture") between Holdings and
Citibank, N.A., as Trustee (the "Senior Debt Trustee"), has been duly executed
and delivered, and, the Senior Debt, when duly executed by Holdings,
authenticated by the Senior Debt Trustee in accordance with the terms of the
Senior Indenture and issued and delivered against payment therefor, will be
legally issued and will constitute a valid and binding obligation of Holdings
entitled to the benefits of the Senior Indenture, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and by an implied covenant of good faith and fair dealing; and
(ii) the Subordinated Debt is duly authorized and, the Indenture pursuant to
which the Subordinated Debt will be issued (the "Subordinated Indenture")
between Holdings and The Chase Manhattan Bank, as successor to Chemical Bank, as
Trustee (the "Subordinated Debt Trustee") has been duly executed and delivered,
the Subordinated Debt, when duly executed by Holdings, authenticated by the
Subordinated Debt Trustee in accordance with the terms of the Subordinated
Indenture and issued and delivered against payment therefor, will be legally
issued and will constitute a valid and binding obligation of Holdings entitled
to the benefits of the Subordinated Indenture, subject to the effects of
bankruptcy, insolvency,
<PAGE>
Letter to Securities and Exchange Commission
October 17, 1997
Page 2
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and by an
implied covenant of good faith and fair dealing; and
(iii) The Preferred Stock is duly authorized, and when and to the extent
issued, the shares of Preferred Stock will be validly issued, fully paid and
non-assessable, and no holder thereof will be subject to personal liability by
reason of being such a holder.
(iv) The Depositary Shares have been duly authorized, and when and to the
extent issued, the Depositary Shares will be validly issued, fully paid and
non-assessable, and no holder thereof will be subject to personal liability by
reason of being such a holder.
In rendering this opinion, I express no opinion as to the laws of any
jurisdiction other than the State of New York, the General Corporation Law of
the State of Delaware and the United States of America.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Opinions" in the Registration Statement, without admitting that I am an "expert"
under the Act, or the rules and regulations of the Securities and Exchange
Commission issued thereunder, with respect to any part of the Registration
Statement, including this exhibit.
Very truly yours,
/s/ Karen M. Muller
Karen M. Muller
Deputy General Counsel
<PAGE>
EXHIBIT 8
October 17, 1997
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
Ladies and Gentlemen:
We have acted as special United States tax counsel to Lehman Brothers
Holdings Inc. (the "Company") in connection with the preparation and filing of
the Registration Statement on Form S-3 filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Registration
Statement"), in respect of Debt Securities, Preferred Stock and Depositary
Shares to be offered by the Company. In that connection, we have given the
opinions contained in the section entitled "United States Taxation" in the
Registration Statement and related prospectus.
We have examined the Registration Statement, including the prospectus
dated October 17, 1997, that forms a part thereof, relating to the above-
described transaction. In addition, we have examined such other documents, and
have made such other and further investigations, as we have deemed relevant and
necessary as a basis for the opinion hereinafter set forth. In such
examination, we have assumed the authenticity of all documents submitted to us
as originals, the conformity to original documents of all
<PAGE>
Lehman Brothers Holdings Inc. -2- October 17, 1997
documents submitted to us as drafts or as certified, conformed, photostatic or
facsimile copies, and the authenticity of the originals of such latter
documents.
Based upon the foregoing, we hereby confirm (i) our opinions set forth
in the Registration Statement under the caption "United States Taxation" and
(ii) that, subject to the qualifications and limitations stated herein, the
statements set forth in the Registration Statement under such caption, insofar
as they purport to constitute summaries of matters of United States federal tax
law and regulations or legal conclusions with respect thereto, constitute
accurate summaries of the matters described therein in all material respects.
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 federal law of the
United States.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement and to the
reference to our firm under the heading "United States Taxation" and "Legal
Opinions" in the prospectus that forms a part of the Registration Statement.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
EXHIBIT 23(B)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm as experts under the caption
"Independent Accountants" in Post-Effective Amendment No. 1 to the Registration
Statement on Form S-3 (File No. 333-14791) and related Prospectus of Lehman
Brothers Holdings Inc. (the "Company") for the registration of $3,500,000,000 of
Debt Securities, Preferred Stock and Depositary Shares of the Company and to the
incorporation by reference therein of our report dated January 7, 1997 with
respect to the consolidated financial statements and financial statement
schedule of the Company included in its Annual Report on Form 10-K for the year
ended November 30, 1996, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
New York, New York
October 17, 1997
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas A. Russo, Karen M. Muller and Marc A.
Silverman and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) and supplements to this Registration
Statement and any Registration Statement previously filed by the Registrant or a
predecessor in interest, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chief Executive Officer
/s/ RICHARD S. FULD, JR. and Chairman of the
- ------------------------------ Board of Directors October 17, 1997
Richard S. Fuld, Jr. (principal executive
officer)
/s/ CHARLES B. HINTZ Chief Financial Officer
- ------------------------------ (principal financial and October 17, 1997
Charles B. Hintz accounting officer)
/s/ MICHAEL L. AINSLIE
- ------------------------------ Director October 17, 1997
Michael L. Ainslie
/s/ JOHN F. AKERS
- ------------------------------ Director October 17, 1997
John F. Akers
/s/ ROGER S. BERLIND
- ------------------------------ Director October 17, 1997
Roger S. Berlind
/s/ THOMAS H. CRUIKSHANK
- ------------------------------ Director October 17, 1997
Thomas H. Cruikshank
/s/ HENRY KAUFMAN
- ------------------------------ Director October 17, 1997
Henry Kaufman
/s/ HIDEICHIRO KOBAYASHI
- ------------------------------ Director October 17, 1997
Hideichiro Kobayashi
/s/ JOHN D. MACOMBER
- ------------------------------ Director October 17, 1997
John D. Macomber
/s/ DINA MERRILL
- ------------------------------ Director October 17, 1997
Dina Merrill
/s/ MASAHIRO YAMADA
- ------------------------------ Director October 17, 1997
Masahiro Yamada
<PAGE>
Exhibit 25(a)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305 (b)(2) ____
________________________
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
Identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
_______________________
LEHMAN BROTHERS HOLDINGS INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3216325
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification no.)
American Express Tower
3 World Financial Center
New York, NY 10285
(Address of principal executive offices) (Zip Code)
_________________________
Debt Securities
(Title of the indenture securities)
<PAGE>
Item 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. LIST OF EXHIBITS.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now in
effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration Statement No.
2-29577).
Exhibit 3 - Copy of authorization of the Trustee to exercise corporate
trust powers. (Exhibit 3 to T-1 to Registration Statement No.
2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to
T-1 to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
(as of June 30, 1997 - attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
2
<PAGE>
__________________
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 16nd day
of October, 1997.
CITIBANK, N.A.
By: /s/ Arthur W. Aslanian
------------------------
Arthur W. Aslanian
Vice President
3
<PAGE>
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
CITIBANK, N.A.
OF NEW YORK IN THE STATE OF NEW YORK, AT THE CLOSE OF BUSINESS ON JUNE 30, 1997,
PUBLISHED IN RESPONSE TO CALL MADE BY COMPTROLLER OF THE CURRENCY, UNDER TITLE
12, UNITED STATES CODE, SECTION 161. CHARTER NUMBER 1461 COMPTROLLER OF THE
CURRENCY NORTHEASTERN DISTRICT.
ASSETS
THOUSANDS
OF DOLLARS
Cash and balances due from de-
pository institutions:
Noninterest-bearing balances
and currency and coin $ 7,129,000
Interest-bearing balances 14,089,000
Held-to-maturity securities 0
Available-for-sale securities 32,578,000
Federal funds sold and
securities purchased under
agreements to resell 10,072,000
Loans and lease financing receiv-
ables:
Loans and Leases, net of un-
earned income $150,867,000
LESS: Allowance for loan
and lease losses 4,253,000
Loans and leases, net of un-
earned income, allowance,
and reserve 146,614,000
Trading assets 27,966,000
Premises and fixed assets (includ-
ing capitalized leases) 3,576,000
Other real estate owned 670,000
Investments in unconsolidated
subsidiaries and associated com-
panies 1,284,000
Customers' liability to this bank
on acceptances outstanding 2,146,000
Intangible assets 180,000
Other assets 8,193,000
------------
TOTAL ASSETS $254,497,000
============
LIABILITIES
Deposits:
In domestic offices $ 36,303,000
Noninterest-
bearing $ 12,930,000
Interest-
bearing 23,373,000
In foreign offices, Edge and
Agreement subsidiaries, and
IBFs 142,390,000
Noninterest-
bearing 11,307,000
Interest-
bearing 131,083,000
Federal funds purchased and
securities sold under agree-
ments to repurchase 7,627,000
Trading liabilities 22,259,000
Other borrowed money (includes
mortgage indebtedness and
obligations under capitalized
leases):
With a remaining maturity of one
year or less 8,826,000
With a remaining maturity of more
than one year through three years 2,250,000
With a remaining maturity of more
than three years 1,656,000
Bank's liability on acceptances ex-
ecuted and outstanding 2,183,000
Subordinated notes and
debentures 5,200,000
Other liabilities 8,663,000
------------
TOTAL LIABILITIES $237,357,000
============
EQUITY CAPITAL
Perpetual preferred stock
and related surplus 0
Common stock $ 751,000
Surplus 7,340,000
Undivided profits and capital re-
serves 8,949,000
Net unrealized holding gains (losses)
on available-for-sale securities 743,000
Cumulative foreign currency
translation adjustments (643,000)
------------
TOTAL EQUITY CAPITAL $ 17,140,000
------------
TOTAL LIABILITIES, LIMITED-
LIFE PREFERRED STOCK, AND
EQUITY CAPITAL $254,497,000
============
I, Roger W. Trupin, Controller of the above-
named bank do hereby declare that this
Report of Condition is true and correct to the
best of my knowledge and belief.
ROGER W. TRUPIN
CONTROLLER
We, the undersigned directors, attest to
the correctness of this Report of Condition.
We declare that it has been examined by us,
and to the best of our knowledge and belief
has been prepared in conformance with the
instructions and is true and correct.
PAUL J. COLLINS
JOHN S. REED
WILLIAM R. RHODES
DIRECTORS
<PAGE>
Exhibit 25(b)
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
____________________________________________
LEHMAN BROTHERS HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 13-3216325
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 WORLD FINANCIAL CENTER
NEW YORK, NY 10285
(Address of principal executive offices) (Zip Code)
____________________________________________
DEBT SECURITIES, PREFERRED STOCK
(Title of the indenture securities)
<PAGE>
____________________________________________
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
<PAGE>
-3-
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September
9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 16TH day of OCTOBER, 1997.
THE CHASE MANHATTAN BANK
By /s/ FRANCINE SPRINGER
----------------------------
FRANCINE SPRINGER
TRUST OFFICER
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ....................................... $ 13,892
Interest-bearing balances ............................... 4,282
Securities: ................................................
Held to maturity securities................................. 2,857
Available for sale securities............................... 34,091
Federal funds sold and securities purchased under
agreements to resell .................................... 29,970
Loans and lease financing receivables:
Loans and leases, net of unearned income ................ $124,827
Less: Allowance for loan and lease losses ............... 2,753
Less: Allocated transfer risk reserve ................... 13
--------
Loans and leases, net of unearned income,
allowance, and reserve .................................. 122,061
Trading Assets ............................................. 56,042
Premises and fixed assets (including capitalized
leases).................................................. 2,904
Other real estate owned .................................... 306
Investments in unconsolidated subsidiaries and
associated companies..................................... 232
Customers' liability to this bank on acceptances
outstanding ............................................. 2,092
Intangible assets .......................................... 1,532
Other assets ............................................... 10,448
--------
TOTAL ASSETS ............................................... $280,709
========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices ..................................... $ 91,249
Noninterest-bearing ..................................... $ 38,157
Interest-bearing ........................................ 53,092
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ............................................... 70,192
Noninterest-bearing ..................................... $ 3,712
Interest-bearing ........................................ 66,480
Federal funds purchased and securities sold under agree-
ments to repurchase ........................................ 35,185
Demand notes issued to the U.S. Treasury ................... 1,000
Trading liabilities ........................................ 42,307
Other borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less ........... 4,593
With a remaining maturity of more than one year.
through three years................................. 260
With a remaining maturity of more than three years....... 146
Bank's liability on acceptances executed and outstanding.... 2,092
Subordinated notes and debentures .......................... 5,715
Other liabilities .......................................... 11,373
TOTAL LIABILITIES .......................................... 264,112
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus............... 0
Common stock ............................................... 1,211
Surplus (exclude all surplus related to preferred stock)... 10,283
Undivided profits and capital reserves ..................... 5,280
Net unrealized holding gains (losses)
on available-for-sale securities ........................... (193)
Cumulative foreign currency translation adjustments ........ 16
TOTAL EQUITY CAPITAL ....................................... 16,597
--------
TOTAL LIABILITIES AND EQUITY CAPITAL ....................... $280,709
========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
-5-
