As filed with the Securities and Exchange Commission on July 8, 1997
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LEHMAN BROTHERS HOLDINGS INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3216325
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Thomas A. Russo, Esq.
3 World Financial Center 3 World Financial Center
New York, New York 10285 New York, New York 10285
(212) 526-7000 (212) 526-7000
(Address, including zip code, (Name, address, including zip code,
and telephone number, including and telephone number,including
area code, of Registrant's area code, of agent for service
principal executive offices)
Copies to:
Raymond W. Wagner, Esq. Jennifer Marre, Esq.
Simpson Thacher & Bartlett Lehman Brothers Inc.
425 Lexington Avenue 3 World Financial Center
New York, New York 10017 New York, New York 10285
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.
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CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Title of Each Class of Securities Amount to Proposed Proposed Amount of
to be Registered be Registered Maximum Maximum Registration Fee
Offering Price Aggregate
Per Share Offering Price
- ---------------------------------------- ----------------------- --------------------- ---------------------- ----------------------
Cumulative Convertible Voting (1) (1) (1) (2)
Preferred Stock, Series B, par
value $1.00 per share.............
======================================== ======================= ===================== ====================== ======================
Common Stock par value $.10 (1) (1) (1) (2)
per share..........................
======================================== ======================= ===================== ====================== ======================
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(1) Indeterminate amount. These securities were registered under Registration
Statement on Form S-4 (File No. 333-25227) in connection with an exchange
offer made to holders of the registrant's Cumulative Convertible Voting
Preferred Stock, Series A. In connection with the filing of such
Registration Statement, the registrant paid a fee of $103,764. This
Registration Statement relates to market making transactions in the
Cumulative Convertible Voting Preferred Stock, Series B by an affiliate of
the registrant.
(2) No fee is payable hereunder.
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 this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 8, 1997
Prospectus
LEHMAN BROTHERS HOLDINGS INC.
Cumulative Convertible Voting Preferred
Stock, Series B, par value $1.00 per share
The annual dividend rate per share on the Cumulative
Convertible Voting Preferred Stock, Series B (the "Series B Preferred Stock") is
an amount equal to $1.955 per share. Dividends on the shares of Series B
Preferred Stock, when and as declared by the Board of Directors of the Company,
are cumulative and are payable on March 15, June 15, September 15 and December
15 in each year (the "Dividend Payment Dates"), commencing on September 15,
1997. Dividends on the Series B Preferred Stock will be paid to the holders of
record of shares of Series B Preferred Stock of the Company on a record date,
not exceeding 40 days preceding the payment date thereof.
The Series B Preferred Stock is redeemable at the option of
the Company on any Dividend Payment Date, in specified cumulative amounts
increasing to 13,000,000 shares on and after June 15, 1998 (subject to reduction
as described herein), upon at least 30 days' and not more than 45 days' notice
to the holders thereof, at $39.10 per share plus accumulated and unpaid
dividends (whether or not earned or declared) to the date fixed for redemption,
provided that the Average Market Price (as defined) of the Company's common
stock, par value $.10 per share (the "Common Stock") on the date such notice is
given is greater than the Conversion Price (as defined). The Series B Preferred
Stock is not subject to any mandatory sinking fund.
Each share of Series B Preferred Stock is convertible at the
option of the holder at any time, unless previously redeemed, into a number of
shares of Common Stock equal to $39.10 divided by the Conversion Price in effect
at the time of such conversion. As of the date of this Prospectus, the
Conversion Price, which is subject to adjustment under certain conditions, is
$123.0212380.
The liquidation preference of each share of Series B Preferred
Stock is equal to $39.10 plus an amount equal to accumulated and unpaid
dividends (whether or not earned or declared) on such share of Series B
Preferred Stock.
As of the date of this Prospectus ______ shares of Series B
Preferred Stock were outstanding.
<PAGE>
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.
This Prospectus may be used by Lehman Brothers Inc. in
connection with offers and sales of Series B Preferred Stock related to market
making transactions, by or through Lehman Brothers Inc., at negotiated prices
related to prevailing market prices at the time of sale or otherwise. Lehman
Brothers Inc. may act as principal or agent in such transactions.
July __, 1997
<PAGE>
AVAILABLE INFORMATION
The Company 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, Citicorp Center, 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 registrants that file electronically with the SEC.
The Company's Common Stock is listed on the New York Stock Exchange ("NYSE") and
the Pacific Stock Exchange Inc. (the "PSE"). The Company's 8 3/4% Notes Due 2002
and 8.3% Quarterly Income Capital Securities (Series A Subordinated Interest
Deferrable Debentures Due 2035) are listed on the NYSE. The Company's $55
Million Serial Zero Coupon Senior Notes Due May 16, 1998, Global
Telecommunications Stock Upside Note Securities SM Due 2000, 9_% Micron Yield
Enhanced Equity Linked Debt Securities Due 1997 and AMEX Hong Kong 30 Index Call
Warrants expiring January 23, 1998 are listed on the American Stock Exchange,
Inc. (the "ASE"). Reports and other information concerning the Company may also
be inspected at the offices of the NYSE at 20 Broad Street, New York, New York
10005, at the offices of the ASE, at 86 Trinity Place, New York, New York 10006
and at the offices of the PSE, 301 Pine Street, San Francisco, California 94104.
The Company has filed with the SEC a registration statement on
Form S-3 (herein, together with all amendments and exhibits, the "Registration
Statement") 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 Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC, and to which reference is hereby made. For
further information, reference is hereby made to the Registration Statement.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company with
the SEC pursuant to the Exchange Act are hereby incorporated by reference in
this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year
ended November 30, 1996.
(2) The Company's Quarterly Reports on Form 10-Q for the
quarter ended February 28, 1997.
(3) The Company's Current Reports on Form 8-K dated January 8,
1997, March 26, 1997 and June 26, 1997.
Each document filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus 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 Statement and this Prospectus to the
extent that a statement contained herein 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.
The Company will provide without charge to each person,
including any beneficial owner of any of the Series A Preferred Stock, 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).
THE COMPANY
The Company 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 and derivative
products. 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, Milan and Stockholm stock exchanges.
The Company was incorporated in Delaware on December 29, 1983.
The Company's principal executive offices are located at 3 World Financial
Center, New York, New York 10285 (telephone (212) 526-7000).
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 three months ended February
28, 1997:
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====================================================================================================================
Year Ended Eleven Months Year Ended Three Months
December 31 Ended November 30, Ended
November 30, February 28,
====================================================================================================================
1992 1993 1994 1995 1996 1996
====================================================================================================================
* * 1.02 1.03 1.05 1.07
====================================================================================================================
</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 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.
DESCRIPTION OF SERIES B PREFERRED STOCK
General
The following description of the Series B Preferred Stock set
forth herein does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Restated Certificate of
Incorporation and the Certificate of Designations relating to the Series B
Preferred Stock (together, the "Restated Certificate of Incorporation") filed as
exhibits to the Registration Statement.
Subject to the Restated Certificate of Incorporation and to
any limitations contained in the outstanding preferred stock, the Company 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 the Company.
The Restated Certificate of Incorporation authorizes the
issuance of 38,000,000 shares of preferred stock, $1.00 par value per share. As
of ________ __, 1997, there were ___________ shares of Cumulative Convertible
Voting Preferred Stock, Series A (the "Series A Preferred Stock"), _______
shares of 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 terms of the Series A Preferred
Stock are identical in all material respects to the terms of the Series B
Preferred Stock described herein, except that the terms of the Series A
Preferred Stock require the conversion of at least 250,000 shares thereof at any
one time.
Redeemable Preferred Stock. As of the date of this Prospectus,
American Express Company ("AMEX") and Nippon Life Insurance Company ("Nippon
Life") together own all of the issued and outstanding shares of Redeemable
Preferred Stock.
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. For each
dividend period following May 31, 1994, the holders of Redeemable Preferred
Stock are entitled to receive 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 exceeds $400 million, up to a maximum of $50 million for any
such period (pro rated in the case of dividend periods of less than 12 months)
(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, the Company
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 the Company 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 in each of the
next five years thereafter.
Holders of Redeemable Preferred Stock are entitled to vote,
together with the holders of the Company's Common Stock as one class, on all
matters to be voted on by stockholders of the Company. Notwithstanding the
foregoing, AMEX 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 the Common Stock
on matters to be voted on by stockholders of the Company 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 the Company are 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 the Company 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.
The Series B Preferred Stock shall rank, as to dividends and
upon liquidation, dissolution or winding up, on a parity with the Company's
Series A Preferred Stock and Redeemable Preferred Stock.
Dividends
The annual dividend rate per share of Series B Preferred Stock
is an amount equal to $1.955 per share. Dividends on the shares of Series B
Preferred Stock are payable, when and as declared by the Board of Directors, out
of funds legally available therefor, are cumulative and are payable quarterly in
cash on March 15, June 15, September 15 and December 15 of each year (or, if any
such day is not a Business Day, then on the next succeeding Business Day) in
each year (the "Dividend Payment Dates"), commencing on September 15, 1997. The
amount of dividends payable on each share of Series B Preferred Stock for each
full quarterly dividend period will be computed by dividing by four such annual
rate. Dividends payable on the Series B Preferred Stock for any period less than
a full quarterly period will be computed on the basis of a 360-day year
consisting of twelve 30-day months for the actual number of days involved.
Dividends with respect to any share of Series B Preferred Stock accumulate from
June 15, 1997. The term "Business Day" means a day other than a Saturday, Sunday
or other day on which commercial banks in New York City are authorized or
required by law to close.
No cash dividends will be declared and set apart for payment
on any capital stock ranking on a par with the Series B Preferred Stock in the
payment of dividends unless there will likewise be or have been declared and set
apart for payment on all shares of Series B Preferred Stock at the time
outstanding full cumulative dividends for all quarterly dividend periods ending
on or before the dividend payment date for such other stock. If and so long as
any full cumulative dividends payable on the shares of Series B Preferred Stock
in respect of all prior dividend periods will not have been paid or set apart
for payment, the Company will not pay any dividends or make any distributions of
assets on or redeem, purchase or otherwise acquire for consideration shares of
capital stock of the Company ranking junior to or on a par with the Series B
Preferred Stock in payment of dividends.
Dividends on the Series B Preferred Stock are payable to the
holders of record thereof as they appear on the stock register of the Company on
such record date, not exceeding 40 days preceding the payment date thereof, as
will be fixed by the Board of Directors or by a duly authorized committee
thereof. Dividends on account of arrears for any past dividend periods may be
declared and paid at any time, without reference to any Dividend Payment Date,
to holders of record on such date, not exceeding 40 days preceding the payment
date thereof, as may be fixed by the Board of Directors or by a duly authorized
committee thereof. Dividends will be paid to each holder of record in United
States dollars by check mailed to such holders at their respective addresses
appearing on the books of the Company.
Redemption
The Company may at its option redeem outstanding shares of
Series B Preferred Stock on any Dividend Payment Date in the specified amounts
and during the periods set forth below (subject, in each case, to reduction by
the number of shares of Series B Common Stock converted into Common Stock or
converted or exchanged for common stock of AMEX or otherwise purchased by the
Company from Nippon Life upon at least 30 days' and not more than 45 days'
written notice to the holders thereof, at a redemption price equal to $39.10 per
share plus accumulated and unpaid dividends (whether or not earned or declared)
to the date fixed for redemption,
Redemption Period Number of Shares
Date of Original Issuance to and 10,400,000
including June 15, 1998
After June 15, 1998 13,000,000
<PAGE>
provided, however, that shares of Series B Preferred Stock are not redeemable by
the Company unless (i) there is Common Stock outstanding on the dates upon which
notice of redemption is first given and such redemption is effected, and (ii)
the Average Market Price of the Common Stock on the date such notice is given is
greater than the Conversion Price. See "--Conversion". As used herein, "Average
Market Price" means the average of the daily closing prices for the 10
consecutive trading days selected by the Company commencing no less than 20 days
nor more than 30 trading days before the day in question. The closing price for
each day will be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the NYSE or, if such security is
not listed or admitted to trading on the NYSE, on the principal national
securities exchange on which such security is listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on the
Nasdaq National Market or, if such security is not listed or admitted to trading
on any national securities exchange or quoted on National Market, the average of
the closing bid and asked prices in the over-the-counter-market as furnished by
any NYSE member firm selected from time to time by the issuer for that purpose.
For the purposes of this definition, the term "trading day" shall mean each
Monday, Tuesday, Wednesday, Thursday or Friday, other than any day on which
securities are not traded on such exchange or in such market.
The Company is required to give notice of any proposed
redemption of shares of Series B Preferred Stock by mailing a copy of such
notice to holders of record of shares of Series B Preferred Stock to be redeemed
at their respective addresses appearing on the books of the Company. Each such
notice will specify the shares called for redemption, the redemption price and
the price at which and the date on which the shares called for redemption will,
upon presentation and surrender of the certificates of stock evidencing such
shares, be redeemed and the redemption price therefor paid. From and after the
date fixed in any such notice as the date of redemption of shares of Series B
Preferred Stock, unless default shall be made by the Company in providing monies
at the time and place specified for the payment of the redemption price pursuant
to said notice, all dividends on the Series B Preferred Stock thereby called for
redemption will cease to accrue and all rights of the holders thereof as
stockholders of the Company, except the right to receive the redemption price,
will cease and terminate.
Conversion
Each share of Series B Preferred Stock is convertible, in
whole or in part, at the option of the holder at any time, into a number of
shares of Common Stock (calculated as to each conversion to the nearest 1/100 of
a share) equal to $39.10 divided by the Conversion Price in effect at the time
of such conversion. As of the date of this Prospectus, the Conversion Price was
$123.0212380 per share. The Conversion Price will be adjusted in certain
instances as described below.
To convert shares of Series B Preferred Stock into Common
Stock, the registered holder of such shares of Series B Preferred Stock must
surrender at the office of the Transfer Agent, or at such other office or
offices, if any, as the Board of Directors may designate, the certificate or
certificates therefor, duly endorsed or assigned to the Company or in blank, and
give written notice to the Company at such office that it elects to convert such
shares.
A payment or adjustment will not be made by the Company upon
any conversion on account of any dividends accrued on the shares of Series B
Preferred Stock surrendered for conversion or on account of any dividends on the
Common Stock issued upon conversion.
Shares of Series B Preferred Stock will be deemed to have been
converted immediately prior to the close of business on the day of the surrender
of such shares for conversion, and the person or persons entitled to receive the
Common Stock issuable upon such conversion will be treated for all purposes as
the record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the conversion date, the Company will issue and deliver
at such office a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with payment in lieu of any
fraction of a share, to the person or persons entitled to receive the same. In
case shares of Series B Preferred Stock are called for redemption, the right to
convert such shares will terminate at the close of business on the date fixed
for redemption, unless default shall be made in payment of the redemption price.
The Conversion Price for shares of Series B Preferred Stock
may be subject to adjustment in certain events, including (i) dividends and
other distributions payable in Common Stock on any class of capital stock of the
Company, (ii) the issuance to all holders of Common Stock of rights or warrants
entitling them to subscribe for or purchase Common Stock at less than, depending
on the circumstances, the Average Market Price (as defined under "--Redemption"
or Fair Market Value (as defined below), (iii) subdivisions, combinations and
reclassifications of the Common Stock, (iv) distributions to all holders of
Common Stock of evidences of indebtedness of the Company or assets (including
securities, but excluding (a) any rights or warrants referred to in (ii) above,
(ii) any dividend or distribution paid in cash or other property out of the
Adjusted Retained Earnings (defined below) of the Company and (iii) any dividend
or distribution referred to (i) above) and (v) a consolidation or merger to
which the Company is a party or the sale or transfer of all or substantially all
of the assets of the Company. In addition to the foregoing adjustments, the
Company is permitted to make such reductions in the Conversion Price for the
Series B Preferred Stock as it considers to be advisable in order that any event
treated for United States federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the recipients. As used herein, (i) the term
"Fair Market Value" per share of Common Stock on any date means the fair market
value thereof on the date in question, determined (A) if Nippon Life and its
affiliates then own a majority of the shares of Series B Preferred Stock then
outstanding (i) jointly by the Company and Nippon Life or (ii) if the Company
and Nippon Life cannot so agree, by the Board of Directors of the Company
reasonably determined in good faith or (B) if Nippon Life and its affiliates do
not then own a majority of the shares of Series B Preferred Stock then
outstanding, by the Board of Directors of the Company reasonably determined in
good faith and (ii) the term "Adjusted Retained Earnings" means the retained
earnings of the Company as of the date of the relevant dividend or distribution
plus $500,000,000 plus any dividend paid after August 10, 1990 (which has been
debited against retained earnings) on any preferred stock of the Company
outstanding on August 10, 1990.
The Company will pay any and all stamp or other similar taxes
that may be payable in respect of the issue or delivery of shares of Common
Stock on conversion of shares of Series B Preferred Stock. The Company will not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that in which the shares of Series B Preferred Stock so converted
were registered, and no such issue or delivery will be made unless and until the
person requesting such issue 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.
In any case in which an adjustment described in this
"Conversion" section will become effective immediately after a record date for
an event, the Company may defer until the occurrence of such event (i) issuing
to the holder of any shares of Series B Preferred Stock converted after such
record date and before the occurrence of such event the additional shares of
Common Stock issuable upon such conversion by reason of the adjustment required
by such event over and above the number of shares of Common Stock issuable upon
such conversion before giving effect to such adjustment and (ii) paying to such
holder any amount in cash in lieu of a fractional share of Common Stock;
provided, that, upon the request of such holder, the Company will deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
rights to receive such additional shares of Common Stock, and such cash, upon
the occurrence of the event requiring such adjustment.
Voting Rights
The holders of Series B Preferred Stock have the following
voting rights subject to the terms and conditions described below.
The holders of Series B Preferred Stock have voting rights
equal to the voting rights of holders of shares of Common Stock and the shares
of Series B Preferred Stock vote together with the shares of Common Stock (and
of any other class or series which may similarly be entitled to vote with the
shares of Common Stock) as a single class upon all matters upon which holders of
Common Stock are entitled to vote.
So long as any shares of Series B Preferred Stock remain
outstanding, the Company will not, either directly or indirectly or through
merger or consolidation with any other corporation, without the affirmative vote
at a meeting or the written consent with or without a meeting of the holders of
at least a majority of the shares of Series B Preferred Stock then outstanding,
amend, alter or repeal any of the provisions of the Restated Certificate of
Incorporation, or authorize any reclassification of the Series B Preferred
Stock, so as in any such case to affect adversely the preferences, special
rights or powers of the Series B Preferred Stock, or authorize any capital stock
of the Company ranking, either as to payment of dividends or upon liquidation,
dissolution or winding up of the Company, prior to the Series B Preferred Stock.
In exercising the voting rights set forth herein or when
otherwise granted voting rights by operation of law, each share of Series B
Preferred Stock is entitled to a number of votes equal to the quotient obtained
by dividing $39.10 by the Conversion Price in effect at the time.
No consent of holders of the Series B Preferred Stock is
required for (i) the creation of any indebtedness of any kind of the Company or
(ii) the authorization or issuance of any class of capital stock of the Company
ranking junior or equal to the Series B Preferred Stock in payment of dividends
or upon liquidation, dissolution or winding up of the Company.
Liquidation
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, before any distribution of the assets
of the Company to holders of Common Stock or any other capital stock of the
Company ranking junior to the Series B Preferred Stock upon liquidation,
dissolution or winding up of the Company, the holders of the Series B Preferred
Stock are entitled to receive out of the assets of the Company available for
distribution to its stockholders, whether from capital, surplus or earnings, an
amount per share of Series B Preferred Stock equal to $39.10 plus an amount
equal to accumulated and unpaid dividends (whether or not earned or declared) on
such share of Series B Preferred Stock to the date of final distribution.
If, upon any liquidation, dissolution or winding up of the
Company, the amounts payable with respect to the Series B Preferred Stock or any
capital stock ranking on a par with the Series B Preferred Stock are not paid in
full, then such holders will share ratably in any such distribution of assets,
or proceeds thereof, in proportion to the full respective preferential amounts
to which they are entitled. Neither a consolidation nor a merger of the Company
with one or more other corporations, nor a sale or a transfer of all or
substantially all of the assets of the Company, will be deemed to be a voluntary
or involuntary liquidation, dissolution or winding up of the Company.
Sinking Fund
The Series B Preferred Stock is not subject to any right of
mandatory payment or prepayment (except for liquidation, dissolution or winding
up of the Company) or to any sinking fund.
Transfer Agent
Bank of Boston, c/o Boston EquiServe, L.P. is the transfer
agent for the Series B Preferred Stock.
PLAN OF DISTRIBUTION
This Prospectus may be used by Lehman Brothers Inc. in
connection with offers and sales of Series B Preferred Stock related to market
making transactions, by or through Lehman Brothers Inc., at negotiated
prices related to prevailing market prices at the time of sale or otherwise.
Lehman Brothers Inc. may act as principal or agent in such transactions.
The distribution of the Series B Preferred Stock by the
Company and Lehman Brothers Inc. will comply with the requirements of Rule 2720
of the NASD regarding a NASD member firm distributing securities of an
affiliate.
The Series B Preferred Stock may not be offered or sold
directly or indirectly (i) in the United Kingdom by means of any document other
than to persons whose ordinary business it is to buy or sell shares or
debentures whether as principal or agent (except in circumstances which do not
constitute an offer to the public within the meaning of the Companies Act 1985),
and (ii) except in compliance with all applicable provisions of the Financial
Services Act 1986 with respect to anything done in relation to the Series B
Preferred Stock in, from or otherwise involving the United Kingdom. In addition,
no person participating in the sale of the Series B Preferred Stock will issue
or pass to any person in the United Kingdom any document received by it in
connection with the issuance of the Series B Preferred Stock unless that person
is of a kind described in Article 9(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1988.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and schedule of the
Company for the years ended November 30, 1996 and 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
schedule are incorporated herein by reference in reliance upon the reports of
Ernst & Young LLP pertaining to such financial statements given upon the
authority of such firm as experts in accounting and auditing.
<PAGE>
No dealer, salesperson or any other Lehman Brothers
person has been authorized to give any Holdings Inc.
information or to make any representation
not contained in this Prospectus in
connection with the offering covered by
this Prospectus. If given or made, such
information or representations must not
be relied upon as having been authorized
by the Company. This Prospectus does
not constitute an offer to sell, or a
solicitation of an offer to buy, any
security other than the Series B Preferred
Stock offered by this Prospectus, nor
does it constitute an offer to sell or a
solicitation of an offer to buy the
Series B Preferred by anyone in any Cumulative Convertible Voting
jurisdiction where, or to any person to Preferred Stock, Series B
whom, it is unlawful to make such offer
or solicitation. Neither the delivery
of this Prospectus nor any sale made
hereunder shall, under any circumstances,
create an implication that there has
been any change in the facts set forth
in this Prospectus or in the affairs of
the Company since the date hereof.
TABLE OF CONTENTS PROSPECTUS
, 1997
Page
AVAILABLE INFORMATION......................... 3
DOCUMENTS INCORPORATED BY REFERENCE........... 4
THE COMPANY .................................. 4
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS................. 5
DESCRIPTION OF SERIES B PREFERRED STOCK....... 5
PLAN OF DISTRIBUTION.......................... 13
INDEPENDENT ACCOUNTANTS....................... 14
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).
Legal fees and expenses.................................................10,000
Accounting fees and expenses.............................................5,000
Fees and expenses of Transfer Agent..................................... 2,500
Total.............................................................17,500
* 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 and Financial Statement Schedules
The Exhibit Index beginning on page E-1 is hereby incorporated by
reference.
Item 17. Undertakings
(a) The undersigned 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
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 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 Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certified that it has reasonable ground to believe that it meets all
of the requirements for filing on Form S-3 and has 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 8th day of July,
1997.
LEHMAN BROTHERS HOLDINGS INC.
By /s/ KAREN M. MULLER
Name: Karen M. Muller
Title: Managing Director
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Signatures Title Date
* Chief Executive Officer and, July 8, 1997
- ----------------------------------------------------------
Richard S. Fuld, Jr. Chairman of the Board of
Directors (principal
executive officer)
* Chief Financial Officer, July 8, 1997
- ----------------------------------------------------------
Charles B. Hintz (principal financial and
accounting officer)
* Director July 8, 1997
- ----------------------------------------------------------
Michael L. Ainslie
* Director July 8, 1997
- ----------------------------------------------------------
John F. Akers
* Director July 8, 1997
- ----------------------------------------------------------
Roger S. Berlind
* Director July 8, 1997
- ----------------------------------------------------------
Thomas H. Cruikshank
* Director July 8, 1997
Katsumi Funaki
* Director July 8, 1997
- ----------------------------------------------------------
Henry Kaufman
* Director July 8, 1997
- ----------------------------------------------------------
John D. Macomber
* Director July 8, 1997
- ----------------------------------------------------------
Dina Merrill
---------------------------------------------------------- Director July 8, 1997
Hideichiro Kobayashi
*By: /s/ KAREN M. MULLER
Karen M. Muller
Attorney-in-Fact
July 8, 1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
E-2
EXHIBIT INDEX
<S> <C> <C>
Exhibit Description Filed Herewith(--)
Number Previously Filed(*)
or Incorporated by
Reference to
3(i) -- Restated Certificate of Incorporation Exhibit 3.1 of Registrant's
dated May 27, 1994 Transition Report on Form
10-K for the eleven months
ended November 30, 1994
4.1 -- Specimen share certificate for Series B Exhibit 3(ii) to Registration
Preferred Stock Statement No. 333-25227
4.2 -- Amended Certificate of Designations, Powers, --
Preferences and Rights of the Series B
Preferred Stock
5 -- Opinion and consent of Karen M. Muller, Esq. --
10.1 -- Investment Agreement by and among American Exhibit 10.21 to Registration
Express Company, Shearson Lehman Brothers Statement No. 33-12976
Holdings Inc. and Nippon Life Insurance
Company dated as of April 15, 1987
10.2 -- 1990 Agreement, dated as of June 12, 1990, by Exhibit 10.25 to Registrants'
and between American Express Company and Annual Report on Form 10-K
Nippon Life Insurance Company for the year ended December
31, 1990
10.3 -- 1994 Agreement, dated April 27, 1994, by and Exhibit 10.32 of Registrants'
among American Express Company, Nippon Life Transition Report on Form
Insurance Company and the Registrant 10-K for the eleven months
ended November 30, 1994
10.4 -- 1997 Letter Agreement, dated January 22, Exhibit 10.4 to Registration
1997, by and between American Express Company Statement No. 333-25227
and Nippon Life Insurance Company
12(a) -- Computation of ratio of earnings to combined Exhibit 12(b) to Registrant's
fixed charges and preferred dividends Quarterly Report on Form
10-Q for the three months
ended February 28, 1997
23(a) -- Consent of Karen M. Muller, Esq. (included in --
Exhibit 5)
23(b) -- Consent of Ernst & Young LLP, Independent --
Auditors
24 -- Power of Attorney --
</TABLE>
<PAGE>
EXHIBIT 4.2
<PAGE>
AMENDED CERTIFICATE OF DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES B PREFERRED STOCK
($39.10 liquidation preference per share)
OF
LEHMAN BROTHERS HOLDINGS INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation having
its registered office at 1013 Centre Street, in the City of Wilmington, in the
County of New Castle (the "Corporation"), HEREBY CERTIFIES that resolutions were
duly adopted by the Executive Committee of the Board of Directors of the
Corporation, acting pursuant to Section 141(c)(2) of the General Corporation Law
of the State of Delaware, pursuant to the authority conferred upon the Board of
Directors of the Corporation by the provisions of the Restated Certificate of
Incorporation of the Corporation, as follows:
RESOLVED, that the Corporation be, and it hereby is,
authorized to offer, issue and sell a series of Preferred Stock of the
Corporation and the Board of Directors hereby fixes the designation,
number of shares, voting powers and the other powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof (in addition to
those set forth in the Restated Certificate of Incorporation of the
Corporation which may be applicable to such series), which, as amended
and restated, are as follows:
<PAGE>
1. Designation; Rank With Respect to Preferred Stock. The
Board of Directors authorizes the issuance of a series of the Preferred Stock
designated as the "Cumulative Convertible Voting Preferred Stock, Series B" (the
"Series B Preferred Stock"). The authorized number of shares of Series B
Preferred Stock shall be thirteen million (13,000,000) shares (the "Series B
Shares"). The par value of the Series B Preferred Stock shall be $1.00 per
share.
The Series B Preferred Stock shall rank, as to dividends and
upon liquidation, dissolution or winding up, on a parity with the Corporation's
Cumulative Convertible Voting Preferred Stock, Series A and Redeemable Voting
Preferred Stock.
2. Dividends. (a) The holders of the shares of Series B
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors or a duly authorized committee thereof, out of funds legally
available for the payment of dividends, cumulative dividends payable quarterly
in cash on March 15, June 15, September 15 and December 15 of each year (or, if
any such day is not a Business Day, then on the next succeeding Business Day) in
each year (the "Dividend Payment Dates"), commencing on September 15, 1997, in
preference to dividends on shares of the common stock, par value $0.10 per
share, of the Corporation (the "Common Stock"), or any other capital stock of
the Corporation ranking junior to the Series B Preferred Stock in payment of
dividends. The annual dividend rate per Series B Share shall be in an amount
equal to $1.955 per share. The amount of dividends payable on each Series B
Share for each full quarterly dividend period shall be computed by dividing by
four such annual rate. Dividends payable on the Series B Preferred Stock for any
period less than a full quarterly period shall be computed on the basis of a
360-day year consisting of twelve 30-day months for the actual number of days
involved. Dividends with respect to any Series B Share shall accumulate from the
date of issue thereof. No cash dividends shall be declared and set apart for
payment on any capital stock ranking on a par with the Series B Preferred Stock
in the payment of dividends unless there shall likewise be or have been declared
and set apart for payment on all Series B Shares at the time outstanding full
cumulative dividends for all quarterly dividend periods ending on or before the
dividend payment date for such other stock. If and so long as any full
cumulative dividends payable on the Series B Shares in respect of all prior
dividend periods shall not have been paid or set apart for payment, the
Corporation shall not pay any dividends or make any distributions of assets
(other than dividends payable in shares of capital stock of the Corporation
ranking junior to the Series B Preferred Stock in payment of dividends) on or
redeem, purchase or otherwise acquire for consideration shares of capital stock
of the Corporation ranking junior to or on a par with the Series B Preferred
Stock in payment of dividends. As used herein, "Business Day" shall have the
meaning set forth in Paragraph 6 of this resolution.
(b) Dividends on the Series B Preferred Stock shall be paid to
the holders of record of Series B Shares as they appear on the stock register of
the Corporation on such record date, not exceeding 40 days preceding the payment
date thereof, as shall be fixed by the Board of Directors or by a duly
authorized committee thereof. Dividends on account of arrears for any past
dividend periods may be declared and paid at any time, without reference to any
Dividend Payment Date, to holders of record on such date, not exceeding 40 days
preceding the payment date thereof, as may be fixed by the Board of Directors or
by a duly authorized committee thereof. Dividends shall be paid to each holder
of record in United States dollars by check mailed to such holders at their
respective addresses appearing on the books of the Corporation.
3. Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any distribution of the assets of the Corporation to holders of Common
Stock or any other capital stock of the Corporation ranking junior upon
liquidation, dissolution or winding up of the Corporation, the holders of the
Series B Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, an amount per Series B Share equal to $39.10 plus
an amount equal to all dividends (whether or not earned or declared) accumulated
and unpaid on such Series B Share to the date of final distribution. If, upon
any liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of Series B
Shares or any capital stock ranking on a par with the Series B Preferred Stock
upon liquidation, dissolution or winding up of the Corporation, shall be
insufficient to pay in full the preferential amounts to which such stock would
be entitled, 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 payable in full.
For the purposes hereof, neither a consolidation nor a merger of the Corporation
with one or more other corporations, nor a sale or a transfer of all or
substantially all of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Corporation.
4. Redemption. (a) The Corporation may at its option redeem
outstanding Series B Shares on any Dividend Payment Date upon at least 30 days'
and not more than 45 days' written notice to the holders thereof, at a
redemption price equal to $39.10 per share plus accumulated and unpaid dividends
(whether or not earned or declared) to the date fixed for redemption:
Number of Shares Subject to Redemption
to and including up to 10,400,000 minus the number of Series B
June 15, 1998 Shares converted into shares of Corporation
Common Stock or redeemed or exchanged for AMEX
Common Shares or otherwise purchased by the
Corporation from Nippon Life
thereafter up to 13,000,000 minus the number of Series
B Shares converted into shares of
Corporation Common Stock or redeemed or
exchanged for AMEX Common Shares or
otherwise purchased by the Corporation from
Nippon Life
provided, however, such Series B Shares shall not be redeemable by the
Corporation unless (i) there is Public Company Stock outstanding on the dates
upon which notice of redemption is first given and such redemption is effected,
and (ii) the Average Market Price of the Common Stock of the Corporation on the
date upon which notice of redemption is first given is above the Conversion
Price then in effect. As used herein, (i) "AMEX Common Shares" means the Common
Shares, $.60 par value of American Express Company, (ii) "1990 Agreement" means
the 1990 Agreement, dated as of June 12, 1990, by and between American Express
Company and Nippon Life Insurance Company ("Nippon Life"), as amended by the
1994 Agreement, dated April 28, 1994, by and among American Express Company,
Nippon Life and the Corporation, as further amended by the Agreement, dated
January 22, 1997, between Nippon Life and American Express Company and (iii)
"Public Common Stock", "Average Market Price" and "Conversion Price" shall have
the meanings set forth in Paragraph 6 of this resolution.
(b) Notice of any proposed redemption of shares of Series B
Preferred Stock shall be given by the Corporation by mailing a copy of such
notice to holders of record of the Series B Shares to be redeemed at their
respective addresses appearing on the books of the Corporation. Said notice
shall specify the shares called for redemption, the redemption price and the
price at which and the date on which the shares called for redemption will, upon
presentation and surrender of the certificates of stock evidencing such shares,
be redeemed and the redemption price therefor paid. From and after the date
fixed in any such notice as the date of redemption of shares of Series B
Preferred Stock, unless default shall be made by the Corporation in providing
monies at the time and place specified for the payment of the redemption price
pursuant to said notice, all dividends on the Series B Preferred Stock thereby
called for redemption shall cease to accrue and all rights of the holders
thereof as stockholders of the Corporation, except the right to receive the
redemption price, shall cease and terminate.
5. Shares to be Retired. All Series B Shares redeemed by the
Corporation shall be retired and canceled and shall resume the status of
authorized and unissued shares of Preferred Stock, provided that such shares
shall not thereafter be issued as Series B Shares.
6. Conversion Rights. The Series B Shares shall be
convertible, in whole or in part, at the option of the holders thereof, into
shares of Common Stock of the Corporation subject to the following terms and
conditions:
(a) The Series B Shares shall be convertible at the office of
any Transfer Agent, and at such other office or offices, if any, as the Board of
Directors may designate, into fully paid and nonassessable shares (calculated as
to each conversion to the nearest 1/100 of a share) of Common Stock of the
Corporation, at the Conversion Price, determined as hereinafter provided, in
effect at the time of conversion, each Series B Share being taken by the
Corporation as having a value equal to $39.10 per share. The number of shares of
Common Stock into which each share of Series B Preferred Stock may be converted
at any time shall be calculated as $39.10 divided by the Conversion Price in
effect at the time of conversion. The price at which shares of Common Stock
shall be delivered upon conversion (herein called the "Conversion Price") shall
be $123.0212380 per share, subject to adjustment in certain instances as
provided below in subparagraphs (c), (d), (e), (f), (g) and (i) of this
Paragraph 6.
(b) In order to convert Series B Shares into Common Stock, the
holder thereof shall surrender at any office hereinabove mentioned the
certificate or certificates therefor, duly endorsed or assigned to the
Corporation or in blank, and give written notice to the Corporation at such
office that he elects to convert such shares. Such notice shall be substantially
in the following form:
"NOTICE TO EXERCISE CONVERSION RIGHT
The undersigned, being a holder of the Cumulative Convertible
Voting Preferred Stock, Series B ("Series B Shares") of Lehman Brothers Holdings
Inc., irrevocably exercises the right to convert _______ outstanding Series B
Shares on _______, ___, into shares of Common Stock of Lehman Brothers Holdings
Inc. in accordance with the terms of the Series B Shares, and directs that the
shares issuable and deliverable upon the conversion, together with any check in
payment for fractional shares, be issued and delivered in the denominations
indicated below to the registered holder hereof unless a different name has been
indicated below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
Dated: [On or before the date fixed for conversion]
Fill in for registration of
shares of Common Stock if
to be issued otherwise
than to the registered
holder:
_________________________
Name
_________________________
Address
_________________________ _______________________
(Please print name and (Signature)
address, including postal
code number)
Denominations: ."
A payment or adjustment shall not be made by the Corporation
upon any conversion on account of any dividends accrued on the Series B Shares
surrendered for conversion or on account of any dividends on the Common Stock
issued upon conversion.
Series B Shares shall be deemed to have been converted
immediately prior to the close of business on the day of the surrender of such
shares for conversion in accordance with the foregoing provisions, and the
person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock at such time. As promptly as practicable on or after the
conversion date, the Corporation shall issue and shall deliver at such office a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with payment in lieu of any fraction of
a share, as hereinafter provided, to the person or persons entitled to receive
the same. In case shares of Series B Preferred Stock are called for redemption,
the right to convert such shares shall cease and terminate at the close of
business on the date fixed for redemption, unless default shall be made in
payment of the redemption price.
(c) In case the Corporation shall pay or make a dividend or
other distribution on any class of capital stock of the Corporation in Common
Stock, the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination. In the
event that such distribution is not so made, (i) the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such date fixed for the determination of stockholders entitled to receive such
distribution had not been fixed, and (ii) the holders shall have the option of
reversing any exercise of their conversion rights hereunder made after such
record date in contemplation of such distribution (and thereby reestablishing
such conversion rights to the extent so exercised) by returning to the
Corporation any Common Stock, cash and other securities or property which had
been received upon such conversion; provided that the option set forth in this
clause (ii) shall be exercisable by a holder only prospectively by a written
instrument delivered to the Corporation at the time of such conversion, which
instrument shall state that such holder revokes such conversion if such
distribution is not so made. For the purposes of this subparagraph (c), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation but shall include shares issuable
in respect of scrip certificates issued in lieu of fractions of shares of Common
Stock.
(d) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than (i) if the Corporation
shall have outstanding at the time of such issuance, and for a period of at
least 30 trading days immediately prior to such issuance, Public Company Stock,
the Average Market Price of the Common Stock or (ii) if otherwise, the Fair
Market Value per share of the Common Stock, on the date fixed for the
determination of stockholders entitled to receive such rights or warrants, the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Average Market Price
or Fair Market Value, as the case may be, and the denominator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination. In the event that such issuance is not so made, (i) the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such date fixed for the determination of stockholders
entitled to receive such rights or warrants had not been fixed, and the holders
shall have the option of reversing any exercise of their conversion rights
hereunder made after such record date in contemplation of such issuance (and
thereby re-establishing such conversion rights to the extent so exercised) by
returning to the Corporation any Common Stock, cash and other securities or
property which had been received upon such conversion; provided that the option
set forth in this clause (ii) shall be exercisable by a holder only
prospectively by a written instrument delivered to the Corporation at the time
of such conversion, which instrument shall state that such holder revokes such
conversion if such distribution is not so made. For the purposes of this
subparagraph (d), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Corporation but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Corporation will not issue any rights
or warrants in respect of shares of Common Stock held in the treasury of the
Corporation.
(e) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the date upon which
such subdivision becomes effective shall be proportionately reduced, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(f) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness or
assets (including securities, but excluding (i) any rights or warrants referred
to in subparagraph (d) above, (ii) any dividend or distribution paid in cash or
other property out of the Adjusted Retained Earnings of the Corporation and
(iii) any dividend or distribution referred to in subparagraph (c) above), then
either (at the option of the Corporation) (I) the Corporation shall elect to
include in such distribution the holders of shares of Series B Preferred Stock
in respect of the number of Series B Shares held by such holders as of the
record date for such distribution as if such holders had converted such Series B
Shares into Common Stock immediately prior to such record date (such conversion
assumed to be made at the Conversion Price in effect without regard to the
adjustment provided in the following clause (II)), or (II) the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which the numerator shall be the Fair
Market Price per share of the Common Stock on the date fixed for such
determination less the fair market value (as determined (A) if Nippon Life and
its Affiliates then own a majority of the Series B Shares then outstanding (i)
jointly by the Corporation and Nippon Life or (ii) if Nippon Life and the
Corporation cannot so agree, by an internationally recognized investment banking
firm selected by Nippon Life and the Corporation or (B) if Nippon Life and its
Affiliates do not then own a majority of the Series B Shares then outstanding,
by an independent, internationally recognized investment banking firm selected
by the Corporation) on such date of the portion of the assets or evidences of
indebtedness so distributed applicable to one share of Common Stock and the
denominator shall be the Fair Market Price per share of the Common Stock, such
adjustment to become effective immediately prior to the opening of business on
the day following the date fixed for the determination of stockholders entitled
to receive such distribution. In the event that such distribution is not so
made, (i) the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such date fixed for the determination of
stockholders entitled to receive such distribution had not been fixed, and (ii)
the holders shall have the option of reversing any exercise of their conversion
rights hereunder made after such record date in contemplation of such
distribution (and thereby re-establishing such conversion rights to the extent
so exercised) by returning to the Corporation any Common Stock, cash and other
securities or property which had been received upon such conversion; provided
that the option set forth in this clause (ii) shall be exercisable by a Holder
only prospectively by a written instrument delivered to the Corporation at the
time of such conversion, which instrument shall state that such holder revokes
such conversion if such distribution is not so made. For purposes of this
subparagraph (f), "Adjusted Retained Earnings" shall mean the retained earnings
of the Corporation as of the date of such dividend or distribution plus
$500,000,000 plus any dividend paid after August 10, 1990 (which has been
debited against retained earnings) on any Preferred Stock of the Corporation
outstanding on August 10, 1990. If the Corporation makes an election under
clause (I) of this subparagraph (f) with respect to any such distribution
payable on any Series B Share (an "Elected Company Dividend"), the Corporation
may in lieu of such distribution elect to pay the fair market value (determined
as provided above) of such Elected Company Dividend in cash (the "Cash
Equivalent") or elect to defer payment of such Elected Company Dividend or the
Cash Equivalent to the holder of such Series B Share and hold such amount (and
any amounts subsequently paid or earned in respect of such deferred Elected
Company Dividend or Cash Equivalent) in trust for the holder until the earlier
to occur of (X) the conversion of such Series B Share into Common Stock or (Y)
if the holder of such Series B Share had the right to exchange such Series B
Share for AMEX Exchange Common Shares (otherwise than as a result of an exchange
for AMEX Exchange Common Shares), such holder no longer has such right;
provided, that payment to the holder of such Series B Share shall be made
promptly after the earliest of such times; and provided, further, that any such
deferred Elected Company Dividend or Cash Equivalent shall not be payable and
shall be released to the Corporation and no longer held in trust for the holder
with respect to any Series B Share that is exchanged for AMEX Exchange Common
Shares or is redeemed or is otherwise purchased by the Corporation pursuant to
Section 7.4 of the 1990 Agreement. Any cash to be held in trust for the holder
as a deferred Elected Company Dividend or Cash Equivalent shall be invested by
the Corporation in U.S. government treasury bills.
(g) The reclassification (including any reclassification upon
a merger in which the Corporation is the continuing corporation, but not
including any transaction for which an adjustment is provided in subparagraph
(h) below of this Paragraph 6) of Common Stock into securities including other
than Common Stock shall be deemed to involve (i) a distribution of such
securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the date fixed
for the determination of stockholders entitled to receive such distribution" and
"the date fixed for such determination" within the meaning of subparagraph (f)
above of this Paragraph 6), and (ii) a subdivision or combination, as the case
may be, of the number of shares of Common Stock outstanding immediately prior to
such reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of subparagraph (e) above of this Paragraph 6).
(h) In case of any consolidation of the Corporation with, or
merger of the Corporation into, any other Person, any merger of another Person
into the Corporation (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock) or any sale or transfer of all or substantially all of the assets
of the Corporation, the Person formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver an assumption agreement satisfactory in form and substance to a majority
in interest of the holders, providing that the holders of Series B Shares shall
have the right thereafter, during the period such Series B Shares shall be
outstanding to convert such Series B Shares only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock into which
such Series B Shares might have been converted immediately prior to such
consolidation, merger, sale or transfer. If the holders of Common Stock may
elect from choices the kind or amount of securities, cash and other property
receivable in respect of any Series B Share upon such consolidation, merger,
sale or transfer, then for the purpose of this Paragraph 6 the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer shall be deemed to be the choice specified by the
holder of such Series B Share, which specification shall be made by such holder
by the later of (i) 20 Business Days after such holder is provided with a final
version of all information required by law or regulation to be furnished to
holders of Common Stock concerning such choice, or if no such information is
required, 20 Business Days after the Corporation notifies such holder of all
material facts concerning such specification and (ii) the last time at which
holders of Common Stock are permitted to make their specification known to the
Corporation. If such holder fails to make any specification, such holder's
choice shall be deemed to be whatever choice is made by a plurality of holders
of Common Stock not affiliated with the Corporation or the other Person to the
merger or consolidation or, if no such holders exist, as specified by the Board
of Directors in good faith. Such assumption agreement shall provide for
adjustments which, for events subsequent to the effective date of such written
instrument, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Paragraph 6. The above provisions of this
subparagraph (h) shall similarly apply to successive consolidations, mergers,
sales or transfers.
(i) The Corporation may make such reductions in the Conversion
Price, in addition to those required by subparagraphs (c), (d), (e), (f) and (g)
above of this Paragraph 6, as it considers to be advisable in order that any
event treated for Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients.
(j) Whenever the Conversion Price is adjusted as herein
provided the Corporation shall compute the adjusted Conversion Price in
accordance with this Paragraph 6 and shall prepare a certificate signed by the
Treasurer (or other responsible financial officer) of the Corporation setting
forth the adjusted Conversion Price and showing in reasonable detail the facts
upon which such adjustment is based, and such certificate shall forthwith be
filed with the Transfer Agent or Agents for the Series B Preferred Stock and a
copy air mailed as soon as practicable to the holders of record of the Series B
Shares.
(k) In case:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
Adjusted Retained Earnings; or
(ii) the Corporation shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or
(iii) of any reclassification of the capital stock of the
Corporation (other than a subdivision or combination of its outstanding shares
of Common Stock), or of any consolidation or merger to which the Corporation is
a party and for which approval of common stockholders of the Corporation is
required, or of the sale or transfer of all or substantially all of the assets
of the Corporation; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the Transfer Agent or
Agents, if any, for the Series B Preferred Stock, and shall cause to be air
mailed to the holders of record of the outstanding shares of Series B Preferred
Stock, at least 30 days (or 15 days in any case specified in clause (i) or (ii)
above) prior to the applicable record or effective date hereinafter specified, a
notice stating (X) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined, or (Y)
the date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up.
(l) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock, for the purpose of effecting the conversion of Series B Shares,
the full number of shares of Common Stock then deliverable upon the conversion
of all Series B Shares then outstanding.
(m) No fractional shares of Common Stock shall be issued upon
conversion, but, instead of any fraction of a share which would otherwise be
issuable, the Corporation shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the market price per share
of Common Stock (as determined in good faith by the Board of Directors or in any
manner prescribed by the Board of Directors) at the close of business on the day
of conversion.
(n) The Corporation will pay any and all stamp or other
similar taxes that may be payable in respect of the issue or delivery of shares
of Common Stock on conversion of Series B Shares pursuant hereto. The
Corporation shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the Series B Shares so converted
were registered, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the Corporation the amount of any
such tax, or has established to the satisfaction of the Corporation that such
tax has been paid.
(o) In any case in which this Paragraph 6 shall require that
an adjustment shall become effective immediately after a record date for an
event, the Corporation may defer until the occurrence of such event (i) issuing
to the holder of any Series B Shares converted after such record date and before
the occurrence of such event the additional shares of Common Stock (and Elected
Company Dividend or Cash Equivalent, if any) issuable upon such conversion by
reason of the adjustment required by such event over and above the number of
shares of Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash in lieu of a
fractional share of Common Stock pursuant to Paragraph 6(m) of this Resolution;
provided, that, upon the request of such holder, the Corporation shall deliver
to such holder a due bill or other appropriate instrument evidencing such
holder's rights to receive such additional shares of Common Stock, and such
cash, upon the occurrence of the event requiring such adjustment.
(p) For the purpose of this Paragraph 6:
(i) "Adjusted Retained Earnings" shall have the meaning
assigned in Paragraph 6(f) of this resolution.
(ii) "Affiliate" means, with respect to a Person, any
corporation or other entity in which such Person has a direct or indirect
controlling interest or by which such Person is directly or indirectly
controlled or which is under direct or indirect common control with such Person.
(iii) "AMEX Exchange Common Shares" means the AMEX Common
Shares (as defined in Paragraph 4 of this resolution) issued to Nippon Life or
its Affiliates pursuant to Section 5.5 of the 1990 Agreement.
(iv) "Average Market Price" of any security on any date
means the average of the daily closing prices for the 10 consecutive trading
days selected by the issuer commencing not less than 20 days nor more than 30
trading days before the day in question. The closing price for each day shall
be the last reported sales price regular way or, in case no such reported
sale takes place on such day, the average of the reported closing bid and
asked prices regular way, in either case on the New York Stock Exchange or, if
such security is not listed or admitted to trading on such Exchange, on the
principal national securities exchange on which such security is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq National Market or, if such security is not
listed or admitted to trading on any national securities exchange or quoted on
the Nasdaq National Market, the average of the closing bid and asked prices in
he over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by the issuer for that purpose. For the
purposes of this definition, the term "trading day" shall mean each Monday,
Tuesday, Wednesday, Thursday or Friday, other than any day on which
securities are not traded on such exchange or in such market.
(v) "Business Day" means each Monday, Tuesday, Wednesday,
Thursday or Friday which is not a day on which banking institutions in New York
City or Tokyo are authorized or obligated by law or executive order to close.
(vi) "Common Stock" shall include any stock of any class of
the Corporation which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation and which is not subject to
redemption by the Corporation. However, shares issuable on conversion of
Series B Shares shall include only shares of the class designated as Common
Stock of the Corporation as of the Closing Date, or shares of any class or
classes resulting from any reclassification or reclassifications thereof
and which have no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation and which are not subject to redemption by the
Corporation; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable
shall be substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the total number
of shares of all such classes resulting from all such reclassifications.
(vii) "Cash Equivalent" shall have the meaning assigned in
Paragraph 6(f) of this resolution.
(viii) "Elected Company Dividend" shall have the meaning
assigned in Paragraph 6(f) of this resolution.
(ix) "Fair Market Value" per share of Common Stock on any
date means the fair market value thereof on the date in question, which either
A) if Nippon Life and its Affiliates then own a majority of the Series B Shares
then outstanding (i) shall be determined jointly by the Corporation and
Nippon Life or (ii) if the Corporation and Nippon Life cannot agree, shall
be the value reasonably determined in good faith by the Board of Directors of
the Corporation or (B) if Nippon Life and its Affiliates do not then own a
majority of the Series B Shares then outstanding, shall be the value reasonably
determined in good faith by the Board of Directors of the Corporation.
(x) "Fair Market Price" per share of Common Stock on
any date means the fair market value thereof on the date in question,
determined (A) if Nippon Life and its Affiliates then own a majority of the
Series B Shares then outstanding (i) jointly by the Corporation and Nippon Life
or (ii) if the Corporation and Nippon Life cannot so agree, by an independent
internationally recognized investment banking firm selected by the
Corporation and Nippon Life or (B) if Nippon Life and its Affiliates do not
then own a majority of the Series B Shares then outstanding, shall be
determined by an independent, internationally recognized investment banking
firm selected by the Corporation, which determination in any such case shall
include the value attributable to any assets or securities to be
distributed to the holders of Common Stock.
(xi) "1990 Agreement" shall have the meaning assigned in
Paragraph 4 of this resolution.
(xii) "Nippon Life" shall have the meaning assigned in
Paragraph 4 of this resolution.
(xiii) "Person" means any individual, corporation,
partnership, joint venture, trust, unincorporated organization or governmental
or any agency or political subdivision thereof.
(xiv) "Public Company Stock" means any class or series of
Voting Stock registered under the Securities Exchange Act of 1934 and broadly
held and actively traded by public stockholders.
(xv) "Voting Stock" means all securities issued by the
Company having the ordinary power to vote in the election of directors of the
Company, other than securities having such power only upon the occurrence
of a default or any other extraordinary contingency.
7. Voting Rights.
The holders of Series B Preferred Stock shall have the
following voting rights subject to the following terms and conditions:
(a) The holders of Series B Preferred Stock shall have voting
rights equal to the voting rights of holders of shares of Common Stock and the
Series B Shares shall vote together with the shares of Common Stock (and of any
other class or series which may similarly be entitled to vote with the shares of
Common Stock) as a single class upon all matters upon which holders of Common
Stock are entitled to vote;
(b) So long as any of the Series B Shares remain outstanding,
the Corporation will not, either directly or indirectly or through merger or
consolidation with any other corporation, without the affirmative vote at a
meeting or the written consent with or without a meeting of the holders of at
least a majority of the Series B Shares then outstanding, amend, alter or repeal
any of the provisions of the Certificate of Designations, Powers, Preferences
and Rights of the Series B Preferred Stock or the Restated Certificate of
Incorporation of the Corporation, or authorize any reclassification of the
Series B Preferred Stock, so as in any such case to affect adversely the
preferences, special rights or powers of the Series B Preferred Stock, or
authorize any capital stock of the Corporation ranking, either as to payment of
dividends or upon liquidation, dissolution or winding up of the Corporation,
prior to the Series B Preferred Stock; and
(c) In exercising the voting rights set forth in this
Paragraph 7 or when otherwise granted voting rights by operation of law, each
share of Series B Preferred Stock shall be entitled to a number of votes equal
to the quotient obtained by dividing $39.10 by the Conversion Price in effect at
the time.
No consent of holders of the Series B Preferred Stock shall be
required for (i) the creation of any indebtedness of any kind of the Corporation
or (ii) the authorization or issuance of any class of capital stock of the
Corporation ranking junior or equal to the Series B Preferred Stock in payment
of dividends or upon liquidation, dissolution or winding up of the Corporation.
8. Sinking Fund. The Series B Preferred Stock shall not be
subject to any right of mandatory payment or prepayment (except for liquidation,
dissolution or winding up of the Corporation) or to any sinking fund.
9. Exchanges. Certificates representing Series B Shares shall
be exchangeable, at the option of the holder, for a new certificate or
certificates of the same or different denominations representing in the
aggregate the same number of Series B Shares.
10. Term. Subject to redemption as set forth in Paragraph 4
of this resolution or to conversion as set forth in Paragraph 6 of this
resolution the Series B Preferred Stock shall be perpetual.
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused
this certificate to be signed by Jennifer Marre, Vice President, and attested
by Karen C. Manson, its Secretary, this day of , 1997.
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ JENNIFER MARRE
Jennifer Marre, Vice President
ATTEST:
/s/ KAREN C. MANSON
Karen C. Manson, Secretary
<PAGE>
EXHIBIT 5
<PAGE>
LEHMAN BROTHERS HOLDINGS INC.
Three World Financial Center
New York, NY 10285
July 8, 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
Cumulative Convertible Voting Preferred Stock, Series B (the "Preferred Stock"),
par value $1.00 per share.
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 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.
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 23(b
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm as experts as experts under the caption
"Independent Accountants" in the registration Statement on Form S-3 and related
prospectus of Lehman Brothers Holdings Inc. (the "Company") for the issuance of
Cumulative Convertible Voting Preferred Stock, Series B and Common Stock and to
the incorporation by reference thereinof our report dated jnuary 7, 1997,
appearing in the Company's Annual Report on Form 10-K for the year ended
November 30, 1996.
New York, New York
July 8, 1997
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
<PAGE>
EXHIBIT 24
<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.
<TABLE>
<CAPTION>
<S> <C> <C>
Signatures Title Date
Chief Executive Officer and July 8, 1997
Chairman of the Board of
/s/ Richard S. Fuld, Jr. Directors
Richard S. Fuld, Jr. (principal executive officer)
July 8, 1997
Chief Financial Officer,
/s/ Charles B. Hintz (principal financial and
Charles B. Hintz accounting officer)
July 8, 1997
/s/ Michael L. Ainslie Director
Michael L. Ainslie
July 8, 1997
/s/ John F. Akers Director
John F. Akers
July 8, 1997
/s/ Roger S. Berlind Director
Roger S. Berlind
July 8, 1997
/s/ Thomas H. Cruikshank Director
Thomas H. Cruikshank
July 8, 1997
/s/ Henry Kaufman Director
Henry Kaufman
July 8, 1997
Director
Hideichiro Kobayashi
July 8, 1997
/s/ John D. Macomber Director
John D. Macomber
July 8, 1997
/s/ Dina Merrill Director
Dina Merrill
July 8, 1997
Director
Masahiro Yamada
</TABLE>
