<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1998
REGISTRATION STATEMENT NO. 333-
POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 333-44771
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
and Post-Effective Amendment
UNDER
THE SECURITIES ACT OF 1933
---------------------
<TABLE>
<S> <C> <C>
LEHMAN BROTHERS HOLDINGS INC. Delaware 13-3216325
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST I Delaware To Be Applied For
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST II Delaware To Be Applied For
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST III Delaware To Be Applied For
(EXACT NAME OF EACH REGISTRANT AS SPECIFIED IN ITS (STATE OR OTHER (I.R.S. EMPLOYER
CHARTER) JURISDICTION OF IDENTIFICATION
INCORPORATION OR NUMBER)
ORGANIZATION)
</TABLE>
------------------------------
<TABLE>
<S> <C>
3 World Financial Center Thomas A. Russo, Esq.
New York, New York 10285 3 World Financial Center
(212) 526-7000 New York, New York 10285
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (212) 526-7000
INCLUDING AREA CODE, OF EACH REGISTRANT'S PRINCIPAL (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
EXECUTIVE OFFICES) INCLUDING AREA CODE, OF AGENT FOR SERVICE FOR EACH
REGISTRANT)
COPIES TO:
Raymond W. Wagner, Esq. Jennifer Marre, Esq.
Simpson Thacher & Bartlett Lehman Brothers Holdings Inc.
425 Lexington Avenue 3 World Financial Center
New York, New York 10017 New York, New York 10285
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
--------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
--------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM AGGREGATE MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PRICE OFFERING
TO BE REGISTERED REGISTERED(1)(2)(3)(4) PER UNIT PRICE(2)(3)(5)
<S> <C> <C> <C>
Debt Securities of Lehman Brothers Holdings Inc.
Preferred Stock, par value $1.00 per share, of Lehman
Brothers Holdings Inc.
Depositary Shares of Lehman Brothers Holdings Inc.(7)
Preferred Securities of the LBH Trusts
Guarantees of Lehman Brothers Holdings Inc. of Preferred
Securities issued by the LBH Trusts and certain back-up
obligations(8)
Total $6,000,000,000 (3) $6,000,000,000
<CAPTION>
AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES REGISTRATION
TO BE REGISTERED FEE(4)(6)
<S> <C>
Debt Securities of Lehman Brothers Holdings Inc.
Preferred Stock, par value $1.00 per share, of Lehman
Brothers Holdings Inc.
Depositary Shares of Lehman Brothers Holdings Inc.(7)
Preferred Securities of the LBH Trusts
Guarantees of Lehman Brothers Holdings Inc. of Preferred
Securities issued by the LBH Trusts and certain back-up
obligations(8)
Total U.S. $1,818,182
</TABLE>
(1) This Registration Statement also relates to offers and sales of Securities
in connection with market-making transactions by and through Lehman Brothers
Inc., a wholly-owned subsidiary of Lehman Brothers Holdings Inc.
("Holdings") and an affiliate of Lehman Brothers Holdings Capital Trust I,
Lehman Brothers Holdings Capital Trust II and Lehman Brothers Holdings
Capital Trust III (each an "LBH Trust" and, together with Holdings, the
"Registrants").
(2) Or, if any securities are issued (i) with an initial offering price
denominated in a foreign currency or currency unit, such amount as shall
result in aggregate gross proceeds equivalent to $6,000,000,000 at the time
of initial offering or (ii) at an original issue discount, such greater
amount as shall result in aggregate gross proceeds of $6,000,000,000.
(3) Pursuant to General Instruction II.D to Form S-3, the Amount to be
Registered, Proposed Maximum Aggregate Price Per Unit and Proposed Maximum
Aggregate Offering Price has been omitted for each class of securities.
(4) As described elsewhere on the cover page of this Registration Statement, the
Prospectus herein also relates to up to $885,437,312 of unsold securities of
Holdings carried forward from Registration Statement 333-44771, previously
filed by Holdings under the Securities Act of 1933. A filing fee of $268,315
in respect of such amount of securities was paid on January 23, 1998 upon
the filing of such Registration Statement.
(5) Estimated solely for calculating the registration fee.
(COVER CONTINUED ON NEXT PAGE)
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- --------------------------------------------------------------------------------
<PAGE>
(CONTINUED FROM PRIOR PAGE)
(6) Calculated in accordance with Rule 457(o) under the Securities Act of 1933.
(7) Such indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts issued pursuant to a Deposit Agreement. In the event the Registrant
elects to offer to the public fractional interests in shares of the
Preferred Stock registered hereunder, Depositary Receipts will be
distributed to those persons purchasing such fractional interests and such
shares will be issued to the Depositary under the Deposit Agreement.
(8) Includes the rights of holders of the Preferred Securities under any
Guarantees and certain back-up undertakings, comprised of the obligations of
Lehman Brothers Holdings Inc. to provide certain indemnities in respect of,
and pay and be responsible for certain costs, expenses, debts and
liabilities of, each LBH Trust (other than with respect to the Preferred
Securities and common securities of such LBH Trust) and such obligations of
Lehman Brothers Holdings Inc. as set forth in the Amended and Restated
Declaration of Trust of each LBH Trust and the Subordinated Indenture, in
each case as further described in the Registration Statement. The
Guarantees, when taken together with Lehman Brothers Holdings Inc.'s
obligations under the related Subordinated Debt, the Subordinated Indenture
and the related Amended and Restated Declaration of Trust, will provide a
full and unconditional guarantee on a subordinated basis by Lehman Brothers
Holdings Inc. of payments due on the Preferred Securities. No separate
consideration will be received for any Guarantees or any such back-up
obligations.
--------------------------
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS HEREIN
IS A COMBINED PROSPECTUS AND ALSO RELATES TO UP TO $885,437,312 OF UNSOLD
SECURITIES OF HOLDINGS COVERED BY REGISTRATION STATEMENT NO. 333-44771
PREVIOUSLY FILED WITH THE COMMISSION ON FORM S-3 AND DECLARED EFFECTIVE FEBRUARY
13, 1998. THIS REGISTRATION STATEMENT ALSO CONSTITUTES POST-EFFECTIVE AMENDMENT
NO. 1 TO REGISTRATION STATEMENT NO. 333-44771.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
INTRODUCTORY NOTE
THIS REGISTRATION STATEMENT CONTAINS: (1) A PROSPECTUS (THE "BASE
PROSPECTUS") RELATING TO (A) DEBT SECURITIES, PREFERRED STOCK AND DEPOSITARY
SHARES WHICH MAY BE OFFERED BY LEHMAN BROTHERS HOLDINGS INC. AND (B) TRUST
PREFERRED SECURITIES WHICH MAY BE OFFERED BY LEHMAN BROTHERS HOLDINGS CAPITAL
TRUSTS I, II AND III, AND (2) A SUPPLEMENT TO THE BASE PROSPECTUS (THE "MTN
SUPPLEMENT"), RELATING TO MEDIUM TERM NOTES, SERIES E, TO BE OFFERED BY LEHMAN
BROTHERS HOLDINGS INC.
THE MTN SUPPLEMENT HAS BEEN FILED AS PART OF THIS REGISTRATION STATEMENT
BECAUSE LEHMAN BROTHERS HOLDINGS INC. EXPECTS THAT THE OFFERING OF ITS DEBT
SECURITIES AS DESCRIBED THEREIN WILL COMMENCE PROMPTLY UPON EFFECTIVENESS OF
THIS REGISTRATION STATEMENT. THE AMOUNT OF DEBT SECURITIES SHOWN AS BEING
OFFERED PURSUANT TO THE MTN SUPPLEMENT WILL BE REDUCED TO THE EXTENT THAT ANY OF
THE OTHER SECURITIES REGISTERED HEREUNDER ARE SOLD. ADDITIONAL SUPPLEMENTS TO
THE BASE PROSPECTUS SHALL BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(PURSUANT TO RULE 424(B) UNDER THE SECURITIES ACT OF 1933) FOLLOWING
EFFECTIVENESS OF THIS REGISTRATION STATEMENT AS CIRCUMSTANCES WARRANT.
<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 15, 1998)
$6,885,437,312
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES E
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
Lehman Brothers Holdings Inc. (the "Company") may offer from time to time
its medium-term notes which are issuable in one or more series and may be
offered and sold either in the United States or outside the United States or
both simultaneously. The Medium-Term Notes, Series E (the "Notes") offered by
this Prospectus Supplement are offered in the United States in an aggregate
principal amount of up to $6,885,437,312 (or (i) the equivalent thereof in
foreign currencies or composite currencies, including the European Currency Unit
("ECU") (each, a "Foreign Currency"), or (ii) such greater amount, if Notes are
issued at an original issue discount, as shall result in aggregate gross
proceeds to the Company of $6,885,437,312), subject to reduction as a result of
the sale under certain circumstances of other Securities. The foregoing limit,
however, may be increased by the Company if in the future it determines that it
may wish to sell additional Notes. Each Note will mature on a day that is nine
months or more from its Issue Date, as selected by the initial purchaser and
agreed to by the Company. Unless otherwise set forth in an accompanying Pricing
Supplement (a "Pricing Supplement") to this Prospectus Supplement, the Notes
will not be redeemable at the option of the Company or repayable at the option
of the Holder prior to their Stated Maturity.
Each Note will be denominated in U.S. dollars or in units of a Foreign
Currency (the "Specified Currency") as specified in the applicable Pricing
Supplement. See "Important Currency Information" and "Currency Risks." Unless
otherwise specified in the applicable Pricing Supplement, Notes denominated in
U.S. dollars will be issued only in denominations of $1,000 or any amount in
excess thereof which is an integral multiple of $1,000. If the Notes are to be
denominated in a Foreign Currency, the authorized denominations and currency
exchange rate information will be set forth in the applicable Pricing
Supplement. The principal amount payable at Maturity and/or any interest or
premium on a Note may be determined by reference to the relationship between two
or more currencies, to the price of one or more specified securities or
commodities or to one or more securities or commodities exchange indices or
other indices or by other similar methods (an "Indexed Note"), as described in
the applicable Pricing Supplement. An Indexed Note, the principal amount payable
at Maturity and/or the interest rate of which is determined by reference to the
relationship between two currencies, two composite currencies or a currency and
a composite currency, is referred to herein as a Currency Indexed Note. See
"Description of Notes--Currency Indexed Notes" and "--Other Indexed Notes and
Certain Terms Applicable to All Indexed Notes."
(COVER CONTINUED ON FOLLOWING 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 SUPPLEMENT,
ANY PRICING SUPPLEMENT HERETO OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO AGENT'S PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
<S> <C> <C> <C>
Per Note......... 100% .125%--.625% 99.375%--99.875%
Total............ $6,885,437,312(4) $8,606,797--$43,033,983 $6,842,403,329--$6,876,830,515
</TABLE>
(1) Unless otherwise indicated in a Pricing Supplement, Notes will be issued at
100% of their principal amount.
(2) Unless otherwise indicated in a Pricing Supplement, the Company will pay
Lehman Brothers Inc. ("Lehman Brothers"), as agent (the "Agent"), a
commission ranging from .125% to .625% of the principal amount of any Note,
depending on its Stated Maturity, sold through the Agent, except that the
commission payable by the Company to the Agent with respect to Notes with
maturities of greater than 30 years will be negotiated at the time the
Company issues such Notes. The Company may also sell Notes to the Agent as
principal for resale to investors and other purchasers at varying prices
related to prevailing market prices at the time of resale to be determined
by the Agent. Unless otherwise specified in the applicable Pricing
Supplement, any Note sold to the Agent as principal will be purchased by the
Agent at a price equal to 100% of the principal amount thereof less a
percentage equal to the commission applicable to an agency sale of a Note of
identical maturity, and may be resold by the Agent. The Company may also
sell Notes directly to investors on its own behalf, in which case no
commission will be payable.
(3) Before deducting other expenses payable by the Company.
(4) Including the U.S. dollar equivalent with respect to any Notes denominated
in foreign or composite currencies.
------------------------
The Notes are offered on a continuing basis by the Company through the
Agent, which has agreed to use reasonable best efforts to solicit purchases of
the Notes. The Notes will not be listed on any securities exchange, and there
can be no assurance that the Notes offered by this Prospectus Supplement will be
sold or that there will be a secondary market for the Notes. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Company or the Agent may reject any offer to purchase Notes in whole
or in part. See "Plan of Distribution of Notes".
This Prospectus Supplement and the accompanying Prospectus may also be used
by Lehman Brothers Inc., a subsidiary of the Company, in connection with offers
and sales of the Notes related to marketmaking transactions, by and through
Lehman Brothers, at negotiated prices related to prevailing market prices at the
time of sale or otherwise. Lehman Brothers may act as principal or agent in such
transactions.
------------------------
LEHMAN BROTHERS
April 15, 1998
<PAGE>
(COVER CONTINUED FROM PRECEDING PAGE)
Each Note will be represented by either a global security (a "Global
Security") registered in the name of a nominee of The Depository Trust Company,
as Depository (each such Note represented by a Global Security being referred to
herein as a "Book-Entry Note"), or a certificate issued in definitive form (a
"Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in Book-Entry Notes will be shown on, and transfers thereof
will be effected only through, records maintained by the Depository and its
participants.
Terms not otherwise provided in this Prospectus Supplement or in the
accompanying Prospectus will be established for each Note by the Company prior
to the date of issuance of such Note (the "Issue Date") and will be indicated in
an accompanying Pricing Supplement. The Pricing Supplement relating to each Note
will describe the following terms, as applicable: (1) the Specified Currency
with respect to such Note (and, if such Specified Currency is a Foreign Currency
(a "Foreign Specified Currency"), certain other terms relating to such Note);
(2) whether such Note is a Fixed Rate Note, a Floating Rate Note, an Amortizing
Note or an Original Issue Discount Note; (3) whether such Note is an Indexed
Note, and if so the special terms thereof; (4) the price (expressed as a
percentage of the aggregate initial public offering price thereof) at which such
Note will be issued to the public; (5) the Issue Date of such Note; (6) the
Stated Maturity of such Note; (7) if such Note is a Fixed Rate Note, the rate
per annum at which such Note will bear interest, if any; (8) if such Note is a
Floating Rate Note, the interest rate formula, the Initial Interest Rate, the
Interest Reset Dates, the Interest Payment Dates, the Index Maturity, the
maximum interest rate and the minimum interest rate, if any, the Spread or
Spread Multiplier, if any, Calculation Dates, Regular Record Dates and any other
terms relating to the Calculation Agent or to the particular method of
calculating the interest rate for such Note; (9) if such Note is an Amortizing
Note, the repayment information in respect thereof; (10) whether such Note is a
Renewable Note, and if so the special terms thereof; (11) whether the interest
rate on such Note may be reset upon the occurrence of certain events or at the
option of the Company; (12) whether such Note may be redeemed at the option of
the Company, or repaid at the option of the Holder, prior to its Stated
Maturity, and if so, the provisions relating to such redemption or repayment;
(13) whether such Note will be issued initially as a Book-Entry Note or a
Certificated Note; (14) certain special federal income tax consequences of the
purchase, ownership and disposition of certain Notes, if any; and (15) any other
terms of such Note not inconsistent with the provisions of the Indenture.
Interest rates and interest rate formulas are subject to change by the
Company, but no such change will affect the interest rate on or interest rate
formula for any Note theretofore issued or which the Company has agreed to sell,
except as described herein under "Subsequent Interest Periods" and "Extension of
Maturity." Unless otherwise indicated in the applicable Pricing Supplement, the
Notes will bear interest at (i) a fixed rate or (ii) a floating rate or rates
determined by reference to the Commercial Paper Rate, the Federal Funds
Effective Rate, the CD Rate, LIBOR, the Prime Rate, the Treasury Rate or such
other interest rate formula as may be designated in an accompanying Pricing
Supplement, as adjusted by the Spread or Spread Multiplier, if any, applicable
to such Notes. Certain Notes issued at a discount from the principal amount
payable at Maturity thereof may provide that Holders of such Notes will not
receive periodic payments of interest. See "Description of Notes-- Original
Issue Discount Notes."
Unless otherwise specified in the applicable Pricing Supplement, interest on
Fixed Rate Notes will be payable each February 15 and August 15 and at Maturity.
Interest on Floating Rate Notes will be payable on the dates indicated therein
and in the applicable Pricing Supplement. See "Description of Notes--Interest
and Interest Rates."
S-2
<PAGE>
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements and to the extent inconsistent therewith replaces the
description of the general terms of the Debt Securities set forth under the
heading "Description of Debt Securities" in the accompanying Prospectus. For a
description of the rights attaching to different series of Debt Securities under
the Indenture, see "Description of Debt Securities" in the Prospectus. The Notes
constitute "Senior Debt" as defined in the accompanying Prospectus.
Certain capitalized terms used herein have the meanings ascribed thereto in
the accompanying Prospectus. Reference is also made to the Glossary for certain
defined terms used herein and the locations of other defined terms used herein.
Currency amounts in this Prospectus Supplement, the accompanying Prospectus
and any Pricing Supplement are stated in United States dollars ("$", "dollars",
"U.S. dollars" or "U.S.$"), unless otherwise indicated.
GENERAL
The Notes constitute a single series of Debt Securities for purposes of the
Indenture under which they are to be issued. As of April 15, 1998, there was an
aggregate of $10,782,840,000 in principal amount (or the equivalent thereof in
Foreign Currencies) of Notes outstanding. The Notes are not limited as to a
total amount authorized. The Company from time to time may sell additional
series of Debt Securities (as defined in the accompanying Prospectus), including
additional series of medium-term notes. See "Plan of Distribution of Notes."
The Notes will be offered on a continuing basis and will mature on a day
nine months or more from their Issue Date, as specified in an applicable Pricing
Supplement. The Notes, other than Amortizing Notes, will not be subject to any
sinking fund nor will the Notes be redeemable at the option of the Company or
repayable at the option of the Holder prior to their Stated Maturity, unless
otherwise provided in an applicable Pricing Supplement.
Unless otherwise specified for Notes denominated in a Foreign Currency or as
otherwise specified in an applicable Pricing Supplement, the Notes will be
issuable only in fully registered form in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. If any of the Notes are to be denominated
in a Foreign Currency, or if the principal of and premium, if any, and any
interest on any of the Notes is to be payable at the option of the Holder or the
Company in a currency, including a currency unit, other than that in which such
Note is denominated, the applicable Pricing Supplement will provide additional
information, including applicable exchange rate information, pertaining to the
terms of such Notes and other matters of interest to the holders thereof.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. Except as set forth in the accompanying Prospectus under
"Description of Debt Securities--Global Securities" or in the applicable Pricing
Supplement, Book-Entry Notes will not be issuable in definitive form. Unless
otherwise specified in the applicable Pricing Supplement, Indexed Notes and Dual
Currency Notes will only be issued as Certificated Notes. See "Book-Entry
Notes." Certificated Notes may be presented for registration of transfer or
exchange at the Corporate Trust Office.
PAYMENT CURRENCY
Unless otherwise specified in the applicable Pricing Supplement, and except
as otherwise described herein with respect to Currency Indexed Notes and Dual
Currency Notes, the Notes will be denominated in U.S. dollars and payments of
principal, premium, if any, and interest will be made in U.S. dollars. The
principal of, premium, if any, and interest on each Note denominated in a
Foreign Currency is payable by the Company in U.S. dollars based on the
equivalent of that Foreign Currency converted into U.S. dollars.
S-3
<PAGE>
If a Note is denominated in a Foreign Currency, the Company will (unless
otherwise specified in the applicable Pricing Supplement) appoint an agent (the
"Exchange Rate Agent") to determine the exchange rate for converting all
payments in respect of such Note into U.S. dollars in the manner described in
the following paragraph. Unless otherwise specified in the applicable Pricing
Supplement, Lehman Brothers Inc., or an affiliate, will act as the Exchange Rate
Agent. Notwithstanding the foregoing, the Holder of a Note denominated in a
Foreign Currency may (if the applicable Pricing Supplement and Note so indicate)
elect to receive all such payments in the Foreign Currency by delivery of a
written request to the Trustee (or to any duly appointed Paying Agent) at the
Corporate Trust Office not later than 10 calendar days prior to the applicable
payment date, and such election will remain in effect for such Holder until
revoked by written notice to the Trustee (or to any such Paying Agent) at the
Corporate Trust Office received not later than 10 calendar days prior to the
applicable payment date; provided, however, no such election or revocation may
be made with respect to payments on any Note with respect to which (i) an Event
of Default (as defined in the accompanying Prospectus) has occurred, (ii) the
Company has exercised any discharge or defeasance options or (iii) the Company
has given a notice of redemption. In the event any Holder makes any such
election pursuant to the preceding sentence, such election will not be effective
on any transferee of such Holder and such transferee shall be paid in U.S.
dollars unless such transferee makes an election pursuant to the preceding
sentence; provided, however, that, unless otherwise specified in the applicable
Pricing Supplement, such election, if in effect while funds are on deposit with
the Trustee to satisfy and discharge such Note in accordance with the provisions
of the Indenture, will be effective on any transferee of such Holder. Unless
otherwise specified in the applicable Pricing Supplement, payment of principal
of, premium, if any, and interest on Notes to be made in a Foreign Specified
Currency will be made to an account maintained by the Holder of such Notes at a
bank in the country which issues such Foreign Specified Currency (or, if such
Foreign Specified Currency is a composite currency, at a bank outside the United
States that accepts deposits in such Foreign Specified Currency).
Unless otherwise specified in the applicable Pricing Supplement, the amount
of U.S. dollars payable in respect of a Note denominated in a Foreign Currency
will be determined by the Exchange Rate Agent based on the indicative quotation
in The City of New York selected by the Exchange Rate Agent at approximately
11:00 A.M., New York City time, on the second Business Day preceding the
applicable payment date that yields the least number of U.S. dollars upon
conversion of such Foreign Currency. Unless otherwise specified in the
applicable Pricing Supplement, such selection shall be made from among the
quotations appearing on the bank composite or multi-contributor pages of the
Reuters Monitor Foreign Exchange Service or, if not available, the Telerate
Monitor Foreign Exchange Service. If such quotations are unavailable from either
such foreign exchange service, such selection shall (unless otherwise specified
in the applicable Pricing Supplement) be made from the quotations received by
the Exchange Rate Agent from no more than three nor less than two recognized
foreign exchange dealers in The City of New York selected by the Exchange Rate
Agent and approved by the Company (one of which may be the Exchange Rate Agent)
for the purchase by the quoting dealer, for settlement on such payment date, of
the aggregate amount of such Foreign Currency payable on such payment date in
respect of all Notes denominated in such Foreign Currency and for which the
applicable dealer commits to execute a contract. If no such bid quotations are
available, payments will be made in the Foreign Currency.
Unless otherwise specified in the applicable Pricing Supplement, if payment
on a Note is required to be made in a Foreign Specified Currency and such
currency is unavailable to the Company for making payments thereof due to the
imposition of exchange controls or other circumstances beyond the Company's
control, or is no longer used by the government of the country which issued such
currency or for the settlement of transactions by public institutions of or
within the international banking community, then the Company will be entitled to
make payments with respect to such Note in U.S. dollars until such Foreign
Currency is again available or so used. The amount so payable on any date in
such Foreign Currency shall be converted into U.S. dollars at a rate determined
by the Exchange Rate Agent on the basis of the noon buying rate in The City of
New York for cable transfers in the Foreign Currency as certified for customs
purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate")
for such Foreign
S-4
<PAGE>
Currency on the second Business Day prior to such payment date, or on such other
basis as shall be specified in the applicable Pricing Supplement. In the event
such Market Exchange Rate is not then available, the Company will be entitled to
make payments in U.S. dollars (i) if such Foreign Currency is not a composite
currency, on the basis of the most recently available Market Exchange Rate for
such Foreign Currency or (ii) if such Foreign Currency is a composite currency,
including, without limitation, the ECU, in an amount determined by the Exchange
Rate Agent to be the sum of the results obtained by multiplying the number of
units of each component currency of such composite currency, as of the most
recent date on which such composite currency was used, by the Market Exchange
Rate for such component currency on the second Business Day prior to such
payment date (or if such Market Exchange Rate is not then available, by the most
recently available Market Exchange Rate for such component currency, or as
otherwise specified in the applicable Pricing Supplement). Any payment in
respect of such Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into two
or more currencies, the amount of that original component currency as a
component shall be replaced by the amounts of such two or more currencies having
an aggregate value on the date of division equal to the amount of the former
component currency immediately before such division.
In the event of an official redenomination of the Specified Currency, the
Denominated Currency, the Indexed Currency or the Optional Payment Currency
(including without limitation, an official redenomination of any such currency
that is a composite currency), the obligations of the Company to make payments
in or with reference to such currency shall, in all cases, be deemed immediately
following such redenomination to be obligations to make payments in or with
reference to that amount of redenominated currency representing the amount of
such currency immediately before such redenomination. Except to the extent
Indexed Notes provide for the adjustment of the amount of principal or interest
payable in respect of such Notes pursuant to application of the formulas
described under "Currency Indexed Notes," or any other formula provided for in
the applicable Pricing Supplement, Notes will not provide for any adjustment to
any amount payable under such Notes as a result of (a) any change in the value
of the Specified Currency thereof relative to any other currency due solely to
fluctuations in exchange rates or (b) any redenomination of any component
currency of any composite currency (unless such composite currency is itself
officially redenominated).
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion (except to the extent expressly provided herein that
any determination is subject to the approval of the Company). In the absence of
manifest error, such determinations shall be conclusive for all purposes and
binding on holders of the Notes and the Exchange Rate Agent shall have no
liability therefor.
All currency exchange costs will be borne by the holders of the applicable
Notes by deduction from the payments made thereon.
PAYMENT OF PRINCIPAL AND INTEREST
Interest, if any, on the Notes will be payable on each Interest Payment Date
and at Maturity. Principal of and premium, if any, on the Notes will be payable
at Maturity.
Unless otherwise specified in the applicable Pricing Supplement, the
interest payable on any Interest Payment Date will, as provided in the
Indenture, be paid to each person in whose name a Note (or one or more
predecessor Notes) is registered at the close of business on the Regular Record
Date (whether or not a Business Day) next preceding such Interest Payment Date;
provided that, notwithstanding any provision
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of the Indenture to the contrary, interest payable on any date of Maturity shall
be payable to the Person to whom principal shall be payable; and provided,
further, that, unless otherwise specified in the applicable Pricing Supplement,
in the case of a Note initially issued between a Regular Record Date and the
Interest Payment Date relating to such Regular Record Date, interest for the
period beginning on the Issue Date and ending on such Interest Payment Date
shall be paid on the Interest Payment Date following the next succeeding Regular
Record Date to the Holder on such next succeeding Regular Record Date.
Unless otherwise specified in the applicable Pricing Supplement and except
as stated below, all interest payments with respect to Certificated Notes and
all principal payments with respect to Amortizing Notes which are Certificated
Notes (in each case other than interest and, in the case of Amortizing Notes,
principal payable at Maturity), will be made by wire transfer or by check;
provided that a Holder of $10,000,000 or more in aggregate principal amount of
Certificated Notes of like tenor and term (or a Holder of the equivalent thereof
in a Foreign Currency) shall be entitled to receive such interest (and, in the
case of Amortizing Notes, principal payments) in immediately available funds,
but only if complete and appropriate instructions have been received in writing
by the Trustee (or any duly appointed Paying Agent) on or prior to the
applicable Regular Record Date. Simultaneously with the election by any Holder
of a Note to receive payments in a Foreign Currency as provided under "Payment
Currency" above, such Holder may, if so entitled as described above, elect to
receive such payments in immediately available funds by providing complete and
appropriate instructions to the Trustee (or any duly appointed Paying Agent),
and all payments of principal of, premium, if any, and interest on such Note
will be made in immediately available funds to an account at a bank outside the
United States or as otherwise specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, payments of
principal, premium, if any, and interest payable at Maturity with respect to
Certificated Notes will be made in immediately available funds (unless otherwise
specified in the applicable Pricing Supplement, payable to an account at a bank
outside the United States if payable in a Foreign Currency) upon surrender of
the Note at the Corporate Trust Office, provided that the Note is presented to
the Trustee (or any duly appointed Paying Agent) in time for the Trustee (or any
such Paying Agent) to make such payments in such funds in accordance with its
normal procedures.
Unless otherwise specified in the applicable Pricing Supplement, payments of
interest on a Book-Entry Note, and principal of Amortizing Notes that are
Book-Entry Notes (in each case, other than at Maturity), will be made in
same-day funds in accordance with existing arrangements between the Trustee (or
any duly appointed Paying Agent) and the Depository. Unless otherwise specified
in the applicable Pricing Supplement, any principal, premium and/or interest
payable at Maturity of a Book-Entry Note will be paid by the Trustee (or any
such Paying Agent) by wire transfer in immediately available funds to an account
specified by the Depository (which account, unless otherwise provided in the
applicable Pricing Supplement, will be at a bank located outside the United
States if payable in a Foreign Currency). The Depository will allocate payments
received by it to each Book-Entry Note and make payments to the holders thereof
in accordance with its existing operating procedures. Neither the Company nor
the Trustee (nor any such Paying Agent) shall have any responsibility or
liability for such payments by the Depository.
In the event that any Interest Payment Date and/or Maturity date of any
Fixed Rate Note is not a Business Day, principal, premium and/or interest
payable at such date will be paid upon the next succeeding Business Day with the
same effect as if paid on such Interest Payment Date or such Maturity date, as
the case may be, and no additional interest shall accrue as a result of such
delayed payments. In the event that any Interest Payment Date and/or Maturity
date of any Floating Rate Note is not a Business Day, principal, premium and/or
interest payable at such date will be paid upon the next succeeding Business Day
with the same effect as if such Business Day were such Interest Payment Date
and/or Maturity date, and no interest shall accrue for the period from and after
such Interest Payment Date and/ or Maturity date to such next succeeding
Business Day, except that in the case of a LIBOR Note, if such
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next succeeding Business Day falls in the next calendar month, such Interest
Payment Date and/or Maturity date shall be the preceding day that is a Business
Day with respect to such Note.
The Company will pay any administrative costs imposed by banks in connection
with making payments in immediately available funds, but any tax, assessment or
governmental charge imposed upon payments, including, without limitation, any
withholding tax, will be borne by the holders of the Notes in respect of which
such payments are made.
INTEREST AND INTEREST RATES
Each Note will bear interest from its Issue Date at the annual rate, or at a
rate determined pursuant to an interest rate formula, stated therein and in the
applicable Pricing Supplement, until the principal thereof is paid or made
available for payment, except as described below under "Subsequent Interest
Periods" and "Extension of Maturity."
Interest rates and interest rate formulas are subject to change by the
Company from time to time but no such change will affect any Note theretofore
issued or which the Company has agreed to sell, except as described below under
"Subsequent Interest Periods" and "Extension of Maturity." Unless otherwise
indicated in the applicable Pricing Supplement, the Interest Payment Dates and
the Regular Record Dates for Fixed Rate Notes shall be as described below under
"Fixed Rate Notes." The Interest Payment Dates for Floating Rate Notes shall be
as indicated in the applicable Pricing Supplement, and unless otherwise
specified in the applicable Pricing Supplement, each Regular Record Date for a
Floating Rate Note will be the fifteenth day (whether or not a Business Day)
next preceding each Interest Payment Date.
Each Note will bear interest at either (a) a per annum fixed rate, in which
case such Note will be a "Fixed Rate Note," or (b) a floating rate determined by
reference to an interest rate formula which may be adjusted by a Spread or
Spread Multiplier, if any, in which case such Note will be a "Floating Rate
Note." Any Floating Rate Note may also have either or both of the following: (i)
a maximum numerical interest rate limitation, or ceiling, on the rate of
interest which may accrue during any interest period; and (ii) a minimum
numerical interest rate limitation, or floor, on the rate of interest which may
accrue during any interest period. The applicable Pricing Supplement will
designate one of the following interest rate bases as applicable to each
Floating Rate Note: (a) the Commercial Paper Rate in which case such Note will
be a "Commercial Paper Rate Note," (b) the Federal Funds Effective Rate in which
case such Note will be a "Federal Funds Effective Rate Note," (c) the CD Rate in
which case such Note will be a "CD Rate Note," (d) LIBOR in which case such Note
will be a "LIBOR Note," (e) the Prime Rate in which case such Note will be a
"Prime Rate Note," (f) the Treasury Rate in which case such Note will be a
"Treasury Rate Note" or (g) such other interest rate formula as is set forth in
such Pricing Supplement.
The interest rate on the Notes will in no event be higher than the maximum
rate permitted by New York law as the same may be modified by United States law
of general application. Under present New York law, the maximum rate of
interest, with certain exceptions, is 25% per annum (calculated, in each case,
on a simple interest basis). This limit does not apply to loans of $2,500,000 or
more.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Issue Date at the annual
rate stated on the face thereof. Unless otherwise indicated in the applicable
Pricing Supplement, the Interest Payment Dates for the Fixed Rate Notes (other
than Amortizing Notes) will be February 15 and August 15 of each year and the
Regular Record Dates will be February 1 and August 1 of each year. Unless
otherwise indicated in the applicable Pricing Supplement, interest on Fixed Rate
Notes will be computed and paid on the basis of a 360-day year of twelve 30-day
months.
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Unless otherwise specified in the applicable Pricing Supplement, principal
of and interest on each Amortizing Note will be payable either quarterly on each
February 15, May 15, August 15 and November 15, or semi-annually on each
February 15 and August 15, as set forth in the applicable Pricing Supplement,
and at Maturity. Payments with respect to Amortizing Notes will be applied first
to interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. A table setting forth repayment information in respect
of each Amortizing Note will be set forth in the applicable Pricing Supplement.
FLOATING RATE NOTES
Except for the period from the Issue Date to the first Interest Reset Date
set forth in the applicable Pricing Supplement, the interest rate on each
Floating Rate Note will be equal to either (i) the interest rate calculated by
reference to the specified interest rate formula (as specified in the applicable
Pricing Supplement) plus or minus the Spread, if any, or (ii) the interest rate
calculated by reference to the specified interest rate formula multiplied by the
Spread Multiplier, if any. The applicable Pricing Supplement will specify the
interest rate basis and the Spread or Spread Multiplier, if any, and the maximum
or minimum interest rate limitation, if any, applicable to each Floating Rate
Note. In addition, such Pricing Supplement may contain particulars as to the
Calculation Agent, Calculation Dates, Index Maturity, Initial Interest Rate,
Interest Determination Dates, Interest Payment Dates, Regular Record Dates and
Interest Reset Dates with respect to such Note.
Except as provided below or as set forth in an applicable Pricing
Supplement, interest on Floating Rate Notes will be payable in the case of
Floating Rate Notes with a daily, weekly or monthly Interest Reset Date on the
third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as specified in the applicable Pricing
Supplement; in the case of Floating Rate Notes with a quarterly Interest Reset
Date, on the third Wednesday of the four months of each year specified in the
applicable Pricing Supplement; in the case of Floating Rate Notes with a
semi-annual Interest Reset Date, on the third Wednesday of the two months of
each year specified in the applicable Pricing Supplement; and in the case of
Floating Rate Notes with an annual Interest Reset Date, on the third Wednesday
of the one month of each year specified in the applicable Pricing Supplement.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each an "Interest Reset Date"),
as specified in the applicable Pricing Supplement. The Interest Reset Date will
be, in the case of Floating Rate Notes which reset daily, each Business Day; in
the case of Floating Rate Notes (other than Treasury Rate Notes) which reset
weekly, the Wednesday of each week; in the case of Treasury Rate Notes which
reset weekly, the Tuesday of each week; in the case of Floating Rate Notes which
reset monthly, the third Wednesday of each month; in the case of Floating Rate
Notes which reset quarterly, the third Wednesday of the four months of each year
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes which reset semi-annually, the third Wednesday of the two months of each
year specified in the applicable Pricing Supplement; and in the case of Floating
Rate Notes which reset annually, the third Wednesday of the one month of each
year specified in the applicable Pricing Supplement; provided, however, that (i)
the interest rate in effect from the Issue Date to the first Interest Reset Date
with respect to a Floating Rate Note will be the Initial Interest Rate (as set
forth in the applicable Pricing Supplement) and (ii) the interest rate in effect
for the ten days immediately prior to Maturity will be that in effect on the
tenth day preceding such Maturity. If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Business Day for such Floating
Rate Note (or in the case of a LIBOR Note, a day that is not a London Banking
Day), the Interest Reset Date for such Floating Rate Note shall be postponed to
the next day that is a Business Day (or in the case of a LIBOR Note, to the next
day that is a London Banking Day) for such Floating Rate Note, except that in
the case of a LIBOR Note, if such London Banking Day is in the next succeeding
calendar month, such Interest Reset Date shall be the immediately preceding
London Banking Day. If an
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auction date for Treasury bills shall fall on any Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the first
Business Day immediately following such auction date.
Unless otherwise specified in the applicable Pricing Supplement, the
Interest Determination Date pertaining to an Interest Reset Date will be (a)
such Interest Reset Date for a Prime Rate Note (the "Prime Interest
Determination Date") and (b) the Business Day preceding such Interest Reset Date
for a Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), a Federal Funds Effective Rate Note (the "Federal Funds Interest
Determination Date") or a CD Rate Note (the "CD Interest Determination Date").
Unless otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the
"LIBOR Interest Determination Date") will be the second London Banking Day
preceding such Interest Reset Date. Unless otherwise specified in the applicable
Pricing Supplement, the Interest Determination Date pertaining to an Interest
Reset Date for a Treasury Rate Note (the "Treasury Interest Determination Date")
will be the day of the week in which such Interest Reset Date falls on which
Treasury bills of the applicable Index Maturity would normally be auctioned.
Treasury bills are usually sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is usually held on the
following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Interest Determination Date pertaining
to the Interest Reset Date occurring in the next succeeding week.
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will mature on an Interest Payment Date. Unless otherwise specified
in the applicable Pricing Supplement, the interest payable on each Interest
Payment Date or at Maturity for Floating Rate Notes will be the amount of
interest accrued from and including the Issue Date or from and including the
last Interest Payment Date to which interest has been paid, as the case may be,
to, but excluding, such Interest Payment Date or the date of Maturity, as the
case may be; provided, however, that in the case of a Floating Rate Note on
which interest is reset daily or weekly, interest payable on each Interest
Payment Date will be the amount of interest accrued from and including the Issue
Date or from and excluding the last date to which interest has been paid, as the
case may be, to, and including, the Regular Record Date immediately preceding
such Interest Payment Date, except that at Maturity the interest payable will
include interest accrued to, but excluding, the date of Maturity. Accrued
interest from the Issue Date or from the last date to which interest has been
paid is calculated by multiplying the face amount of a Note by an accrued
interest factor. This accrued interest factor is computed by adding the interest
factors calculated for each day from the Issue Date or from the last date to
which interest has been paid, to the date for which accrued interest is being
calculated. The interest factor for each such day is computed by dividing the
interest rate applicable to such date by 360, in the case of Commercial Paper
Rate Notes, Federal Funds Effective Rate Notes, CD Rate Notes, LIBOR Notes and
Prime Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes. The interest rate applicable to any day that is an Interest
Reset Date is the interest rate as determined, in accordance with the procedures
hereinafter set forth, with respect to the Interest Determination Date
pertaining to such Interest Reset Date. The interest rate applicable to any
other day is the interest rate for the immediately preceding Interest Reset Date
(or, if none, the Initial Interest Rate).
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest one hundred-thousandth
of a percent (.0000001), with five one-millionths of a percentage point rounded
upward, and all currency amounts used in or resulting from such calculation on
Floating Rate Notes will be rounded to the nearest one-hundredth of a unit (with
five one-thousandths of a unit being rounded upwards).
The Calculation Agent will, upon the request of the Holder of any Floating
Rate Note, provide the interest rate then in effect and, if determined, the
interest rate which will become effective as a result of a determination made on
the most recent Interest Determination Date with respect to such Note. For
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purposes of calculating the rate of interest payable on Floating Rate Notes, the
Company will enter into an agreement with the Calculation Agent.
COMMERCIAL PAPER RATE NOTES
A Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in the Commercial Paper Rate Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on that
date for commercial paper having the applicable Index Maturity as such rate is
published in H.15(519) under the heading "Commercial Paper." If such rate is not
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Commercial Paper Interest Determination Date, then the Commercial Paper
Rate shall be the Money Market Yield of the rate on such Commercial Paper
Interest Determination Date for commercial paper having the applicable Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on such Calculation Date, then the
Commercial Paper Rate for such Commercial Paper Interest Determination Date
shall be calculated by the Calculation Agent and shall be the Money Market Yield
of the arithmetic mean of the offered rates as of 11:00 A.M., New York City
time, on such Commercial Paper Interest Determination Date of three leading
dealers of commercial paper in The City of New York selected by the Calculation
Agent after consultation with the Company for commercial paper having the
applicable Index Maturity, placed for industrial issuers whose bond rating is
"AA", or the equivalent, from a nationally recognized securities rating agency;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate
for the applicable period will be the Commercial Paper Rate in effect on such
Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C>
D X 360
Money Market Yield = -------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
FEDERAL FUNDS EFFECTIVE RATE NOTES
A Federal Funds Effective Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Effective Rate and the Spread or
Spread Multiplier, if any) specified in the Federal Funds Effective Rate Note
and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Effective Rate" means, with respect to any Federal Funds Interest
Determination Date, the rate on that day for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not so published
by 9:00 A.M., New York City time, on the Calculation Date pertaining to such
Federal Funds Interest Determination Date, the Federal Funds Effective Rate will
be the rate on such Federal Funds Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Federal
Funds Interest Determination Date, then the Federal Funds Effective Rate for
such Federal Funds Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates as of 11:00 A.M.,
New
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York City time, on such Federal Funds Interest Determination Date for the last
transaction in overnight Federal Funds arranged by three leading brokers of
Federal Funds transactions in The City of New York selected by the Calculation
Agent after consultation with the Company; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Effective Rate for the applicable
period will be the Federal Funds Effective Rate in effect on such Federal Funds
Interest Determination Date.
CD RATE NOTES
A CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in the CD Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the applicable Index Maturity as
published in H.15(519) under the heading "CDs (Secondary Market)" or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such CD Interest Determination Date, the CD Rate will be the rate on such CD
Interest Determination Date for negotiable certificates of deposit of the
applicable Index Maturity as published in Composite Quotations under the heading
"Certificates of Deposit." If such rate is not yet published in either H.15(519)
or Composite Quotations by 3:00 P.M., New York City time, on such Calculation
Date, then the CD Rate for such CD Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of the opening of business, New York City
time, on such CD Interest Determination Date, of three leading nonbank dealers
in negotiable U.S. dollar certificates of deposit in The City of New York
selected by the Calculation Agent after consultation with the Company for
negotiable certificates of deposit of major United States money center banks of
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the applicable Index Maturity in a
denomination of $5,000,000; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate for the applicable period will be the CD Rate in effect on
such CD Interest Determination Date.
LIBOR NOTES
A LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in the
LIBOR Note and in the applicable Pricing Supplement.
With respect to LIBOR Notes indexed to the offered rate for U.S. dollar or
Foreign Currency deposits, unless otherwise indicated in the applicable Pricing
Supplement, "LIBOR" means the rate determined by the Calculation Agent as
follows:
(a) With respect to a LIBOR Interest Determination Date, LIBOR will be,
as specified in the applicable Pricing Supplement, either (i) the arithmetic
mean of the offered rates for deposits in U.S. dollars for the period
(commencing on the Interest Reset Date) of the applicable Index Maturity
which appear on the Reuters Screen LIBO Page at approximately 11:00 A.M.,
London time, on such LIBOR Interest Determination Date, if at least two such
offered rates appear on the Reuters Screen LIBO Page ("LIBOR Reuters"), or
(ii) the offered rate for deposits in U.S. dollars or the applicable Foreign
Currency specified in the applicable Pricing Supplement for the period
(commencing on the Interest Reset Date) of the applicable Index Maturity
which appears on the Telerate Page 3740 or the Telerate Page 3750, as
applicable, at approximately 11:00 A.M., London time, on such LIBOR Interest
Determination Date ("LIBOR Telerate"). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable Pricing Supplement, LIBOR will be
determined as if LIBOR Telerate had been specified.
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(b) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Reuters Screen LIBO Page as specified
in (a)(i) above, or on which no rate appears on the Telerate Page 3740 or
the Telerate Page 3750, as applicable, as specified in (a)(ii) above, as
applicable, the Calculation Agent will request the principal London office
of each of four major banks in the London interbank market, as selected by
the Calculation Agent after consultation with the Company, to provide the
Calculation Agent with its offered quotation for deposits in the applicable
currency for the period (commencing on the Interest Reset Date) of the
applicable Index Maturity to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date and in a principal amount equal to an amount of not less than
$1,000,000 (or the equivalent thereof in the applicable currency if such
currency is a Foreign Currency) that is representative of a single
transaction in such market at such time. If at least two such quotations are
provided, LIBOR in respect of such LIBOR Interest Determination Date will be
the arithmetic mean of such quotations. If fewer than two such quotations
are provided, LIBOR in respect of such LIBOR Interest Determination Date
will be the arithmetic mean of the rates quoted at approximately 11:00 A.M.,
New York City time, on such LIBOR Interest Determination Date by three major
banks in The City of New York selected by the Calculation Agent after
consultation with the Company for loans in the applicable currency to
leading European banks, for the period (commencing on the Interest Reset
Date) of the applicable Index Maturity and in a principal amount equal to an
amount of not less than $1,000,000 (or the equivalent thereof in the
applicable currency if such currency is a Foreign Currency) that is
representative of a single transaction in such market at such time,
provided, however, that if the banks in The City of New York selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR for the applicable period will be LIBOR as in effect on such
LIBOR Interest Determination Date.
PRIME RATE NOTES
A Prime Rate Note will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the Prime Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Interest Determination Date, the rate on
that day as published in H.15(519) under the heading "Bank Prime Loan" or, if
not so published by 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Prime Interest Determination Date, the Prime Rate will be
determined by the Calculation Agent and will be the arithmetic mean of the rates
of interest publicly announced by each bank named on the Reuters Screen NYMF
Page as such bank's prime rate or base lending rate as in effect for such Prime
Interest Determination Date. If fewer than four such rates but more than one
such rate appear on the Reuters Screen NYMF Page for such Prime Interest
Determination Date, the Prime Rate will be determined by the Calculation Agent
and will be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Prime Interest Determination Date by four major money center banks in The
City of New York selected by the Calculation Agent after consultation with the
Company. If fewer than two such rates appear on the Reuters Screen NYMF Page,
the Prime Rate will be calculated by the Calculation Agent and will be the
arithmetic mean of the prime rates in effect for such Prime Interest
Determination Date as furnished in The City of New York by at least three
substitute banks or trust companies organized and doing business under the laws
of the United States, or any state thereof, in each case having total equity
capital of at least $500,000,000 and being subject to supervision or examination
by federal or state authority, selected by the Calculation Agent after
consultation with the Company to provide such rate or rates; provided, however,
that if the banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate for the applicable period will be the
Prime Rate in effect on such Prime Interest Determination Date.
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TREASURY RATE NOTES
A Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in the Treasury Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the auction held on such Treasury Interest Determination Date of direct
obligations of the United States ("Treasury bills") having the applicable Index
Maturity as published in H.15(519) under the heading "U.S. Government
Securities--Treasury bills--auction average (investment)" or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Treasury Interest Determination Date, the auction average rate
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the Treasury
Department. In the event that the results of the auction of Treasury bills
having the applicable Index Maturity are not published or reported as provided
above by 3:00 P.M., New York City time, on such Calculation Date or if no such
auction is held on such Treasury Interest Determination Date, then the Treasury
Rate shall be calculated by the Calculation Agent and shall be a yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Interest Determination Date, of three leading primary United
States government securities dealers selected by the Calculation Agent after
consultation with the Company for the issue of Treasury bills with a remaining
maturity closest to the applicable Index Maturity; provided, however, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate for the applicable period will be
the Treasury Rate in effect on such Treasury Interest Determination Date.
S-13
<PAGE>
CURRENCY INDEXED NOTES
GENERAL
The Company may from time to time offer Notes the principal amount payable
at Maturity and/or the interest rate of which is determined by reference to the
rate of exchange between the currency or composite currency in which such Notes
(the "Currency Indexed Notes") are denominated (the "Denominated Currency") and
the other currency or composite currency specified as the Indexed Currency (the
"Indexed Currency") in the applicable Pricing Supplement, or as determined in
such other manner as may be specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, Holders of
Currency Indexed Notes will be entitled to receive (i) an amount exceeding the
stated face amount of the principal (the "Face Amount") of, and/or interest
calculated at the stated rate of interest on, their Currency Indexed Notes if,
at Maturity or upon the relevant Interest Payment Date, as the case may be, the
rate at which the Denominated Currency can be exchanged for the Indexed Currency
exceeds the rate of such exchange designated as the Base Exchange Rate,
expressed in units of the Indexed Currency per one unit of the Denominated
Currency, in the applicable Pricing Supplement (the "Base Exchange Rate") or
(ii) an amount less than such Face Amount and/or interest calculated at such
stated interest rate if, at Maturity or upon the relevant Interest Payment Date,
as the case may be, the rate at which the Denominated Currency can be exchanged
for the Indexed Currency is less than such Base Exchange Rate, in each case
determined as described below under "Payment of Principal and Interest."
Information as to the relative historical value (which information is not
necessarily indicative of relative future value) of the applicable Denominated
Currency against the applicable Indexed Currency, any exchange controls
applicable to such Denominated Currency or Indexed Currency and certain tax
consequences to Holders of Currency Indexed Notes will be set forth in the
applicable Pricing Supplement.
PAYMENT OF PRINCIPAL AND INTEREST
Unless otherwise specified in the applicable Pricing Supplement, the payment
of principal at Maturity and interest on each Interest Payment Date (until the
principal thereof is paid or made available for payment) will be payable in the
Denominated Currency (except as otherwise described under "Payment Currency") in
amounts calculated in the manner described below.
Unless otherwise specified in the applicable Pricing Supplement, principal
at Maturity, if indexed, will be payable in an amount equal to the Face Amount
of the Currency Indexed Note, plus or minus an amount determined by reference to
the difference between the Base Exchange Rate specified in the applicable
Pricing Supplement and the rate at which the Denominated Currency can be
exchanged for the Indexed Currency on the second Exchange Rate Day (the
"Determination Date") prior to the Maturity date of such Currency Indexed Note,
as determined by the determination agent specified in the applicable Pricing
Supplement (the "Determination Agent"). Such rate of exchange shall be based
upon the arithmetic mean of the open market spot offer quotations for the
Indexed Currency (spot bid quotations for the Denominated Currency) obtained by
the Determination Agent from the Reference Dealers in The City of New York at
approximately 11:00 A.M., New York City time, on the Determination Date, for an
amount of Indexed Currency equal to the aggregate Face Amount of such Currency
Indexed Notes multiplied by the Base Exchange Rate, with settlement on the
Maturity date to be in the Denominated Currency (such rate of exchange, as so
determined and expressed in units of the Indexed Currency per one unit of the
Denominated Currency, is hereafter referred to as the "Spot Rate"). If such
quotations from the Reference Dealers are not available on the Determination
Date due to circumstances beyond the control of the Company or the Determination
Agent, the Spot Rate will be determined on the basis of the most recently
available quotations from the Reference Dealers. As used herein, the term
"Reference Dealers" shall mean the three banks or firms specified as such in the
applicable Pricing Supplement, or if any of them shall be unwilling or unable to
provide the requested quotations, such other major money center bank or banks in
The City of New York selected by the Company, in consultation with the
Determination Agent, to act as Reference Dealer or Dealers in replacement
therefor. The principal
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amount of and interest on the Currency Indexed Notes determined by the
Determination Agent to be payable will be payable to the Holders thereof in the
manner set forth herein and in the applicable Pricing Supplement. In the absence
of manifest error, the determination by the Determination Agent of the Spot Rate
and of the amount of principal and interest payable in respect of Currency
Indexed Notes shall be final and binding on the Company and the Holders of such
Currency Indexed Notes.
Unless otherwise specified in the applicable Pricing Supplement, on the
basis of the aforesaid determination by the Determination Agent and the formulas
and limitations set forth below, (i) if the Base Exchange Rate equals the Spot
Rate for any Currency Indexed Note, then the principal amount of such Currency
Indexed Note payable at Maturity would be equal to the Face Amount of such
Currency Indexed Note; (ii) if the Spot Rate exceeds the Base Exchange Rate
(i.e., the Denominated Currency has appreciated against the Indexed Currency
during the term of the Currency Indexed Note), then the principal amount so
payable would be greater than the Face Amount of such Currency Indexed Note;
(iii) if the Spot Rate is less than the Base Exchange Rate (i.e., the
Denominated Currency has depreciated against the Indexed Currency during the
term of the Currency Indexed Note) but is greater than one-half of the Base
Exchange Rate, then the principal amount so payable would be less than the Face
Amount of such Currency Indexed Note; and (iv) if the Spot Rate is less than or
equal to one-half of the Base Exchange Rate, then the Spot Rate will be deemed
to be one-half of the Base Exchange Rate and no principal amount of the Currency
Indexed Note would be payable at Maturity.
With respect to the payment of interest on each Interest Payment Date, if
indexed, the amount will be the Face Amount multiplied by the relevant interest
rate, indexed as specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
formulas to be used by the Determination Agent to determine the principal amount
of a Currency Indexed Note payable at Maturity and the interest payable on each
Interest Payment Date will be as follows:
As to principal, if the Spot Rate equals or exceeds the Base Exchange Rate,
the principal amount of a Currency Indexed Note payable at Maturity shall equal:
<TABLE>
<S> <C>
Spot Rate - Base Exchange Rate
Face Amount + (Face Amount X ------------------------------
Spot Rate );
</TABLE>
and if the Base Exchange Rate exceeds the Spot Rate, the principal amount of a
Currency Indexed Note payable at Maturity (which shall, in no event, be less
than zero) shall equal:
<TABLE>
<S> <C>
Base Exchange Rate - Spot Rate
Face Amount - (Face Amount X ------------------------------
Spot Rate ).
</TABLE>
As to interest, the amount of interest payable on any Interest Payment Date
on a Currency Indexed Note shall equal:
<TABLE>
<S> <C>
Spot Rate
Face Amount X Stated Interest Rate X -------------------
Base Exchange Rate.
</TABLE>
Unless otherwise specified in the applicable Pricing Supplement, in the
event of any redemption or repayment of a Currency Indexed Note prior to its
Stated Maturity, the phrases "Maturity date" and "at Maturity" used above would
refer to the redemption or repayment date of such Currency Indexed Note.
OTHER INDEXED NOTES AND CERTAIN TERMS APPLICABLE TO ALL INDEXED NOTES
The Notes may be issued as Indexed Notes, other than Currency Indexed Notes,
the principal amount payable at Maturity and/or the interest rate of which may
be determined by reference to the relationship between two or more currencies,
to the price of one or more specified securities or commodities, to one or
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<PAGE>
more securities or commodities exchange indices or other indices or by other
similar methods or formulas (each an "applicable Index"). The Pricing Supplement
relating to such an Indexed Note will describe, as applicable, the method by
which the amount of interest payable on any Interest Payment Date and the amount
of principal payable at Maturity in respect of such Indexed Note will be
determined, certain special tax consequences of the purchase, ownership or
disposition of such Indexed Notes, certain risks associated with an investment
in such Indexed Notes and other information relating to such Indexed Notes.
Unless otherwise specified in the applicable Pricing Supplement, the maximum
principal amount payable at Maturity in respect of any Indexed Note will be an
amount equal to twice the face amount thereof and the minimum principal amount
so payable would be zero.
Unless otherwise specified in the applicable Pricing Supplement, (a) for the
purpose of determining whether Holders of the requisite principal amount of Debt
Securities outstanding under the Indenture have made a demand or given a notice
or waiver or taken any other action, the outstanding principal amount of Indexed
Notes will be deemed to be the face amount thereof and (b) if the payment of
principal of and interest on any Indexed Note is accelerated in accordance with
the provisions described under "Description of Debt Securities--Events of
Default" in the Prospectus, then the Company shall pay to the Holder of such
Indexed Note on the date of acceleration the principal amount determined by
reference to the formula by which the principal amount of such Indexed Note
would be determined on the Stated Maturity date thereof, as if the date of
acceleration were the Stated Maturity date.
An investment in Indexed Notes entails significant risks, including wide
fluctuations in market value as well as in the amounts of payments due
thereunder, that are not associated with a similar investment in a conventional
debt security. Such risks depend on a number of factors including supply and
demand for the particular commodity and economic and political events over which
the Company has no control. Fluctuations in the price of any particular security
or commodity, in the rates of exchange between particular currencies or in
particular indices that have occurred in the past are not necessarily
indicative, however, of fluctuations in the price or rates of exchange that may
occur during the term of any Indexed Notes. Accordingly, prospective investors
should consult their own financial and legal advisors as to the risks entailed
by an investment in Indexed Notes. Indexed Notes are not an appropriate
investment for investors who are unsophisticated with respect to securities,
commodities and/or foreign currency transactions.
DUAL CURRENCY NOTES
GENERAL
The Company may from time to time offer Notes (the "Dual Currency Notes") as
to which the Company has a one time option, exercisable on any one of the dates
specified in the applicable Pricing Supplement (each an "Option Election Date")
in whole, but not in part, with respect to all Dual Currency Notes issued on the
same day and having the same terms (a "Tranche"), of thereafter making all
payments of principal, premium, if any, and interest (which payments would
otherwise be made in the Specified Currency of such Notes) in the optional
currency specified in the applicable Pricing Supplement (the "Optional Payment
Currency"). Information as to the relative value of the Specified Currency
compared to the Optional Payment Currency will be set forth in the applicable
Pricing Supplement.
The Pricing Supplement for each issuance of Dual Currency Notes will
specify, among other things, the Specified Currency and Optional Payment
Currency of such issuance and the Designated Exchange Rate for such issuance,
which will be a fixed exchange rate used for converting amounts denominated in
the Specified Currency into amounts denominated in the Optional Payment
Currency. The Pricing Supplement will also specify the Option Election Dates and
Interest Payment Dates for the related issuance of Dual Currency Notes. Each
Option Election Date will be a certain number of days before an Interest Payment
Date or the Stated Maturity date, as set forth in the applicable Pricing
Supplement, and
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<PAGE>
will be the date on which the Company may select whether to make all scheduled
payments due thereafter in the Optional Payment Currency rather than in the
Specified Currency.
If the Company makes such an election, the amount payable in the Optional
Payment Currency shall be determined using the exchange rate specified in the
applicable Pricing Supplement (the "Designated Exchange Rate"). If such election
is made, notice of such election shall be mailed in accordance with the terms of
the applicable Tranche of Dual Currency Notes within five Business Days of the
Option Election Date and shall state (i) the first date, whether an Interest
Payment Date and/or the Stated Maturity date, on which scheduled payments in the
Optional Payment Currency will be made and (ii) the Designated Exchange Rate.
Any such notice by the Company, once given, may not be withdrawn. The equivalent
value in the Specified Currency of payments made after such an election may be
less, at the then current exchange rate, than if the Company had made such
payment in the Specified Currency.
For further information regarding certain tax consequences to Holders of
Dual Currency Notes, see "United States Taxation--Dual Currency Debt Securities"
in the accompanying Prospectus.
PAYMENT DUE UPON EARLY MATURITY
Unless otherwise specified in the applicable Pricing Supplement,
notwithstanding any prior election made by the Company, if a Note is a Dual
Currency Note, the amount payable on such Note in the event of any optional
redemption by the Company, any repayment at the option of the Holder, any
acceleration of the Maturity of such Note or other prepayment of such Note prior
to the Stated Maturity of such Note shall be an amount equal to the Face Amount
thereof plus accrued interest to but excluding the date of Maturity minus the
Total Option Value multiplied by a fraction, the numerator of which is the Face
Amount of such Dual Currency Note and the denominator of which is the aggregate
Face Amount of all Dual Currency Notes of the same Tranche, provided, however,
that if such Dual Currency Note is also an Original Issue Discount Note, the
aggregate Face Amount of all Dual Currency Notes of the same Tranche upon
acceleration will be deemed to be the principal amount of an original issue
discount note payable upon acceleration as described below under "Original Issue
Discount Notes." Notwithstanding any prior election made by the Company, such
payment shall be made in the Specified Currency unless otherwise provided in the
applicable Pricing Supplement.
In no event will payment of principal of any Dual Currency Note upon
acceleration be less than zero.
All determinations with respect to Dual Currency Notes made by the Exchange
Rate Agent or the Option Value Calculation Agent shall be at their sole
discretion (except to the extent it is expressly provided that any determination
is subject to approval by the Company) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder thereof, and
neither the Exchange Rate Agent nor the Option Value Calculation Agent shall
have any liability therefor.
AMORTIZING NOTES
The Company may from time to time offer Fixed Rate Notes for which payments
combining principal and interest are made in installments over the life of the
Notes ("Amortizing Notes"). Unless otherwise specified in the applicable Pricing
Supplement, interest on each Amortizing Note will be computed on the basis of a
360-day year of twelve 30-day months. Payments with respect to Amortizing Notes
will be applied first to interest due and payable thereon and then to the
reduction of the unpaid principal amount thereof. Further information concerning
additional terms and conditions of any issue of Amortizing Notes will be
provided in the applicable Pricing Supplement. A table setting forth repayment
information in respect of each Amortizing Note will be included in the
applicable Pricing Supplement and set forth on such Notes.
S-17
<PAGE>
ORIGINAL ISSUE DISCOUNT NOTES
The Company may from time to time offer Original Issue Discount Notes. The
applicable Pricing Supplement to certain Original Issue Discount Notes may
provide that Holders of such Notes will not receive periodic payments of
interest.
Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note is an
Original Issue Discount Note, the amount payable on such Note in the event of
Maturity prior to its Stated Maturity shall be the Amortized Face Amount of such
Note as of the date of Maturity. The "Amortized Face Amount" of an Original
Issue Discount Note shall be the amount equal to (i) the issue price set forth
in the applicable Pricing Supplement plus (ii) that portion of the difference
between the issue price and the principal amount of such Note that has accrued
at the yield to maturity set forth in the Pricing Supplement (computed in
accordance with generally accepted United States bond yield computation
principles) by such date of Maturity, but in no event shall the Amortized Face
Amount of an Original Issue Discount Note exceed its principal amount.
OTHER PROVISIONS
Any provisions with respect to the determination of an interest rate basis,
the specification of interest rate basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the terms
as specified under "Other Provisions" on the face of such Note, or in an
addendum relating thereto if so specified on the face thereof, and in the
applicable Pricing Supplement.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same terms may be represented
by a single Global Security. Each Global Security representing Book-Entry Notes
will be deposited with, or on behalf of, The Depository Trust Company, New York,
New York (the "Depository"), and registered in the name of a nominee of the
Depository. The Depository currently only accepts Notes denominated in U.S.
dollars.
So long as the Depository or its nominee is the registered owner of any
Global Security, the Depository or its nominee, as the case may be, will be
considered the sole owner or Holder of the Book-Entry Note or Notes represented
by such Global Security for all purposes under the Indenture.
The Depository has advised the Company and the Agent as follows: The
Depository is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of section 17A of the
Securities Exchange Act of 1934, as amended. The Depository was created to hold
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's participants include securities brokers and dealers (including the
Agent), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own the Depository.
Access to the Depository's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly. See
"Description of Debt Securities--Global Securities" in the accompanying
Prospectus.
REDEMPTION AND REPAYMENT
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be redeemable prior to their Stated Maturity. If so specified in an
applicable Pricing Supplement with respect to a Note or Notes, such Note or
Notes will be redeemable on or after the date or dates set forth in such Pricing
Supplement, either in whole or from time to time in part, at the option of the
Company, at a redemption
S-18
<PAGE>
price equal to 100% of the principal amount to be redeemed or at such other
price or prices set forth in such Pricing Supplement, together with interest
accrued thereon to the date of redemption, on notice given not more than 60 nor
less than 30 days prior to the date of redemption. If less than all of the Notes
with like tenor and terms are to be redeemed, the Notes to be redeemed shall be
selected by the Trustee by such method as the Trustee shall deem fair and
appropriate. The Notes, other than Amortizing Notes, will not be subject to any
sinking fund, unless otherwise specified in an applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be repayable prior to their Stated Maturity. If so specified in an
applicable Pricing Supplement with respect to a Note or Notes, such Note or
Notes will be repayable at the option of the Holder on a date or dates specified
prior to their Stated Maturity at a price or prices set forth in the applicable
Pricing Supplement, together with accrued interest to the date of repayment.
In order for a Note to be repaid, the Paying Agent must receive at least 30
days but not more than 45 days prior to the repayment date (i) the Note with the
form entitled "Option to Elect Repayment" on the reverse of the Note duly
completed or (ii) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. (the "NASD") or a commercial bank or trust company in
the United States setting forth the name of the Holder of the Note, the
principal amount of the Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of the Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that the Note to be repaid with the form entitled "Option to Elect
Repayment" on the reverse of the Note duly completed will be received by the
Paying Agent not later than five Business Days after the date of such telegram,
telex, facsimile transmission or letter and such Note and form duly completed
are received by the Paying Agent by such fifth Business Day. Exercise of the
repayment option by the Holder of a Note shall be irrevocable. The repayment
option may be exercised by the Holder of a Note for less than the entire
principal amount of the Note provided that the principal amount of the Note
remaining outstanding after repayment is an authorized denomination. Upon any
partial repayment of a Note, such Note will be cancelled and a new Note or Notes
for the remaining principal amount shall be issued in the name of the Holder of
the partially repaid Note.
If a Note is represented by a Global Security, the Depository's nominee will
be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depository's nominee
will timely exercise a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depository of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Note in
order to ascertain the cut-off time by which such an instruction must be given
in order for timely notice to be delivered to the Depository.
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes purchased by the Company may, at its discretion, be held,
resold or surrendered to the Trustee for cancellation.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each Note will indicate whether the
Company has the option with respect to such Note to reset the interest rate, in
the case of a Fixed Rate Note, or to reset the Spread or Spread Multiplier, in
the case of a Floating Rate Note, and, if so, the date or dates on which such
interest rate or such Spread or Spread Multiplier, as the case may be, may be
reset (each an "Optional Reset Date"). If the Company has such option with
respect to any Note, the following procedures shall apply, unless modified as
set forth in the applicable Pricing Supplement.
The Company may exercise such an option with respect to a Note by notifying
the Trustee in writing of such exercise at least 45 but not more than 60 days
prior to an Optional Reset Date for such Note. Not
S-19
<PAGE>
later than five Business Days after receipt thereof, the Trustee will mail to
the Holder of such Note a notice (the "Reset Notice"), first class, postage
prepaid, setting forth (i) the election of the Company to reset the interest
rate, in the case of a Fixed Rate Note, or the Spread or Spread Multiplier, in
the case of a Floating Rate Note, (ii) such new interest rate or such new Spread
or Spread Multiplier, as the case may be, and (iii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next Optional
Reset Date or, if there is no such next Optional Reset Date, to the Stated
Maturity of such Note (each such period a "Subsequent Interest Period"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during such Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, the Company may, at its option, revoke the interest rate,
in the case of a Fixed Rate Note, or the Spread or Spread Multiplier, in the
case of a Floating Rate Note, provided for in the Reset Notice and establish a
higher interest rate or higher Spread or Spread Multiplier, as the case may be,
for the Subsequent Interest Period commencing on such Optional Reset Date by
causing the Trustee to mail notice of such higher interest rate or higher Spread
or Spread Multiplier, as the case may be, first class, postage prepaid, to the
Holder of such Note. Such notice shall be irrevocable and shall be mailed by the
Trustee within five Business Days after receipt thereof. All Notes with respect
to which the interest rate or Spread or Spread Multiplier is reset on an
Optional Reset Date will bear such higher interest rate, in the case of a Fixed
Rate Note, or higher Spread or Spread Multiplier, in the case of a Floating Rate
Note, whether or not tendered for repayment.
If the Company resets the interest rate or the Spread or Spread Multiplier
of a Note, the Holder of such Note will have the option to elect repayment of
such Note, or any portion thereof, by the Company on an Optional Reset Date at a
price equal to the principal amount thereof to be repaid plus any accrued
interest to such Optional Reset Date. In order for a Note to be so repaid on an
Optional Reset Date, the Holder thereof must follow the procedures set forth
above under "Redemption and Repayment" for optional repayment except that the
period for delivery of such Note or notification to the Trustee shall be at
least 25 but not more than 35 days prior to such Optional Reset Date and except
that a Holder who has tendered a Note for repayment pursuant to a Reset Notice
may, by written notice to the Trustee, revoke any such tender for repayment
until the close of business on the tenth day prior to such Optional Reset Date;
provided, however, that if such day is not a Business Day, then such notice may
be given on the next succeeding Business Day.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether the
Company has the option with respect to such Note to extend the Stated Maturity
of such Note, and, if so, the number of periods of from one to five whole years
(each an "Extension Period") for which the Maturity of such Note is extendible
and the date beyond which such Maturity may not be extended (the "Final
Maturity"). If the Company has such option with respect to any Note, the
following procedures shall apply, unless modified as set forth in the applicable
Pricing Supplement.
The Company may exercise such an option with respect to a Note by notifying
the Trustee of such exercise at least 45 but not more than 60 days prior to the
Stated Maturity of such Note in effect prior to the exercise of such option (the
"Original Stated Maturity"). Not later than five Business Days after receipt
thereof, the Trustee will mail to the Holder of such Note a notice (the
"Extension Notice"), first class, postage prepaid setting forth (i) the election
of the Company to extend the Stated Maturity of such Note, (ii) the new Stated
Maturity, (iii) in the case of a Fixed Rate Note, the interest rate applicable
to the Extension Period or, in the case of a Floating Rate Note, the Spread or
Spread Multiplier applicable to the Extension Period, and (iv) the provisions,
if any, for redemption during the Extension Period, including the date on which
or the period or periods during which and the price at which such redemption may
occur during the Extension Period. Upon the mailing by the Trustee of an
Extension Notice to the Holder of a
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Note, the Stated Maturity of such Note shall be extended automatically, and,
except as modified by the Extension Notice and as described in the next
paragraph, such Note will have the same terms as prior to the mailing of such
Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity for a Note, the Company may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread or Spread Multiplier, in
the case of a Floating Rate Note, provided for in the Extension Notice and
establish a higher interest rate or a higher Spread or Spread Multiplier, as the
case may be, for the Extension Period by causing the Trustee to mail notice of
such higher interest rate or higher Spread or Spread Multiplier, as the case may
be, first class, postage prepaid, to the Holder of such Note. Such notice shall
be irrevocable and shall be mailed by the Trustee within three Business Days
after receipt thereof. All Notes with respect to which the Stated Maturity is
extended will bear such higher interest rate, in the case of a Fixed Rate Note,
or higher Spread or Spread Multiplier, in the case of a Floating Rate Note, for
the Extension Period, whether or not tendered for repayment.
If the Company extends the Stated Maturity of a Note, the Holder of such
Note will have the option to elect repayment by the Company of such Note, or of
any portion thereof, on the Original Stated Maturity at a price equal to the
principal amount thereof to be repaid plus any accrued interest to such date. In
order for a Note to be so repaid on the Original Stated Maturity, the Holder
thereof must follow the procedures set forth above under "Redemption and
Repayment" for optional repayment, except that the period for delivery of such
Note or notification to the Trustee shall be at least 25 but not more than 35
days prior to the Original Stated Maturity and except that a Holder who has
tendered a Note for repayment pursuant to an Extension Notice may, by written
notice to the Trustee, revoke any such tender for repayment until the close of
business on the tenth day prior to the Original Stated Maturity; provided,
however, that if such day is not a Business Day, then such notice may be given
on the next succeeding Business Day.
RENEWABLE NOTES
The Company may from time to time offer Notes which will mature on an
Interest Payment Date specified in the applicable Pricing Supplement occurring
in or prior to the twelfth month following the Issue Date of such Notes (the
"Initial Maturity Date") unless the maturity of all or any portion of any such
Note (a "Renewable Note") is extended in accordance with the procedures
described below.
On each Election Date (the "Election Date") specified in the applicable
Pricing Supplement prior to the Initial Maturity Date of a Renewable Note, the
Maturity of such Renewable Note may be extended by the Holder thereof to the
Interest Payment Date occurring in the twelfth month after the Interest Reset
Date next succeeding such Election Date, or such other date as may be specified
in the applicable Pricing Supplement (the "Extended Maturity Date"), as
described below. If a Holder does not elect to extend the maturity of any
portion of the principal amount of a Renewable Note during the specified period
prior to any Election Date, such portion will become due and payable on the
Extended Maturity Date specified at the prior Election Date.
A Holder of a Renewable Note may elect to extend the Maturity of such
Renewable Note, or if so specified in the applicable Pricing Supplement, any
portion thereof, by delivering a notice to such effect to the Trustee (or any
duly appointed Paying Agent) at the Corporate Trust Office not less than 3 nor
more than 15 days prior to such Election Date (unless another period is
specified in the applicable Pricing Supplement as the "Special Election
Period"). Such election will be irrevocable and will be binding upon each
subsequent Holder of such Renewable Note. An election to extend the Maturity of
a Renewable Note may be exercised with respect to less than the entire principal
amount of such Renewable Note only if so specified in the applicable Pricing
Supplement and only in such principal amount, or any integral multiple in excess
thereof, as is specified in the applicable Pricing Supplement. Notwithstanding
the foregoing, the maturity of the Renewable Notes may not be extended beyond
the Stated Maturity Date specified for such Renewable Notes in the applicable
Pricing Supplement.
S-21
<PAGE>
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Redemption and Repayment," "Subsequent Interest Periods,"
"Extension of Maturity" and "Renewable Notes."
IMPORTANT CURRENCY INFORMATION
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for each Note in the Specified Currency for such Note.
Currently, there are limited facilities in the United States for conversion of
U.S. dollars into Foreign Currencies and vice versa, and most banks do not
currently offer non-U.S. dollar denominated checking or savings account
facilities in the United States. However, if requested by a prospective
purchaser of Notes denominated in a Foreign Currency, the Agent will arrange for
the conversion of U.S. dollars into such Foreign Currency to enable the
purchaser to pay for such Notes. Such requests must be made on or before the
fifth Business Day preceding the date of delivery of the Notes, or by such other
date as may be determined by the Agent. Each such conversion will be made by the
Agent on such terms and subject to such conditions, limitations and charges as
the Agent may from time to time establish in accordance with its regular foreign
exchange practice. All costs of exchange will be borne by the purchaser of such
Notes.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in, or the payment of which is
to be made in or determined with reference to, a Foreign Currency entails
significant risks that are not associated with a similar investment in a
security denominated in U.S. dollars. Such risks generally depend on factors
over which the Company has no control and include, without limitation, the
possibility of significant changes in rates of exchange between the U.S. dollar
and the Foreign Currency. Currency exchange rates are determined by, among other
factors: changing supply and demand for a particular currency; trade, fiscal,
monetary, foreign investment and exchange control programs and policies of
governments; U.S. and foreign political and economic events and policies, rates
of inflation or interest rates; restrictions on U.S. or foreign exchanges or
markets; changes in balances of payment and trade; and currency devaluations and
regulations. In recent years, rates of exchange between U.S. dollars and certain
foreign currencies have been highly volatile and such volatility may be expected
to continue in the future. Fluctuations in any particular exchange rate that
have occurred in the past are not necessarily indicative, however, of
fluctuations in the rate that may occur during the term of any Note.
Depreciation of the Foreign Currency in which a Note is denominated against
the U.S. dollar would result in a decrease in the effective yield of such Note
below its coupon rate and, in certain circumstances, could result in a loss to
the investor on a U.S. dollar basis. Similarly, depreciation of the Denominated
Currency with respect to an Indexed Note against the applicable Index would
result in the principal amount payable with respect to such Note at the date of
Maturity being less than the Face Amount of such Note which, in turn, would
decrease the effective yield of such Note below its applicable interest rate and
could also result in a loss to the investor.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Foreign Currency for making payments with respect to a Note denominated in
such currency. There can be no assurances that exchange controls will not
restrict or prohibit payments of principal or interest in any currency or
currency unit. Even if there are no actual exchange controls, it is possible
that on an Interest Payment Date with respect to, or at the Maturity of, any
particular Note, the Foreign Currency for such Note would not be available to
the Company to make payments of interest and principal then due. In that event,
the Company will make such payments in the manner described under "Description
of Notes--Payment Currency." In the event of an official redenomination of the
Specified Currency (including without limitation, an official redenomination
S-22
<PAGE>
of a Specified Currency that is a composite currency) the obligations of the
Company with respect to payments on Notes denominated in such currency shall be
deemed, in all cases, immediately following such redenomination to provide for
the payment of that amount of redenominated currency specified in the applicable
Pricing Supplement representing the amount of such obligations immediately
before such redenomination. See "Description of Notes--Payment Currency."
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT AND ANY
PRICING SUPPLEMENT WILL NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES
DENOMINATED IN, OR THE PAYMENT OF WHICH IS TO BE MADE IN OR IS RELATED TO THE
VALUE OF, A CURRENCY (INCLUDING ANY COMPOSITE CURRENCY) OTHER THAN U.S. DOLLARS,
AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF
SUCH RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR THE DATE
OF ANY PRICING SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN SUCH NOTES, WHICH ARE NOT AN
APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY TRANSACTIONS.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers of Notes who are residents of the United States, and the
Company disclaims any responsibility to advise prospective purchasers who are
residents of countries other than the United States with respect to any matters
that may affect the purchase or holding of, or receipt of payments of principal,
premium or interest in respect of, Notes. Such persons should consult their own
counsel with regard to such matters.
Pricing Supplements relating to Notes denominated in a Foreign Currency will
contain information concerning historical exchange rates for such Foreign
Currency against the U.S. dollar, a description of the currency and any exchange
controls as of the date of the applicable Pricing Supplement affecting such
currency.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than U.S. dollars.
Under New York law, any judgment with respect to a Note denominated in a Foreign
Specified Currency will be rendered in such Foreign Currency and converted into
U.S. dollars at a rate of exchange prevailing on the date of entry of the
judgment or decree. In the event an action based on Notes denominated in a
Foreign Currency were commenced in a court in the United States outside New
York, the currency of judgment and/or applicable exchange rate may differ. The
Indenture provides that if it is necessary for the purpose of obtaining a
judgment in any court to convert any currency into any other currency, such
conversion shall be made at a rate of exchange prevailing on the date the
Company makes payment to any person in satisfaction of the judgment. If pursuant
to any judgment conversion is to be made on a date other than the payment date,
the Indenture provides that the Company shall pay any additional amounts
necessary to indemnify such person for any change between the rate of exchange
prevailing on the payment date and the rate of exchange prevailing on such other
date.
S-23
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the ownership of Notes as of the date hereof. Except where
noted, it deals only with Notes held as capital assets by United States Holders
and does not deal with special situations, such as those of dealers in
securities, financial institutions, life insurance companies or United States
Holders whose "functional currency" is not the U.S. dollar. Furthermore, the
discussion below is based upon the provisions of the Internal Revenue Code of
1986 (the "Code") and regulations, rulings and judicial decisions thereunder as
of the date hereof, and such authorities may be repealed, revoked or modified so
as to result in federal income tax consequences different from those discussed
below. For a discussion of certain United States federal income tax consequences
of the ownership of Notes to United States Holders and Non-United States Holders
see "United States Taxation" in the accompanying Prospectus and the discussion
set forth below. Any special United States federal income tax considerations
relevant to a particular issue of the Notes will be provided in the applicable
financing supplement. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION
OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. AS USED HEREIN, A
"UNITED STATES HOLDER" OF A NOTE MEANS (I) A CITIZEN OR RESIDENT OF THE UNITED
STATES, (II) A CORPORATION OR PARTNERSHIP CREATED OR ORGANIZED IN OR UNDER THE
LAWS OF THE UNITED STATES OR ANY POLITICAL SUBDIVISION THEREOF, ALTHOUGH THE
INTERNAL REVENUE SERVICE (THE "IRS") HAS BEEN GRANTED REGULATORY AUTHORITY TO
AMEND THE DEFINITION OF A PARTNERSHIP ON A PROSPECTIVE BASIS, (III) AN ESTATE
OR, FOR TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 1997, A TRUST THE INCOME OF
WHICH IS SUBJECT TO UNITED STATES FEDERAL INCOME TAXATION REGARDLESS OF ITS
SOURCE OR (IV) FOR TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1996, A TRUST
WHICH IS SUBJECT TO THE SUPERVISION OF A COURT WITHIN THE UNITED STATES AND THE
CONTROL OF ONE OR MORE UNITED STATES PERSONS AS DEFINED IN SECTION 7701(A)(30)
OF THE CODE. A "NON-UNITED STATES HOLDER" IS A HOLDER THAT IS NOT A UNITED
STATES HOLDER.
ORIGINAL ISSUE DISCOUNT
Notes issued with "original issue discount" ("OID") will be referred to as
"Original Issue Discount Notes". For a discussion of the principal United States
federal income tax consequences of the ownership of Original Issue Discount
Notes by United States Holders, see "United States Taxation" in the accompanying
Prospectus. Notice will be given in the applicable Pricing Supplement when the
Company determines that a particular Note will be an Original Issue Discount
Note.
Persons considering the purchase of Original Issue Discount Notes that may
be redeemed prior to their Maturity at the option of the Company and/or at the
option of the Holder should carefully examine the applicable Pricing Supplement
and should consult their own tax advisors with respect to such features since
the tax consequences with respect to OID will depend, in part, on the particular
terms and features of such Notes.
INDEXED NOTES
The tax treatment of a United States Holder of an Indexed Note including a
Currency-Indexed Note, will depend on factors including the specific index or
indices used to determine indexed payments on the Note and the amount and timing
of any contingent payments of principal and interest. Persons considering the
purchase of Indexed Notes should carefully examine the applicable Pricing
Supplement and should consult their own tax advisors regarding the United States
federal income tax consequences of the holding and disposition of such Notes.
NON-UNITED STATES HOLDERS
The discussion under "United States Taxation" in the accompanying Prospectus
does not address the United States tax consequences of purchasing and owning
Index Notes or any other Notes that might be
S-24
<PAGE>
deemed to be contingent principal debt instruments. United States tax
consequences applicable to the purchase, ownership and disposition of Notes
bearing contingent interest, contingent principal or Index Notes will be
discussed in an applicable Pricing Supplement.
PLAN OF DISTRIBUTION OF NOTES
The Notes are offered on a continuing basis by the Company through Lehman
Brothers Inc. ("Lehman Brothers"), as Agent, which will use its reasonable best
efforts to solicit offers to purchase the Notes. The Company will pay the Agent
a commission of from .125% to .625% of the principal amount of each Note,
depending on its Maturity, sold through the Agent. The Company will have the
sole right to accept offers to purchase Notes and may reject any such offer in
whole or in part. The Agent shall have the right, in its discretion reasonably
exercised, without notice to the Company, to reject any offer to purchase Notes
received by it, in whole or in part. The Company also may sell Notes to the
Agent, acting as principal, at a discount to be agreed upon at the time of sale,
for resale to one or more investors at varying prices related to prevailing
market prices at the time of such resale, as determined by the Agent. The
Company has also reserved the right to sell Notes directly on its own behalf or
to or through one or more underwriters or additional agents.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of each Note will be required to be made in the Specified
Currency of such Note.
The Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Act").
The Agent may sell Notes to or through dealers who may resell to investors.
The Agent may pay all or part of its discount or commission to such dealers.
Such dealers may be deemed to be "underwriters" within the meaning of the Act.
The Company has been advised by the Agent that it may from time to time
purchase and sell Notes in the secondary market, but that it is not obligated to
do so. No assurance can be given that there will be a secondary market for the
Notes.
This Prospectus Supplement, together with the accompanying Prospectus, may
also be used by Lehman Brothers in connection with offers and sales of the Notes
related to market making transactions, by and through Lehman Brothers, at
negotiated prices related to prevailing market prices at the time of sale or
otherwise. Lehman Brothers may act as principal or agent in such transactions.
This offering, and all members of the NASD participating in this offering,
will comply with the applicable requirements of Rule 2720 of the NASD.
GLOSSARY
Set forth below are definitions of some of the terms used in this Prospectus
Supplement and not defined in the related Prospectus.
"Business Day" means with respect to any Note, unless otherwise specified in
the applicable Pricing Supplement, any day, other than a Saturday or Sunday,
that meets each of the following applicable requirements: such day is (a) not a
day on which banking institutions in the Borough of Manhattan, The City of New
York are authorized or required by law, regulation or executive order to close;
(b) if the Note is denominated in a Foreign Currency other than the ECU, (x) not
a day on which banking institutions are authorized or required by law or
regulation to close in the principal financial center of the country issuing the
Foreign Currency and (y) a day on which banking institutions in such principal
financial center are carrying out transactions in such Foreign Currency; (c) if
the Note is denominated in ECU, (x) not a day on which banking institutions are
authorized or required by law or regulation to close in Luxembourg and
S-25
<PAGE>
(y) an ECU clearing day, as determined by the ECU Banking Association in Paris;
and (d) if such Note is a LIBOR Note, a London Banking Day.
"Calculation Agent" means the agent appointed by the Company to calculate
interest rates for Floating Rate Notes. Unless otherwise provided in a Pricing
Supplement, the Calculation Agent will be Citibank, N.A.
"Calculation Date" means the date, if any, on which the Calculation Agent is
to calculate an interest rate for a Floating Rate Note, which shall be the tenth
calendar day after the related Interest Determination Date for such Note or if
such day is not a Business Day, the next succeeding Business Day, unless
otherwise specified in such Note and the related Pricing Supplement.
"Composite Quotations" means the daily statistical release entitled
"Composite 3:30 P.M. Quotations for U.S. Government Securities," or any
successor publication, published by the Federal Reserve Bank of New York.
"Corporate Trust Office" means the office of the Trustee at 111 Wall Street,
5th Floor, New York, New York 10043, or such other office of the Trustee or of
any duly appointed Paying Agent as may be specified in the applicable Pricing
Supplement.
"Exchange Rate Day" means any day which is a Business Day in The City of New
York, and if such term is used with reference to a Denominated Currency or
Indexed Currency that is a Foreign Currency, in the principal financial center
of the country of such Denominated Currency or Indexed Currency.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System.
"Indenture" means the Indenture, dated as of September 1, 1987 between the
Company and the Trustee, as supplemented and amended by Supplemental Indentures
dated as of November 25, 1987, as of November 27, 1990, as of September 13,
1991, as of October 4, 1993, as of October 1, 1995 and as of June 26, 1997.
"Index Maturity" means the period of time designated as the representative
maturity of the commercial paper, the certificates of deposit, the U.S. dollar
deposits or the Treasury bills, respectively, by reference to transactions in
which the Commercial Paper Rate, the CD Rate, LIBOR and the Treasury Rate,
respectively, or any other interest rate index in effect from time to time with
respect to a Note, are to be calculated as set forth in a Note bearing interest
at one of those rates and the related Pricing Supplement.
"Initial Interest Rate" means the rate at which a Floating Rate Note will
bear interest from the Issue Date to the first Interest Reset Date, as set forth
in the Note and the related Pricing Supplement.
"Interest Determination Date" means the date as of which the interest rate
for a Floating Rate Note is to be calculated, to be effective as of the
following Interest Reset Date and calculated on the related Calculation Date
(except in the case of LIBOR and Prime Rate, which are calculated on the
Interest Determination Date) as described under the heading "Floating Rate
Notes" or as otherwise set forth in a Floating Rate Note and the related Pricing
Supplement.
"Interest Payment Date" means the date on which payments of interest on a
Note (other than payments on Maturity) are to be made, which will be on February
15 and August 15 of each year in the case of Fixed Rate Notes and will be the
dates described under the heading "Floating Rate Notes" in the case of Floating
Rate Notes, unless otherwise specified in the Note and the related Pricing
Supplement.
"London Banking Day" means any day on which dealings in deposits in the
Specified Currency are transacted in the London interbank market.
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<PAGE>
"Maturity" means the date on which the principal of a Note becomes due and
payable, whether at the Stated Maturity or by declaration of acceleration or
otherwise.
"Non-United States Holder" means any holder of a Note other than a United
States Holder.
"Option Value" means, with respect to an Interest Payment Date or Stated
Maturity date, the amount calculated by the Option Value Calculation Agent to be
the arithmetic average of the prices quoted on the date of calculation by three
reference banks (which banks shall be selected by the Option Value Calculation
Agent and shall be reasonably acceptable to the Company) for the right on the
Option Election Date immediately preceding such Interest Payment Date or Stated
Maturity date to purchase for value on such Interest Payment Date or Stated
Maturity date from such reference banks (A) the aggregate amount of the
Specified Currency due on such Interest Payment Date or Stated Maturity date
with respect to all of the Dual Currency Notes of the same Tranche in exchange
for (B) the amount of the Optional Payment Currency that would be received if
the amount in clause (A) were converted into the Optional Payment Currency at
the Designated Exchange Rate.
"Option Value Calculation Agent" means, with respect to any Dual Currency
Note, the option value calculation agent designated in the applicable Pricing
Supplement.
"Original Issue Discount Note" means any Note issued with OID.
"Regular Record Date" means the date on which a Note must be held in order
for the holder to receive an interest payment on the next Interest Payment Date.
Unless otherwise specified in a Note and the related Pricing Supplement, the
Regular Record Dates for Fixed Rate Notes shall be the February 1 and August 1
next preceding such Interest Payment Date, and, in the case of Floating Rate
Notes, shall be the fifteenth day prior to the Interest Payment Date.
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service, or such other page as may replace the
LIBO page on that service for the purpose of displaying London interbank offered
rates of major banks.
"Reuters Screen NYMF Page" means the display designated as page "NYMF" on
the Reuters Monitor Money Rates Service, or such other page as may replace the
NYMF page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks.
"Security Register" means the register maintained at the Corporate Trust
Office of the Trustee.
"Spread" means the constant amount, if any, to be added to the Commercial
Paper Rate, the Federal Funds Effective Rate, the CD Rate, LIBOR, the Prime
Rate, the Treasury Rate or any other interest rate index in effect from time to
time with respect to a Note, which amount will be set forth in such Note and the
related Pricing Supplement.
"Spread Multiplier" means the constant amount by which the Commercial Paper
Rate, the Federal Funds Effective Rate, the CD Rate, LIBOR, the Prime Rate, the
Treasury Rate or any other interest rate index in effect from time to time with
respect to a Note is to be multiplied, which amount will be set forth in such
Note and the related Pricing Supplement.
"Stated Maturity" means the date specified in a Note as the date on which
principal of such Note is due and payable.
"Telerate Page 3740" means the display designated as page "3740" on the
Telerate Service, or such other page as may replace the 3740 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for deposits in Australian Dollars, French Francs, Canadian Dollars,
Italian Lira, Spanish Pesetas and Dutch Guilders.
S-27
<PAGE>
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service, or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for deposits in U.S. Dollars, British Pounds Sterling, German Deutsche
Marks, Swiss Francs, Japanese Yen and ECU.
"Total Option Value" means, with respect to any Dual Currency Note on any
date, an amount (calculated, as of such date, by the Option Value Calculation
Agent) equal to the sum of the Option Values (calculated as of such date by the
Option Value Calculation Agent) for all Interest Payment Dates occurring after
the date of calculation up to and including the Stated Maturity date.
"Treasury Department" means the United States Department of the Treasury.
"Treasury Regulations" means final, temporary or proposed Treasury
Department regulations.
"Trustee" means Citibank, N.A.
In addition, definitions for the following terms are set forth in this
Prospectus Supplement at the pages indicated:
<TABLE>
<CAPTION>
LOCATION
DEFINED TERM OF DEFINITION
- -------------------------------------------------------------------------------- ---------------
<S> <C>
Act............................................................................. S-26
Agency Agreement................................................................ S-25
Agent........................................................................... S-1
Amortized Face Amount........................................................... S-18
Amortizing Notes................................................................ S-17
applicable Index................................................................ S-16
Base Exchange Rate.............................................................. S-14
Book-Entry Note................................................................. S-1
CD Interest Determination Date.................................................. S-9
CD Rate......................................................................... S-11
CD Rate Note.................................................................... S-7
Certificated Note............................................................... S-1
Code............................................................................ S-24
Commercial Paper Interest Determination Date.................................... S-9
Commercial Paper Rate........................................................... S-10
Commercial Paper Rate Note...................................................... S-7
Company......................................................................... S-1
Currency Indexed Notes.......................................................... S-14
Denominated Currency............................................................ S-14
Depository...................................................................... S-18
Designated Exchange Rate........................................................ S-17
Determination Agent............................................................. S-14
Determination Date.............................................................. S-14
Dual Currency Notes............................................................. S-16
ECU............................................................................. S-1
Exchange Rate Agent............................................................. S-4
Extended Maturity Date.......................................................... S-21
Extension Notice................................................................ S-20
Extension Period................................................................ S-20
Face Amount..................................................................... S-14
Federal Funds Effective Rate.................................................... S-10
Federal Funds Effective Rate Note............................................... S-7
</TABLE>
S-28
<PAGE>
<TABLE>
<CAPTION>
LOCATION
DEFINED TERM OF DEFINITION
- -------------------------------------------------------------------------------- ---------------
<S> <C>
Federal Funds Interest Determination Date....................................... S-9
Final Maturity.................................................................. S-20
Fixed Rate Note................................................................. S-7
Floating Rate Note.............................................................. S-7
Foreign Currency................................................................ S-1
Foreign Currency Note........................................................... S-31
Foreign Specified Currency...................................................... S-2
Global Security................................................................. S-1
Indexed Currency................................................................ S-14
Indexed Note.................................................................... S-1
Initial Maturity Date........................................................... S-21
Interest Reset Date............................................................. S-8
Issue Date...................................................................... S-2
LIBOR........................................................................... S-11
LIBOR Interest Determination Date............................................... S-9
LIBOR Note...................................................................... S-7
LIBOR Reuters................................................................... S-11
LIBOR Telerate.................................................................. S-11
Market Exchange Rate............................................................ S-5
NASD............................................................................ S-19
New Notes....................................................................... S-24
Notes........................................................................... S-1
OID............................................................................. S-24
Old Notes....................................................................... S-24
Option Election Date............................................................ S-16
Optional Payment Currency....................................................... S-16
Optional Reset Date............................................................. S-19
Original Stated Maturity........................................................ S-20
Pricing Supplement.............................................................. S-1
Prime Interest Determination Date............................................... S-9
Prime Rate...................................................................... S-12
Prime Rate Note................................................................. S-7
Renewable Note.................................................................. S-21
Reset Notice.................................................................... S-20
Revised Terms................................................................... S-24
Special Election Period......................................................... S-21
Specified Currency.............................................................. S-1
Spot Rate....................................................................... S-14
Subsequent Interest Period...................................................... S-20
Tranche......................................................................... S-16
Treasury bills.................................................................. S-13
Treasury Interest Determination Date............................................ S-9
Treasury Rate................................................................... S-13
Treasury Rate Note.............................................................. S-7
United States Holder............................................................ S-24
</TABLE>
S-29
<PAGE>
PROSPECTUS
LEHMAN BROTHERS HOLDINGS INC.
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
-----------------
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST I
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST II
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST III
TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, TO THE EXTENT SET FORTH HEREIN, BY
LEHMAN BROTHERS HOLDINGS INC.
------------
Lehman Brothers Holdings Inc. ("Holdings") may offer from time to time (i)
unsecured debt securities (the "Debt
Securities") consisting of debentures, notes and/or other evidences of
indebtedness, or (ii) shares of preferred stock, par value $1.00 per share (the
"Offered Preferred Stock"), which may be issued in the form of depositary shares
evidenced by depositary receipts (the "Depositary Shares") in one or more
series, in each case at prices and on terms to be determined at the time of
sale.
Lehman Brothers Holdings Capital Trust I, Lehman Brothers Holdings Capital
Trust II and Lehman Brothers Holdings Capital Trust III (each, an "LBH Trust"
and together, the "LBH Trusts"), each a statutory business trust formed under
the laws of the State of Delaware, may offer from time to time, in each case at
prices and on terms to be determined at the time of sale, trust preferred
securities, representing undivided beneficial ownership interests in the assets
of the respective LBH Trust ("Preferred Securities") with the payment of
periodic cash distributions ("Distributions") and payments on liquidation,
redemption or otherwise of such Preferred Securities guaranteed (each a
"Guarantee" and together, the "Guarantees", and together with the Debt
Securities, the Offered Preferred Stock, the Depositary Shares and the Preferred
Securities, the "Securities") on a subordinated basis by Holdings to the extent
described herein. Holdings' obligations under the Guarantees will rank on a
parity with the most senior preferred or preference stock now or hereafter
issued by Holdings. Subordinated Debt (as defined herein) may be issued and sold
from time to time in one or more series by Holdings to an LBH Trust, or a
trustee of such trust, in connection with the investment of the proceeds from
the offering of Preferred Securities and Common Securities (as defined herein)
of such LBH Trust. Subordinated Debt purchased by an LBH Trust may be
subsequently distributed pro rata to holders of Preferred Securities and Common
Securities in connection with the dissolution of such LBH Trust upon the
occurrence of certain events as may be described in an accompanying Prospectus
Supplement. Each Guarantee, when taken together with Holdings' obligations under
the related Subordinated Debt, the Subordinated Indenture (as defined herein)
and the Declaration (as defined herein) of the related LBH Trust, including
Holdings' obligations to pay costs, expenses, debts and liabilities of such LBH
Trust (other than with respect to the Preferred Securities and the Common
Securities of such LBH Trust), will provide a full and unconditional guarantee
on a subordinated basis by Holdings of payments due on such Preferred
Securities.
The aggregate initial public offering price of all Securities shall not
exceed $6,885,437,312 (or, if any Securities are issued (i) with an initial
offering price denominated in a foreign currency or currency unit, such amount
as shall result in aggregate gross proceeds equivalent to $6,885,437,312 at the
time of initial offering or (ii) at an original issue discount, such greater
amount as shall result in aggregate gross proceeds of $6,885,437,312).
(COVER CONTINUED ON NEXT 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 not be used to consummate sales of Securities unless
accompanied or, to the extent permitted by applicable law, preceded by a
Prospectus Supplement.
The Securities will be sold either through underwriters, dealers or agents,
or directly by Holdings or any of the LBH Trusts. The applicable Prospectus
Supplement sets forth the names of any underwriters or agents (which may include
Lehman Brothers Inc., a subsidiary of Holdings and an affiliate of the LBH
Trusts ("Lehman Brothers")) involved in the sale of the Securities in respect of
which this Prospectus is being delivered, the proposed amounts or number of
shares, if any, to be purchased by underwriters and the compensation, if any, of
such underwriters or agents.
This Prospectus together with the applicable Prospectus Supplement may also
be used by Lehman Brothers in connection with offers and sales of Securities
related to market making transactions, by and through Lehman Brothers, at
negotiated prices related to prevailing market prices at the time of sale or
otherwise. Lehman Brothers may act as principal or agent in such transactions.
------------------------
April 15, 1998
<PAGE>
(CONTINUED FROM PRIOR PAGE)
Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an applicable Prospectus Supplement
("Prospectus Supplement"), together with the terms of the offering of the
Securities, the initial offering price, the net proceeds to Holdings or an LBH
Trust, as applicable, from the sale thereof and any listing on a securities
exchange. The Prospectus Supplement will also set forth, among other matters,
the following with respect to the particular Securities: (i) in the case of Debt
Securities, the title, priority, aggregate principal amount, the currency or
currency unit for which the Debt Securities may be purchased, the currency or
currency unit in which the principal and interest, if any, is payable, the rate
(or method of calculation) and time of payment of interest, if any, authorized
denominations, maturity, any redemption or sinking fund provisions and any
conversion or exchange rights, (ii) in the case of Offered Preferred Stock, the
designation, number of shares, liquidation preference, dividend rate (or method
of calculation thereof), dates on which dividends shall be payable and dates
from which dividends shall accrue, any redemption or sinking fund provisions and
any conversion or exchange rights and whether interests in the Offered Preferred
Stock will be represented by Depositary Shares and (iii) in the case of
Preferred Securities, the designation, number of securities, liquidation
preference per security, initial public offering price, any listing on a
securities exchange, distribution rate (or method of calculation thereof), dates
on which Distributions shall be payable and dates from which Distributions shall
accrue, any voting rights, any redemption or sinking fund provisions, any other
rights, preferences, privileges, limitations or restrictions relating to the
Preferred Securities and the terms upon which the proceeds of the sale of the
Preferred Securities shall be used to purchase a specific series of Subordinated
Debt.
AVAILABLE INFORMATION
Holdings is subject to the informational reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "SEC"). Such reports and information may be inspected and copied at the
public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the SEC: New
York Regional Office, 7 World Trade Center, New York, New York 10048; and
Chicago Regional Office, Suite 1400, 500 W. Madison Street, Chicago, Illinois
60661-2511; and copies of such material can be obtained from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The SEC also maintains a Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. Holdings' Common
Stock is listed on the New York Stock Exchange, Inc. (the "NYSE") and the
Pacific Stock Exchange Inc. (the "PSE"). Holdings' 8 3/4% Notes Due 2002 and
8.30% Quarterly Income Capital Securities Due December 31, 2035 are listed on
the NYSE. Holdings' $55 Million Serial Zero Coupon Senior Notes Due May 16,
1998, Global Telecommunications Stock Upside Note Securities(SM) Due 2000,
Select Technology Index Call Warrants Expiring May 15, 1998 and 5% Cisco Systems
Yield Enhanced Equity Linked Debt Securities Due 2001 are listed on the American
Stock Exchange, Inc. (the "ASE"). Reports and other information concerning
Holdings may also be inspected at the offices of the NYSE at 20 Broad Street,
New York, New York 10005, at the offices of the ASE, 86 Trinity Place, New York,
New York 10006 and at the offices of the PSE, 301 Pine Street, San Francisco,
California 94104.
Holdings and the LBH Trusts have filed with the SEC a registration statement
on Form S-3 (herein, together with all amendments and exhibits, referred to as
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. For further information,
reference is hereby made to the Registration Statement.
2
<PAGE>
No separate financial statements of the LBH Trusts have been included or
incorporated by reference herein. Holdings does not believe that such financial
statements would be material to holders of the Preferred Securities because (i)
all of the voting securities of the LBH Trusts will be owned, directly or
indirectly, by Holdings, a reporting company under the Exchange Act, (ii) the
LBH Trusts have no independent operations but exist for the sole purpose of
issuing securities representing undivided beneficial ownership interests in
their assets and investing the proceeds thereof in Subordinated Debt issued by
Holdings and (iii) the obligations of the LBH Trusts under the Preferred
Securities are guaranteed by Holdings to the extent described herein. See
"Description of Subordinated Debt" and "Description of Guarantees."
The LBH Trusts are not currently subject to the informational reporting
requirements of the Exchange Act. The LBH Trusts will become subject to such
requirements upon the effectiveness of the Registration Statement, although they
intend to seek and expect to receive exemptions therefrom.
------------------------
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by Holdings with the SEC pursuant
to the Exchange Act are hereby incorporated by reference in this Prospectus:
(1) Holdings' Annual Report on Form 10-K for the fiscal year ended
November 30, 1997, filed with the Commission on February 27, 1998;
(2) Holdings' Quarterly Report on Form 10-Q for the quarterly period
ended February 28, 1998, filed with the Commission on April 14, 1998; and
(3) Holdings' Current Reports on Form 8-K, filed with the Commission on
January 7, 1998, March 28, 1998 and April 6, 1998.
Each document filed by Holdings pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities offered by an applicable
Prospectus Supplement shall be deemed to be incorporated by reference into this
Prospectus from the date of filing of such document. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein,
in an applicable Prospectus Supplement or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
Holdings will provide without charge to each person, including any
beneficial owner of any of the Securities, to whom a copy of this Prospectus is
delivered, upon the written or oral request of any such person, a copy of any or
all of the documents which are incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to the
Controller's Office, Lehman Brothers Holdings Inc., 3 World Financial Center,
8th Floor, New York, New York 10285 (telephone (212) 526-0660).
3
<PAGE>
THE COMPANY
Lehman Brothers Holdings Inc. (together with its consolidated subsidiaries,
hereinafter referred to as the "Company" unless the context otherwise requires)
is one of the leading global investment banks serving institutional, corporate,
government and high net worth individual clients and customers. The Company's
worldwide headquarters in New York and regional headquarters in London and Tokyo
are complemented by offices in additional locations in the United States,
Europe, the Middle East, Latin and South America and the Asia Pacific region.
The Company's business includes capital raising for clients through
securities underwriting and direct placements; corporate finance and strategic
advisory services; merchant banking; securities sales and trading; asset
management; research; and the trading of foreign exchange, derivative products
and certain commodities. The Company acts as a market marker in all major equity
and fixed income products in both the domestic and international markets. The
Company is a member of all principal securities and commodities exchanges in the
United States, as well as the National Association of Securities Dealers, Inc.
("NASD"), and holds memberships or associate memberships on several principal
international securities and commodities exchanges, including the London, Tokyo,
Hong Kong, Frankfurt and Milan stock exchanges.
Holdings was incorporated in Delaware on December 29, 1983. Holdings'
principal executive offices are located at 3 World Financial Center, New York,
New York 10285 (telephone (212) 526-7000).
THE LBH TRUSTS
Each of the LBH Trusts is a statutory business trust formed under the
Delaware Business Trust Act, as amended (the "Trust Act"), pursuant to (i) a
declaration of trust, dated as of January 16, 1998 executed by Holdings, as
sponsor (the "Sponsor"), and the trustees of such LBH Trust and (ii) a
certificate of trust, dated as of January 16, 1998, filed with the Secretary of
State of the State of Delaware. Each such declaration will be amended and
restated in its entirety (as so amended and restated, each a "Declaration")
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. Holdings will acquire common securities
representing undivided beneficial ownership interests in the assets of each LBH
Trust (the "Common Securities," and together with the Preferred Securities, the
"Trust Securities") in an aggregate liquidation amount equal to at least 3% of
the total capital of such LBH Trust, at the same time as the Preferred
Securities are sold. Each LBH Trust will use all the proceeds derived from the
issuance of its Trust Securities to purchase Subordinated Debt and, accordingly,
the assets of each LBH Trust will consist solely of Subordinated Debt. Each LBH
Trust exists for the exclusive purposes of (i) issuing and selling the Trust
Securities, (ii) investing the gross proceeds from such sales in Subordinated
Debt and (iii) engaging in only those other activities necessary or incidental
thereto.
Each LBH Trust's business and affairs will be conducted by the trustees of
such LBH Trust (the "LBH Trustees") appointed by Holdings as holder of all the
Common Securities. Pursuant to the Declaration, there will initially be five
trustees (the "Trustees") for each LBH Trust. For each LBH Trust, three of the
LBH Trustees (the "Regular Trustees") will be individuals who are employees or
officers of or who are affiliated with Holdings. An additional trustee will be a
financial institution that is unaffiliated with Holdings, has a combined capital
and surplus of at least $50,000,000 and is subject to supervision or examination
by federal or state authorities (the "Property Trustee"). Such trustee, or a
fifth trustee, must be an entity that maintains its principal place of business
in the State of Delaware (the "Delaware Trustee"). Initially for each LBH Trust,
The Chase Manhattan Bank will act as Property Trustee and Chase Manhattan Bank
Delaware will act as Delaware Trustee, in each case, until removed or replaced
by Holdings as the holder of the Common Securities.
4
<PAGE>
The Property Trustee will hold title to the applicable Subordinated Debt for
the benefit of the holders of the Trust Securities and, as the holder of
Subordinated Debt, the Property Trustee will have the power to exercise all
rights, powers and privileges of a holder of Subordinated Debt under the
Subordinated Indenture. In addition, the Property Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of Subordinated Debt
for the benefit of the holders of the Trust Securities. Holdings, as the holder
of all the Common Securities, will have the right to appoint, remove or replace
any of the LBH Trustees and to increase or decrease the number of LBH Trustees,
provided that the number of LBH Trustees will be at least three; provided
further that at least one LBH Trustee will be a Delaware Trustee, at least one
LBH Trustee will be the Property Trustee and at least one LBH Trustee will be a
Regular Trustee. Holdings, as issuer of the Subordinated Debt to be held by the
LBH Trusts, will pay all fees and expenses related to the organization and
operations of the LBH Trusts (including any taxes, duties, assessments or
governmental charges of whatever nature (other than United States withholding
taxes) imposed by the United States or any other domestic taxing authority upon
the LBH Trusts) and the offering of the Trust Securities and be responsible for
all debts and obligations of the LBH Trusts (other than with respect to the
Trust Securities).
For each LBH Trust, for so long as the Preferred Securities of such LBH
Trust remain outstanding, Holdings will covenant, among other things, to
maintain 100% ownership of the Common Securities of such LBH Trust, to cause
such LBH Trust to remain a statutory business trust and to use its commercially
reasonable efforts to ensure that such LBH Trust will not be an "investment
company" for purposes of the Investment Company Act of 1940 (the "Investment
Company Act"). See "Description of Debt Securities-- Certain Provisions
Applicable to LBH Trusts."
The rights of the holders of the Preferred Securities of an LBH Trust,
including economic rights, rights to information and voting rights, are set
forth in the Declaration of such LBH Trust and the Trust Indenture Act. See
"Description of Preferred Securities." Declarations and Guarantees also
incorporate by reference the terms of the Trust Indenture Act.
The office of the Delaware Trustee for each LBH Trust is Chase Manhattan
Bank Delaware, 1201 Market Street, Wilmington, Delaware 19802. The location of
the principal executive office of each LBH Trust is c/o Lehman Brothers Holdings
Inc., 3 World Financial Center, New York, New York 10285 (telephone number (212)
526-7000).
USE OF PROCEEDS
Except as otherwise may be set forth in an applicable Prospectus Supplement
accompanying this Prospectus, Holdings intends to apply the net proceeds from
the sale of Subordinated Debt to the LBH Trusts, and the net proceeds from the
sale of any other Debt Securities, Preferred Stock or Depositary Shares, for
general corporate purposes. Each LBH Trust will invest all of its net proceeds
from the sale of any Preferred Securities in Subordinated Debt.
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Company for the year ended December 31, 1993, the eleven months ended November
30, 1994 and the years ended November 30, 1995, 1996 and 1997:
<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED ENDED YEAR ENDED NOVEMBER 30
DECEMBER 31, NOVEMBER 30, ---------------------------------
1993 1994 1996 1997
- --------------- ----------------- --------- ---------
1995
-----
<S> <C> <C> <C> <C>
1.00 1.03 1.03 1.06 1.07
</TABLE>
In computing the ratio of earnings to fixed charges, "earnings" consist of
earnings from continuing operations before income taxes and fixed charges.
"Fixed charges" consist principally of interest expense and one-third of office
rentals and one-fifth of equipment rentals, which are deemed to be
representative of the interest factor.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends of the Company for the year ended December
31, 1993, the eleven months ended November 30, 1994 and the years ended November
30, 1995, 1996 and 1997:
<TABLE>
<CAPTION>
ELEVEN MONTHS
YEAR ENDED DECEMBER ENDED YEAR ENDED NOVEMBER 30
31, NOVEMBER 30, ---------------------------------
1993 1994 1996 1997
- ------------------- ----------------- --------- ---------
1995
-----
<S> <C> <C> <C> <C>
* 1.02 1.03 1.05 1.06
</TABLE>
- ------------------------
* Earnings were inadequate to cover fixed charges and preferred dividends
and would have had to increase approximately $27 million in 1993 in order
to cover the deficiency.
In computing the ratio of earnings to combined fixed charges and preferred
stock dividends, "earnings" consist of earnings from continuing operations
before income taxes and fixed charges. "Fixed charges" consist principally of
interest expense and one-third of office rentals and one-fifth of equipment
rentals, which are deemed to be representative of the interest factor.
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either Senior Debt (as defined below) or
Subordinated Debt (as defined below) of Holdings. The Debt Securities
constituting Senior Debt will be issued under an indenture, dated as of
September 1, 1987, between Holdings and Citibank, N.A., Trustee, as supplemented
and amended by Supplemental Indentures dated as of November 25, 1987, as of
November 27, 1990, as of September 13, 1991, as of October 4, 1993, as of
October 1, 1995 and as of June 26, 1997 (the "Senior Indenture"), and the Debt
Securities constituting Subordinated Debt will be issued under an indenture,
dated as of February 1, 1996, between Holdings and The Chase Manhattan Bank,
formerly known as Chemical Bank, as Trustee, as amended and supplemented by the
Supplemental Indenture dated as of February 1, 1996 (the "Subordinated
Indenture"). The Senior Indenture and the Subordinated Indenture are hereinafter
collectively referred to as the "Indentures" and, individually, as an
"Indenture". Each Indenture will incorporate by reference certain Standard
Multiple-Series Indenture Provisions, as filed with the SEC on July 30, 1987 and
as amended and refiled with the SEC on November 16, 1987. This Prospectus
contains descriptions of all material provisions of the Indentures. The summary
of such provisions of the Indentures does not purport to be complete; copies of
such Indentures are filed as exhibits to the Registration Statement of which
this Prospectus is a part. All articles and sections of the applicable
Indenture, and all capitalized terms set forth below, have the meanings
specified in the applicable Indenture. Particular provisions of Subordinated
Debt held by any LBH Trust will be contained in the certificates evidencing such
Subordinated Debt and described in the applicable Prospectus Supplement
accompanying this Prospectus; a copy of the form of such Subordinated Debt to be
held by any LBH Trust is filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
GENERAL
Neither Indenture limits the amount of debentures, notes or other evidences
of indebtedness which may be issued thereunder. Each Indenture provides that
Debt Securities may be issued from time to time in one or more series. Since, as
a holding company, Holdings' assets primarily consist of the equity securities
of its subsidiaries, its cash flow and consequent ability to service its debt,
including the Debt Securities, are dependent upon the earnings of its
subsidiaries and the distribution of those earnings to Holdings, or upon loans
or other payments of funds by those subsidiaries to Holdings. Holdings'
subsidiaries, including Lehman Brothers, are separate and distinct legal
entities and will have no obligation, contingent or otherwise, to pay any
interest or principal on the Debt Securities or to make any funds available
therefor, whether by dividends, loans or other payments. Dividends, loans and
other payments by Lehman Brothers are restricted by net capital and other rules
of various regulatory bodies. See "Capital Requirements." The payment of
dividends by Holdings' subsidiaries is contingent upon the earnings of those
subsidiaries and is subject to various business considerations in addition to
net capital requirements and contractual restrictions. Except as described under
"Limitations on Liens" and "Consolidation, Merger and Sale of Assets", neither
Indenture affords holders of Debt Securities protection in the event of a highly
leveraged transaction, reorganization, restructuring, merger or other similar
transaction involving the Company that may adversely affect holders of Debt
Securities.
Since the Debt Securities will be obligations of a holding company, the
ability of holders of the Debt Securities to benefit from any distribution of
assets of any subsidiary upon the liquidation or reorganization of such
subsidiary is subordinate to the prior claims of present and future creditors of
such subsidiary.
Reference is made to the applicable Prospectus Supplement for the following
terms and other information with respect to the Debt Securities being offered
thereby: (1) the title of such Debt Securities and whether such Debt Securities
will be Senior Debt or Subordinated Debt; (2) any limit on the aggregate
principal amount of such Debt Securities; (3) whether the Debt Securities are to
be issuable as Registered Securities or Bearer Securities or both, and if Bearer
Securities are issued, whether Bearer Securities may be exchanged for Registered
Securities and the circumstances and places for such exchange, if permitted; (4)
whether the Debt Securities are to be issued in whole or in part in the form of
one or more temporary or permanent global Debt Securities ("Global Securities")
in registered or bearer form and, if so, the identity of the depositary, if any,
for such Global Security or Securities; (5) the date or dates (or manner of
7
<PAGE>
determining the same) on which such Debt Securities will mature; (6) the rate or
rates (or manner of determining the same) at which such Debt Securities will
bear interest, if any, and the date or dates from which such interest will
accrue; (7) the dates (or manner of determining the same) on which such interest
will be payable and the Regular Record Dates for such Interest Payment Dates for
Debt Securities which are Registered Securities, and the extent to which, or the
manner in which, any interest payable on a temporary or permanent global Debt
Security on an Interest Payment Date will be paid if other than in the manner
described under "Global Securities" below; (8) any mandatory or optional sinking
fund or analogous provisions; (9) each office or agency where, subject to the
terms of the applicable Indenture as described below under "Payment and Paying
Agents", the principal of and premium, if any, and interest, if any, on the Debt
Securities will be payable and each office or agency where, subject to the terms
of the applicable Indenture as described below under "Denominations,
Registration and Transfer," the Debt Securities may be presented for
registration of transfer or exchange; (10) the date, if any, after which, and
the price or prices in the currency or currency unit in which, such Debt
Securities are payable pursuant to any optional or mandatory redemption
provision; (11) any provisions for payment of additional amounts for taxes and
any provision for redemption, in the event Holdings must comply with reporting
requirements in respect of a Debt Security or must pay such additional amounts
in respect of any Debt Security; (12) the terms and conditions, if any, upon
which the Debt Securities of such series may be repayable prior to maturity at
the option of the holder thereof (which option may be conditional) and the price
or prices in the currency or currency unit in which such Debt Securities are
payable; (13) the denominations in which any Debt Securities which are
Registered Securities will be issuable if other than denominations of $1,000 and
any integral multiple thereof, and the denomination or denominations in which
any Debt Securities which are Bearer Securities will be issuable if other than
the denomination of $5,000; (14) the currency, currencies or currency units for
which such Debt Securities may be purchased and the currency, currencies or
currency units in which the principal of and interest, if any, on such Debt
Securities may be payable; (15) any index used to determine the amount of
payments of principal of and premium, if any, and interest, if any, on such Debt
Securities; (16) the terms and conditions, if any, pursuant to which such Debt
Securities may be converted or exchanged for other securities of Holdings or any
other person; (17) the terms and conditions, if any, pursuant to which the
principal of and premium, if any, and interest, if any, on such Debt Securities
are payable at the election of Holdings or the holder thereof, in securities or
other property; and (18) other terms of the Debt Securities.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units or if the principal of or interest, if any, on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Debt Securities and such currencies or currency
units will be set forth in an applicable Prospectus Supplement relating thereto.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable to any such series are
described under "United States Taxation" and may be further described in an
applicable Prospectus Supplement.
SENIOR DEBT
The Debt Securities constituting part of the senior debt of Holdings (the
"Senior Debt") will rank equally with all other unsecured debt of Holdings
except Subordinated Debt.
SUBORDINATED DEBT
The Debt Securities constituting part of the subordinated debt of Holdings
(the "Subordinated Debt") will be subordinate and junior in the right of
payment, to the extent and in the manner set forth in the Subordinated
Indenture, to all present or future Senior Debt. "Senior Debt" is defined to
mean (a) any indebtedness for money borrowed or evidenced by bonds, notes,
debentures or similar instruments, (b) indebtedness under capitalized leases,
(c) any indebtedness representing the deferred and unpaid
8
<PAGE>
purchase price of any property or business, and (d) all deferrals, renewals,
extensions and refundings of any such indebtedness or obligation; except that
the following does not constitute Senior Debt: (i) indebtedness evidenced by the
Subordinated Debt, (ii) indebtedness which is expressly made equal in right of
payment with the Subordinated Debt or subordinate and subject in right of
payment to the Subordinated Debt, (iii) indebtedness for goods or materials
purchased in the ordinary course of business or for services obtained in the
ordinary course of business or indebtedness consisting of trade payables or (iv)
indebtedness which is subordinated to any obligation of Holdings of the type
specified in clauses (a) through (d) above. The effect of clause (iv) is that
Holdings may not issue, assume or guaranty any indebtedness for money borrowed
which is junior to the Senior Debt and senior to the Subordinated Debt.
(Subordinated Indenture Section 1401). The Prospectus Supplement related to a
particular series of Subordinated Debt will set forth the amount of Senior Debt
then outstanding. The Subordinated Indenture does not limit the amount of Senior
Debt or other indebtedness that may be issued.
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of Holdings or a substantial part of its property, (b) that (i) a
default shall have occurred with respect to the payment of principal of or
interest on or other monetary amounts due and payable on any Senior Debt or (ii)
there shall have occurred an event of default (other than a default in the
payment of principal of or interest or other monetary amounts due and payable)
with respect to any Senior Debt, as defined therein or in the instrument under
which the same is outstanding, permitting the holder or holders thereof to
accelerate the maturity thereof (with notice or lapse of time, or both), and
such event of default shall have continued beyond the period of grace, if any,
in respect thereof, and such default or event of default shall not have been
cured or waived or shall not have ceased to exist, or (c) that the principal of
and accrued interest on the Subordinated Debt shall have been declared due and
payable upon an Event of Default under the Subordinated Indenture and such
declaration shall not have been rescinded and annulled as provided therein, then
the holders of all Senior Debt shall first be entitled to receive payment of the
full amount unpaid thereon in cash before the holders of any of the Subordinated
Debt are entitled to receive a payment on account of the principal, premium, if
any, or interest, if any, on such Subordinated Debt.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Debt Securities will be issuable as Registered Securities without
coupons and in denominations of $1,000 or any integral multiple thereof, unless
an applicable Prospectus Supplement provides with respect to a series of Debt
Securities that such series of Debt Securities will be issued in whole or in
part as Bearer Securities and/or in different denominations. Debt Securities of
a series may be issuable in whole or in part in the form of one or more Global
Securities, as described below under "Global Securities." One or more Global
Securities will be issued in a denomination or aggregate denominations equal to
the aggregate principal amount of Debt Securities of the series to be
represented by such Global Security or Securities. If so provided with respect
to a series of Debt Securities, Debt Securities of such series will be issuable
solely as Bearer Securities with coupons attached or as both Registered
Securities and Bearer Securities. (Section 201).
In connection with the sale during the "restricted period" as defined in
Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury Regulations
(generally, the first 40 days after the closing date and, with respect to unsold
allotments, until sold) no Bearer Security shall be mailed or otherwise
delivered to any location in the United States (as defined under "Limitations on
Issuance of Bearer Securities"). A Bearer Security in definitive form (including
interests in a permanent Global Security) may be delivered only if the Person
entitled to receive such Bearer Security furnishes written certification, in the
form required by the applicable Indenture, to the effect that such Bearer
Security is not owned by or on behalf of a United States person (as defined
under "Limitations on Issuance of Bearer Securities"), or, if a beneficial
interest in such Bearer Security is owned by or on behalf of a United States
person, that such United States person (i) acquired and holds the Bearer
Security through a foreign branch of a United States financial institution, (ii)
is a foreign branch of a United States financial institution
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purchasing for its own account or resale (and in either case, (i) or (ii), such
financial institution agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder) or (iii) is a financial institution
purchasing for resale during the restricted period only to non-United States
persons outside the United States. (Sections 303, 304). See "Global
Securities--Bearer Debt Securities" and "Limitations on Issuance of Bearer
Securities."
Registered Securities of any series (other than a Global Security) will be
exchangeable for other Registered Securities of the same series and of a like
aggregate principal amount and tenor of different authorized denominations. In
addition, if Debt Securities of any series are issuable as both Registered
Securities and as Bearer Securities, at the option of the Holder upon request
confirmed in writing, and subject to the terms of the applicable Indenture,
definitive Bearer Securities (with all unmatured coupons, except as provided
below, and all matured coupons in default) of such series will be exchangeable
into definitive Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor. Any definitive
Bearer Security surrendered in exchange for a definitive Registered Security
between a Regular Record Date or a Special Record Date and the relevant date for
payment of interest shall be surrendered without the coupon relating to such
date for payment of interest and interest will not be payable in respect of the
definitive Registered Security issued in exchange for such definitive Bearer
Security, but will be payable only to the Holder of such coupon when due in
accordance with the terms of the applicable Indenture. (Section 305). Except as
provided in an applicable Prospectus Supplement, Bearer Securities will not be
issued in exchange for Registered Securities.
Debt Securities may be presented for exchange as provided above, and
Registered Securities (other than a Global Security) may be presented for
registration of transfer (with the form of transfer endorsed thereon duly
executed), at the office of the Security Registrar or at the office of any
transfer agent designated by Holdings for such purpose with respect to any
series of Debt Securities and referred to in an applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in each Indenture. Such transfer or exchange
will be effected upon the Security Registrar or such transfer agent, as the case
may be, being satisfied with the documents of title and identity of the person
making the request. Holdings has appointed each Trustee as Security Registrar
under the applicable Indenture. (Section 305). If a Prospectus Supplement refers
to any transfer agents (in addition to the Security Registrar) initially
designated by Holdings with respect to any series of Debt Securities, Holdings
may at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that,
if Debt Securities of a series are issuable only as Registered Securities,
Holdings will be required to maintain a transfer agent in each Place of Payment
for such series and, if Debt Securities of a series are issuable as Bearer
Securities, Holdings will be required to maintain (in addition to the Security
Registrar) a transfer agent in a Place of Payment for such series located
outside the United States. Holdings may at any time designate additional
transfer agents with respect to any series of Debt Securities. (Section 1002).
In the event of any redemption in part, Holdings shall not be required to
(i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before any
selection of Debt Securities of that series to be redeemed and ending at the
close of business on (A) if Debt Securities of the series are issuable only as
Registered Securities, the day of mailing of the relevant notice of redemption
and (B) if Debt Securities of the series are issuable as Bearer Securities, the
day of the first publication of the relevant notice of redemption or, if Debt
Securities of the series are also issuable as Registered Securities and there is
no publication, the mailing of the relevant notice of redemption; (ii) register
the transfer of or exchange any Registered Security, or portion thereof, called
for redemption, except the unredeemed portion of any Registered Security being
redeemed in part; or (iii) exchange any Bearer Security called for redemption,
except to exchange such Bearer Security for a Registered Security of that series
and like tenor which is immediately surrendered for redemption. (Section 305).
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PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Bearer Securities will
be payable, subject to any applicable laws and regulations, at the offices of
such Paying Agents outside the United States as Holdings may designate from time
to time, at the option of the Holder, by check or by transfer to an account
maintained by the payee with a bank located outside the United States. (Sections
307 and 1002). Unless otherwise indicated in an applicable Prospectus
Supplement, payment of interest on Bearer Securities on any Interest Payment
Date will be made only against surrender of the coupon relating to such Interest
Payment Date. (Section 1001). No payment of interest on a Bearer Security will
be made unless on the earlier of the date of the first such payment by Holdings
or the delivery by Holdings of the Bearer Security in definitive form (including
interests in a permanent Global Security) (the "Certification Date"), a written
certificate in the form and to the effect described under "Denominations,
Registration and Transfer" is provided to Holdings. No payment with respect to
any Bearer Security will be made at any office or agency of Holdings in the
United States or by check mailed to any address in the United States or by
transfer to an account maintained with a bank located in the United States.
Notwithstanding the foregoing, payment of principal of (and premium, if any) and
interest on Bearer Securities denominated and payable in U.S. dollars will be
made at the office of Holdings' Paying Agent in the Borough of Manhattan, The
City of New York if, and only if, payment of the full amount thereof in U.S.
dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
(Section 1002).
Unless otherwise indicated in an applicable Prospectus Supplement, as
contemplated under "Description of Securities--General", payment of principal of
(and premium, if any) and any interest on Registered Securities (other than a
Global Security) will be made in U.S. dollars at the office of such Paying Agent
or Paying Agents as Holdings may designate from time to time, except that at the
option of Holdings payment of any interest may be made (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Security Register or (ii) by wire transfer to an account maintained by the
Person entitled thereto as specified in the Security Register. (Sections 307,
1002). Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on Registered Securities will be made to
the Person in whose name such Registered Security is registered at the close of
business on the Regular Record Date for such interest payment. (Section 307).
The principal office of each Trustee under the applicable Indenture in The
City of New York will be designated as Holdings' sole Paying Agent for payments
with respect to Debt Securities which are issuable solely as Registered
Securities and as Holdings' Paying Agent in the Borough of Manhattan, The City
of New York, for payments with respect to Debt Securities (subject to the
limitations described above in the case of Bearer Securities) which may be
issuable as Bearer Securities. Any Paying Agents outside the United States and
any other Paying Agents in the United States initially designated by Holdings
for the Debt Securities will be named in an applicable Prospectus Supplement.
Holdings may at any time designate additional Paying Agents or rescind the
designation of any Paying Agents or approve a change in the office through which
any Paying Agent acts, except that, if Debt Securities of a series are issuable
only as Registered Securities, Holdings will be required to maintain a Paying
Agent in each Place of Payment for such series, and if Debt Securities of a
series may be issuable as Bearer Securities, Holdings will be required to
maintain (i) a Paying Agent in the Borough of Manhattan, The City of New York
for payments with respect to any Registered Securities of the series (and for
payments with respect to Bearer Securities of the series in the circumstances
described above, but not otherwise), and (ii) a Paying Agent in a Place of
Payment located outside the United States where Debt Securities of such series
and any coupons appertaining thereto may be presented and surrendered for
payment; provided that if the Debt Securities of such series are listed on The
Luxembourg Stock Exchange (the "Stock Exchange") or any other stock exchange
located outside the United States and such stock exchange shall so require,
Holdings will maintain a Paying Agent in Luxembourg or any other required city
located outside the United States, as the case may be, for the Debt Securities
of such series. (Section 1002).
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All moneys paid by Holdings to a Paying Agent for the payment of principal
of (and premium, if any) or interest on any Debt Security which remain unclaimed
at the end of two years after such principal, premium or interest shall have
become due and payable will be repaid to Holdings and the Holder of such Debt
Security or any coupon will thereafter look only to Holdings for payment
thereof. (Section 1003).
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with or on behalf
of a depositary (a "Depositary") identified in the Prospectus Supplement
relating to such series. Global Securities may be issued in either registered or
bearer form and in either temporary or permanent form.
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depositary arrangements.
Debt Securities which are to be represented by a Global Security in
registered form to be deposited with or on behalf of a Depositary will be
registered in the name of such Depositary or its nominee. Upon the issuance of a
Global Security in registered form, the Depositary for such Global Security will
credit the respective principal amounts of the Debt Securities represented by
such Global Security to the accounts of institutions that have accounts with
such Depositary or its nominee ("participants"). The accounts to be credited
shall be designated by the underwriters or agents of such Debt Securities or by
Holdings, if such Debt Securities are offered and sold directly by Holdings.
Ownership of beneficial interests in such Global Securities will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests by participants in such Global Securities will be shown
on, and the transfer of that ownership interest will be effected only through,
records maintained by the Depositary or its nominee for such Global Security.
Ownership of beneficial interests in Global Securities by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security in registered form, or its
nominee, is the registered owner of such Global Security, such depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture governing such Debt Securities. Except as set forth below, owners
of beneficial interests in such Global Securities will not be entitled to have
Debt Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture.
Payment of principal of, premium, if any, and any interest on Debt
Securities registered in the name of or held by a Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the registered
owner or the holder of the Global Security. None of the Company, the Trustee,
any Paying Agent or the Security Registrar for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. (Section 308).
The Company expects that the Depositary for a permanent Global Security in
registered form, upon receipt of any payment of principal, premium or interest
in respect of a permanent Global Security, will credit immediately participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Security as shown on the
records of such Depositary. The Company also expects that payments by
participants to owners of beneficial interests in
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such Global Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants.
A Global Security in registered form may not be transferred except as a
whole by the Depositary for such Global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor. If a Depositary for a permanent
Global Security in registered form is at any time unwilling or unable to
continue as Depositary and a successor Depositary is not appointed by the
Company within 90 days, the Company will issue Debt Securities in definitive
registered form in exchange for all of the Global Securities representing such
Debt Securities. In addition, the Company may at any time and in its sole
discretion determine not to have any Debt Securities in registered form
represented by one or more Global Securities and, in such event, will issue Debt
Securities in definitive form in exchange for all of the Global Securities
representing such Debt Securities. (Section 305). Further, if the Company so
specifies with respect to the Debt Securities of a series in registered form, an
owner of a beneficial interest in a Global Security representing Debt Securities
of such series may, on terms acceptable to the Company and the Depositary for
such Global Security, receive Registered Debt Securities of such series in
definitive form. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery in definitive form of
Registered Securities of the series represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name. (Section 305). Debt Securities of such series so issued
in definitive form will be issued (a) as Registered Securities in denominations,
unless otherwise specified by the Company, of $1,000 and integral multiples
thereof if the Debt Securities of such series are issuable as Registered
Securities, (b) as Bearer Securities in the denomination, unless otherwise
specified by the Company, of $5,000 if the Debt Securities of such series are
issuable as Bearer Securities or (c) as either Registered or Bearer Securities
if the Debt Securities of such series are issuable in either form. See, however,
"Limitations on Issuance of Bearer Securities" below for a description of
certain restrictions on the issuance of a Bearer Security in definitive form in
exchange for an interest in a Global Security.
BEARER DEBT SECURITIES
If so specified in an applicable Prospectus Supplement, pending the
availability of a permanent Global Security, all or any portion of the Debt
Securities of a series which may be issuable as Bearer Securities will initially
be represented by one or more temporary Global Securities, without interest
coupons, to be deposited with a common depositary in London for Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of the Euroclear System
("Euroclear") and Cedel Bank, societe anonyme ("Cedel") for credit to the
designated accounts. The interests of the beneficial owner or owners in a
temporary Global Security in bearer form will be exchangeable for: (i) in whole,
definitive Bearer Securities, (ii) in whole, Senior Debt Securities to be
represented thereafter by one or more permanent Global Securities in bearer
form, without interest coupons, and/or (iii) in whole or in part, definitive
Registered Securities, (the date of such exchange, the "Exchange Date");
provided, however, that if definitive Bearer Securities have previously been
issued in exchange for an interest in a permanent Global Security in bearer form
representing Senior Debt Securities of the same series, then interests in such
Senior Debt Securities (with certain exceptions) shall only thereafter be
exchangeable, in whole, for definitive Bearer Securities, definitive Registered
Securities, or any combination thereof (with certain exceptions) representing
Debt Securities having the same interest rate and Stated Maturity, but only upon
written certification in the form and to the effect described under
"Denominations, Registration and Transfer" unless such certification has been
provided on an earlier interest payment date. The beneficial owner of a Debt
Security represented by a permanent Global Security in bearer form may, on the
applicable Exchange Date and upon 30 days' notice to the applicable Trustee
given through Euroclear or Cedel, exchange its interest in whole for definitive
Bearer Securities or, if specified in an applicable Prospectus Supplement, in
whole or in part, for definitive Registered Securities of any authorized
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denomination, provided, however, that if definitive Bearer Securities are issued
in partial exchange for Senior Debt Securities represented by such permanent
Global Security or by a temporary Global Security in bearer form of the same
series, such issuance (with certain exceptions) shall give rise to the exchange
of such permanent Global Security in whole for, at the option of the Holders,
definitive Bearer Securities, definitive Registered Securities, or any
combination thereof. No Bearer Security delivered in exchange for a portion of a
permanent Global Security shall be mailed or otherwise delivered to any location
in the United States in connection with such exchange. (Sections 303 and 304).
Unless otherwise specified in an applicable Prospectus Supplement, interest
in respect of any portion of a temporary Global Security in bearer form payable
in respect of an Interest Payment Date occurring prior to the issuance of a
permanent Global Security in bearer form will be paid to each of Euroclear and
Cedel with respect to the portion of the temporary Global Security in bearer
form held for its account. Each of Euroclear and Cedel will undertake in such
circumstances to credit such interest received by it in respect of a temporary
Global Security in bearer form to the respective accounts for which it holds
such temporary Global Security in bearer form as of the relevant Interest
Payment Date, but only upon receipt in each case of written certification, in
the form and to the effect described under "Denomination, Registration and
Transfer."
LIMITATION ON LIENS
So long as any Debt Securities remain outstanding, unless an applicable
Prospectus Supplement relating thereto provides otherwise, Holdings will not,
and will not permit any Designated Subsidiary (as defined below), directly or
indirectly, to create, issue, assume, incur or guarantee any indebtedness for
money borrowed which is secured by a mortgage, pledge, lien, security interest
or other encumbrance of any nature on any of the present or future common stock
of a Designated Subsidiary unless the Debt Securities and, if Holdings so
elects, any other indebtedness of Holdings ranking at least PARI PASSU with the
Debt Securities, shall be secured equally and ratably with (or prior to) such
other secured indebtedness for money borrowed so long as it is outstanding.
(Section 1005).
The term "Designated Subsidiary" means any present or future consolidated
subsidiary of Holdings, the consolidated net worth of which constitutes at least
5% of the consolidated net worth of Holdings. As of February 28, 1998, Holdings'
Designated Subsidiaries were Lehman Brothers, Lehman Brothers Holdings PLC,
Lehman Brothers UK Holdings Limited, Lehman Brothers International (Europe),
Lehman Brothers U.K. Holdings (Delaware) Inc., Structured Asset Securities
Corp., Lehman Brothers Japan Inc. and Lehman Brothers Financial Products Inc.
EVENTS OF DEFAULT
The following are Events of Default under each Indenture: (a) failure to pay
principal of or premium, if any, on any Debt Security of that series when due;
(b) failure to pay interest, if any, on any Debt Security of that series and any
related coupons when due, continued for 30 days; (c) failure to deposit any
sinking fund payment or analogous obligation, when due, continued for 30 days,
in respect of any Debt Security of that series; (d) failure to perform any other
covenant of Holdings in the Indenture (other than a covenant included in the
applicable Indenture solely for the benefit of a series of Debt Securities other
than that series), continued for 90 days after written notice as provided in the
Indenture; and (e) certain events in bankruptcy, insolvency or reorganization in
respect of Holdings. (Section 501). In the event Subordinated Debt of a series
is issued and sold to an LBH Trust or a trustee of such trust in connection with
the issuance of Preferred Securities and Common Securities by such LBH Trust,
the following is an additional Event of Default under the Subordinated Indenture
with respect to such series of Subordinated Debt: the LBH Trust shall have
voluntarily or involuntarily dissolved, wound-up its business or otherwise
terminated its existence except in connection with the (i) distribution of
Subordinated Debt to holders of Preferred Securities and Common Securities in
liquidation of their interests in the LBH Trust, (ii) the redemption of
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all of the outstanding Preferred Securities and Common Securities of such LBH
Trust, or (iii) certain mergers, consolidations or amalgamations, each as
permitted by such LBH Trust's Declaration. Each Indenture may be amended without
the consent of Holders to provide for additional Events of Default with respect
to any series of Debt Securities then outstanding. In addition, prior to the
issuance of any series of Debt Securities, there may be additions to or
modifications or deletions of the Events of Default described above with respect
to such series of Debt Securities. Any such additions, modifications or
deletions will be specified in an applicable Prospectus Supplement. An Event of
Default with respect to a particular series of Debt Securities does not
necessarily constitute an Event of Default with respect to any other series of
Debt Securities issued under the same or another Indenture. The Trustee may
withhold notice to the Holders of any series of Debt Securities of any default
with respect to such series (except in the payment of principal, premium, if
any, or interest) if it considers such withholding to be in the interest of such
Holders. (Section 602).
If an Event of Default with respect to Debt Securities of any series at the
time outstanding occurs and is continuing, unless the principal of all of the
Debt Securities of such series shall have already become due and payable, either
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Debt Securities of that series may declare the principal amount (or,
if the Debt Securities of that series are (i) Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of the series, or (ii) Indexed Securities or Dual Currency Securities, the
amount determined in accordance with the specified terms of the series) of all
the Debt Securities of that series to be due and payable immediately. At any
time after a declaration of acceleration with respect to Debt Securities of any
series has been made, but before a judgment or decree based on acceleration has
been obtained and entered, the Holders of a majority in principal amount of the
outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration. (Section 502). For information as to waiver
of defaults, see "Meetings, Modification and Waiver." Each Indenture provides
that the Trustee will be under no obligation, subject to the duty of the Trustee
during default to act with the required standard of care, to exercise any of its
rights or powers under such Indenture at the request or direction of any of the
Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. (Section 603). Subject to such provisions for indemnification of the
Trustee, the Holders of a majority in principal amount of the outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the Debt
Securities of that series. (Section 512). Holdings will be required to furnish
to each Trustee annually a statement as to the performance by Holdings of
certain of its obligations under the applicable Indenture and as to any default
in such performance. (Section 1006).
SATISFACTION AND DISCHARGE
Except as may otherwise be set forth in an applicable Prospectus Supplement
relating to a series of Debt Securities, each Indenture provides that Holdings
shall be discharged from its obligations under the Debt Securities of such
series (with certain exceptions) at any time prior to the Stated Maturity or
redemption thereof when (a) Holdings has irrevocably deposited with the
applicable Trustee, in trust, (i) sufficient funds in the currency or currency
unit in which the Debt Securities of such series are payable to pay the
principal of (and premium, if any), and interest, if any, to Stated Maturity (or
redemption) on, the Debt Securities of such series, or (ii) such amount of
direct obligations of, or obligations the principal of and interest, if any, on
which are fully guaranteed by, the government which issued the currency in which
the Debt Securities of such series are payable, and which are not subject to
prepayment, redemption or call, as will, together with the predetermined and
certain income to accrue thereon without consideration of any reinvestment
thereof, be sufficient to pay when due the principal of (and premium, if any),
and interest, if any, to Stated Maturity (or redemption) on, the Debt Securities
of such series, or (iii) such combination of such funds and securities as
described in (i) and (ii), respectively, as will, together with the
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predetermined and certain income to accrue on any such securities as described
in (ii), be sufficient to pay when due the principal of (and premium, if any),
and interest, if any, to Stated Maturity (or redemption) on, the Debt Securities
of such series and (b) Holdings has paid all other sums payable with respect to
the Debt Securities of such series and (c) certain other conditions are met.
Upon such discharge, the Holders of the Debt Securities of such series shall no
longer be entitled to the benefits of the Indenture, except for certain rights,
including registration of transfer and exchange of the Debt Securities of such
series and replacement of lost, stolen or mutilated Debt Securities, and shall
look only to such deposited funds or obligations for payment. (Sections 401 and
403).
DEFEASANCE OF CERTAIN OBLIGATIONS
If the terms of the Debt Securities of any series so provide, Holdings may
omit to comply with the restrictive covenants in Section 801 ("Company May
Consolidate, Etc., Only on Certain Terms"), Section 1005 ("Limitations on Liens
on Common Stock of Designated Subsidiaries") and any other specified covenant
and any such omission with respect to such Sections shall not be an Event of
Default with respect to the Debt Securities of such series, if (a) Holdings has
irrevocably deposited with the applicable Trustee, in trust, (i) sufficient
funds in the currency or currency unit in which the Debt Securities of such
series are payable to pay the principal of (and premium, if any), and interest,
if any, to Stated Maturity (or redemption) on, the Debt Securities of such
series, or (ii) such amount of direct obligations of, or obligations the
principal of and interest, if any, on which are fully guaranteed by, the
government which issued the currency in which the Debt Securities of such series
are payable and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay when due
the principal of (and premium, if any), and interest, if any, to Stated Maturity
(or redemption) on, the Debt Securities of such series or, (iii) such
combination of such funds and securities as described in (i) and (ii),
respectively, as will, together with the predetermined and certain income to
accrue on any such securities as described in (ii), be sufficient to pay when
due the principal of (and premium, if any), and interest, if any, to Stated
Maturity (or redemption) on, the Debt Securities of such series and (b) certain
other conditions are met. The obligations of Holdings under the Indenture with
respect to the Debt Securities of such series, other than with respect to the
covenants referred to above shall remain in full force and effect. (Section
1009).
MEETINGS, MODIFICATION AND WAIVER
Modifications and amendments of either Indenture may be made by Holdings and
the applicable Trustee with the consent of the Holders of not less than 66 2/3%
in principal amount of the Outstanding Debt Securities of each series issued
under such Indenture affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest, if
any, on, any Debt Security, (b) reduce the principal amount of, or the premium,
if any, or interest, if any, on, any Debt Security, (c) change any obligation of
Holdings to pay additional amounts, (d) reduce the amount of principal of an
Original Issue Discount Security payable upon acceleration of the Maturity
thereof, (e) adversely affect the right of repayment or repurchase, if any, at
the option of the Holder, (f) reduce the amount, or postpone the date fixed for,
any payment under any sinking fund or analogous provision, (g) change the place
or currency or currency unit of payment of principal of or premium, if any, or
interest, if any, on any Debt Security, (h) change or eliminate the right, if
any, to elect payment in a coin or currency or currency unit other than that in
which Debt Securities which are Registered Securities are denominated or stated
to be payable, (i) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security, (j) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the consent of
the Holders of which is required for modification or amendment of the applicable
Indenture or for waiver of compliance with certain provisions of the applicable
Indenture or for waiver of certain defaults, (k) reduce the requirements
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contained in either Indenture for quorum or voting, or (l) change any obligation
of Holdings to maintain an office or agency in the places and for the purposes
required in the applicable Indenture. (Section 902); provided, further, that if
Subordinated Debt of a series is held by an LBH Trust or a trustee of such
trust, no such modification or amendment shall be effective until the holders of
not less than 66 2/3% of the aggregate liquidation amount of the Trust
Securities of the applicable LBH Trust shall have consented to such modification
or amendment; provided, further, that where a consent under the Subordinated
Indenture would require the consent of the holders of more than 66 2/3% of the
principal amount of such series of Subordinated Debt, such modification or
amendment shall not be effective until the holders of at least the same
proportion in aggregate stated liquidation amount of the Trust Securities of the
applicable LBH Trust shall have consented to such modification or amendment.
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of that series waive, insofar as that series is concerned,
compliance by Holdings with certain restrictive provisions of the applicable
Indenture. (Section 1007). The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series may on behalf of the
Holders of all Debt Securities of that series and any coupons appertaining
thereto waive any past default under the applicable Indenture with respect to
that series, except a default in the payment of the principal of or premium, if
any, or interest, if any, on any Debt Security of that series or in the payment
of any sinking fund installment or analogous obligation or in respect of a
provision which under the applicable Indenture cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security of that
series affected. (Section 513). If Subordinated Debt of a series is held by an
LBH Trust or a trustee of such trust, such waiver shall not be effective until
the holders of a majority in aggregate liquidation amount of Trust Securities of
the applicable LBH Trust shall have consented to such waiver; provided, further,
that where a consent under the Subordinated Indenture would require the consent
of the holders of more than a majority in principal amount of such series of
Subordinated Debt, such waiver shall not be effective until the holders of at
least the same proportion in aggregate stated liquidation amount of the Trust
Securities of the applicable LBH Trust shall have consented to such waiver.
Each Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series if Debt Securities of that series are issuable as
Bearer Securities. A meeting may be called at any time by the applicable
Trustee, and also, upon request, by Holdings or Holders of at least 10% in
principal amount of the Outstanding Debt Securities of such series, in any such
case upon notice given in accordance with "Notices" below. (Section 1302).
Except as limited by the proviso in the second preceding paragraph, any
resolution presented at a meeting or adjourned meeting at which a quorum is
present may be adopted by the affirmative vote of the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series; provided,
however, that, except as limited by the proviso in the second preceding
paragraph, any resolution with respect to any consent or waiver which may be
given by the Holders of not less than 66 2/3% in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or an
adjourned meeting at which a quorum is present only by the affirmative vote of
66 2/3% in principal amount of the Outstanding Debt Securities of that series;
and provided, further, that, except as limited by the proviso in the second
preceding paragraph, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of Outstanding Debt Securities of a series
may be adopted at a meeting or adjourned meeting duly reconvened at which a
quorum is present by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of Holders of
Debt Securities of any series duly held in accordance with the applicable
Indenture will be binding on all Holders of Debt Securities of that series and
the related coupons. The quorum at any meeting called to adopt a resolution, and
at any reconvened meeting, will be persons holding or representing a majority in
principal amount of the Outstanding Debt Securities of a series; provided,
however, that if any action is to be taken at such meeting with respect to a
consent or waiver which may be given by the Holders of not less than 66 2/3% in
principal amount of the Outstanding Debt Securities of a
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series, the persons holding or representing 66 2/3% in principal amount of the
Outstanding Debt Securities of such series will constitute a quorum (Section
1304).
CONSOLIDATION, MERGER AND SALE OF ASSETS
Holdings may, without the consent of any Holders of Outstanding Debt
Securities, consolidate or merge with or into, or transfer or lease its assets
substantially as an entirety to, any Person, and any other Person may
consolidate or merge with or into, or transfer or lease its assets substantially
as an entirety to, Holdings, provided that (i) the Person (if other than
Holdings) formed by such consolidation or into which Holdings is merged or which
acquires or leases the assets of Holdings substantially as an entirety is
organized under the laws of any United States jurisdiction and assumes Holdings'
obligations on the Debt Securities and under the Indenture, (ii) after giving
effect to the transaction, no Event of Default, and no event which, after notice
or lapse of time or both, would become an Event of Default, shall have happened
and be continuing, and (iii) certain other conditions are met. (Section 801).
NOTICES
Except as may otherwise be set forth in an applicable Prospectus Supplement
relating to a series of Debt Securities, notices to Holders of Bearer Securities
will be given by publication in a daily newspaper in the English language of
general circulation in The City of New York and in London, and so long as such
Bearer Securities are listed on the Stock Exchange and the Stock Exchange shall
so require, in a daily newspaper of general circulation in Luxembourg or, if not
practical, elsewhere in Western Europe. Such publication is expected to be made
in THE WALL STREET JOURNAL, the FINANCIAL TIMES and the LUXEMBURGER WORT.
Notices to Holders of Registered Securities will be given by mail to the
addresses of such Holders as they appear in the Security Register. (Sections 101
and 106).
TITLE
Title to any temporary global Debt Security, any permanent global Debt
Security, any Bearer Securities and any coupons appertaining thereto will pass
by delivery. Holdings, each Trustee and any agent of Holdings or the applicable
Trustee may treat the bearer of any Bearer Security and the bearer of any coupon
and the registered owner of any Registered Security as the absolute owner
thereof (whether or not such Debt Security or coupon shall be overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all other purposes. (Section 308).
REPLACEMENT OF DEBT SECURITIES AND COUPONS
Any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining thereto will be replaced by Holdings at the expense of the Holder
upon surrender of such Debt Security to the applicable Trustee. Debt Securities
or coupons that become destroyed, stolen or lost will be replaced by Holdings at
the expense of the Holder upon delivery to the applicable Trustee of the Debt
Security and coupons or evidence of the destruction, loss or theft thereof
satisfactory to Holdings and the applicable Trustee; in the case of any coupon
which becomes destroyed, stolen or lost, such coupon will be replaced by
issuance of a new Debt Security in exchange for the Debt Security to which such
coupon appertains. In the case of a destroyed, lost or stolen Debt Security or
coupon an indemnity satisfactory to the applicable Trustee and Holdings may be
required at the expense of the Holder of such Debt Security or coupon before a
replacement Debt Security will be issued. (Section 306).
CONCERNING THE TRUSTEES
Business and other relationships (including other trusteeships) between, on
the one hand, Holdings and its affiliates and, on the other hand, the Trustee
under the Indenture pursuant to which any of the
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Debt Securities to which an applicable Prospectus Supplement accompanying this
Prospectus relates are described in such Prospectus Supplement.
CERTAIN PROVISIONS APPLICABLE TO LBH TRUSTS
In the event Subordinated Debt of a series is issued and sold to an LBH
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by such LBH Trust, such Subordinated Debt subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of such LBH Trust upon the occurrence of certain events
described in the Prospectus Supplement relating to such Trust Securities. Only
one series of Subordinated Debt will be issued to an LBH Trust or a trustee of
such trust in connection with the issuance of Trust Securities by such LBH
Trust. In each certificate evidencing Subordinated Debt of a series held by an
LBH Trust or a trustee of such trust, Holdings will covenant that, so long as
any Trust Securities issued by such LBH Trust remain outstanding, if (i) there
shall have occurred any Event of Default under the Subordinated Indenture with
respect to such series of Subordinated Debt, (ii) Holdings shall be in default
with respect to its payment of any obligations under its Guarantee with respect
to such LBH Trust or (iii) Holdings shall have given notice of its election of
an Extension Period as provided in the certificate evidencing such Subordinated
Debt and shall not have rescinded such notice, or such Extension Period or any
extension thereof shall be continuing, then Holdings will not, and will not
permit any subsidiary to, (x) declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation payment with respect to, any
of Holdings' capital stock or (y) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of
Holdings that rank on a parity with or junior in interest to such Subordinated
Debt or make any guarantee payments with respect to any guarantee by Holdings of
the debt securities of any subsidiary of Holdings if such guarantee ranks on a
parity with or junior in interest to such Subordinated Debt (other than (a)
dividends or distributions in common stock of Holdings, (b) payments under the
applicable Guarantee made by Holdings in respect of the Trust Securities of such
LBH Trust, (c) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, and (d) purchases of common stock related to the issuance of
common stock or rights under any of Holdings' benefit plans).
In the event Subordinated Debt of a series is issued to an LBH Trust or a
trustee of such trust in connection with the issuance of Trust Securities of
such LBH Trust, for so long as such Trust Securities remain outstanding,
Holdings will covenant (i) to maintain directly or indirectly 100% ownership of
the Common Securities of such LBH Trust, (ii) to cause such LBH Trust to remain
a statutory business trust and not to voluntarily dissolve, wind-up, liquidate
or be terminated, except as permitted by such LBH Trust's Declaration, (iii) to
use its commercially reasonable efforts to ensure that such LBH Trust will not
be an "investment company" for purposes of the Investment Company Act and (iv)
to take no action that would be reasonably likely to cause such LBH Trust to be
classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes.
DESCRIPTION OF PREFERRED SECURITIES
Each LBH Trust may issue only one series of Preferred Securities having
terms described in the Prospectus Supplement relating thereto. The Declaration
of each LBH Trust will be qualified as an indenture under the Trust Indenture
Act. The Chase Manhattan Bank will act as indenture trustee under each
Declaration. The Preferred Securities will represent undivided beneficial
ownership interests in the assets of the LBH Trusts and the holders thereof will
be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the Common
Securities, as well as other benefits as described in the Declaration. This
Prospectus contains a description of all material provisions of each
Declaration. The summary of such provisions does not purport to be complete; a
copy of the form of such Declarations is filed as an exhibit to the Registration
Statement of
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which this Prospectus forms a part. All capitalized terms set forth below have
the meanings specified in the form of Declaration.
The Preferred Securities will have such terms, including as to
Distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the Declaration of the LBH Trust issuing such Preferred Securities or made part
of such Declaration by the Trust Indenture Act. Reference is made to any
Prospectus Supplement relating to the Preferred Securities of an LBH Trust for
specific terms, including (i) the distinctive designation of such Preferred
Securities, (ii) the number of Preferred Securities issued by such LBH Trust,
(iii) the annual Distribution rate (or method of determining such rate) for
Preferred Securities issued by such LBH Trust and the date or dates upon which
such Distributions shall be payable, (iv) whether Distributions on Preferred
Securities issued by such LBH Trust shall be cumulative, and, in the case of
Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates form which distributions on
Preferred Securities issued by such LBH Trust shall be cumulative, (v) the
amount or amounts which shall be paid out of the assets of such LBH Trust to the
Holders of Preferred Securities of such LBH Trust upon voluntary or involuntary
dissolution, winding-up or termination of such LBH Trust, (vi) the obligation,
if any, of such LBH Trust to purchase or redeem Preferred Securities issued by
such LBH Trust and the price or prices at which, the period or periods within
which and the terms and conditions upon which Preferred Securities issued by
such LBH Trust shall be purchased or redeemed, in whole or in part, pursuant to
such obligation, (vii) the voting rights, if any, of Preferred Securities issued
by such LBH Trust in addition to those required by law, including the number of
votes per Preferred Security and any requirement for the approval by the holders
of Preferred Securities as a condition to specified action or amendments to the
Declaration of such LBH Trust, and (viii) any other relevant rights,
preferences, privileges, limitations or restrictions of Preferred Securities
issued by such LBH Trust, consistent with the Declaration of such LBH Trust and
with applicable law. All Preferred Securities offered hereby will be guaranteed
by the Company to the extent set forth below under "Description of Guarantees."
Certain United States federal income tax considerations applicable to any
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto.
In connection with the issuance of Preferred Securities, each LBH Trust will
issue one series of Common Securities, having such terms, including as to
Distributions, redemption, voting, liquidation rights or such restrictions, as
shall be set forth in the Declaration of the LBH Trust issuing such Common
Securities or made part of such Declaration by the Trust Indenture Act. The
terms of the Common Securities issued by such LBH Trust will be substantially
identical to the terms of the Preferred Securities issued by such LBH Trust. The
Common Securities will rank on a parity, and payments will be made thereon pro
rata, with such Preferred Securities except that upon a Trust Enforcement Event
under the Declaration of such LBH Trust, the rights of the holders of such
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of such Preferred Securities. Except in certain limited circumstances,
the holders of Common Securities of an LBH Trust will also be entitled to vote
and appoint, remove or replace any of the LBH Trustees of such LBH Trust. All of
the Common Securities of an LBH Trust will be directly or indirectly owned by
Holdings.
If a Trust Enforcement Event with respect to a Declaration of any LBH Trust
occurs and is continuing, then the holders of Preferred Securities of such LBH
Trust would rely on the enforcement by the Property Trustee of its rights as a
holder of Subordinated Debt against the Company. In addition, the Holders of a
majority in liquidation amount of such Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Property Trustee or to direct the exercise of any trust
or power conferred upon the Property Trustee under such Declaration, including
the right to direct the Property Trustee to exercise the remedies available to
it as a holder of Subordinated Debt.
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An Event of Default under the Subordinated Indenture that has occurred and
is continuing constitutes a "Trust Enforcement Event" under the Declaration with
respect to any LBH Trust, provided that pursuant to such Declaration, the holder
of the Common Securities will be deemed to have waived any Trust Enforcement
Event with respect to the Common Securities until all Trust Enforcement Events
with respect to the Preferred Securities have been cured, waived or otherwise
eliminated. Until such Trust Enforcement Event with respect to the Preferred
Securities has been so cured, waived or otherwise eliminated, the Property
Trustee will be deemed to be acting solely on behalf of the Holders of the
Preferred Securities and only the Holders of the Preferred Securities will have
the right to direct the Property Trustee with respect to certain matters under
such Declaration, and therefore the Subordinated Indenture.
Upon the occurrence of a Trust Enforcement Event, the Property Trustee, as
the holder of Subordinated Debt, will have the right under the Subordinated
Indenture to declare the principal of and premium, if any, and interest on such
Subordinated Debt to be immediately due and payable.
If the Property Trustee fails to enforce its rights with respect to
Subordinated Debt, any Holder of Preferred Securities may, to the extent
permitted by applicable law, institute a legal proceeding directly against
Holdings to enforce the Property Trustee's rights under such Subordinated Debt
without first instituting any legal proceeding against the Property Trustee or
any other person or entity. In addition, if a Trust Enforcement Event has
occurred and is continuing and such event is attributable to the failure of
Holdings to pay principal of and premium, if any, and interest or other required
payments on Subordinated Debt on the date such interest, principal or other
payment is otherwise payable, then a Holder of Preferred Securities of such LBH
Trust may, on or after the respective due dates specified in such Subordinated
Debt, institute a proceeding directly against Holdings under the Subordinated
Indenture for enforcement of payment on such Subordinated Debt having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities held by such Holder (a "Direct Action"). In connection with such
Direct Action, the rights of Holdings will be subrogated to the rights of such
Holder of Preferred Securities under such Declaration to the extent of any
payment made by Holdings to such Holder of Preferred Securities in such Direct
Action. Consequently, Holdings will be entitled to payment of amounts that a
Holder of Preferred Securities receives in respect of an unpaid distribution
that resulted in the bringing of a Direct Action to the extent that such Holder
receives or has already received full payment with respect to such unpaid
distribution from an LBH Trust. The Holders of Preferred Securities of an LBH
Trust will not be able to exercise directly any other remedy available to the
holders of Subordinated Debt.
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by Holdings concurrently with the
issuance by an LBH Trust of Preferred Securities for the benefit of the Holders
from time to time of such Preferred Securities.
Each Guarantee will be qualified as an indenture under the Trust Indenture Act.
The Chase Manhattan Bank will act as indenture trustee under each Guarantee (the
"Guarantee Trustee"). This Prospectus contains a description of all material
provisions of each Guarantee. The summary of such provisions does not purport to
be complete; a copy of the form of such Guarantees is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. All capitalized
terms set forth below have the meanings specified in the form of Guarantee. The
Guarantee Trustee will hold each Guarantee for the benefit of the Holders of the
Preferred Securities of an LBH Trust.
GENERAL
Pursuant to and to the extent set forth in each Guarantee, and except as
otherwise set forth in the applicable Prospectus Supplement, Holdings will
irrevocably and unconditionally agree to pay in full the Guarantee Payments (as
defined below) to the Holders of the Preferred Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that such LBH Trust
may have or assert. The
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following payments or Distributions with respect to the Preferred Securities, to
the extent not paid by or on behalf of such LBH Trust (the "Guarantee
Payments"), will be subject to such Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on such Preferred Securities, to the extent
that such LBH Trust has sufficient funds available therefor at the time, (ii)
the Redemption Price with respect to any Preferred Securities called for
redemption, to the extent that such LBH Trust has sufficient funds available
therefor at such time, and (iii) upon a voluntary or involuntary dissolution,
winding up or liquidation of such LBH Trust (unless Subordinated Debt are
distributed to Holders of the Preferred Securities), the lesser of (a) the
aggregate liquidation amount of the Preferred Securities and all accumulated and
unpaid Distributions thereon to the date of payment and (b) the amount of assets
of such LBH Trust remaining available for distribution to Holders of such
Preferred Securities. Holdings' obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by Holdings to the Holders
of the applicable Preferred Securities or by causing such LBH Trust to pay such
amounts to such Holders.
Each Guarantee will apply only to the extent that the applicable LBH Trust
has sufficient funds available to make such payments. If Holdings does not make
interest payments on Subordinated Debt held by an LBH Trust, such LBH Trust will
not be able to pay Distributions on the Preferred Securities issued by such LBH
Trust and will not have funds legally available therefor.
Holdings will also irrevocably and unconditionally guarantee the obligations
of any LBH Trust with respect to such LBH Trust's Common Securities to the same
extent as the Guarantee of the Preferred Securities of such LBH Trust, except
that upon the occurrence and the continuation of a Trust Enforcement Event with
respect to such LBH Trust, holders of such Preferred Securities shall have a
priority over holders of such Common Securities with respect to Distributions
and payments on liquidation, redemption or otherwise.
Holdings will, through the Declaration, the Guarantee, the Subordinated Debt
and the Subordinated Indenture, taken together, fully and unconditionally
guarantee each LBH Trust's obligations under the Preferred Securities of such
LBH Trust. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full
and unconditional guarantee of each LBH Trust's obligations under the Preferred
Securities of such LBH Trust.
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of Holdings and will
rank (i) subordinate and junior in right of payment to all other liabilities of
Holdings, (ii) on a parity with the most senior preferred or preference stock
now or hereafter issued by Holdings and with any guarantee now or hereafter
entered into by Holdings in respect of any preferred securities of any affiliate
of Holdings and (iii) senior to Holding's common stock. The Guarantees will not
place a limitation on the amount of additional Senior Debt that may be incurred
by Holdings.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
Holdings to enforce its rights under a Guarantee without first instituting a
legal proceeding against any other person or entity). Each such Guarantee will
not be discharged except by payment of the Guarantee Payments in full to the
extent not paid by the applicable LBH Trust or upon distribution of Subordinated
Debt to the holders of the applicable Preferred Securities in exchange for all
such Preferred Securities.
CERTAIN COVENANTS OF HOLDINGS
In each Guarantee, Holdings will covenant that, so long as any Trust
Securities issued by the applicable LBH Trust remain outstanding, if (i) there
shall have occurred any Event of Default under the
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Subordinated Indenture with respect to the applicable series of Subordinated
Debt held by such LBH Trust, (ii) Holdings shall be in default with respect to
its payment of any obligations under such Guarantee or (iii) Holdings shall have
given notice of its election of an Extension Period as provided in the
certificate evidencing such Subordinated Debt and shall not have rescinded such
notice, or such Extension Period or any extension thereof shall be continuing,
then Holdings will not, and will not permit any subsidiary to, (x) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of Holdings' capital stock or (y) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of Holdings that rank on a parity with or junior
in interest to Subordinated Debt or make any guarantee payments with respect to
any guarantee by Holdings of the debt securities of any subsidiary of Holdings
if such guarantee ranks on a parity with or junior in interest to such
Subordinated Debt (other than (a) dividends or distributions in common stock of
Holdings, (b) payments under the applicable Guarantee made by Holdings in
respect of the Trust Securities of such LBH Trust, (c) any declaration of a
dividend in connection with the implementation of a shareholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of Holdings'
benefit plans).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Preferred Securities to which a Guarantee relates (in
which case no consent of such holders will be required), a Guarantee may not be
amended without the prior approval of the holders of not less than 66 2/3% of
the aggregate liquidation amount of the outstanding Preferred Securities to
which a Guarantee relates. The manner of obtaining any such approval will be as
set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of Holdings and shall inure to the
benefit of the Holders of the related Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under a Guarantee will occur upon the failure of
Holdings to perform any of its payment or other obligations thereunder. The
Holders of not less than a majority in aggregate liquidation amount of the
Preferred Securities to which a Guarantee relates have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of the Guarantee or to direct the exercise of
any trust or power conferred upon the Guarantee Trustee under such Guarantee.
If the Guarantee Trustee fails to enforce a Guarantee, then any Holder of
Preferred Securities to which such Guarantee relates may institute a legal
proceeding directly against Holdings to enforce the Guarantee Trustee's rights
under such Guarantee, without first instituting a legal proceeding against the
LBH Trust that issued such Preferred Securities, the Guarantee Trustee or any
other person or entity.
Holdings, as guarantor, will be required to file annually with the Guarantee
Trustee a certificate as to whether or not Holdings is in compliance with all
the conditions and covenants applicable to it under any outstanding Guarantees.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by Holdings in performance of a Guarantee, undertakes to perform only
such duties as are specifically set forth in the Guarantee and, after default
with respect to a Guarantee (that has not been cured or waived) that is actually
known to a responsible officer of the Guarantee Trustee, must exercise the same
degree of care
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and skill as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by a
Guarantee at the request of any Holder of Preferred Securities to which such
Guarantee relates unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate as to the Preferred Securities issued by an
LBH Trust and be of no further force and effect upon full payment of the
Redemption Price of all Preferred Securities of such LBH Trust, upon full
payment of the amounts payable upon liquidation of such LBH Trust or upon
distribution of Subordinated Debt held by such LBH Trust to the holders of the
Preferred Securities of such LBH Trust in exchange for all of the Preferred
Securities of such LBH Trust. Each Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any Holder of related
Preferred Securities issued by an LBH Trust must restore payment of any sums
paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
The Guarantees will be governed by and construed and interpreted in
accordance with the laws of the State of New York.
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DESCRIPTION OF OFFERED PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Offered Preferred Stock. The particular terms of any series of any such
Offered Preferred Stock will be described in an applicable Prospectus
Supplement. If so indicated in such a Prospectus Supplement, the terms of any
such series may differ from the terms set forth below.
The summary of terms of any Offered Preferred Stock contained in this
Prospectus and in an applicable Prospectus Supplement does not purport to be
complete and is subject to, and qualified in its entirety by, the provisions of
Holdings' Restated Certificate of Incorporation (the "Restated Certificate of
Incorporation"), filed as an exhibit to the Registration Statements of which
this Prospectus is a part, and the certificate of designations relating to such
series of Preferred Stock (the "Certificate of Designation"), the form of which
is filed as an exhibit to the Registration Statement and which will be filed
with the Secretary of State of Delaware, at or prior to the time of issuance of
such series of Preferred Stock.
GENERAL
The Restated Certificate of Incorporation authorizes the issuance of
38,000,000 shares of Preferred Stock, $1.00 par value per share. As of December
31, 1997, there were 32,100 shares of Cumulative Convertible Voting Preferred
Stock, Series A (the "Series A Preferred Stock"), 12,967,900 shares of
Cumulative Convertible Voting Preferred Stock, Series B (the "Series B Preferred
Stock") and 1,000 shares of Redeemable Voting Preferred Stock (the "Redeemable
Preferred Stock") issued and outstanding.
SERIES A PREFERRED STOCK. The shares of Series A Preferred Stock are
entitled to receive preferential dividends, as and when declared by the Board of
Directors out of funds legally available therefor, in an amount equal to $1.955
per share per annum, payable quarterly on a cumulative basis. The liquidation
preference of the Series A Preferred Stock is equal to $39.10 plus accumulated
and unpaid dividends. Holdings may redeem shares of Series A Preferred Stock in
cumulative annual increments of 10,400,000 shares, subject to adjustment for
shares theretofore converted, at a price per share equal to $39.10, but only if
there is a public market for the Holdings' common stock and the average market
price of shares of Holdings' common stock exceeds the conversion price on the
date notice of redemption is given.
Each share of Series A Preferred Stock is convertible, at any time prior to
the date of redemption, into 0.3178313 of a share of Holdings' common stock,
subject to adjustment, provided that at least 250,000 shares of Series A
Preferred Stock (or such lesser number of shares then outstanding) must be
converted each time. Holders of Series A Preferred Stock are entitled to vote,
together with the holders of Holdings' common stock as one class (except as
otherwise required by law), on all matters to be voted on by stockholders of
Holdings. Each share of Series A Preferred Stock is entitled to the number of
votes per share equal to the quotient obtained by dividing $39.10 by the
conversion price then in effect. In addition, the holders of the Series A
Preferred Stock have voting rights in certain other circumstances.
SERIES B PREFERRED STOCK. The terms of the Series B Preferred Stock
(including dividend rate, voting rights and liquidation preference) are
identical in all material respects to the terms of the Series A Preferred Stock,
except that conversion of the Series B Preferred Stock is not subject to the
restriction in the terms of the Series A Preferred Stock requiring that at least
250,000 shares thereof be converted at any one time.
REDEEMABLE PREFERRED STOCK. As of the date of this Prospectus, American
Express Company and Nippon Life Insurance Company 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. Beginning
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on December 1, 1994, the holders of Redeemable Preferred Stock are entitled to
receive annual dividends in an amount equal to, in the aggregate, 50% of the
amount, if any, by which the Company's net income for the applicable dividend
period for the fiscal year exceeds $400 million, up to a maximum of $50 million
for any such period (pro rated for the last dividend period which runs from
December 1, 2001 to May 31, 2002) (the "Dividend Formula"). The liquidation
preference per share of the Redeemable Preferred Stock is $1.00 plus accumulated
and unpaid dividends and accrued interest, if any, thereon at a specified rate.
Subject to funds being legally available therefor, Holdings is required to
redeem all of the Redeemable Preferred Stock on the final dividend payment date
therefor, or as soon as practicable thereafter when funds become legally
available, at a price per share equal to the liquidation preference referred to
above. In addition, if a Designated Event (as defined in the Restated
Certificate of Incorporation) occurs, the holders of the Redeemable Preferred
Stock have the right to require Holdings to redeem, out of funds legally
available therefor, all of the Redeemable Preferred Stock for an aggregate
redemption price equal to $200 million if such Designated Event takes place
prior to November 30, 1998, declining $50 million per year thereafter.
Holders of Redeemable Preferred Stock are entitled to vote, together with
the holders of Holdings' common stock as one class, on all matters to be voted
on by stockholders of Holdings. Notwithstanding the foregoing, American Express
has agreed that so long as it or any of its subsidiaries holds any shares of the
Redeemable Preferred Stock, it will vote such shares in the same proportion as
the votes cast by the holders of shares of Holdings' common stock on matters to
be voted on by stockholders of Holdings generally. Each share of Redeemable
Preferred Stock is entitled to 1,059 votes. In addition, if the equivalent of
six quarterly dividends (whether or not consecutive) to which the holders of the
Redeemable Preferred Stock are entitled in accordance with the Dividend Formula,
or to which the holders of any Parity Preferred Stock are entitled pursuant to
the terms of such Parity Preferred Stock, are in arrears, then the authorized
number of directors of Holdings shall be increased by two and the holders of the
Redeemable Preferred Stock will have the right (voting as a class with the
holders of any other Parity Preferred Stock of Holdings upon which like voting
rights have been conferred and are exercisable) to elect such two directors
until such time as all accumulated dividends have been paid. In addition, the
holders of Redeemable Preferred Stock have voting rights in certain other
circumstances.
------------------------
Subject to the Restated Certificate of Incorporation and to any limitations
contained in then outstanding Preferred Stock, Holdings may issue additional
classes or series of Preferred Stock, at any time or from time to time, with
such powers, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof, as the Board of
Directors or any duly authorized committee thereof shall determine, all without
further action of the stockholders, including holders of then outstanding
Preferred Stock, of Holdings.
The Offered Preferred Stock will have the dividend, liquidation, redemption
and voting rights set forth below unless otherwise provided in an applicable
Prospectus Supplement. Reference is made to such Prospectus Supplement for
specific terms, including (1) the designation of such Offered Preferred Stock;
(2) the number of shares of such Offered Preferred Stock, the liquidation
preference per share and the initial offering price of such Offered Preferred
Stock; (3) the dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Offered Preferred Stock; (4) the date
from which dividends on such Offered Preferred Stock shall accumulate, if
applicable; (5) the procedures for any auction and remarketing, if any, of such
Offered Preferred Stock; (6) the provision of a sinking fund, if any, for such
Offered Preferred Stock; (7) the provision for redemption, if applicable, of
such Offered Preferred Stock; (8) any listing of such Offered Preferred Stock on
any securities exchange; (9) the terms and conditions, if applicable, upon which
such Offered Preferred Stock will be convertible into or exchangeable for
Holdings' common stock or other securities, and whether at the option of the
holder thereof or the Company; (10) whether such Offered Preferred Stock will
rank senior or junior to or on a parity with any other class or series of
Offered Preferred Stock; (11) the voting rights, if any, of such
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Offered Preferred Stock; (12) any conversion or exchange rights of such Offered
Preferred Stock; (13) whether Holdings has elected to offer Depositary Shares
with respect to such Offered Preferred Stock as described below under
"Depositary Shares"; (14) any other specific terms, preferences, rights
limitations or restrictions of such Offered Preferred Stock; and (15) a
discussion of Federal income tax considerations applicable to such Offered
Preferred Stock.
The Offered Preferred Stock will, when issued, be fully paid and
non-assessable.
RANK
Each series of Offered Preferred Stock will, with respect to dividends or
upon liquidation, dissolution or winding up, rank (i) senior to all common stock
of Holdings, and to all equity securities issued by Holdings the terms of which
specifically provide that such equity securities rank junior to such Offered
Preferred Stock (collectively referred to as "Junior Securities"); (ii) on a
parity with all equity securities issued by Holdings the terms of which
specifically provide that such equity securities rank on a parity with such
Preferred Stock (collectively referred to as "Parity Preferred Stock"); and
(iii) junior to all equity securities issued by Holdings the terms of which
specifically provide that such equity securities rank senior to such Offered
Preferred Stock (collectively referred to as "Senior Securities").
Each series of Offered Preferred Stock will rank on a parity with the Series
A Preferred Stock, the Cumulative Preferred Stock and the Redeemable Preferred
Stock as to dividends and upon liquidation, dissolution or winding up.
DIVIDENDS
Holders of shares of Offered Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available therefor, dividends payable on such dates and at such rates per share
per annum as set forth in an applicable Prospectus Supplement. Each such
dividend will be payable to the holders of record as they appear on the stock
books of Holdings (or, if applicable, the records of the Depositary referred to
below under "Depositary Shares") on such record dates as will be fixed by the
Board of Directors or a duly authorized committee thereof, or specified in such
Prospectus Supplement. No dividends may be declared or paid or set apart for
payment on any Parity Preferred Stock with regard to the payment of dividends
unless there shall also be or have been declared and paid or set apart for
payment on the Offered Preferred Stock, dividends for all dividend payment
periods of such Offered Preferred Stock ending on or before the dividend payment
date of such Parity Preferred Stock, ratably in proportion to the respective
amounts of dividends (x) accumulated and unpaid or payable on such Parity
Preferred Stock, on the one hand, and (y) accumulated and unpaid through the
dividend payment period or periods of Offered Preferred Stock next preceding
such dividend payment date, on the other hand.
Except as set forth in the preceding sentence, unless full cumulative
dividends on the Offered Preferred Stock have been paid through the most
recently completed dividend period for such Offered Preferred Stock, no
dividends (other than in Holdings' common stock) may be paid or declared and set
aside for payment or other distribution made upon such common stock or on any
other stock of Holdings that are Junior Securities or Parity Preferred Stock as
to dividends, nor may any Holdings' common stock or shares of any other stock of
Holdings that are Junior Securities or Parity Preferred Stock as to dividends be
redeemed, purchased or otherwise acquired for any consideration (or any payment
be made to or available for a sinking fund for the redemption of any shares of
such stock; provided, however, that any moneys theretofore deposited in any
sinking fund with respect to any preferred stock of Holdings in compliance with
the provisions of such sinking fund may thereafter be applied to the purchase or
redemption of such preferred stock in accordance with the terms of such sinking
fund, regardless of whether at the time of such application full cumulative
dividends upon shares of such Offered Preferred Stock outstanding to the last
dividend payment date shall have been paid or declared and set apart for
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payment), provided that any such Junior Securities or Parity Preferred Stock or
Holdings' common stock may be converted into or exchanged for shares of stock
that are Junior Securities as to dividends.
Payment of dividends on any series of Offered Preferred Stock may be
restricted by loan agreements, indentures or other transactions entered into by
Holdings.
CONVERTIBILITY
No series of Offered Preferred Stock offered hereby will be convertible
into, or exchangeable for, other securities or property except as set forth in
an applicable Prospectus Supplement.
REDEMPTION AND SINKING FUND
No series of Offered Preferred Stock offered hereby will be redeemable or
receive the benefit of a sinking fund except as set forth in an applicable
Prospectus Supplement.
LIQUIDATION
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Holdings, holders of any series of Offered Preferred Stock then outstanding
shall be entitled to receive out of the assets of Holdings available for
distribution to its stockholders, after any distribution is made to or set aside
for holders of Senior Securities and before any distribution is made to holders
of Junior Securities, the liquidation preference per share specified in an
applicable Prospectus Supplement, if any, in each case together with any
accumulated and unpaid dividends. After payment of the full amount of the
liquidation preference and such dividends, the holders of shares of Offered
Preferred Stock will not be entitled to any further participation in any
distribution of assets by Holdings. If, upon any liquidation, dissolution or
winding up of the assets of Holdings, the assets of Holdings, or proceeds
thereof, distributable among the holders of shares of Parity Preferred Stock
shall be insufficient to pay in full the preferential amount aforesaid, then
such assets, or the proceeds thereof, shall be distributable among such holders
ratably in accordance with the respective amounts which would be payable on such
shares if all amounts payable thereon were paid in full. Neither a consolidation
or merger of Holdings with or into any other corporation, nor a merger of any
other corporation with or into Holdings, nor a sale or transfer of all or any
part of Holdings' assets shall be considered a liquidation, dissolution or
winding up of Holdings.
The Restated Certificate of Incorporation does not contain any language
requiring funds to be set aside to protect the liquidation preference of the
Offered Preferred Stock, although such liquidation preference may be
substantially in excess of the par value of the Offered Preferred Stock. In
addition, Holdings is not aware of any provision of Delaware law or any
controlling decision of the courts of the State of Delaware (the state of
incorporation of Holdings) that requires a restriction upon the surplus of
Holdings solely because the liquidation preference of Offered Preferred Stock
will exceed its par value. Consequently, there will be no restriction upon
surplus of Holdings solely because the liquidation preference of Offered
Preferred Stock will exceed the par value and there will be no remedies
available to holders of Offered Preferred Stock before or after the payment of
any dividend, other than in connection with the liquidation of Holdings, solely
by reason of the fact that such dividend would reduce the surplus of Holdings to
an amount less than the difference between the liquidation preference of Offered
Preferred Stock and its par value.
VOTING
Except as provided by Delaware law, no series of Offered Preferred Stock
will be entitled to vote except as provided in an applicable Prospectus
Supplement.
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MISCELLANEOUS
The holders of Offered Preferred Stock will have no preemptive rights.
Shares of Offered Preferred Stock redeemed or otherwise reacquired by Holdings
shall be retired and, upon the taking of any action required by applicable law,
resume the status of authorized and unissued shares of Offered Preferred Stock
undesignated as to series, and shall be available for subsequent issuance. The
shares of a series of Offered Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in an applicable Prospectus Supplement, the
Restated Certificate of Incorporation or the related Certificate of Designation
or as otherwise required by law. Neither the par value nor the liquidation
preference is indicative of the price at which the Offered Preferred Stock will
actually trade on or after the date of issuance.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Offered Preferred Stock
will be described in an applicable Prospectus Supplement.
DEPOSITARY SHARES
GENERAL. Holdings may, at its option, elect to offer fractional shares of
Offered Preferred Stock, rather than full shares of Offered Preferred Stock. In
the event such option is exercised, Holdings will issue to the public receipts
for Depositary Shares, each of which will represent a fraction (to be set forth
in the Prospectus Supplement relating to a particular series of Offered
Preferred Stock) of a share of a particular series of Offered Preferred Stock as
described below.
The shares of any series of Offered Preferred Stock represented by
Depositary Shares will be deposited under a Deposit Agreement (the "Deposit
Agreement") between Holdings and a bank or trust company selected by Holdings
having its principal office in the United States and having a combined capital
and surplus of at least $50,000,000 (the "Depositary"). Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Offered Preferred Stock
represented by such Depositary Share, to all the rights and preferences of the
Offered Preferred Stock represented thereby (including dividend, voting,
redemption and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of Offered
Preferred Stock in accordance with the terms of the offering. Copies of the
forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and the following
summary is qualified in its entirety by reference to such exhibits.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of Holdings, issue temporary Depositary
Receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive Depositary Receipts but not in
definitive form. Definitive Depositary Receipts will be prepared thereafter
without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at Holdings' expense. In
addition, subject to the terms of the Deposit Agreement, holders of Depositary
Shares are entitled to withdraw and receive, upon surrender of Depositary
Receipts, certificates evidencing the fractional number of shares of Offered
Preferred Stock represented by such Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS. The Depositary will distribute all cash
dividends or other cash distributions received in respect of the Offered
Preferred Stock to the record holders of Depositary Shares relating to such
Offered Preferred Stock in proportion to the number of such Depositary Shares
owned by such holders.
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In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
Holdings, sell such property and distribute the net proceeds from such sale to
such holders.
REDEMPTION OF DEPOSITARY SHARES. If a series of Offered Preferred Stock
represented by Depositary Shares is subject to redemption, the Depositary Shares
will be redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of such series of Offered Preferred Stock held
by the Depositary. The redemption price per Depositary Share will be equal to
the applicable fraction of the redemption price per share payable with respect
to such series of the Offered Preferred Stock. Whenever Holdings redeems shares
of Offered Preferred Stock held by the Depositary, the Depositary will redeem as
of the same redemption date the number of Depositary Shares representing the
shares of Offered Preferred Stock so redeemed. If fewer than all the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be selected
by lot or pro rata as may be determined by the Depositary.
VOTING THE OFFERED PREFERRED STOCK. Upon receipt of notice of any meeting
at which the holders of the Offered Preferred Stock are entitled to vote, the
Depositary will mail the information contained in such notice of meeting to the
record holders of the Depositary Shares relating to such Offered Preferred
Stock. Each record holder of such Depositary Shares on the record date (which
will be the same date as the record date for the Offered Preferred Stock) will
be entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of the Offered Preferred Stock represented by such
holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the amount of the Offered Preferred Stock represented by
such Depositary Shares in accordance with such instructions, and Holdings will
agree to take all action which may be deemed necessary by the Depositary in
order to enable the Depositary to do so. The Depositary will abstain from voting
shares of the Offered Preferred Stock to the extent it does not receive specific
instructions from the holders of Depositary Shares representing such Offered
Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between Holdings and
the Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Shares will not be effective unless such
amendment has been approved by the holders of at least a majority of the
Depositary Shares then outstanding. The Deposit Agreement may be terminated by
Holdings or the Depositary only if (i) all outstanding Depositary Shares have
been redeemed or (ii) there has been a final distribution in respect of the
Offered Preferred Stock in connection with any liquidation, dissolution or
winding up of Holdings and such distribution has been distributed to the holders
of Depositary Receipts.
CHARGES OF DEPOSITARY. Holdings will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. Holdings will pay charges of the Depositary in connection with the
initial deposit of the Offered Preferred Stock and any redemption of the Offered
Preferred Stock. Holders of Depositary Receipts will pay other transfer and
other taxes and governmental charges and such other charges, including a fee for
the withdrawal of shares of Offered Preferred Stock upon surrender of Depositary
Receipts, as are expressly provided in the Deposit Agreement to be for their
accounts.
MISCELLANEOUS. The Depositary will forward to holders of Depositary
Receipts all reports and communications from Holdings that are delivered to the
Depositary and which Holdings is required to furnish to the holders of the
Offered Preferred Stock.
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Neither the Depositary nor Holdings will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Holdings and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Offered
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or upon information provided by
persons presenting Offered Preferred Stock for deposit, holders of Depositary
Receipts or other persons believed to be competent and on documents believed to
be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may resign at any
time by delivering to Holdings notice of its election to do so, and Holdings may
at any time remove the Depositary, any such resignation or removal to take
effect upon the appointment of a successor Depositary and its acceptance of such
appointment. Such successor Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered or sold during the restricted period (as defined
under "Description of Debt Securities--Denominations, Registration and
Transfer"), or delivered in definitive form in connection with a sale during the
restricted period, in the United States or to United States persons other than
to (a) the United States office of (i) an international organization (as defined
in Section 7701(a)(18) of the Code), (ii) a foreign central bank (as defined in
Section 895 of the Code), or (iii) any underwriter, agent, or dealer offering or
selling Bearer Securities during the restricted period (a "Distributor")
pursuant to a written contract with the issuer or with another Distributor, that
purchases Bearer Securities for resale or for its own account and agrees to
comply with the requirements of Section 165(j)(3)(A), (B), or (C) of the Code,
or (b) the foreign branch of a United States financial institution purchasing
for its own account or for resale, which institution agrees to comply with the
requirements of Section 165(j)(3)(A), (B), or (C) of the Code. In addition, a
sale of a Bearer Security may be made during the restricted period to a United
States person who acquired and holds the Bearer Security on the Certification
Date through a foreign branch of a United States financial institution that
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the Code. Any Distributor (including an affiliate of a Distributor) offering or
selling Bearer Securities during the restricted period must agree not to offer
or sell Bearer Securities in the United States or to United States persons
(except as discussed above) and must employ procedures reasonably designed to
ensure that its employees or agents directly engaged in selling Bearer
Securities are aware of these restrictions.
Bearer Securities and their interest coupons will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Section 165(j) and 1287(a) of the
Internal Revenue Code."
Purchasers of Bearer Securities may be affected by certain limitations under
United States tax laws. See "United States Taxation--Backup Withholding and
Information Reporting." As used herein, a "United States person" means a citizen
or resident of the United States, a corporation or partnership created or
organized in or under the laws of the United States or any political subdivision
thereof, an estate the income of which is subject to United States federal
income taxation regardless of its source or a trust that is subject to the
supervision of a court within the United States and the control of a United
States person as described in section 7701(a)(30) of the Code, and "United
States" means the United States of America (including the States and the
District of Columbia) and its possessions including Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. The
term "Non-United States Holder" means any Holder which is not a United States
person.
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UNITED STATES TAXATION
In the opinion of Simpson Thacher & Bartlett, special United States tax
counsel to the Company, the following discussion is an accurate summary of the
material United States federal income tax consequences of the purchase,
ownership and disposition of Debt Securities as of the date hereof. Except where
noted, it deals only with Debt Securities held as capital assets by United
States Holders and does not deal with special situations, such as those of
dealers in securities or currencies, financial institutions, tax-exempt
entities, life insurance companies, persons holding Debt Securities or
Depositary Shares as a part of a hedging, conversion or constructive sale
transaction or a straddle or United States Holders whose "functional currency"
is not the U.S. dollar. Furthermore, the discussion below is based upon the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
federal income tax consequences different from those discussed below. This
summary deals only with Debt Securities that are classified as debt for United
States federal income tax purposes. Any special United States federal income tax
considerations relevant to a particular issue of Debt Securities or Depositary
Shares will be provided in the applicable Prospectus Supplement. PERSONS
CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF DEBT SECURITIES OR
DEPOSITARY SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL
INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
Certain United States federal income tax considerations applicable to any
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto.
PAYMENTS OF INTEREST
Except as set forth below, interest on a Debt Security will generally be
taxable to a United States Holder as ordinary income at the time it is paid or
accrued in accordance with the United States Holder's method of accounting for
tax purposes. As used herein, a "United States Holder" of a Debt Security means
a holder that is a citizen or resident of the United States, a corporation or
partnership created or organized in or under the laws of the United States or
any political subdivision thereof, an estate the income of which is subject to
United States federal income taxation regardless of its source or a trust that
is subject to the supervision of a court within the United States and the
control of a United States person as described in section 7701(a)(30) of the
Code. A "Non-United States Holder" is a holder that is not a United States
Holder.
ORIGINAL ISSUE DISCOUNT
United States Holders of Debt Securities issued with original issue discount
("OID") will be subject to special tax accounting rules, as described in greater
detail below. United States Holders of such Debt Securities should be aware that
they generally must include OID in gross income in advance of the receipt of
cash attributable to that income. However, United States Holders of such Debt
Securities generally will not be required to include separately in income cash
payments received on the Debt Securities, even if denominated as interest, to
the extent such payments do not constitute qualified stated interest (as defined
below). Debt Securities issued with OID will be referred to as "Original Issue
Discount Debt Securities." Notice will be given in the applicable Prospectus
Supplement when the Company determines that a particular Debt Security will be
an Original Issue Discount Debt Security. This summary is based upon Treasury
regulations applicable to debt instruments issued with OID (the "OID
Regulations").
A Debt Security with an "issue price" that is less than its stated
redemption price at maturity (the sum of all payments to be made on the Debt
Security other than "qualified stated interest") will be issued with OID if such
difference is at least 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity. The "issue price" of
each Debt Security in a particular offering will be the first price at which a
substantial amount of that particular offering is sold (other than to an
underwriter, placement agent or wholesaler). The term "qualified stated
interest" means stated interest that is unconditionally payable in cash or in
property (other than debt instruments of the issuer) at least
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annually at a single fixed rate or, subject to certain conditions, based on one
or more indices. Interest is payable at a single fixed rate only if the rate
appropriately takes into account the length of the interval between payments.
Notice will be given in the applicable Prospectus Supplement when the Company
determines that a particular Debt Security will bear interest that is not
qualified stated interest.
In the case of a Debt Security issued with de minimis OID (I.E., discount
that is not OID because it is less than 0.25 percent of the stated redemption
price at maturity multiplied by the number of complete years to maturity), the
United States Holder generally must include such de minimis OID in income as
principal payments on the Debt Securities are made in proportion to the stated
principal amount of the Debt Security. Any amount of de minimis OID that has
been included in income shall be treated as capital gain.
Original Issue Discount Debt Securities that may be redeemed prior to their
stated maturity at the option of the Company and/or at the option of the Holder
may be subject to rules that differ from the general rules discussed herein.
Persons considering the purchase of Original Issue Discount Debt Securities with
such features should carefully examine the applicable Prospectus Supplement and
should consult their own tax advisors with respect to such features since the
tax consequences with respect to OID will depend, in part, on the particular
terms and features of the Debt Securities.
United States Holders of Original Issue Discount Debt Securities with a
maturity upon issuance of more than one year must, in general, include OID in
income in advance of the receipt of some or all of the related cash payments.
The amount of OID includible in income by the initial United States Holder of an
Original Issue Discount Debt Security is the sum of the "daily portions" of OID
with respect to the Debt Security for each day during the taxable year or
portion of the taxable year in which such United States Holder held such Debt
Security ("accrued OID"). The daily portion is determined by allocating to each
day in any "accrual period" a pro rata portion of the OID allocable to that
accrual period. The "accrual period" for an Original Issue Discount Debt
Security may be of any length and may vary in length over the term of the Debt
Security, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs on the first day or the final
day of an accrual period. The amount of OID allocable to any accrual period is
an amount equal to the excess, if any, of (a) the product of the Debt Security's
adjusted issue price at the beginning of such accrual period and its yield to
maturity (determined on the basis of compounding at the close of each accrual
period and properly adjusted for the length of the accrual period) over (b) the
sum of any qualified stated interest allocable to the accrual period. OID
allocable to a final accrual period is the difference between the amount payable
at maturity (other than a payment of qualified stated interest) and the adjusted
issue price at the beginning of the final accrual period. Special rules will
apply for calculating OID for an initial short accrual period. The "adjusted
issue price" of a Debt Security at the beginning of any accrual period is equal
to its issue price increased by the accrued OID for each prior accrual period
(determined without regard to the amortization of any acquisition or bond
premium, as described below) and reduced by any payments made on such Debt
Security (other than qualified stated interest) on or before the first day of
the accrual period. Under these rules, a United States Holder will have to
include in income increasingly greater amounts of OID in successive accrual
periods. The Company is required to provide information returns stating the
amount of OID accrued on Debt Securities held of record by persons other than
corporations and other exempt holders.
In the case of certain Original Issue Discount Debt Securities that are
floating rate Debt Securities, both the "yield to maturity" and "qualified
stated interest" will be determined solely for purposes of calculating the
accrual of OID as though the Debt Security will bear interest in all periods at
a fixed rate generally equal to the rate that would be applicable to interest
payments on the Debt Security on its date of issue or, in the case of certain
floating rate Debt Securities, the rate that reflects the yield to maturity that
is reasonably expected for the Debt Security. Additional rules may apply if
interest on a floating rate Debt Security is based on more than one interest
index. Persons considering the purchase of floating rate Debt Securities should
carefully examine the applicable Prospectus Supplement and should consult their
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own tax advisors regarding the United States federal income tax consequences of
the holding and disposition of such Debt Securities.
United States Holders may elect to treat all interest on any Debt Security
as OID and calculate the amount includible in gross income under the constant
yield method described above. For the purposes of this election, interest
includes stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. The election is to be made for
the taxable year in which the United States Holder acquired the Debt Security,
and may not be revoked without the consent of the IRS. UNITED STATES HOLDERS
SHOULD CONSULT WITH THEIR OWN TAX ADVISORS ABOUT THIS ELECTION.
SHORT-TERM DEBT SECURITIES
In the case of Original Issue Discount Debt Securities having a term of one
year or less ("Short-Term Debt Securities"), under the OID Regulations all
payments (including all stated interest) will be included in the stated
redemption price at maturity and, thus, United States Holders will generally be
taxable on the discount in lieu of stated interest. The discount will be equal
to the excess of the stated redemption price at maturity over the issue price of
a Short-Term Debt Security, unless the United States Holder elects to compute
this discount using tax basis instead of issue price. In general, individuals
and certain other cash method United States Holders of a Short-Term Debt
Security are not required to include accrued discount in their income currently
unless they elect to do so (but may be required to include any stated interest
in income as it is received). United States Holders that report income for
federal income tax purposes on the accrual method and certain other United
States Holders are required to accrue discount on such Short-Term Debt
Securities (as ordinary income) on a straight-line basis, unless an election is
made to accrue the discount according to a constant yield method based on daily
compounding. In the case of a United States Holder that is not required, and
does not elect, to include discount in income currently, any gain realized on
the sale, exchange or retirement of the Short-Term Debt Security will generally
be ordinary income to the extent of the discount accrued through the date of
sale, exchange or retirement. In addition, a United States Holder that does not
elect to include currently accrued discount in income may be required to defer
deductions for a portion of the United States Holder's interest expense with
respect to any indebtedness incurred or continued to purchase or carry such Debt
Securities.
MARKET DISCOUNT
If a United States Holder purchases a Debt Security (other than an Original
Issue Discount Debt Security) for an amount that is less than its stated
redemption price at maturity or, in the case of an Original Issue Discount Debt
Security, its adjusted issue price, the amount of the difference will be treated
as "market discount" for United States federal income tax purposes, unless such
difference is less than a specified de minimis amount. Under the market discount
rules, a United States Holder will be required to treat any principal payment
on, or any gain on the sale, exchange, retirement or other disposition of, a
Debt Security as ordinary income to the extent of the market discount which has
not previously been included in income and is treated as having accrued on such
Debt Security at the time of such payment or disposition. In addition, the
United States Holder may be required to defer, until the maturity of the Debt
Security or its earlier disposition in a taxable transaction, the deduction of
all or a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry such Debt Security.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Debt Security, unless
the United States Holder elects to accrue on a constant interest method. A
United States Holder of a Debt Security may elect to include market discount in
income currently as it accrues (on either a ratable or constant interest
method), in which case the rule described above regarding deferral of interest
deductions will not apply. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired on or
after the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
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ACQUISITION PREMIUM; AMORTIZABLE BOND PREMIUM
A United States Holder that purchases a Debt Security for an amount that is
greater than its adjusted issue price but equal to or less than the sum of all
amounts payable on the Debt Security after the purchase date other than payments
of qualified stated interest will be considered to have purchased such Debt
Security at an "acquisition premium." Under the acquisition premium rules, the
amount of OID which such holder must include in its gross income with respect to
such Debt Security for any taxable year will be reduced by the portion of such
acquisition premium properly allocable to such year.
A United States Holder that purchases a Debt Security for an amount in
excess of the sum of all amounts payable on the Debt Security after the purchase
date other than qualified stated interest will be considered to have purchased
such Debt Security at a "premium" and will not be required to include any OID in
income. A United States Holder generally may elect to amortize the premium over
the remaining term of the Debt Security (or over a shorter period in certain
instances) on a constant yield method. The amount amortized in any year will be
treated as a reduction of the United States Holder's interest income from the
Debt Security. Bond premium on a Debt Security held by a United States Holder
that does not make such an election will decrease the gain or increase the loss
otherwise recognized on disposition of the Debt Security. The election to
amortize premium on a constant yield method once made applies to all debt
obligations held or subsequently acquired by the electing United States Holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
Final Treasury regulations issued on December 30, 1997 provide that, at a
holder's election, premium may be amortized to offset interest income only as a
United States Holder takes the qualified stated interest into account under the
United States Holder's regular accounting method. In the case of instruments
that provide for alternative payment schedules, bond premium is calculated by
assuming that (i) the holder will exercise or not exercise options in a manner
that maximizes the holder's yield and (ii) the issuer will exercise or not
exercise options in a manner that minimizes the holder's yield, except with
respect to call options for which the issuer is assumed to exercise such call
options in a manner that maximizes the holder's yield. To the extent the
assumptions prove incorrect, adjustments may then be made to the holder's bond
premium amortization. The final regulations are effective for debt instruments
acquired on or after March 2, 1998. However, if a United States Holder elects to
amortize bond premium for the taxable year containing March 2, 1998 or for any
subsequent taxable year, the final Treasury regulations would apply to all the
United States Holder's debt instruments held on or after the first day of that
taxable year. Once made, the election cannot be revoked without the consent of
the IRS.
SALE, EXCHANGE AND RETIREMENT OF DEBT SECURITIES
A United States Holder's tax basis in a Debt Security will, in general, be
the United States Holder's cost therefor, increased by OID, market discount or
any discount with respect to a Short-Term Debt Security previously included in
income by the United States Holder and reduced by any amortized premium and any
cash payments on the Debt Security other than qualified stated interest. Upon
the sale, exchange or retirement of a Debt Security, a United States Holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange or retirement (less any accrued qualified stated interest,
which will be taxable as such) and the adjusted tax basis of the Debt Security.
Except as described above with respect to certain Short-Term Debt Securities or
with respect to market discount, such gain or loss will be capital gain or loss
and will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Debt Security has been held for more than one year. Long-term
capital gains of individuals are eligible for reduced rates of taxation, with
additional rate reductions applicable to gains from capital assets held for more
than 18 months. The deductibility of capital losses is subject to limitations.
Prospective investors should consult their own tax advisors with respect to the
treatment of capital gains and losses.
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TAX CONSEQUENCES OF SATISFACTION AND DISCHARGE
The Company may discharge its obligations under the Debt Securities as more
fully described under "Description of Debt Securities--Satisfaction and
Discharge" above. Such a discharge would generally for federal income tax
purposes constitute the retirement of the Debt Securities and the issuance of
new obligations with the result that Holders of the Debt Securities would
realize gain or loss (if any) on such exchange, which would be recognized
depending upon, for example, whether the exchange qualified as a tax-free
recapitalization for federal income tax purposes or whether the wash sale loss
disallowance rules applied. Any such gain would generally not be taxable to
Non-United States Holders under the circumstances outlined below. Furthermore,
following discharge, the Debt Securities might be subject to withholding, backup
withholding and/or information reporting and might be issued with OID. Similar
results might occur if the Company defeases certain obligations as described
under "Description of Debt Securities--Defeasance of Certain Obligations".
EXTENDIBLE DEBT SECURITIES, RENEWABLE DEBT SECURITIES AND RESET DEBT SECURITIES
If so specified in an applicable Prospectus Supplement relating to a Debt
Security, the Company may have the option to extend the maturity of a Debt
Security (an "Extendible Debt Security" or a "Renewable Debt Security"). In
addition, the Company may have the option to reset the interest rate, the Spread
or the Spread Multiplier (a "Reset Debt Security"). The treatment of a United
States Holder of Debt Securities with respect to which such an option has been
exercised is unclear and will depend, in part, on the terms established for such
Debt Securities by the Company pursuant to the exercise of such option (the
"Revised Terms"). Such United States Holder may be treated for federal income
tax purposes as having exchanged such Debt Securities (the "Old Debt
Securities") for new Debt Securities with Revised Terms (the "New Debt
Securities"). If the exercise of the option by the Company is not treated as an
exchange of Old Debt Securities for New Debt Securities, no gain or loss will be
recognized by a United States Holder as a result thereof. If the exercise of the
option is treated as a taxable exchange of Old Debt Securities for New Debt
Securities, a United States Holder would recognize gain or loss equal to the
difference between the issue price of the New Debt Securities and the United
States Holder's tax basis in the Old Debt Securities.
The presence of such options may also affect the calculation of OID, among
other things. The OID Regulations provide that, solely for purposes of the
accrual of OID, an issuer of a debt instrument having an option or combination
of options to extend the term of the debt instrument will be presumed to
exercise such option or options in a manner that minimizes the yield on the debt
instrument. Conversely, if a holder is treated as having a put option, such an
option will be presumed to be exercised in a manner that maximizes the yield on
the debt instrument. If the exercise of such option or options to extend the
term of the debt instrument actually occurs or the option to put does not occur,
contrary to the presumption made under the OID Regulations (a "change in
circumstances"), then, solely for purposes of the accrual of OID, the debt
instrument is treated as reissued on the date of the change in circumstances for
an amount equal to its adjusted issue price on the date. Persons considering the
purchase of Extendible Debt Securities, Renewable Debt Securities or Reset Debt
Securities should carefully examine the applicable Prospectus Supplement and
should consult their own tax advisors regarding the United States federal income
tax consequences of the holding and disposition of such Debt Securities.
FOREIGN CURRENCY DEBT SECURITIES
The following is a summary of the principal United States federal income tax
consequences to a United States Holder of the ownership of a Debt Security
denominated in a Specified Currency other than the U.S. dollar (a "Foreign
Currency Debt Security"). If interest payments are made in a Foreign Currency to
a United States Holder that is not required to accrue such interest prior to its
receipt, such holder will be required to include in income the U.S. dollar value
of the amount received (determined by translating the Foreign Currency received
at the "spot rate" for such Foreign Currency on the date such payment is
received), regardless of whether the payment is in fact converted into U.S.
dollars. No exchange gain or loss is recognized with respect to the receipt of
such payment.
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A United States Holder that is required to accrue interest on a Foreign
Currency Debt Security prior to the receipt of such interest will be required to
include in income for each taxable year the U.S. dollar value of the interest
that has accrued during such year, determined by translating such interest at
the average rate of exchange for the period or periods during which such
interest accrued. The average rate of exchange for an interest accrual period is
the simple average of the exchange rates for each business day of such period
(or such other average that is reasonably derived and consistently applied by
the holder). An accrual basis holder may elect to translate interest income at
the spot rate on the last day of the accrual period (or last day of the taxable
year in the case of an accrual period that straddles the holder's taxable year)
or on the date the interest payment is received if such date is within five days
of the end of the accrual period. Upon receipt of an interest payment on such
Debt Security, such United States Holder will recognize ordinary income or loss
in an amount equal to the difference between the U.S. dollar value of such
payment (determined by translating any Foreign Currency received at the "spot
rate" for such Foreign Currency on the date received) and the U.S. dollar value
of the interest income that such United States Holder has previously included in
income with respect to such payment.
OID on a Debt Security that is also a Foreign Currency Debt Security will be
determined for any accrual period in the applicable Foreign Currency and then
translated into U.S. dollars in the same manner as interest income accrued by a
holder on the accrual basis, as described above. Likewise, a United States
Holder will recognize exchange gain or loss when the OID is paid to the extent
of the difference between the U.S. dollar value of the accrued OID (determined
in the same manner as for accrued interest) and the U.S. dollar value of such
payment (determined by translating any Foreign Currency received at the spot
rate for such Foreign Currency on the date of payment). For this purpose, all
receipts on a Debt Security will be viewed first as the receipt of any stated
interest payments called for under the terms of the Debt Security, second as
receipts of previously accrued OID (to the extent thereof), with payments
considered made for the earliest accrual periods first, and thereafter as the
receipt of principal.
The amount of market discount on Foreign Currency Debt Securities includible
in income will generally be determined by translating the market discount
determined in the Foreign Currency into U.S. dollars at the spot rate on the
date the Foreign Currency Debt Security is retired or otherwise disposed of. If
the United States Holder has elected to accrue market discount currently, then
the amount which accrues is determined in the Foreign Currency and then
translated into U.S. dollars on the basis of the average exchange rate in effect
during such accrual period. A United States Holder will recognize exchange gain
or loss with respect to market discount which is accrued currently using the
approach applicable to the accrual of interest income as described above.
Bond premium on a Foreign Currency Debt Security will be computed in the
applicable Foreign Currency. With respect to a United States Holder that elects
to amortize the premium, the amortizable bond premium will reduce interest
income in the applicable Foreign Currency. At the time bond premium is
amortized, exchange gain or loss (which is generally ordinary income or loss)
will be realized based on the difference between spot rates at such time and at
the time of acquisition of the Foreign Currency Debt Security. A United States
Holder that does not elect to amortize bond premium will translate the bond
premium, computed in the applicable Foreign Currency, into U.S. dollars at the
spot rate on the maturity date and such bond premium will constitute a capital
loss which may be offset or eliminated by exchange gain.
A United States Holder's tax basis in a Foreign Currency Debt Security will
be the U.S. dollar value of the Foreign Currency amount paid for such Foreign
Currency Debt Security determined at the time of such purchase. A United States
Holder that purchases a Debt Security with previously owned Foreign Currency
will recognize exchange gain or loss at the time of purchase attributable to the
difference at the time of purchase, if any, between his tax basis in such
Foreign Currency and the fair market value of the Debt Security in U.S. dollars
on the date of purchase. Such gain or loss will be ordinary income or loss.
For purposes of determining the amount of any gain or loss recognized by a
United States Holder on the sale, exchange, retirement or other disposition of a
Foreign Currency Debt Security, the amount
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realized upon such sale, exchange, retirement or other disposition will be the
U.S. dollar value of the amount realized in Foreign Currency (other than amounts
attributable to accrued but unpaid interest not previously included in the
holder's income), determined at the time of the sale, exchange, retirement or
other disposition.
A United States Holder will recognize exchange gain or loss attributable to
the movement in exchange rates between the time of purchase and the time of
disposition (including the sale, exchange, retirement or other disposition) of a
Foreign Currency Debt Security. Such gain or loss will be treated as ordinary
income or loss. The realization of such gain or loss will be limited to the
amount of overall gain or loss realized on the disposition of a Foreign Currency
Debt Security. Under proposed Treasury Regulations issued on March 17, 1992, if
a Foreign Currency Debt Security is denominated in one of certain
hyperinflationary currencies, generally (i) exchange gain or loss would be
realized with respect to movements in the exchange rate between the beginning
and end of each taxable year (or such shorter period) that such Debt Security
was held and (ii) such exchange gain or loss would be treated as an addition or
offset, respectively, to the accrued interest income on (and an adjustment to
the holder's tax basis in) the Foreign Currency Debt Security.
A United States Holder's tax basis in Foreign Currency received as interest
on (or OID with respect to), or received on the sale, exchange, retirement or
other disposition of, a Foreign Currency Debt Security will be the U.S. dollar
value thereof at the spot rate at the time the holder received such Foreign
Currency. Any gain or loss recognized by a United States Holder on a sale,
exchange, retirement or other disposition of Foreign Currency will be ordinary
income or loss and will not be treated as interest income or expense, except to
the extent provided in Treasury Regulations or administrative pronouncements of
the IRS.
DUAL CURRENCY DEBT SECURITIES
If so specified in an applicable Prospectus Supplement relating to a Foreign
Currency Debt Security, the Company may have the option to make all payments of
principal and interest scheduled after the exercise of such option in a currency
(the "Optional Payment Currency") other than the Specified Currency. The United
States federal income tax treatment of Dual Currency Debt Securities is
uncertain. Treasury Regulations currently in effect do not address the tax
treatment of Dual Currency Debt Securities. Under the approach of proposed
Treasury Regulations issued on March 17, 1992, a Dual Currency Debt Security
would be bifurcated into two hypothetical instruments: (i) a zero coupon bond
denominated in the currency of the stated redemption price at maturity, and (ii)
an installment obligation denominated in the currency of the qualified stated
interest payments. The proposed regulations are effective only for Debt
Securities issued or transactions occurring after final regulations are
published. Persons considering the purchase of Dual Currency Debt Securities
should carefully examine the applicable Prospectus Supplement and should consult
their own tax advisors regarding the United States federal income tax
consequences of the holding and disposition of such Debt Securities.
A United States Holder of a Dual Currency Debt Security with respect to
which the Company's option has been exercised may be considered to have
exchanged a Debt Security denominated in the Specified Currency for a Debt
Security denominated in the Optional Payment Currency. If the exercise of the
option by the Company is not treated as a deemed exchange, a United States
Holder of a Dual Currency Debt Security will not recognize gain or loss and the
Holder's basis in the Debt Security will be unchanged. If the exercise of the
option is treated as a taxable exchange, a United States Holder will recognize
gain or loss, if any, equal to the difference between the holder's basis in the
Debt Security denominated in the Specified Currency and the value of the Debt
Security denominated in the Optional Payment Currency.
CONTINGENT PAYMENT DEBT SECURITIES
The OID Regulations contain special rules for determining the timing and
amount of OID to be accrued with respect to certain Debt Securities providing
for one or more contingent payments ("Contingent Payment Debt Security"). Under
these rules, United States Holders will accrue OID each year based on the
"comparable yield" of the Debt Securities. The comparable yield of the Debt
Securities will
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generally be the rate at which the Company would issue a fixed rate debt
instrument with terms and conditions similar to the Debt Securities. The Company
is required to provide the comparable yield to the United States Holders and,
solely for tax purposes, is also required to provide a projected payment
schedule that includes the actual interest payments on the Debt Securities and
estimates the amount and timing of contingent payments on the Debt Securities.
Notice will be given in the applicable Prospectus Supplement when the Company
determines that a particular Debt Security will be treated as a Contingent
Payment Debt Security.
The amount of OID on a Contingent Payment Debt Security for each accrual
period will be determined by multiplying the comparable yield of the Contingent
Payment Debt Security (adjusted for the length of the accrual period) by the
Debt Security's adjusted issue price at the beginning of the accrual period
(determined in accordance with the rules set forth in the OID Regulations
relating to contingent payment debt instruments). The amount of OID so
determined will then be allocated on a ratable basis to each day in the accrual
period that the United States Holder holds the Contingent Payment Debt Security.
If the actual payments made on the Contingent Payment Debt Securities in a
taxable year differ from the projected contingent payments, the OID Regulations
require that adjustments be made for such differences. A positive adjustment
(i.e., the amount by which an actual payment exceeds a projected contingent
payment) will be treated as additional interest. A negative adjustment will
first reduce the amount of interest required to be accrued in the current year.
Any negative adjustments that exceed the amount of interest accrued in the
current year will be treated as ordinary loss to the extent that the United
States Holder's total interest inclusions on the Contingent Payment Debt
Security exceed the total amount of the United States Holder's net negative
adjustments treated as ordinary loss on the Contingent Payment Debt Security in
prior taxable years. Any excess negative adjustments will be carried forward to
offset future income or amount realized on disposition of the Contingent Payment
Debt Securities.
Gain on the sale, exchange, or retirement of a Contingent Payment Debt
Security generally will be treated as ordinary income. Loss from the disposition
of a Contingent Payment Debt Security will be treated as ordinary loss to the
extent of the United States Holder's prior net interest inclusions (reduced by
the total net negative adjustments previously allowed to the United States
Holder as ordinary loss). Any loss in excess of such amount will be treated as
capital loss.
A United States Holder is generally bound by the comparable yield and
projected payment schedule provided by the Company. However, if a United States
Holder believes that the Company's projected payment schedule is unreasonable, a
United States Holder may set its own projected payment schedule so long as such
United States Holder explicitly discloses the use of such schedule and the
reason therefor. Unless otherwise prescribed by the Commissioner of the IRS,
such disclosure must be made in a statement attached to the United States
Holder's timely filed federal income tax return for the taxable year in which
the Debt Security is acquired.
For special treatment of Foreign Currency Debt Securities or Dual Currency
Debt Securities that are also Contingent Payment Debt Securities see the
applicable Prospectus Supplement.
The rules regarding Contingent Payment Debt Securities are complex.
Investors considering the purchase of Debt Securities providing for one or more
contingent payments should carefully examine the applicable Prospectus
Supplement and consult their own tax advisors regarding the United States
federal income tax consequences of the holding and disposition of such Debt
Securities.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be required
with respect to the payment by the Company or any Paying Agent of principal,
premium, if any, or interest (which for purposes of this discussion includes
OID) on a Debt Security owned by a Non-United States Holder, provided (i)
that the beneficial owner does not actually or constructively own 10% or
more of the total
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combined voting power of all classes of stock of the Company entitled to
vote within the meaning of section 871(h)(3) of the Code and the regulations
thereunder, (ii) the beneficial owner is not a controlled foreign
corporation that is related to the Company through stock ownership, (iii)
the beneficial owner is not a bank whose receipt of interest on a Debt
Security is described in section 881(c)(3)(A) of the Code, (iv) in the case
of a Registered Security, the beneficial owner satisfies the statement
requirement (described generally below) set forth in section 871(h) and
section 881(c) of the Code and the regulations thereunder and (v) such
interest is not considered contingent interest under Section 871(h)(4) of
the Code and the regulations thereunder;
(b) no withholding of United States federal income tax will be required
with respect to any gain or income realized by a Non-United States Holder
upon the sale, exchange or retirement of a Debt Security; and
(c) a Debt Security beneficially owned by an individual who at the time
of death is a Non-United States Holder will not be subject to United States
federal estate tax as a result of such individual's death, provided that
such individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the company entitled
to vote within the meaning of section 871(h)(3) of the Code and provided
that the interest payments with respect to such Debt Security would not have
been, if received at the time of such individual's death, effectively
connected with the conduct of a United States trade or business by such
individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Debt Security, or a financial institution holding the Debt
Security on behalf of such owner, must provide, in accordance with specified
procedures, a paying agent of the Company with a statement to the effect that
the beneficial owner is not a U.S. person, citizen or resident. Currently, these
requirements will be met if (1) the beneficial owner provides his name and
address, and certifies, under penalties of perjury, that he is not a U.S.
person, citizen or resident (which certification may be made on an Internal
Revenue Service Form W-8 (or successor form)) or (2) a financial institution
holding the Debt Security on behalf of the beneficial owner certifies, under
penalties of perjury, that such statement has been received by it and furnishes
a paying agent with a copy thereof. Under Treasury regulations (the "Final
Regulations") finalized in 1997, the statement requirement referred to in
(a)(iv) above may be satisfied with other documentary evidence for interest paid
after December 31, 1999 with respect to an offshore account or through certain
foreign intermediaries.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, as might be the case with
a Contingent Payment Debt Security, payments of premium, if any, and interest
(including OID) made to such Non-United States Holder will be subject to a 30%
withholding tax unless the beneficial owner of the Debt Security provides the
Company or its paying agent, as the case may be, with a properly executed (1)
Internal Revenue Service Form 1001 (or successor form) claiming an exemption or
reduced rate from withholding under the benefit of a tax treaty or (2) Internal
Revenue Service Form 4224 (or successor form) stating that interest paid on the
Note is not subject to withholding tax because it is effectively connected with
the beneficial owner's conduct of a trade or business in the United States.
Under the Final Regulations, Non-United States Holders will generally be
required to provide IRS Form W-8 in lieu of IRS Form 1001 and IRS Form 4224,
although alternative documentation may be applicable in certain situations.
If a Non-United States Holder is engaged in a trade or business in the
United States and premium, if any, or interest (including OID) on the Debt
Security is effectively connected with the conduct of such trade or business,
the Non-United States Holder, although exempt from the withholding tax discussed
above, will be subject to United States federal income tax on such premium, if
any, and interest (including OID) on a net income basis in the same manner as if
it were a United States Holder. In addition, if such holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% of its
effectively connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, such
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premium, if any, and interest (including OID) on a Debt Security will be
included in such foreign corporation's earnings and profits.
Any gain or income realized upon the sale, exchange or retirement of a Debt
Security will generally not be subject to United States federal income tax if
(i) such gain or income is not effectively connected with a trade or business in
the United States of the Non-United States Holder, and (ii) in the case of a
Non-United States Holder who is an individual, such individual is not present in
the United States for 183 days or more in the taxable year of such sale,
exchange or retirement, and certain other conditions are not met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on Debt Securities and to
the proceeds of sale of a Debt Security made to United States Holders other than
certain exempt recipients (such as corporations). A 31% backup withholding tax
will apply to such payments if the United States Holder fails to provide a
taxpayer identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income.
No information reporting on IRS Form 1099 or backup withholding will be
required with respect to payments made by the Company or any paying agent to
Non-United States Holders (1) if those payments are made outside of the United
States on Bearer Securities or (2) on Registered Securities with respect to
which a statement described in (a)(iv) under "Non-United States Holders" has
been received and the payor does not have actual knowledge that the beneficial
owner is a United States person. However, interest (including OID) paid to a
Non-United States Holder on a Registered Security will be required to be
reported annually on IRS Form 1042-S.
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on a Debt Security are paid
or collected by a foreign office of a custodian, nominee or other foreign agent
on behalf of the beneficial owner of such Debt Security, or if a foreign office
of a broker (as defined in applicable Treasury regulations) pays the proceeds of
the sale of a Debt Security to the owner thereof. If, however, such nominee,
custodian, agent or broker is, for United States federal income tax purposes, a
United States person, a controlled foreign corporation or a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, or, after December 31, 1999, if such
nominee, custodian, agent or broker is a foreign partnership in which one or
more United States persons, in the aggregate, own more than 50% of the income or
capital interests in the partnership or if the partnership is engaged in a trade
or business in the United States, such payments will not be subject to backup
withholding but will be subject to information reporting, unless (1) such
custodian, nominee, agent or broker has documentary evidence in its records that
the beneficial owner is not a U.S. person and certain other conditions are met
or (2) the beneficial owner otherwise establishes an exemption.
Payments of principal, interest, OID and premium on a Debt Security paid to
the beneficial owner of a Debt Security by a United States office of a
custodian, nominee or agent, or the payment by the United States office of a
broker of the proceeds of sale of a Debt Security, will be subject to both
backup withholding and information reporting unless the beneficial owner
provides the statement referred to in (a)(iv) above and the payor does not have
actual knowledge that the beneficial owner is a United States person or
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS.
PREFERRED STOCK AND DEPOSITARY SHARES
Persons considering the purchase of Offered Preferred Stock or Depositary
Shares should carefully examine the applicable Prospectus Supplement regarding
the United States federal income tax consequences of the holding and disposition
of such Offered Preferred Stock and Depositary Shares.
41
<PAGE>
CAPITAL REQUIREMENTS
As a registered broker-dealer, Lehman Brothers is subject to the SEC's net
capital rule (Rule 15c3-1, the "Net Capital Rule"), promulgated under the
Exchange Act. The Exchange monitors the application of the Net Capital Rule by
Lehman Brothers. Lehman Brothers computes net capital under the alternative
method of the Net Capital Rule which requires the maintenance of minimum net
capital, as defined. A broker-dealer may be required to reduce its business if
its net capital is less than 4% of aggregate debit balances and may also be
prohibited from expanding its business or paying cash dividends if resulting net
capital would be less than 5% of aggregate debit balances. In addition, the Net
Capital Rule does not allow withdrawal of subordinated capital if net capital
would be less than 5% of such debit balances.
The Net Capital Rule also limits the ability of broker-dealers to transfer
large amounts of capital to parent companies and other affiliates. Under the Net
Capital Rule equity capital cannot be withdrawn from a broker-dealer without the
prior approval of the SEC when net capital after the withdrawal would be less
than 25% of its securities positions haircuts (which are deductions from capital
of certain specified percentages of the market value of securities to reflect
the possibility of a market decline prior to disposition). In addition, the Net
Capital Rule requires broker-dealers to notify the SEC and the appropriate
self-regulatory organization two business days before a withdrawal of excess net
capital if the withdrawal would exceed the greater of $500,000 or 30% of the
broker-dealer's excess net capital, and two business days after a withdrawal
that exceeds the greater of $500,000 or 20% of excess net capital. Finally, the
Net Capital Rule authorizes the SEC to order a freeze on the transfer of capital
if a broker-dealer plans a withdrawal of more than 30% of its excess net capital
and the SEC believes that such a withdrawal would be detrimental to the
financial integrity of the firm or would jeopardize the broker-dealer's ability
to pay its customers.
Compliance with the Net Capital Rule could limit those operations of Lehman
Brothers that require the intensive use of capital, such as underwriting and
trading activities and the financing of customer account balances, and also
could restrict Holdings' ability to withdraw capital from Lehman Brothers which
in turn could limit Holdings' ability to pay dividends, repay debt and redeem or
purchase shares of its outstanding capital stock. The Company is subject to
other domestic and international regulatory requirements with which it is
required to comply.
42
<PAGE>
PLAN OF DISTRIBUTION
Holdings may sell any series of Debt Securities, Offered Preferred Stock or
Depositary Shares and any LBH Trust may sell Preferred Securities in any one or
more of the following ways: (i) through, or through underwriting syndicates
managed by, Lehman Brothers alone or with one or more other underwriters; (ii)
through one or more dealers or agents (which may include Lehman Brothers); or
(iii) directly to one or more purchasers. The specific managing underwriter or
underwriters or agent or agents with respect to the offer and sale of Securities
are set forth on the cover of the Prospectus Supplement relating to such
Securities and the members of the underwriting syndicate, if any, are named in
such Prospectus Supplement. Only the underwriters or agents so named in such
Prospectus Supplement are underwriters or agents, respectively, in connection
with such Securities. The applicable Prospectus Supplement also describes the
discounts and commissions to be allowed or paid to the underwriters or agents,
all other items constituting underwriting or agency compensation, the discounts
and commissions to be allowed or paid to dealers, if any, and the exchanges, if
any, on which such Securities will be listed. Securities acquired by any
underwriter will be acquired for its own account and may be resold from time to
time in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase such Securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all such Securities if any of such Securities are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time. To the extent, if any, that Securities
to be purchased by Lehman Brothers, as underwriter, are not resold by it or are
not resold at the public offering price set forth in an applicable Prospectus
Supplement, the funds derived from such offering by the Company on a
consolidated basis may be reduced.
If so indicated in an applicable Prospectus Supplement, Holdings will
authorize the underwriters named therein to solicit offers by certain
institutional investors to purchase Debt Securities providing for payment and
delivery on a future date specified in such Prospectus Supplement. There may be
limitations on the minimum amount which may be purchased by any such
institutional investor or on the portion of the aggregate principal amount of
the particular Debt Securities which may be sold pursuant to such arrangements.
Institutional investors to which such offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
educational charitable institutions and such other institutions as may be
approved by Holdings. The obligations of any such purchasers pursuant to such
delayed delivery and payment arrangements will not be subject to any conditions
except (i) the purchase by an institution of the particular Debt Securities
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject and (ii)
Holdings shall have sold to such underwriters the total principal amount of such
Debt Securities less the principal amount thereof covered by such arrangements.
Underwriters named therein will not have any responsibility in respect of the
validity of such arrangements or the performance of Holdings or such
institutional investors thereunder.
Each distributor of Bearer Securities will agree that it will not offer or
sell during the restricted period, directly or indirectly, Bearer Securities in
the United States or to United States persons (other than as discussed under
"Limitations on Issuance of Bearer Securities") and in connection with the sale
of Bearer Securities during the restricted period, will not deliver definitive
Bearer Securities within the United States. See "Limitations on Issuance of
Bearer Securities."
Securities may also be offered and sold, if so indicated in an applicable
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for Holdings. Any remarketing firm will be identified and
the terms of its agreement, if any, with Holdings and its compensation will be
described in such Prospectus Supplement. Remarketing firms may be deemed to be
underwriters, as that term is defined in the Securities Act, in connection with
the Securities remarketed thereby.
43
<PAGE>
Each underwriter, agent or remarketing firm will represent and agree that
(i) it has not offered or sold and, prior to the expiration of six months from
the issue date thereof, will not offer or sell any Securities to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purpose of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995 (the
"Regulations"); (ii) it complied and will comply with all applicable provisions
of the Financial Services Act 1986 and the Regulations with respect to anything
done by it in relation to the Securities in, from or otherwise involving the
United Kingdom; and (iii) it has only issued or passed on and will only issue or
pass on to any person in the United Kingdom any document received by it in
connection with the issue of the Securities if that person is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1997 or is a person to whom such document may
otherwise lawfully be issued or passed on.
This Prospectus together with an applicable Prospectus Supplement may also
be used by Lehman Brothers in connection with offers and sales of Securities
related to market making transactions, by and through Lehman Brothers, at
negotiated prices related to prevailing market prices at the time of sale or
otherwise. Lehman Brothers may act as principal or agent in such transactions.
The underwriting and agency arrangements for any offering of the Securities
will comply with the requirements of Rule 2720 of the National Association of
Securities Dealers, Inc. (the "NASD") regarding an NASD member firm's
participating in distributing its affiliate's securities.
ERISA MATTERS
Each of Holdings and Lehman Brothers may be considered a "party in interest"
within the meaning of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and a "disqualified person" under corresponding provisions of
the Code, with respect to certain employee benefit plans. Certain transactions
between an employee benefit plan and a party in interest or disqualified person
may result in "prohibited transactions" within the meaning of ERISA and the
Code. ANY EMPLOYEE BENEFIT PLAN PROPOSING TO INVEST IN THE DEBT SECURITIES OR
THE PREFERRED SECURITIES SHOULD CONSULT WITH ITS LEGAL COUNSEL.
LEGAL OPINIONS
Unless otherwise indicated in an applicable Prospectus Supplement, the
validity of the Debt Securities, Preferred Stock, Depositary Shares and
Guarantees offered hereby will be passed upon for Holdings by Karen M. Muller,
Esq., Deputy General Counsel of Holdings, for the LBH Trusts by Richards, Layton
& Finger, One Rodney Square, Wilmington, Delaware 19899, and for the
underwriters or agents by Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017. Simpson Thacher & Bartlett acts as counsel in various
matters for Holdings, Lehman Brothers and certain of their subsidiaries.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and financial statement schedule of
the Company for each of the three years in the period ended November 30, 1997
appearing in the Company's Annual Report on Form 10-K for the year ended
November 30, 1997, 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 financial statement
schedule are incorporated herein by reference in reliance upon the reports of
Ernst & Young LLP pertaining to such financial statements (to the extent covered
by consents filed with the Securities and Exchange Commission) given upon the
authority of such firm as experts in accounting and auditing.
44
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND
THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY AGENT OR UNDERWRITER. NEITHER THIS PROSPECTUS NOR THE
ACCOMPANYING PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND
THE ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes...................................................... S-3
Important Currency Information............................................ S-22
Currency Risks............................................................ S-22
Certain United States Federal Income Tax Consequences..................... S-24
Plan of Distribution of Notes............................................. S-25
Glossary.................................................................. S-25
PROSPECTUS
Available Information..................................................... 2
Documents Incorporated by Reference....................................... 3
The Company............................................................... 4
The LBH Trusts............................................................ 4
Use of Proceeds........................................................... 5
Ratio of Earnings to Fixed Charges........................................ 6
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends............................................................... 6
Description of Debt Securities............................................ 7
Description of Preferred Securities....................................... 19
Description of Guarantees................................................. 21
Description of Offered Preferred Stock.................................... 25
Limitations on Issuance of Bearer Securities.............................. 31
United States Taxation.................................................... 32
Capital Requirements...................................................... 42
Plan of Distribution...................................................... 43
ERISA Matters............................................................. 44
Legal Opinions............................................................ 44
Independent Accountants................................................... 44
</TABLE>
$6,885,437,312
LEHMAN BROTHERS
HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES E
--------------------------------
PROSPECTUS SUPPLEMENT
APRIL 15, 1998
--------------------------------
LEHMAN BROTHERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses to be incurred and paid by the
Registrants in connection with the offerings described in this Registration
Statement (other than underwriting discounts and commissions).
<TABLE>
<S> <C>
SEC registration fee............................................ $1,818,182
NASD fee........................................................ 30,500*
Rating Agency fees.............................................. 400,000*
New York Stock Exchange listing fee............................. 100,000*
Legal fees and expenses......................................... 75,000*
Accounting fees and expenses.................................... 75,000*
Transfer Agent and Trustees fees and expenses................... 50,000*
Blue Sky qualification fees and expenses........................ 5,000*
Printing and engraving fees and expenses........................ 250,000*
Miscellaneous fees and expenses................................. 196,318*
---------
Total....................................................... $3,000,000*
---------
---------
</TABLE>
- ------------------------
* Estimated and subject to future contingencies.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Certificate of Incorporation of Holdings requires Holdings to
indemnify its directors and officers to the fullest extent permitted by Delaware
General Corporation Law. In addition, the officers and directors of Holdings are
insured under officers' and directors' liability insurance policies purchased by
Holdings. The directors, officers and employees of Holdings and the Regular
Trustees of each LBH Trust are also insured against fiduciary liabilities under
the Employee Retirement Income Security Act of 1974.
The Declaration of each LBH Trust provides that Holdings shall indemnify the
Property Trustee or any of its affiliates, the Delaware Trustee or any of its
affiliates, or any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Property
Trustee and the Delaware Trustee (each, a "Fiduciary Indemnified Person") for,
and hold each Fiduciary Indemnified Person harmless against, any loss, liability
or expense incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties under
such Declaration.
The Declaration of each LBH Trust also provides that Holdings will
indemnify, to the full extent permitted by law, any Regular Trustee, affiliate
of any Regular Trustee or any officers, directors, shareholders, members,
partners, employees, representatives or agents of any Regular Trustee or any
affiliate thereof; or any officer, employee or agent of such LBH Trust or its
affiliates (each, a "Debenture Issuer Indemnified Person") who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such LBH Trust) by
reason of the fact that he is or was a Debenture Issuer Indemnified Person
against expenses (including attorney fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of such LBH
Trust, and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction or upon a plea
II-1
<PAGE>
of nolo contendere or its equivalent, shall not, of itself, create a presumption
that the Debenture Issuer Indemnified Person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of such LBH Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful. The
Declaration of each LBH Trust also provides that Holdings shall indemnify, to
the full extent permitted by law, any Debenture Issuer Indemnified Person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Debenture Issuer
Indemnified Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust and except that no
such indemnification shall be made in respect of any claim, issue or matter as
to which such Debenture Issuer Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper. The Declaration of each LBH Trust further provides that
expenses (including attorneys' fees) incurred by a Debenture Issuer Indemnified
Person in defending a civil, criminal, administrative or investigative action,
suit or proceeding referred to in the immediately preceding two sentences shall
be paid by Holdings in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Debenture
Issuer Indemnified Person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by Holdings as authorized
in the Declaration.
Any underwriting agreement or agency agreement with respect to an offering
of securities registered hereunder will provide for indemnification of Holdings
and its officers and directors and the LBH Trustees who signed this Registration
Statement by the underwriters or agents, as the case may be, against certain
liabilities including liabilities under the Securities Act of 1933 (the "Act").
ITEM 16. EXHIBITS
The Exhibit Index beginning on page E-1 is hereby incorporated by reference.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(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
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;
II-2
<PAGE>
(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 Holdings pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purposes of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial BONA FIDE
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
That, for purposes of determining any liability under the Act, each filing
of Holdings' annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrants
pursuant to the foregoing provisions, or otherwise, the Registrants have 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 Registrants of expenses incurred
or paid by a director, officer or controlling person of the Registrants 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 Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lehman Brothers
Holdings Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and had duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on April 15, 1998.
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ KAREN M. MULLER
-----------------------------------------
Name: Karen M. Muller
Title: Vice President
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
Dated: April 15, 1998
SIGNATURE TITLE
- ------------------------------ --------------------------------------------
* Chief Executive Officer and Chairman of the
- ------------------------------ Board of Directors (principal executive
Richard S. Fuld, Jr. officer)
*
- ------------------------------ Chief Financial Officer (principal financial
Charles B. Hintz and accounting officer)
*
- ------------------------------ Director
Michael L. Ainslie
*
- ------------------------------ Director
John F. Akers
*
- ------------------------------ Director
Roger S. Berlind
*
- ------------------------------ Director
Thomas H. Cruikshank
*
- ------------------------------ Director
Henry Kaufman
- ------------------------------ Director
Hideichiro Kobayashi
*
- ------------------------------ Director
John D. Macomber
*
- ------------------------------ Director
Dina Merrill
*By: /s/ KAREN M. MULLER
-------------------------
Karen M. Muller
Attorney-in-fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
FILED HEREWITH(--);
TO BE FILED BY
AMENDMENT OR PAGE NUMBER
BY FORM 8-K(*) IN SEQUENTIAL
EXHIBIT OR INCORPORATED BY NUMBERING
NUMBER DESCRIPTION REFERENCE TO SYSTEM
- --------- --------------------------------------------- --------------------------------- ---------------
<C> <S> <C> <C> <C>
1(a) -- Form of Underwriting Agreement (including --
Delayed Delivery Contract) for Debt
Securities
1(b) -- Form of Underwriting Agreement for Preferred --
Stock
1(c) -- Form of Underwriting Agreement for Depositary --
Shares
1(d) -- Form of Underwriting Agreement for Preferred --
Securities
4(a) -- Holdings Standard Multiple Series Indenture Exhibit 4(a) to Post-Effective
Provisions dated July 30, 1987 and as amended Amendment No. 1 to Registration
November 16, 1987 Statement No. 33-16141 filed
November 16, 1987
4(b) -- Indenture dated as of September 1, 1987 Exhibit 4(b) to Post-Effective
between Holdings and Citibank, N.A., as Amendment No. 1 to Registration
Trustee, with respect to the Senior Debt Statement No. 33-16141 filed
Securities November 16, 1987
4(c) -- Supplemental Indenture, dated as of November Exhibit 4(m) to Registration
25, 1987, between Holdings and Citibank, Statement No. 33-25797 filed
N.A., as Trustee, with respect to the Senior November 25, 1988
Debt Securities
4(d) -- Second Supplemental Indenture, dated as of Exhibit 4(e) to Registration
November 27, 1990 between Holdings and Statement No. 33-49062 filed
Citibank, N.A., as Trustee, with respect to June 30, 1992
the Senior Debt Securities
4(e) -- Third Supplemental Indenture dated as of Exhibit 4(f) to Registration
September 13, 1991, between Holdings and Statement No. 33-46146 filed
Citibank, N.A., as Trustee, with respect to March 10, 1992
the Senior Debt Securities
4(f) -- Fourth Supplemental Indenture dated as of Exhibit 4(f) to Form 8-A filed
October 4, 1993, between Holdings and October 7, 1993
Citibank, N.A., as Trustee, with respect to
Senior Debt Securities
4(g) -- Fifth Supplemental Indenture dated as of Exhibit 4(h) to Post-Effective
August 1, 1995 between Holdings and Citibank, Amendment No. 1 to Registration
N.A., as Trustee, with respect to Senior Debt Statement No. 33-56615 filed
Securities August 24, 1995
4(h) -- Sixth Supplemental Indenture dated as of June Exhibit 4(h) to Registration
26, 1997 between Holdings and Citibank, N.A., Statement No. 333-38227 filed
as Trustee, with respect to Senior Debt October 17, 1997
Securities
4(i) -- Form of Senior Debt Security--Fixed Rate Note --
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
FILED HEREWITH(--);
TO BE FILED BY
AMENDMENT OR PAGE NUMBER
BY FORM 8-K(*) IN SEQUENTIAL
EXHIBIT OR INCORPORATED BY NUMBERING
NUMBER DESCRIPTION REFERENCE TO SYSTEM
- --------- --------------------------------------------- --------------------------------- ---------------
<C> <S> <C> <C> <C>
4(j) -- Form of Senior Debt Security--Variable Rate --
Note
4(k) -- Form of Senior Debt Security--Serial Zero Exhibit 4.1 to Holdings' Current
Coupon Senior Note Report on Form 8-K dated April
27, 1988
4(l) -- Form of Senior Debt Security--Medium-Term --
Note, Series E (Fixed Rate)
4(m) -- Form of Senior Debt Security--Medium-Term --
Note, Series E (Floating Rate)
4(n) -- Form of Senior Debt Security--Medium-Term --
Note, Series E (Currency Indexed)
4(o) -- Indenture dated as of February 1, 1996 Exhibit 2 to Form 8-A filed
between Holdings and Chemical Bank, as February 8, 1996
Trustee, with respect to the Subordinated
Debt Securities
4(p) -- Supplemental Indenture, dated as of February Exhibit 3 to Form 8-A filed
1, 1996, between Holdings and Chemical Bank, February 8, 1996
as Trustee, with respect to the Subordinated
Debt Securities
4(q) -- Form of Subordinated Debt Security --
4(r) -- Form of Subordinated Debt Security to be --
issued to each LBH Trust
4(s) -- Form of Certificate of Designations with --
respect to the Preferred Stock
4(t) -- Form of Deposit Agreement with respect to the --
Depositary Shares (including the form of
Depositary Receipt to be issued thereunder)
4(u) -- Certificate of Trust of Lehman Brothers --
Holdings Capital Trust I
4(v) -- Certificate of Trust of Lehman Brothers --
Holdings Capital Trust II
4(w) -- Certificate of Trust of Lehman Brothers --
Holdings Capital Trust III
4(x) -- Declaration of Trust of Lehman Brothers --
Holdings Capital Trust I
4(y) -- Declaration of Trust of Lehman Brothers --
Holdings Capital Trust II
4(z) -- Declaration of Trust of Lehman Brothers --
Holdings Capital Trust III
4(aa) -- Form of Amended and Restated Declaration of --
Trust for each LBH Trust (including the forms
of Preferred Security and Common Security to
be issued thereunder)
4(bb) -- Form of Guarantee with respect to the --
Preferred Securities of each LBH Trust
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
FILED HEREWITH(--);
TO BE FILED BY
AMENDMENT OR PAGE NUMBER
BY FORM 8-K(*) IN SEQUENTIAL
EXHIBIT OR INCORPORATED BY NUMBERING
NUMBER DESCRIPTION REFERENCE TO SYSTEM
- --------- --------------------------------------------- --------------------------------- ---------------
<C> <S> <C> <C> <C>
5(a) -- Opinion and consent of Karen M. Muller, Esq. --
as to the validity of the Debt Securities,
Preferred Stock, Depositary Shares and
Guarantees of Holdings
5(b) -- Opinion and consent of Richards, Layton & --
Finger as to the validity of the Preferred
Securities of the LBH Trusts
8 -- Opinion and consent of Simpson Thacher & --
Bartlett regarding certain tax matters
12(a) -- Computation of ratio of earnings to fixed Exhibit 12.1 to Holdings' Annual
charges Report on Form 10-K
for the fiscal year ended
November 30, 1997
12(b) -- Computation of ratio of earnings to combined Exhibit 12.2 to Holdings' Annual
fixed charges and preferred dividends Report on Form 10-K
for the fiscal year ended
November 30, 1997
23(a) -- Consent of Karen M. Muller, Esq. (included in --
Exhibit 5(a))
23(b) -- Consent of Richards, Layton & Finger --
(included in Exhibit 5(b))
23(c) -- Consent of Ernst & Young LLP, Independent --
Auditors
23(d) -- Consent of Simpson Thacher & Bartlett --
(included in Exhibit 8)
24 -- Power of Attorney --
25(a) -- Form T-1 Statement of Eligibility and --
Qualification under Trust Indenture Act of
1939 ("Form T-1") of Citibank, N.A. as
Trustee under the Indenture with respect to
the Senior Debt Securities
25(b) -- Form T-1 of The Chase Manhattan Bank as --
Trustee under the Indenture with respect to
the Subordinated Debt Securities
25(c) -- Form T-1 of The Chase Manhattan Bank as --
Trustee under the Declaration of Trust of
Lehman Brothers Holdings Capital Trust I
25(d) -- Form T-1 of The Chase Manhattan Bank as --
Trustee under the Declaration of Trust of
Lehman Brothers Holdings Capital Trust II
25(e) -- Form T-1 of The Chase Manhattan Bank as --
Trustee under the Declaration of Trust of
Lehman Brothers Holdings Capital Trust III
</TABLE>
E-3
<PAGE>
<TABLE>
<CAPTION>
FILED HEREWITH(--);
TO BE FILED BY
AMENDMENT OR PAGE NUMBER
BY FORM 8-K(*) IN SEQUENTIAL
EXHIBIT OR INCORPORATED BY NUMBERING
NUMBER DESCRIPTION REFERENCE TO SYSTEM
- --------- --------------------------------------------- --------------------------------- ---------------
<C> <S> <C> <C> <C>
25(f) -- Form T-1 of The Chase Manhattan Bank as --
Guarantee Trustee under the Preferred
Securities Guarantee of Lehman Brothers
Holdings Inc. for the benefit of holders of
Trust Securities of Lehman Brothers Holdings
Capital Trust I
25(g) -- Form T-1 of The Chase Manhattan Bank as --
Guarantee Trustee under the Preferred
Securities Guarantee of Lehman Brothers
Holdings Inc. for the benefit of holders of
Trust Securities of Lehman Brothers Holdings
Capital Trust II
25(h) -- Form T-1 of The Chase Manhattan Bank as --
Guarantee Trustee under the Preferred
Securities Guarantee of Lehman Brothers
Holdings Inc. for the benefit of holders of
Trust Securities of Lehman Brothers Holdings
Capital Trust III
</TABLE>
E-4
<PAGE>
EXHIBIT 1(a)
Debt Securities
LEHMAN BROTHERS HOLDINGS INC.
UNDERWRITING AGREEMENT
New York, New York
Dated the date set forth
In Schedule I hereto
To the Representative(s)
named in Schedule I
hereto, of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
Lehman Brothers Holdings Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to you and the other underwriters named in Schedule
II hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its debt securities identified in
Schedule I hereto (the "Securities") to be issued under the indenture (the
"Indenture") identified in such Schedule I, between the Company and the trustee
(the "Trustee") identified therein. If the firm or firms listed in Schedule II
hereto include only the firm or firms listed in Schedule I hereto, then the
terms "Underwriters" and "Representatives" shall each be deemed to refer to such
firm or firms.
1. Representations and Warranties. The Company
represents and warrants to each Underwriter that:
(a) The Company meets the requirements for the use of Form S-3 under
the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations promulgated thereunder (the "Rules"), and has
carefully prepared and filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (the file number of
which is set forth in Schedule I hereto), which has become effective, for
the registration of the Securities under the Securities Act. The
registration statement, as amended at the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(x) under the Securities Act and
complies in all other material respects with such rule. The Company
proposes to file with the Commission pursuant to Rule 424 under the
Securities Act ("Rule 424") a supplement to the form of prospectus included
in the registration statement relating to the initial
<PAGE>
offering of the Securities and the plan of distribution thereof and has
previously advised you of all further information (financial and other)
with respect to the Company to be set forth therein. The term
"Registration Statement" means the registration statement, as amended at
the date of this Agreement, including the exhibits thereto, financial
statements, and all documents incorporated therein by reference pursuant to
Item 12 of Form S-3 (the "Incorporated Documents"), and such prospectus as
then amended, including the Incorporated Documents, is hereinafter referred
to as the "Basic Prospectus"; and such supplemented form of prospectus, in
the form in which it shall be filed with the Commission pursuant to
Rule 424 (including the Basic Prospectus as so supplemented), is
hereinafter called the "Final Prospectus". Any preliminary form of the
Basic Prospectus which has heretofore been filed pursuant to Rule 424 is
hereinafter called the "Interim Prospectus". Any reference herein to the
Registration Statement, the Basic Prospectus, any Interim Prospectus or the
Final Prospectus shall be deemed to refer to and include the Incorporated
Documents which were filed under the Securities Exchange Act of 1934 (the
"Exchange Act"), on or before the date of this Agreement or the issue date
of the Basic Prospectus, any Interim Prospectus or the Final Prospectus, as
the case may be; and any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Registration Statement, the Basic
Prospectus, any Interim Prospectus or the Final Prospectus shall be deemed
to refer to and include the filing of any Incorporated Documents under the
Exchange Act after the date of this Agreement or the issue date of the
Basic Prospectus, any Interim Prospectus or the Final Prospectus, as the
case may be, and deemed to be incorporated therein by reference.
(b) As of the date hereof, when the Final Prospectus is first filed
with the Commission pursuant to Rule 424, when, before the Closing Date
(hereinafter defined), any amendment to the Registration Statement becomes
effective, when, before the Closing Date, any Incorporated Document is
filed with the Commission, when any supplement to the Final Prospectus is
filed with the Commission and at the Closing Date, the Registration
Statement, the Final Prospectus and any such amendment or supplement will
comply in all material respects with the applicable requirements of the
Securities Act and the Rules, and the Incorporated Documents will comply in
all material respects with the requirements of the Exchange Act or the
Securities Act, as applicable, and the rules and regulations adopted by the
Commission thereunder; on the date hereof and on the Closing Date, the
Indenture shall have been qualified under and will comply in all material
respects with the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"); on the date it became effective, the Registration
Statement did not, and, on the date that any post-effective amendment to
the Registration
2
<PAGE>
Statement becomes effective, the Registration Statement as amended by such
post-effective amendment did not or will not, as the case may be, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; on the date the Final Prospectus is filed with the
Commission pursuant to Rule 424 and on the Closing Date, the Final
Prospectus, as it may be amended or supplemented, will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; and on said dates,
the Incorporated Documents will comply in all material respects with the
applicable provisions of the Exchange Act and rules and regulations of the
Commission thereunder, and, when read together with the Final Prospectus,
or the Final Prospectus as it may be then amended or supplemented, will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided that the foregoing representations and warranties in
this paragraph (b) shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives on behalf of any Underwriter
specifically for use in connection with the preparation of the Registration
Statement or the Final Prospectus, as they may be amended or supplemented,
or to any statements in or omissions from the statement of eligibility and
qualification on Form T-1 of the Trustee under the Trust Indenture Act
("Form T-1").
(c) The Basic Prospectus and any Interim Prospectus, as of their
respective dates, complied in all material respects with the requirements
of the Securities Act and of the Rules and did not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Commission has not issued
an order preventing or suspending the use of the Basic Prospectus or any
Interim Prospectus.
(d) The nationally recognized firm of independent public accountants
whose report appears in the Company's most recent Annual Report on
Form 10-K, which is incorporated by reference in the Final Prospectus, are
independent public accountants as required by the Securities Act and the
Rules.
(e) In the event that a report of a nationally recognized firm of
independent public accountants regarding
3
<PAGE>
historical financial information with respect to any entity acquired by the
Company is required to be incorporated by reference in the Final
Prospectus, such independent public accountants were independent public
accountants, as required by the Securities Act and the Rules, during the
period of their engagement to examine the financial statements being
reported on and at the date of their report.
(f) The audited consolidated financial statements of the Company in
the Final Prospectus and the Registration Statement present fairly on a
consolidated basis the financial position, the results of operations,
changes in common stock and other stockholder's equity and cash flows of
the Company and its subsidiaries, as of the respective dates and for the
respective periods indicated, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. The unaudited consolidated financial statements of the Company,
if any, included in the Final Prospectus and the Registration Statement and
the related notes are true, complete and correct, subject to normally
recurring changes resulting from year-end audit adjustments, and have been
prepared in accordance with the instructions to Form 10-Q.
(g) Except as described in or contemplated by the Registration
Statement and the Final Prospectus, there has not been any material adverse
change in or any adverse development which materially affects the business,
properties, financial condition or results of the Company or the Company
and its subsidiaries taken as whole, from the dates as of which information
is given in the Registration Statement and Final Prospectus.
(h) The Securities conform to the description thereof contained in
the Final Prospectus, are duly and validly authorized, and, when validly
authenticated, issued and delivered in accordance with the Indenture and
sold to the Underwriters as provided in this Agreement, will be validly
issued and outstanding obligations of the Company entitled to the benefits
of the Indenture.
(i) The Company does not have any subsidiaries having business or
properties that are material to the business and properties of the Company
and its subsidiaries taken as a whole with the exception of Lehman Brothers
Inc. ("Lehman") and the possible exception of Lehman Commercial Paper Inc.
(the "Named Subsidiary"). Neither the Company nor any of the Named
Subsidiary is in violation of its corporate charter or by-laws or in
default under any agreement, indenture or instrument, the effect of which
violation or default would be material to the Company and its subsidiaries
taken as a whole. The execution, delivery and performance of this
Agreement will not conflict with, result in the creation or imposition of
any material lien, charge
4
<PAGE>
or encumbrance upon any of the assets of the Company or any of its
subsidiaries pursuant to the terms of, or constitute a default under, any
material agreement, indenture or instrument, or result in a violation of
the corporate charter or by-laws of the Company or any of its subsidiaries
or any order, rule or regulation of any court or governmental agency having
jurisdiction over the Company, the Named Subsidiary or their property.
Except as set forth in the Final Prospectus or as required by the
Securities Act, the Exchange Act, the Trust Indenture Act and applicable
state securities laws, no consent, authorization or order of, or filing or
registration with, any court or governmental agency is required for the
execution, delivery and performance of this Agreement.
(j) The Company and the Named Subsidiary have been duly organized,
are validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified to do
business and in good standing as foreign corporations and are fully
registered as a broker-dealer, broker, dealer or investment advisor, as the
case may be, in each jurisdiction in which their respective ownership of
property or the conduct of their respective businesses requires such
qualification or registration and in which the failure to qualify or
register would be reasonably likely, individually or in the aggregate, to
have a material adverse effect on the business, condition or properties of
the Company and its subsidiaries taken as a whole. Each of the Company and
its Named Subsidiary holds all material licenses, permits, and certificates
from governmental authorities necessary for the conduct of its business and
owns, or possesses adequate rights to use, all material rights necessary
for the conduct of such business and has not received any notice of
conflict with the asserted rights of others in respect thereof; and each of
the Company and its Named Subsidiary has the corporate power and authority
necessary to own or hold its properties and to conduct the businesses in
which it is engaged. Except as may be disclosed in the Registration
Statement and the Final Prospectus, all outstanding shares of capital stock
of the Named Subsidiary are owned by the Company, directly or indirectly
through subsidiaries, free and clear of any lien, pledge and encumbrance or
any claim of any third party and are duly authorized, validly issued and
outstanding, fully paid and non-assessable.
(k) Except as described in the Registration Statement and the Final
Prospectus, there is no material litigation or governmental proceeding
pending or, to the knowledge of the Company, threatened against the Company
or any of its subsidiaries which might reasonably be expected to result in
any material adverse change in the business, properties, financial
condition or results of operations of the Company and its subsidiaries
taken as a whole or which is required
5
<PAGE>
to be disclosed in the Registration Statement and the Final Prospectus.
(l) The certificates delivered pursuant to paragraph (f) of Section 6
hereof and all other documents delivered by the Company or its
representatives in connection with the issuance and sale of the Securities
were on the dates on which they were delivered, or will be on the dates on
which they are to be delivered, in all material respects true and complete.
2. Sale and Purchase of the Securities. The Company agrees to sell
to each Underwriter, and each Underwriter, on the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein stated, agrees to purchase from the Company, at the purchase
price set forth in Schedule I hereto, the principal amount of Securities set
forth opposite the name of such Underwriter in Schedule II hereto, except that,
if Schedule I hereto provides for the sale of Securities pursuant to delayed
delivery arrangements, the respective principal amounts of Securities to be
purchased by the Underwriters shall be as set forth in Schedule II hereto, less
the respective amounts of Contract Securities determined as provided below.
Securities to be purchased by the Underwriters are herein sometimes called the
"Underwriters' Securities" and Securities to be purchased pursuant to Delayed
Delivery Contracts (as hereinafter defined) are herein called "Contract
Securities". The obligations of the Underwriters under this Agreement are
several and not joint.
If so provided in Schedule I hereto, the Underwriters are authorized
to solicit offers to purchase Securities, or a portion thereof, from the Company
pursuant to delayed delivery contracts ("Delayed Delivery Contracts"),
substantially in the form of Schedule III hereto but with such changes therein
as the Company may authorize or approve, and the Underwriters will endeavor to
make such arrangements. Delayed Delivery Contracts are to be with institutional
investors, including commercial and savings banks, insurance companies, pension
funds and educational and charitable institutions. The Company will make
Delayed Delivery Contracts in all cases where sales of Contract Securities
arranged by the Underwriters have been approved by the Company but, except as
the Company may otherwise agree, each such Delayed Delivery Contract must be for
not less than the minimum principal amount set forth in Schedule I hereto and
the total principal amount of Contract Securities may not exceed the maximum
principal amount set forth in Schedule I hereto. The Underwriters will not have
any responsibility in respect of the validity or performance of Delayed Delivery
Contracts. The principal amount of Securities to be purchased by each
Underwriter as set forth in Schedule II hereto shall be reduced by an amount
which bears the same proportion to the total principal amount of Contract
Securities as the principal amount of Securities set forth opposite the name of
such Underwriter
6
<PAGE>
bears to the total principal amount of Securities set forth in Schedule II
hereto, except to the extent that the Representatives determine that such
reduction shall be otherwise than in such proportion and so advise the Company
in writing; provided, however, that the total principal amount of Securities to
be purchased by all Underwriters shall be the total principal amount set forth
in Schedule II hereto less the total principal amount of Contract Securities.
3. Delivery and Payment. Delivery by the Company of the
Underwriters' Securities to the Representatives for the respective accounts of
the several Underwriters and payment by the Underwriters therefor by certified
or official bank check or checks payable in, or by wire transfer of, immediately
available (federal) funds to or upon the order of the Company shall take place
at the office, on the date and at the time specified in Schedule I hereto, which
date and time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the Underwriters' Securities being herein called the "Closing
Date").
Concurrently with the delivery of any payment for Underwriters'
Securities as provided in this Section 3, the Company will deliver to the
Representatives for the respective accounts of the several Underwriters a check
in an amount equal to the fee set forth in Schedule I hereto with respect to the
principal amount of Securities for which Delayed Delivery Contracts are made.
The Underwriters' Securities will be registered in such names and in
such authorized denominations as the Representatives may request no less than
two full business days in advance of the Closing Date. The Company agrees to
have the Underwriters' Securities available for inspection, checking and
packaging by the Representatives at such place as is designated by the
Representatives, not later than 1:00 p.m., New York City time, on the business
day prior to the Closing Date.
4. Offering by Underwriters. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed any Interim Prospectus and are authorized to distribute the Final
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters). The
Representatives agree that, as soon as the Representatives believe the offering
of the Securities has been terminated, the Representatives will so advise the
Company.
5. Agreements. The Company agrees with the several Underwriters
that:
(a) The Company will cause the Final Prospectus to be filed with the
Commission pursuant to Rule 424 as required
7
<PAGE>
thereby and will promptly advise the Representatives (A) when the Final
Prospectus shall have been filed with the Commission pursuant to Rule 424,
(B) when any amendment to the Registration Statement relating to the
Securities shall have become effective, (C) of any request by the
Commission for any amendment of the Registration Statement, the Final
Prospectus, the Basic Prospectus or any Interim Prospectus, or for any
additional information, (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
qualification of the Indenture or the institution or threatening of any
proceedings for that purpose and (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. After the date of this Agreement and
prior to the termination of the offering of these Securities the Company
will not file any amendment of the Registration Statement or amendment or
supplement to the Final Prospectus (except an amendment or supplement to
the Final Prospectus that is deemed to be incorporated by reference in the
Final Prospectus pursuant to Item 12 of Form S-3) without the consent of
the Representatives and will use its best efforts to prevent the issuance
of any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof. Prior to receipt of the advice to be given by the
Representatives pursuant to Section 4, the Company will not file any
document that would be deemed to be incorporated by reference in the Final
Prospectus pursuant to Item 12 of Form S-3 without delivering to the
Representatives a copy of the document proposed to be so filed, such
delivery to be made at least twenty-four hours prior to such filing, and
the Company will consult with the Representatives as to any comments which
the Representatives make in a timely manner with respect to the document so
delivered.
(b) Subject to the last sentence of the immediately preceding
paragraph, if, at any time during which a prospectus relating to the
Securities is required to be delivered under the Securities Act, any event
occurs as a result of which the Final Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it shall be necessary at any time to amend or supplement
the Final Prospectus to comply with the Securities Act or the Rules, the
Company promptly will prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance and will use its best efforts to cause
any amendment of the Registration Statement containing an
8
<PAGE>
amended Final Prospectus to be made effective as soon as possible.
(c) The Company will deliver to the Representatives, without charge,
(i) signed copies of the Registration Statement relating to the Securities
and of any amendments thereto (including all exhibits filed with, or
incorporated by reference in, any such document) and (ii) as many conformed
copies of the Registration Statement and of any amendments thereto which
shall become effective on or before the Closing Date (excluding exhibits)
as the Representatives may reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an Underwriter or dealer, the Company will deliver, without
charge to the Representatives and to Underwriters and dealers, at such
office or offices as the Representatives may designate, as many copies of
the Basic Prospectus, any Interim Prospectus and the Final Prospectus as
the Representatives may reasonably request.
(e) The Company will make generally available to its security holders
and to the Representatives as soon as practicable an earnings statement
(which need not be audited) of the Company and its subsidiaries, covering a
period of at least 12 months beginning after the date the Final Prospectus
is filed with the Commission pursuant to Rule 424, which will satisfy the
provisions of Section 11(a) of the Securities Act.
(f) The Company will furnish such information, execute such
instruments and take such actions as may be required to qualify the
Securities for offering and sale under the laws of such jurisdictions as
the Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Securities;
provided, however, that the Company shall not be required to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action which would subject it to general or unlimited service of
process in any jurisdiction where it is not now so subject.
(g) So long as any Securities are outstanding, the Company will
furnish or cause to be furnished to the Representatives copies of all
annual reports and current reports filed with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission.
(h) If the Company has applied for the listing of the Securities on
the New York Stock Exchange Inc. (the "NYSE"), it will use its best efforts
to cause such listing to be approved as soon as possible.
9
<PAGE>
(i) For a period beginning at the time of execution of this Agreement
and ending on the later of the business day following the Closing Date or
following the date on which any price restrictions on the sale of the
Securities are terminated, without the prior consent of the
Representatives, the Company will not offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company covered by the
Registration Statement or any other registration statement filed under the
Securities Act.
(j) The Company will use its best efforts to do and perform all
things to be done and performed hereunder prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Securities to be
purchased hereunder.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy in all material respects of the representations and warranties on
the part of the Company contained herein as of the date hereof and the Closing
Date, to the accuracy of any material statements made in any certificates,
opinions, affidavits, written statements or letters furnished to the
Representatives or to Simpson Thacher & Bartlett ("Underwriters' Counsel")
pursuant to this Section 6, to the performance by the Company of its respective
obligations hereunder and to the following additional conditions:
(a) The Final Prospectus shall have been filed with the Commission
pursuant to Rule 424 not later than 5:00 p.m., New York City time, on the
second business day following the date of this Agreement or such later date
and time as shall be consented to in writing by the Representatives.
(b) No order suspending the effectiveness of the Registration
Statement, as amended from time to time, or suspending the qualification of
the Indenture, shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission and any requests for
additional information on the part of the Commission (to be included in the
Registration Statement or the Final Prospectus or otherwise) shall have
been complied with to the reasonable satisfaction of the Representatives.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Final Prospectus, there shall not have
been any change or decrease specified in the letter referred to in
paragraph (g) of this Section 6 which, in the judgment of the
Representatives, makes it impracticable or inadvisable to proceed with the
offering and delivery of the Securities as contemplated by the Registration
Statement and the Final Prospectus.
10
<PAGE>
(d) The Company shall have furnished to the Representatives the
opinion of a Deputy General Counsel or the Chief Legal Officer for the
Company, dated the day of the Closing Date, to the effect that:
(i) The Company has been duly organized and is validly existing
and in good standing under the laws of the jurisdiction of its
incorporation with all requisite corporate power and authority to own
and operate its properties and to conduct its business as described in
the Final Prospectus.
(ii) The Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Final
Prospectus.
(iii) The Indenture has been duly authorized, executed and
delivered by the Company, has been duly qualified under the Trust
Indenture Act and constitutes a legal, valid and binding instrument
enforceable against the Company in accordance with its terms; and the
Securities have been duly authorized, executed and issued by the
Company, and assuming due authentication by the Trustee and upon
payment and delivery in accordance with the Underwriting Agreement,
will constitute legal, valid and binding obligations of the Company
entitled to the benefits of the Indenture; provided however, that the
foregoing is subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and by an implied covenant of good faith and fair dealing.
(iv) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated in this Agreement, except for (1) such
consents, approvals, authorizations or orders as have been obtained
under the Securities Act and such as may be required under the
Exchange Act and the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters, and (2) the qualification of the Indenture under the
Trust Indenture Act, which has been obtained.
(v) Such counsel does not know of any contracts or other
documents which are required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which
have not been filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules.
11
<PAGE>
(vi) To the best of such counsel's knowledge, neither the Company
nor its Named Subsidiary is in violation of its corporate charter or
by-laws, or in default under any material agreement, indenture or
instrument known to such counsel, the effect of which violation or
default would be material to the Company and its subsidiaries taken as
a whole.
(vii) This Agreement and, to the extent applicable, the Delayed
Delivery Contracts have been duly authorized, executed and delivered
by the Company; the execution, delivery and performance of this
Agreement and any Delayed Delivery Contracts by the Company will not
conflict with, or result in the creation or imposition of any material
lien, charge or encumbrance upon any of the assets of the Company or
its Named Subsidiary pursuant to the terms of, or constitute a default
under, any material agreement, indenture or instrument known to such
counsel and to which the Company or its Named Subsidiary is a party or
is bound, or result in a violation of the corporate charter or by-laws
of the Company or its Named Subsidiary or any order, rule or
regulation known to such counsel of any court or governmental agency
having jurisdiction over the Company, its Named Subsidiary or any of
their respective properties, the effect of which would be material to
the Company and its subsidiaries taken as a whole.
(viii) The Registration Statement has become effective under the
Securities Act, and, to the best of the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose is pending or
threatened by the Commission.
(ix) The Registration Statement, the Final Prospectus and each
amendment thereof or supplement thereto (except that no opinion need
be expressed as to the financial statements or other financial or
statistical data or the Form T-1 of the Trustee under the Trust
Indenture Act included or incorporated by reference therein) comply as
to form in all material respects with the requirements of the
Securities Act and the Rules.
(x) If the Securities are to be listed on the NYSE,
authorization therefor has been given, subject to official notice of
issuance and evidence of satisfactory distribution, or the Company has
filed a preliminary listing application and all required supporting
documents with respect to the Securities with the NYSE, and such
counsel has no reason to believe that the Securities will not be
authorized for
12
<PAGE>
listing, subject to official notice of issuance and evidence of
satisfactory distribution.
(xi) The Named Subsidiary is a duly organized and validly
existing corporation in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate power
and authority to own and operate its properties and to conduct its
business as described in the Final Prospectus. Each of the Company
and its Named Subsidiary is duly qualified to do business as a foreign
corporation, is in good standing and is duly registered as a
broker-dealer, broker, dealer or investment advisor, as the case may
be, in each jurisdiction in which the nature of the business conducted
by it or in which the ownership or holding by lease of the properties
owned or held by it require such qualification or registration and
where the failure to so qualify or register would have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xii) All the outstanding shares of capital stock of the
Company's Named Subsidiary have been duly and validly authorized and
issued and are fully paid and non-assessable and, except for
directors' qualifying shares, are owned by the Company or a subsidiary
of the Company free and clear of any claims, liens, encumbrances and
security interests.
(xiii) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company or
any of its subsidiaries which would affect the subject matter of this
Agreement or is required to be disclosed in the Final Prospectus which
is not disclosed and correctly summarized therein.
Such opinion shall also contain a statement that although such counsel
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Final Prospectus (except as to those matters stated in
paragraph (ii) of such opinion), such counsel has no reason to believe that (i)
the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading or (ii) the Final Prospectus contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (except that no opinion need be expressed as to the
financial statements or other financial or statistical data or the Form T-1
included or incorporated by reference therein).
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<PAGE>
In rendering such opinion, such counsel may rely upon opinions of
local counsel satisfactory to the Representatives for matters not governed by
New York law and may rely as to matters of fact, to the extent he deems proper,
upon certificates or affidavits of officers of the Company, the Trustee and
public officials. Such counsel may rely on a certificate of the Trustee with
respect to the execution of the Securities by the Company and the authentication
thereof by the Trustee.
(e) The Representatives shall have received from Underwriters'
Counsel such opinion or opinions, dated the day of the Closing Date, with
respect to the issuance and sale of the Securities, the Registration Statement,
the Final Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.
(f) The Company shall have furnished to the Representatives a
certificate of its Chief Executive Officer, its President or any Managing
Director or Vice President and its Chief Financial Officer or its Treasurer,
dated the day of the Closing Date, to the effect that, to the best of their
knowledge after due inquiry:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date,
and the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior to
the Closing Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened.
(iii)(x) The Registration Statement does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (y) the Final Prospectus does not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and (z) since the effective date of the
Registration Statement there has not occurred any event required to be
set forth in an amended or supplemented prospectus which has not been
so set forth.
14
<PAGE>
(g) At the Closing Date, a nationally recognized firm of
independent public accountants shall have furnished to the Representatives a
letter, dated the day of the Closing Date, confirming that they are
independent auditors with respect to the Company within the meaning of the
Securities Act and in form and substance satisfactory to the Representatives,
stating in effect that:
(i) In their opinion, the consolidated financial statements of
the Company and its subsidiaries, and the supporting schedules,
included in the Registration Statement and the Final Prospectus and
audited by them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder.
(ii) On the basis of a reading of the unaudited consolidated
financial statements of the Company and its subsidiaries, if any,
included in the Registration Statement and the Final Prospectus and of
the latest unaudited consolidated financial statements made available
by the Company and Lehman, carrying out certain specified procedures
(but not an audit in accordance with generally accepted auditing
standards), a reading of the minutes of the meetings of the directors
of the Company and Lehman, and inquiries of certain officials of the
Company and its subsidiaries, who have responsibility for financial
and accounting matters of the Company and its subsidiaries, as to
transactions and events subsequent to the date of the most recent
audited consolidated financial statements included in the Registration
Statement and the Final Prospectus, nothing came to their attention
that caused them to believe that:
(A) any material modifications should be made to the
unaudited consolidated financial statements of the Company and
its subsidiaries, if any, included in the Registration Statement
and the Final Prospectus, for them to be in conformity with
generally accepted accounting principles; and such financial
statements do not comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and
the published instructions, rules and regulations thereunder.
(B) the unaudited capsule information of the Company and its
subsidiaries, if any, included in the Registration Statement and
the Final Prospectus does not agree with the amounts set forth in
the unaudited consolidated financial statements of the Company
from which it was
15
<PAGE>
derived or was not determined on a basis substantially consistent
with that of the corresponding financial information in the
latest audited financial statements of the Company included in
the Registration Statement and the Final Prospectus.
(C)(I) as of the latest date as of which the Company and its
subsidiaries have monthly financial statements, there was any
decrease in the capital stock, additional paid-in capital or
related earnings, or increase in long-term indebtedness of the
Company and its subsidiaries, as compared with the amounts shown
in the most recent consolidated statement of financial condition
of the Company and its subsidiaries included in the Registration
Statement and the Final Prospectus, (II) with respect to the
period subsequent to the date of the most recent financial
statements included in the Registration Statement and the Final
Prospectus and extending through the latest date as of which the
Company and its subsidiaries have monthly financial statements,
there was a consolidated net loss or (III) with respect to the
amounts of net capital or excess net capital of Lehman determined
pursuant to Commission Rule 15c3-1 and shown in the most recent
financial statement of Lehman filed pursuant to Commission Rule
17a-5, there has been any decrease in such amounts as compared
with the amounts shown in the most recent consolidated financial
statements included in the Registration Statement and the Final
Prospectus;
(D) as of a specified date not more than three business
days prior to the date of the letter, there was any decrease in
the capital stock or additional paid-in capital, or increase in
long-term indebtedness of the Company and its subsidiaries, as
compared with the amounts shown in the most recent consolidated
statement of financial condition of the Company and its
subsidiaries included in the Registration Statement and the Final
Prospectus;
except in all instances for increases or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof, unless said
explanation is not deemed necessary by the Representatives.
(iii) If pro forma financial statements are included in the
Registration Statement or the Final Prospectus,
16
<PAGE>
(x) they have read such pro forma financial statements, (y) they have
made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company as
to the basis for their determination of the pro forma adjustments and
whether such pro forma financial statements comply as to form in all
material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X and (z) they have proved the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts; and as a result thereof, nothing came to their
attention that caused them to believe that such pro forma financial
statements do not so comply with Rule 11-02 of Regulation S-X and that
such pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements.
(iv) They have performed certain other specified procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature (which is expressed in
dollars, or percentages derived from dollar amounts, and has been
obtained from the general accounting records of the Company) set forth
in the Registration Statement, as amended, and the Final Prospectus,
as amended or supplemented, and in Exhibit 12 to the Registration
Statement, including specified information, if any, included or
incorporated from the Company's Annual Report on Form 10-K
incorporated therein or specified information, if any, included or
incorporated from any of the Company's Quarterly Reports on Form 10-Q
or its Current Reports on Form 8-K incorporated therein, agrees with
the accounting records of the Company and its subsidiaries or
computations made therefrom, excluding any questions of legal
interpretation.
(h) Subsequent to the execution of this Agreement, there shall not
have been any decrease in the ratings of any of the Company's debt securities by
Moody's Investors Service, Inc. or Standard & Poor's Corporation.
(i) The Company shall have accepted Delayed Delivery Contracts in any
case where sales of Contract Securities arranged by the Underwriters have been
approved by the Company.
(j) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as the
Representatives or Underwriters' Counsel may reasonably request.
17
<PAGE>
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates or opinions furnished to the Representatives or Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and to
Underwriters' Counsel, this Agreement and all obligations of the Underwriters
hereunder may be cancelled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing, or by telegraph confirmed in writing.
7. Expenses. (a) Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company will
pay all costs and expenses incident to the performance of the obligations of the
Company hereunder, including, without limiting the generality of the foregoing,
all costs, taxes and expenses incident to the issuance, sale and delivery of the
Securities to the Underwriters, all fees and expenses of the Company's counsel
and accountants, all costs and expenses incident to the preparing, printing and
filing of the Registration Statement (including all exhibits thereto), any
Interim Prospectus, the Basic Prospectus, the Final Prospectus and any
amendments thereof or supplements thereto and the Indenture, and the rating of
the Securities by one or more rating agencies, all costs and expenses (including
fees of Underwriters' Counsel and their disbursements) incurred in connection
with blue sky qualifications, advising on the legality of the Securities for
investment, the filing requirements, if any, of the National Association of
Securities Dealers, Inc. in connection with its review of corporate financings,
the fee for listing the Securities on the NYSE, the fees and expenses of the
Trustee and all costs and expenses of the printing and distribution of all
documents in connection with such offering. Except as provided in this Section
7, the Company will have no responsibility to the Underwriters for the
Underwriters' own costs and expenses, including the fees of Underwriters'
Counsel and any advertising expenses in connection with any offer the
Underwriters may make.
(b) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied or because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will, subject to demand by the
Representatives, reimburse the Underwriters for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities.
8. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person who controls such Underwriter within
the meaning of the Securities
18
<PAGE>
Act against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or in any amendment thereof, or in
any Interim Prospectus, the Basic Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i) the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company as herein stated by the Representatives on behalf of any Underwriter
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to the Basic Prospectus or any Interim Prospectus shall
not inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim, damage or
liability purchased the Securities which are the subject thereof if such person
did not receive a copy of the Final Prospectus at or prior to the confirmation
of the sale of such Securities to such person in any case where such delivery is
required by the Securities Act and the untrue statement or omission of a
material fact contained in the Basic Prospectus or any Interim Prospectus was
corrected in the Final Prospectus, unless such failure to deliver the Final
Prospectus was a result of noncompliance by the Company with Section 5(d)
hereof. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person, if any, who controls the Company within
the meaning of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Basic Prospectus, any Interim
Prospectus or the Final Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or
19
<PAGE>
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that the
same was made therein in reliance upon and in conformity with written
information furnished to the Company as herein stated by the Representatives on
behalf of such Underwriter specifically for use in the preparation thereof, and
agrees to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which any Underwriter may otherwise have. The
statements set forth in the last paragraph of the cover page and under the
heading "Underwriting" in the Final Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in the Registration Statement and the Final Prospectus, as the case may be, and
you, as the Representatives, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and either (i) the indemnifying party or parties and
the indemnified party or parties mutually agree or (ii) representation of both
the indemnifying party or parties and the indemnified party or parties by the
same counsel is inappropriate under applicable standards of professional conduct
due to actual or potential differing interests between them, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed
20
<PAGE>
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of subparagraph
(a) representing the indemnified parties under subparagraph (a), as the case may
be, who are parties to such action), (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subparagraph (a) of
this Section 8 is due in accordance with its terms but is for any reason held by
a court to be unavailable from the Company on grounds of policy or other similar
grounds, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to which
the Company and one or more of the Underwriters may be subject in such
proportion so that the Underwriters are responsible for that portion represented
by the percentage that the underwriting discounts appearing on the cover page of
the Final Prospectus bear to the public offering prices appearing thereon and
the Company is responsible for the balance; provided, however, that (i) in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters) be responsible for any amount in excess of the underwriting
discounts applicable to the Securities purchased by such Underwriter hereunder
and (ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
the Securities Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this subparagraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be
21
<PAGE>
sought from any other obligation it or they may have hereunder or otherwise than
under this subparagraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for all of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule II hereto bear to the
aggregate principal amount of Securities set opposite the names of the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
aggregate principal amount of Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
principal amount of the Securities, the remaining Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase any, of
the Securities, and if such non-defaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any
non-defaulting Underwriters or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding seven days, as the Representatives shall
determine in order that the required changes in the Registration Statement and
the Final Prospectus or in any other documents or arrangements may be effected.
Nothing herein contained shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any non-defaulting Underwriter for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
at or prior to delivery of and payment for all the Securities, if, prior to such
time (i) trading in securities generally on the NYSE or the over-the-counter
market shall have been suspended or limited or minimum prices shall have been
established on the NYSE or the over-the-counter market, (ii) a banking
moratorium shall have been declared either by federal or New York State
authorities, (iii) any new restriction materially affecting the distribution of
the Securities shall have become effective; trading in any securities of the
Company shall have been suspended or halted by any national securities exchange,
the National Association of Securities Dealers, Inc. or the Commission, (iv) the
United States becomes engaged in hostilities or there is an escalation in
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States, or (v) there shall have been such a
material adverse change in national or international political, financial or
economic conditions, national or international equity markets or currency
22
<PAGE>
exchange rates or controls as to make it, in the judgment of the
Representatives, inadvisable or impracticable to proceed with the payment for
and delivery of the Securities.
11. Representations and Indemnities to Survive Delivery. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers (as such officers) and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its officers or directors or any
controlling person within the meaning of the Securities Act, and will survive
delivery of the payment for the Securities.
12. Notices. All communications hereunder will be in writing, and,
if sent to the Representatives will be mailed, delivered, telegraphed or telexed
and confirmed to them, at the address specified in Schedule I hereto; or, if
sent to the Company will be mailed, delivered, telegraphed or telexed and
confirmed to it at 3 World Financial Center, New York, New York 10285,
Attention: Chief Financial Officer.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their successors and, to the extent and only
to the extent stated in Section 8 hereof, the officers and directors and
controlling persons referred to in Section 8 hereof, and except as provided in
Section 8 hereof, no person other than the parties hereto and their respective
successors will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
LEHMAN BROTHERS HOLDINGS INC.
By
-----------------------------------
Title:
23
<PAGE>
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
LEHMAN BROTHERS INC.
By
-----------------------------
Title:
Acting on behalf of the Representatives named in Schedule I annexed hereto
and the several Underwriters named in Schedule II annexed hereto.
24
<PAGE>
SCHEDULE I
Date of Underwriting Agreement:
Registration Statement No. 333-
Representative and Address: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Indenture, Title, Purchase Price and Description of Securities:
Indenture:
Title:
Principal amount:
Price to public:
Purchase price:
Interest rate:
Time of payment of
interest:
Maturity:
Sinking fund
provisions:
Redemption
provisions:
Repayment:
Closing Date, Time and Location:
Date:
Time:
Location: Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
Delayed Delivery
Arrangements:
<PAGE>
SCHEDULE II
Principal
Amount of
Securities
to be
Underwriters Purchased
------------
Lehman Brothers Inc. .............................................$
Total.......................................................$
------------
<PAGE>
SCHEDULE III
Delayed Delivery Contract
, 19
[Insert name and address of lead Representative]
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from Lehman Brothers Holdings
Inc. (the "Company"), and the Company agrees to sell to the undersigned, on
, 19 (the "Delivery Date"), $ principal amount of the Company's %
due (the "Securities") offered by the Company's Prospectus dated
, 19 , and related Prospectus Supplement dated , 19 , receipt of a
copy of which is hereby acknowledged, at a purchase price of % of the
principal amount thereof, plus accrued interest or amortization of original
issue discount, if any, thereon from , 19 , to the date of payment
and delivery, and on the further terms and conditions set forth in this
contract.
Payment for the Securities to be purchased by the undersigned shall be made
on or before 11:00 a.m., New York City time, on the Delivery Date to or upon the
order of the Company in New York Clearing House (next day) funds, at your office
or at such other place as shall be agreed between the Company and the
undersigned upon delivery to the undersigned of the Securities in definitive
fully registered form and in such authorized denominations and registered in
such names as the undersigned may request by written or telegraphic
communication addressed to the Company not less than five full business days
prior to the Delivery Date. If no request is received, the Securities will be
registered in the name of the undersigned and issued in a denomination equal to
the aggregate principal amount of Securities to be purchased by the undersigned
on the Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Securities on the Delivery Date, and the obligation of the Company to sell and
deliver Securities on the Delivery Date, shall be subject to the conditions (and
neither party shall incur any liability by reason of the failure thereof) that
(1) the purchase of Securities to be made by the undersigned, which purchase the
undersigned represents is not prohibited on the date hereof, shall not on the
Delivery Date be prohibited under the laws of the jurisdiction to which the
undersigned is subject, and (2) the Company, on or before the Delivery Date,
shall have sold to certain underwriters (the "Underwriters") such principal
amount of the Securities as is to be sold to them pursuant to the Underwriting
Agreement referred to in the Prospectus and Prospectus Supplement mentioned
above. Promptly after completion of such sale to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith. The
<PAGE>
obligation of the undersigned to take delivery of and make payment for the
Securities, and the obligation of the Company to cause the Securities to be sold
and delivered, shall not be affected by the failure of any purchaser to take
delivery of and make payment for the Securities pursuant to other contracts
similar to this contract.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that acceptance of this contract and other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first come, first served basis. If this contract is
acceptable to the Company, it is required that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding contract
between the Company and the undersigned, as of the date first above written,
when such counterpart is so mailed or delivered.
This agreement shall be governed by and construed in accordance with the
laws of the State of New York.
Very truly yours,
_________________________________________
(Name of Purchaser)
By_________________________________
(Signature and Title of Officer)
_________________________________________
(Address)
Accepted:
Lehman Brothers Holdings Inc.
By___________________________________
(Authorized Signature)
2
<PAGE>
EXHIBIT 1(b)
Preferred Stock
LEHMAN BROTHERS HOLDING INC.
UNDERWRITING AGREEMENT
New York, New York
Dated the date set forth
In Schedule I hereto
To the Representative(s)
named in Schedule I
hereto, of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
Lehman Brothers Holdings Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to you and the other underwriters named in Schedule
II hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), the number of shares identified in Schedule I hereto (the
"Firm Stock") of the Company's preferred stock, par value $1.00 per share (the
"Preferred Stock"). In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional number of shares of the
Preferred Stock identified in Schedule I hereto on the terms and for the
purposes set forth in Section 2 (the "Option Stock"). The Firm Stock and the
Option Stock, if purchased, are hereinafter collectively called the "Stock". If
the firm or firms listed in Schedule II hereto include only the firm or firms
listed in Schedule I hereto, then the terms "Underwriters" and "Representatives"
shall each be deemed to refer to such firm or firms. This is to confirm the
agreement concerning the purchase of the Stock from the Company by the
Underwriters named in Schedule II hereto.
1. Representation and Warranties. The Company represents and
warrants to each Underwriter that:
(a) The Company meets the requirements for the use of Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations promulgated thereunder (the "Rules"),
and has carefully prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(the file number of which is set forth in Schedule I hereto), which
has become effective, for the registration of the Stock under the
Securities Act. The registration statement, as amended at the date of
this Agreement, meets the requirements set forth in Rule 415(a)(1)(x)
under the Securities Act and complies in all other material respects
with such rule. The Company proposes to file with the Commission
pursuant to Rule 424 under the
<PAGE>
Securities Act ("Rule 424") a supplement to the form of prospectus
included in the registration statement relating to the initial
offering of the Stock and the plan of distribution thereof and has
previously advised you of all further information (financial and
other) with respect to the Company to be set forth therein. The term
"Registration Statement" means the registration statement, as amended
at the date of this Agreement, including the exhibits thereto,
financial statements, and all documents incorporated therein by
reference pursuant to Item 12 of Form S-3 (the "Incorporated
Documents"), and such prospectus as then amended, including the
Incorporated Documents, is hereinafter referred to as the "Basic
Prospectus"; and such supplemented form of prospectus, in the form in
which it shall be filed with the Commission pursuant to Rule 424
(including the Basic Prospectus as so supplemented), is hereinafter
called the "Final Prospectus". Any preliminary form of the Basic
Prospectus which has heretofore been filed pursuant to Rule 424 is
hereinafter called the "Interim Prospectus". Any reference herein to
the Registration Statement, the Basic Prospectus, any Interim
Prospectus or the Final Prospectus shall be deemed to refer to and
include the Incorporated Documents which were filed under the
Securities Exchange Act of 1934 (the "Exchange Act"), on or before the
date of this Agreement or the issue date of the Basic Prospectus, any
Interim Prospectus or the Final Prospectus, as the case may be; and
any reference herein to the terms "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus, any
Interim Prospectus or the Final Prospectus shall be deemed to refer to
and include the filing of any Incorporated Documents under the
Exchange Act after the date of this Agreement or the issue date of the
Basic Prospectus, any Interim Prospectus or the Final Prospectus, as
the case may be, and deemed to be incorporated therein by reference.
(b) As of the date hereof, when the Final Prospectus is first
filed with the Commission pursuant to Rule 424, when, before either
Delivery Date (hereinafter defined), any amendment to the Registration
Statement becomes effective, when, before either Delivery Date, any
Incorporated Document is filed with the Commission, when any
supplement to the Final Prospectus is filed with the Commission and at
each Delivery Date, the Registration Statement, the Final Prospectus
and any such amendment or supplement will comply in all material
respects with the applicable requirements of the Securities Act and
the Rules, and the Incorporated Documents will comply in all material
respects with the requirements of the
2
<PAGE>
Exchange Act or the Securities Act, as applicable, and the rules and
regulations adopted by the Commission thereunder, on the date it
became effective, the Registration Statement did not, and, on the date
that any post-effective amendment to the Registration Statement
becomes effective, the Registration Statement as amended by such
post-effective amendment did not or will not, as the case may be,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statement therein not misleading; on the date the Final Prospectus is
filed with the Commission pursuant to Rule 424 and on each Delivery
Date, the Final Prospectus, as it may be amended or supplemented, will
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not
misleading; and on said dates, the Incorporated Documents will comply
in all material respects with the applicable provisions of the
Exchange Act and rules and regulations of the Commission thereunder,
and, when read together with the Final Prospectus, or the Final
Prospectus as it may be then amended or supplemented, will not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided that the foregoing representations and warranties
in this paragraph (b) shall not apply to statements or omissions made
in reliance upon and in conformity with written information furnished
to the Company by or through the Representatives on behalf of any
Underwriter specifically for use in connection with the preparation of
the Registration Statement or the Final Prospectus, as they may be
amended or supplemented.
(c) The Basic Prospectus and any Interim Prospectus, as of their
respective dates, complied in all material respects with the
requirements of the Securities Act and of the Rules and did not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The Commission has not issued an order preventing or
suspending the use of the Basic Prospectus or any Interim Prospectus.
(d) The nationally recognized firm of independent public
accountants whose report appears in the Company's most recent Annual
Report on Form 10-K, which is incorporated by reference in the Final
Prospectus,
3
<PAGE>
are independent public accountants as required by the Securities Act
and the Rules.
(e) In the event that a report of a nationally recognized firm
of independent public accounts regarding historical financial
information with respect to any entity acquired by the Company is
required to be incorporated by reference in the Final Prospectus, such
independent public accountants were independent public accountants, as
required by the Securities Act and the Rules, during the period of
their engagement to examine the financial statements being reported on
and at the date of their report.
(f) The audited consolidated financial statements of the Company
in the Final Prospectus and the Registration Statement present fairly
on a consolidated basis the financial position, the results of
operations, changes in common stock and other stockholder's equity and
cash flows of the Company and its subsidiaries, as of the respective
dates and for the respective periods indicated, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The unaudited consolidated financial
statements of the Company, if any, included in the Final Prospectus
and the Registration Statement and the related notes are true,
complete and correct, subject to normally recurring changes resulting
from year-end audit adjustments, and have been prepared in accordance
with the instructions to Form 10-Q.
(g) Except as described in or contemplated by the Registration
Statement and the Final Prospectus, there has not been any material
adverse change in or any adverse development which materially affects
the business, properties, financial condition or results of the
Company or the Company and its subsidiaries taken as whole, from the
dates as of which information is given in the Registration Statement
and Final Prospectus.
(h) The Stock conforms to the description thereof contained in
the Final Prospectus, is duly and validly authorized, and, when issued
and delivered against payment therefor as provided in this Agreement,
will be validly issued, fully paid and non-assessable.
(i) The Company does not have any subsidiaries having business
or properties that are material to the business and properties of the
Company and its subsidiaries taken as a whole with the exception of
Lehman Brothers Inc. ("Lehman") and the possible exception of Lehman
Commercial Paper Inc. (the "Named
4
<PAGE>
Subsidiaries"). Neither the Company nor any of the Named Subsidiaries
is in violation of its corporate charter or by-laws or in default
under any agreement, indenture or instrument, the effect of which
violation or default would be material to the Company and its
subsidiaries taken as a whole. The execution, delivery and
performance of this Agreement will not constitute a breach of, result
in the creation or imposition of any material lien, charge or
encumbrance upon any of the assets of the Company or any of its
subsidiaries pursuant to the terms of, or constitute a default under,
any material agreement, indenture or instrument, or result in a
violation of the corporate charter or by-laws of the Company or any of
its subsidiaries or any order, rule or regulation of any court or
governmental agency having jurisdiction over the Company, any of the
Named Subsidiaries or their property. Except as set forth in the
Final Prospectus or as required by the Securities Act, the Exchange
Act and applicable state securities laws, no consent, authorization or
order of, or filing or registration with, any court or governmental
agency is required for the execution, deliver and performance of this
Agreement.
(j) The Company and each of the Named Subsidiaries have been
duly organized, are validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, are duly
qualified to do business and in good standing as foreign corporations
and are fully registered as a broker-dealer, broker, dealer or
investment advisor, as the case may be, in each jurisdiction in which
their respective ownership of property or the conduct of their
respective businesses requires such qualification or registration and
in which the failure to qualify or register would be reasonably
likely, individually or in the aggregate, to have a material adverse
effect on the business, condition or properties of the Company and its
subsidiaries taken as a whole. Each of the Company and its Named
Subsidiaries holds all material licenses, permits, and certificates
from governmental authorities necessary for the conduct of its
business and owns, or possesses adequate rights to use, all material
rights necessary for the conduct of such business and has not received
any notice of conflict with the asserted rights of others in respect
thereof; and each of the Company and its Named Subsidiaries has the
corporate power and authority necessary to own or hold its properties
and to conduct the businesses in which it is engaged. Except as may
be disclosed in the Registration Statement and the Final Prospectus,
all outstanding shares of capital stock of the Named Subsidiaries are
owned by the Company, directly or
5
<PAGE>
indirectly through subsidiaries, free and clear of any lien, pledge
and encumbrance or any claim of any third party and are duly
authorized, validly issued and outstanding, fully paid and
non-assessable.
(k) Except as described in the Registration Statement and the
Final Prospectus, there is no material litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries which might reasonably
be expected to result in any material adverse change in the business,
properties, financial condition or results of operations of the
Company and its subsidiaries taken as a whole or which is required to
be disclosed in the Registration Statement and the Final Prospectus.
(l) The certificates delivered pursuant to paragraph (f) of
Section 6 hereof and all other documents delivered by the Company or
its representatives in connection with the issuance and sale of the
Stock were on the dates on which they were delivered, or will be on
the dates on which they are to be delivered, in all material respects
true and complete.
2. Sale and Purchase of the Stock. The Company agrees to sell to
each Underwriter, and each Underwriter, on the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein stated, agrees to purchase from the Company the number of
shares of Firm Stock set forth opposite the name of Underwriter in Schedule II
hereto. The obligations of the Underwriters under this Agreement are several
and not joint.
In addition, the Company grants to the Underwriters an option to
purchase up to an additional number of shares of Option Stock indicated in
Schedule I hereto. Such option is granted solely for the purpose of covering
over-allotments in the sale of Firm Stock and is exercisable as provided in
Section 3 hereof. Shares of Option Stock shall be purchased severally for the
account of the Underwriters in proportion to the number of shares of Firm Stock
set forth opposite the name of such Underwriters in Schedule II hereto. The
respective purchase obligations of each Underwriter with respect to the Option
Stock shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Stock other than in 100 share amounts. The price
of both the Firm Stock and any Option Stock shall be the price per share
indicated in Schedule I hereto.
3. Delivery and Payment. Delivery by the Company of the Firm Stock
to the Representatives for the respective accounts of the several Underwriters
and payment by the Underwriters therefor by certified or official bank check or
checks payable
6
<PAGE>
in, or by wire transfer of, immediately available (federal) funds to or upon the
order of the Company shall take place at the office, on the date and at the time
specified in Schedule I hereto, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
9 hereof (such date and time of delivery and payment for the Firm Stock being
herein called the "First Delivery Date").
The Firm Stock will be registered in such names and in such authorized
denominations as the Representatives may request no less than two full business
days in advance of the First Delivery Date. The Company agrees to have the Firm
Stock available for inspection, checking and packaging by the Representatives at
such place as is designated by the Representatives, not later than 1:00 p.m.,
New York City time, on the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date as of which
the Registration Statement is declared effective by the Commission, the option
granted in Section 2 may be exercised by written notice being given to the
Company by the Representatives. Such notice shall set forth the aggregate
number of shares of Option Stock as to which the option is being exercised, the
names in which the shares of Option Stock are to be registered, the
denominations in which the shares of Option Stock are to be issued and the date
and time, as determined by the Representatives, when the shares of Option Stock
are to be delivered provided, however, that this date and time shall not be
earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes referred to as a "Delivery Date".
Delivery by the Company of the Option Stock to the Representatives for
the respective accounts of the several Underwriters and payment by the
Underwriters therefor by certified or official bank check or checks payable in,
or by wire transfer of, immediately available (federal) funds to or upon the
order of the Company shall take place at the office and at the time specified in
Schedule I hereto, on the Second Delivery Date, which date and time may be
postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof.
The Option Stock will be registered in such names and in such
authorized denominations as the Representatives may request in the aforesaid
written notice. The Company agrees to have the Option Stock available for
inspection, checking and packaging by the Representatives at such place as is
designated
7
<PAGE>
by the Representatives, not later than 1:00 p.m., New York City time, on the
business day prior to the Second Delivery Date.
4. Offering by Underwriters. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed any Interim Prospectus and are authorized to distribute the Final
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters). The
Representatives agree that, as soon as the Representatives believe the offering
of the Stock has been terminated, the Representatives will so advise the
Company.
5. Agreement. The Company agrees with the several Underwriters
that:
(a) The Company will cause the Final Prospectus to be filed with the
Commission pursuant to Rule 424 not later than 10:00 a.m., New York City
time, on the business day following the date of this Agreement and will
promptly advise the Representatives (A) when the Final Prospectus shall
have been filed with the Commission pursuant to Rule 424, (B) when any
amendment to the Registration Statement relating to the Stock shall have
become effective, (C) of any request by the Commission for any amendment of
the Registration Statement, the Final Prospectus, the Basic Prospectus or
any Interim Prospectus, or for any additional information, (D) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threatening of any
proceedings for that purpose and (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Stock for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. After the date of this Agreement and prior to
the termination of the offering of the Stock, the Company will not file any
amendment of the Registration Statement or amendment or supplement to the
Final Prospectus (except an amendment to the Final Prospectus that is
deemed to be incorporated by reference in the Final Prospectus pursuant to
Item 12 of Form S-3) without the consent of the Representatives and will
use its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof. Prior to
receipt of the advice to be given by the Representatives pursuant to
Section 4, the Company will not file any document that would be deemed to
be incorporated by reference in the Final Prospectus pursuant to Item 12 of
Form S-3 without delivering to the Representatives a copy of the document
proposed to be so filed, such delivery to be made at least twenty-four
hours prior to such filing, and the Company will consult with the
Representatives as to any comments which the Representatives make in a
timely manner with respect to the document so delivered.
8
<PAGE>
(b) Subject to the last sentence of the immediately preceding
paragraph, if, at any time during which a prospectus relating to the Stock
is required to be delivered under the Securities Act, any event occurs as a
result of which the Final Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it shall be necessary at any time to amend or supplement the Final
Prospectus to comply with the Securities Act or the Rules, the Company
promptly will prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance and will use its best efforts to cause
any amendment of the Registration Statement containing an amended Final
Prospectus to be made effective as soon as possible.
(c) The Company will deliver to the Representatives, without charge,
(i) signed copies of the Registration Statement relating to the Stock and
of any amendments thereto (including all exhibits filed with, or
incorporated by reference in, any such document) and (ii) as many conformed
copies of the Registration Statement and of any amendments thereto which
shall become effective on or before the First Delivery Date (excluding
exhibits) as the Representatives may reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an Underwriter or dealer, the Company will deliver, without
charge to the Representatives and to Underwriters and dealers, at such
office or offices as the Representatives may designate, as many copies of
the Basic Prospectus, any Interim Prospectus and the Final Prospectus as
the Representatives may reasonably request.
(e) The Company will make generally available to its security holders
and to the Representatives as soon as practicable an earnings statement
(which need not be audited) of the Company and its subsidiaries, covering a
period of at least 12 months beginning after the date the Final Prospectus
is filed with the Commission pursuant to Rule 424, which will satisfy the
provisions of Section 11(a) of the Securities Act.
(f) The Company will furnish such information, execute such
instruments and take such actions as may be required to qualify the Stock
for offering and sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in
effect so long as required for the distribution of the Stock; provided,
however, that the Company shall not be required to qualify to do business
in any jurisdiction where it is not now so
9
<PAGE>
qualified or to take any action which would subject it to general or
unlimited service of process in any jurisdiction where it is not now so
subject.
(g) So long as any Stock is outstanding, the Company will furnish or
cause to be furnished to the Representatives copies of all annual reports
and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K,
or such other similar forms as may be designated by the Commission.
(h) If the Company has applied for the listing of the Stock on the
New York Stock Exchange Inc. (the "NYSE"), it will use its best efforts to
cause such listing to be approved as soon as possible.
(i) For a period beginning at the time of execution of this Agreement
and ending on the later of the business day following either the Second
Delivery Date or following the date on which any price restrictions on the
sale of the Stock are terminated, without the prior consent of the
Representatives, the Company will not offer, sell, contract to sell or
otherwise dispose of any shares of Preferred Stock (other than the Stock),
or sell or grant options, rights or warrants with respect to any shares of
registration statement filed under the Securities Act.
(j) The Company will use its best efforts to do and perform all
things to be done and performed hereunder prior to each Delivery Date and
to satisfy all conditions precedent to the delivery of the Stock to be
purchased hereunder.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Stock shall be subject to the
accuracy in all material respects of the representations and warranties on the
part of the Company contained herein as of the date hereof and each Delivery
Date, to the accuracy of any material statements made in any certificates,
opinions, affidavits, written statements or letters furnished to the
Representatives or to Simpson Thacher & Bartlett ("Underwriters' Counsel")
pursuant to this Section 6, to the performance by the Company of its respective
obligations hereunder and to the following additional conditions:
(a) The Final Prospectus shall have been filed with the Commission
pursuant to Rule 424 not later than 10:00 a.m., New York City time, on the
business day following the date of this Agreement or such later date and
time as shall be consented to in writing by the Representatives.
(b) No order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the
Commission and any
10
<PAGE>
requests for additional information on the part of the Commission (to be
included in the Registration Statement or the Final Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of
the Representatives.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Final Prospectus, there shall not have
been any change or decrease specified in the letter referred to in
paragraph (g) of this Section 6 which, in the judgment of the
Representatives, makes it impracticable or inadvisable to proceed with the
offering and delivery of the Stock as contemplated by the Registration
Statement and the Final Prospectus.
(d) The Company shall have furnished to the Representatives the
opinion of a Deputy General Counsel or the Chief Legal Officer for the
Company, dated the day of each Delivery Date to the effect that:
(i) The Company has been duly organized and is validly existing
and in good standing under the laws of the jurisdiction of its
incorporation with all requisite corporate power and authority to own
and operate its properties and to conduct its business as described in
the Final Prospectus.
(ii) The Stock conforms in all material respects to the
descriptions thereof contained in the Final Prospectus.
(iii) The Company has an authorized capitalization as set forth
in the Final Prospectus, and all of the issued shares of capital stock
of the Company (including the shares of Stock being delivered on such
Delivery Date) have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus;
(iv) There are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer of, any
shares of the Stock pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such counsel;
(v) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated in this Agreement, except for such consents,
approvals, authorizations or orders as have been obtained under the
Securities Act and such as may be required under the Exchange Act and
the blue sky laws of any
11
<PAGE>
jurisdiction in connection with the purchase and distribution of the
Stock by the Underwriters.
(vi) Such counsel does not know of any contracts or other
documents which are required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which
have not been filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules.
(vii) To the best of such counsel's knowledge, neither the
Company nor any of its Named Subsidiaries is in violation of its
corporate charter or by-laws, or in default under any material
agreement, indenture or instrument known to such counsel, the effect
of which violation or default would be material to the Company and its
subsidiaries taken as a whole.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company; the execution, delivery and performance of
this Agreement by the Company will not constitute a breach of, or
result in the creation or imposition of any material lien, charge or
encumbrance upon any of the assets of the Company or any of its Named
Subsidiaries pursuant to the terms of, or constitute a default under,
any material agreement, indenture or instrument known to such counsel
and to which the Company or any of its Named Subsidiaries is a party
of is bound, or result in a violation of the corporate charter or
by-laws of the Company or any of its Named Subsidiaries or any order,
rule or regulation known to such counsel of any court or governmental
agency having jurisdiction over the Company, any of its Named
Subsidiaries or any of their respective properties, the effect of
which would be material to the Company and its subsidiaries taken as a
whole.
(ix) The Registrations Statement has become effective under the
Securities Act, and, to the best of the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose is pending or
threatened by the Commission.
(x) The Registration Statement, the Final Prospectus and each
amendment thereof or supplement thereto (except that no opinion need
be expressed as to the financial statements or other financial or
statistical data included or incorporated by reference therein) comply
as to form in all material respects with the requirements of the
Securities Act and the Rules.
12
<PAGE>
(xi) If the Stock is to be listed on the NYSE, authorization
therefor has been given, subject to official notice of issuance and
evidence of satisfactory distribution, or the Company has filed a
preliminary listing application and all required supporting documents
with respect to the Stock with the NYSE, and such counsel has no
reason to believe that the Stock will not be authorized for listing,
subject to official notice of issuance and evidence of satisfactory
distribution.
(xii) Each of the Named Subsidiaries is a duly organized and
validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate power
and authority to own and operate its properties and to conduct its
business as described in the Final Prospectus. Each of the Company
and its Named Subsidiaries is duly qualified to do business as a
foreign corporation, is in good standing and is duly registered as a
broker-dealer, broker, dealer or investment advisor, as the case may
be, in each jurisdiction in which the nature of the business conducted
by it or in which the ownership or holding by lease of the properties
owned or held by it require such qualification or registration and
where the failure to so qualify or register would have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xiii) All the outstanding shares of capital stock of each of the
Company's Named Subsidiaries have been duly and validly authorized and
issued and are fully paid and non-assessable and, except for
directors' qualifying shares, are owned by the Company or a subsidiary
of the Company free and clear of any claims, liens, encumbrances and
security interests.
(xiv) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company or
any of its subsidiaries which would affect the subject matter of this
Agreement or is required to be disclosed in the Final Prospectus which
is not disclosed and correctly summarized therein.
Such opinion shall also contain a statement that although such counsel
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Final Prospectus (except as to those matters stated in
paragraph (ii) of such opinion), such counsel has no reason to believe that (i)
the Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any
13
<PAGE>
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) the Final Prospectus contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that no opinion
need be expressed as to the financial statements or other financial or
statistical data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely upon opinions of
local counsel satisfactory to the Representatives for matters not governed by
New York law and may rely as to matters of fact, to the extent such counsel
deems proper, upon certificates or affidavits of officers of the Company and
public officials.
(e) The Representatives shall have received from Underwriters' Counsel
such opinion or opinions, dated the day of such Delivery Date, with respect to
the issuance and sale of the Stock, the Registration Statement, the Final
Prospectus and other related matters as the Representatives may reasonably
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(f) The Company shall have furnished to the Representatives a
certificate of its Chief Executive Officer, its President or any Managing
Director or Vice President and its Chief Financial Officer or its Treasurer,
dated the day of each Delivery Date, to the effect that, to the best of their
knowledge after due inquiry:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
such Delivery Date with the same effect as if made on such Delivery
Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to such Delivery Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened.
(iii) (x) The Registration Statement does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (y) the Final Prospectus does not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in
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<PAGE>
the light of the circumstances under which they were made, not
misleading, and (z) since the effective date of the Registration
Statement there has not occurred any event required to be set forth in
an amended or supplemented prospectus which has not been so set forth.
(g) At each Delivery Date, a nationally recognized firm of
independent public accountants shall have furnished to the Representatives a
letter, dated the day of such Delivery Date, confirming that they are
independent auditors to the Company within the meaning of the Securities Act
and in form and substance satisfactory to the Representatives, stating in
effect that:
(i) In their opinion, the consolidated financial statements of
the Company and its subsidiaries, and the supporting schedules,
included in the Registration Statement and the Final Prospectus and
audited by them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder.
(ii) On the basis of a reading of the unaudited consolidated
financial statements of the Company and its subsidiaries, if any,
included in the Registration Statement and the Final Prospectus and
of the latest unaudited consolidated financial statements made
available by the Company and Lehman, carrying out certain specified
procedures (but not an audit in accordance with generally accepted
auditing standards), a reading of the minutes of the meetings of the
directors of the Company and Lehman, and inquiries of certain
officials of the Company and its subsidiaries, who have
responsibility for financial and accounting matters of the Company
and its subsidiaries, as to transactions and events subsequent to
the date of the most recent audited consolidated financial
statements included in the Registration Statement and the Final
Prospectus, nothing came to their attention that caused them to
believe that:
(A) any material modifications should be made to the unaudited
consolidated financial statements of the Company and its subsidiaries,
if any, included in the Registration Statement and the Final
Prospectus, for them to be in conformity with generally accepted
accounting principles; and such financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the published instructions,
rules and regulations thereunder.
(B) the unaudited capsule information of the Company and its
subsidiaries, if any, included in the
15
<PAGE>
Registration Statement and the Final Prospectus does not agree with
the amounts set forth in the unaudited consolidated financial
statements of the Company from which it was derived or was not
determined on a basis substantially consistent with that of the
corresponding financial information in the latest audited financial
statements of the Company included in the Registration Statement and
the Final Prospectus.
(C)(I) as of the latest date as of which the Company and its
subsidiaries have monthly financial statements, there was any decrease
in the capital stock, additional paid-in capital or retained earnings,
or increase in long-term indebtedness of the Company and its
subsidiaries, as compared with the amounts shown in the most recent
consolidated statement of financial condition of the Company and its
subsidiaries included in the Registration Statement and the Final
Prospectus, (II) with respect to the period subsequent to the date of
the most recent financial statements included in the Registration
Statement and the Final Prospectus and extending through the latest
date as of which the Company and its subsidiaries have monthly
financial statements, there was a consolidated net loss or (III) with
respect to the amounts of net capital or excess net capital of Lehman
determined pursuant to Commission Rule 15c3-1 and shown in the most
recent financial statement of Lehman filed pursuant to Commission Rule
17a-5, there has been any decrease in such amounts as compared with
the amounts shown in the most recent consolidated financial statements
included in the Registration Statement and the Final Prospectus;
(D) as of a specified date not more than three business days
prior to the date of the letter, there was any decrease in the capital
stock or additional paid-in capital, or increase in long-term
indebtedness of the Company and its subsidiaries, as compared with the
amounts shown in the most recent consolidated statement of financial
condition of the Company and its subsidiaries included in the
Registration Statement and the Final Prospectus;
except in all instances for increase or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by the Company as
to the significance thereof, unless said explanation is not deemed necessary by
the Representatives.
(iii) If pro forma financial statements are included in the
Registration Statement or the Final Prospectus, (x) they have read such
pro forma financial statements, (y) they have made inquiries of certain
officials of the Company who have responsibility for
16
<PAGE>
financial and accounting matters of the Company as to the basis for their
determination of the pro forma adjustments and whether such pro forma
financial statements comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X and (z)
they have proved in the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts; and as a result thereof,
nothing came to their attention that caused them to believe that such pro
forma financial statements do not so comply with Rule 11-02 of Regulation
S-X and that such pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements.
(iv) They have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is expressed in dollars, or
percentages derived from dollar amounts, and has been obtained from the
general accounting records of the Company) set forth in the Registration
Statement, as amended, and the Final Prospectus, as amended or supplemented,
and in Exhibit 12 to the Registration Statement, including specified
information, if any, included or incorporated from the Company's Annual
Report on Form 10-K incorporated therein or specified information, if any,
included or incorporated from any of the Company's Quarterly Reports on
Form 10-Q or its Current Reports on Form 8-K incorporated therein, agrees
with the accounting records of the Company and its subsidiaries or
computations made therefrom, excluding any questions of legal
interpretation.
(h) Subsequent to the execution of this Agreement, there shall not
have been any decrease in the ratings of any of the Company's debt securities by
Moody's Investors Service, Inc. or Standard & Poor's Corporation.
Prior to each Delivery Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives or Underwriters' Counsel may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates or opinions furnished to the Representatives or Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and to
Underwriters' Counsel, this Agreement and all obligations of the Underwriters
hereunder may be cancelled at, or at any time prior to, each Delivery Date by
the Representatives. Notice of such cancellation shall be given to the Company
in writing, or by telegraph confirmed in writing.
17
<PAGE>
7. Expenses.(a) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company will pay
all costs and expenses incident to the performance of the obligations of the
Company hereunder, including, without limiting the generality of the foregoing,
all costs, taxes and expenses incident to the issuance, sale and delivery of the
Stock to the Underwriters, all fees and expenses of the Company's counsel and
accountants, all costs and expenses incident to the preparing, printing and
filing of the Registration Statement (including all exhibits thereto), any
Interim Prospectus, the Basic Prospectus, the Final Prospectus and any
amendments thereof or supplements thereto, and the rating of the Stock by one or
more rating agencies, all costs and expenses (including fees of Underwriters'
Counsel and their disbursements) incurred in connection with blue sky
qualifications, advising on the legality of the Stock for investment, the filing
requirements, if any, of the National Association of Securities Dealers, Inc. in
connection with its review of corporate financings, the fee for listing the
Stock on the NYSE and all costs and expenses of the printing and distribution of
all documents in connection with such offering. Except as provided in this
Section 7, the Company will have no responsibility to the Underwriters for the
Underwriters' own costs and expenses, including the fees of Underwriters'
Counsel and any advertising expenses in connection with any offer the
Underwriters may make.
(b)If the sale of the Stock provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 6 hereof is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will, subject to demand by the
Representatives, reimburse the Underwriters for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the Stock.
8. Indemnification.(a) The Company agrees to indemnify and hold
harmless each Underwriter and each person who controls such Underwriter within
the meaning of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, as originally filed or in any amendment
thereof, or in any Interim Prospectus, the Basic Prospectus or the Final
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
18
<PAGE>
therein not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that (i) the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company as herein stated by the Representatives on
behalf of any Underwriter specifically for use in connection with the
preparation thereof, and (ii) such indemnity with respect to the Basic
Prospectus or any Interim Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Stock which is
the subject thereof if such person did not receive a copy of the Final
Prospectus at or prior to the confirmation of the sale of such Stock to such
person in any case where such delivery is required by the Securities Act and the
untrue statement or omission of a material fact contained in the Basic
Prospectus or any Interim Prospectus was corrected in the Final Prospectus,
unless such failure to deliver the Final Prospectus was a result of
noncompliance by the Company with Section 5(d) hereof. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b)Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person, if any, who controls the Company within
the meaning of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Basic Prospectus, any Interim
Prospectus or the Final Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that the same was made therein in reliance upon and in conformity
with written information furnished to the Company as herein stated by the
Representatives on behalf of such Underwriter specifically for use in the
preparation thereof, and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The statements set forth in
19
<PAGE>
the last paragraph of the cover page and under the heading "Underwriting" in the
Final Prospectus constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in the Registration Statement
and the Final Prospectus, as the case may be, and you, as the Representatives,
confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and either (i) the indemnifying party or parties and
the indemnified party or parties mutually agree or (ii) representation of both
the indemnifying party or parties and the indemnified party or parties by the
same counsel is inappropriate under applicable standards of professional conduct
due to actual or potential differing interests between them, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed counsel in connection with the assumption
of legal defenses in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel, approved by the
Representatives in the case of subparagraph (a) representing the indemnified
parties under subparagraph (a), as the case may be, who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party.
20
<PAGE>
(d)In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subparagraph (a) of
this Section 8 is due in accordance with its terms but is for any reason held by
a court to be unavailable from the Company on grounds of policy or other similar
grounds, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to which
the Company and one or more of the Underwriters may be subject in such
proportion so that the Underwriters are responsible for that portion represented
by the percentage that the underwriting discounts appearing on the cover page of
the Final Prospectus bear to the public offering prices appearing thereon and
the Company is responsible for the balance; provided, however, that (i) in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters) be responsible for any amount in excess of the underwriting
discounts applicable to the Stock purchased by such Underwriter hereunder and
(ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(i) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
the Securities Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this subparagraph (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
subparagraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this
subparagraph (d).
9. Default by an Underwriter. If, on either Delivery Date, any one or
more Underwriters shall fail to purchase and pay for all of the Stock agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the number
of shares of Firm Stock set forth opposite their names in Schedule II hereto
bear to the aggregate number of shares of Firm Stock set opposite the names of
the remaining Underwriters) the Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date; provided,
however, that in the event that the
21
<PAGE>
aggregate number of shares of Stock which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date shall exceed
10% of the aggregate number of shares of the Stock, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Stock, and if such non-defaulting Underwriters do not
purchase all the Stock, this Agreement (or, with respect to the Second Delivery
Date, the obligation of the Underwriters to purchase, and of the Company to
sell, the Option Stock) will terminate without liability to any non-defaulting
Underwriters or the Company. In the event of a default by any Underwriter as
set forth in this Section 9, the particular Delivery Date shall be postponed for
such period, not exceeding seven days, as the Representatives shall determine in
order that the required changes in the Registration Statement and the Final
Prospectus or in any other documents or arrangements may be effected. Nothing
herein contained shall relieve any defaulting Underwriter of its liability, if
any, to the Company and any non-defaulting Underwriter for damages occasioned by
its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
at or prior to delivery of and payment for all the Firm Stock, if, prior to such
time (i) trading in securities generally on the NYSE or the over-the-counter
market shall have been suspended or limited or minimum prices shall have been
established on the NYSE or the over-the-counter market, (ii) a banking
moratorium shall have been declared either by federal or New York State
authorities, (iii) any new restriction materially affecting the distribution of
the Stock shall have become effective or trading in any securities of the
Company shall have been suspended or halted by any national securities exchange,
the National Association of Securities Dealers, Inc. or the Commission, (iv) the
United States becomes engaged in hostilities or there is an escalation in
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States, or (v) there shall have been such a
material adverse change in national or international political, financial or
economic conditions, national or international equity markets or currency
exchange rates or controls as to make it, in the judgment of the
Representatives, inadvisable or impracticable to proceed with the payment for
and delivery of the Stock.
11. Representation and Indemnities to Survive Delivery. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers (as such officers) and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its officers or directors or any
controlling person within the meaning of the Securities Act, and will survive
delivery of the payment for the Stock.
22
<PAGE>
12. Notices. All communications hereunder will be in writing, and, if
sent to the Representatives will be mailed, delivered, telegraphed or telexed
and confirmed to them, at the address specified in Schedule I hereto; or, if
sent to the Company will be mailed, delivered, telegraphed or telexed and
confirmed to it at 3 World Financial Center, New York, New York 10285,
Attention: Chief Financial Officer.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their successors and, to the extent and only
to the extent stated in Section 8 hereof, the officers and directors and
controlling persons referred to in Section 8 hereof, and except as provided in
Section 8 hereof, no person other than the parties hereto and their respective
successors will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
LEHMAN BROTHERS HOLDINGS INC.
By: _________________________
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
By: ___________________________
Title:
Acting on behalf of the Representatives
named in Schedule I annexed hereto and
the several Underwriters named in
Schedule II annexed hereto.
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<PAGE>
SCHEDULE I
Date of Underwriting Agreement:
Registration Statement No. 333-
Representative and Address: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Description of Stock:
Title:
Number of shares of Firm Stock: _________shares
Maximum number of shares of Option Stock: _________shares
Price per share: $
Price to public:
Time of payment of dividends:
Sinking fund provisions:
Redemption provisions:
Repayment provisions:
Other provisions:
First Delivery Date, Time and Location:
Date:
Time:
Location:
<PAGE>
SCHEDULE II
NUMBER OF
SHARES OF FIRM
STOCK TO BE
UNDERWRITERS PURCHASED
------------ ----------------
Lehman Brothers Inc...........................................................
Total......................................................................
<PAGE>
EXHIBIT 1(c)
Depositary Shares
Each Representing a Fraction
of a Share of Preferred Stock
LEHMAN BROTHERS HOLDING INC.
UNDERWRITING AGREEMENT
New York, New York
Dated the date set forth
In Schedule I hereto
To the Representative(s)
named in Schedule I
hereto, of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
Lehman Brothers Holdings Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to you and the other underwriters
named in Schedule II hereto (the "Underwriters"), for whom you are acting as
representatives (the "Representatives"), the number of shares identified in
Schedule I hereto (the "Firm Shares") of the Company's preferred stock, par
value $1.00 per share (the "Preferred Stock") identified in Schedule I
hereto. In addition, if so indicated in Schedule I the Company proposes to
grant to the Underwriters an option to purchase up to an additional number of
shares of the Preferred Stock identified in Schedule I hereto on the terms
and for the purposes set forth in Section 2 (the "Option Shares"). The Firm
Shares and the Option Shares, if purchased, are hereinafter collectively
called the "Shares". The Shares are to be deposited by you or on your behalf
against delivery of Depositary Receipts (the "Depositary Receipts") to be
issued by _____________, as Depositary (the "Depositary"), under a Deposit
Agreement, dated as of ___________, 19__ (the "Deposit Agreement"), among the
Company, the Depositary and holders from time to time of the Depositary
Receipts issued thereunder. The Depositary Receipts will evidence Depositary
Shares (the "Depositary Shares"), and each Depositary Share will represent
the fraction of a share of Preferred Stock identified in Schedule I. The
number of Depositary Shares in respect of Firm Shares to be purchased by each
Underwriter is also identified in Schedule I. If the firm or firms listed in
Schedule II hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives" shall each be
deemed to refer to such firm or firms. This is to confirm the agreement
concerning the purchase of the Shares from the Company by the Underwriters
named in Schedule II hereto.
1. REPRESENTATION AND WARRANTIES. The Company represents and
warrants to each Underwriter that:
<PAGE>
(a) The Company meets the requirements for the use of Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations promulgated thereunder (the "Rules"),
and has carefully prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form S-3 (the file number of which is set forth in Schedule I
hereto), which has become effective, for the registration of the
Shares and the Depositary Shares under the Securities Act. The
registration statement, as amended at the date of this Agreement,
meets the requirements set forth in Rule 415(a)(1)(x) under the
Securities Act and complies in all other material respects with such
rule. The Company proposes to file with the Commission pursuant to
Rule 424 under the Securities Act ("Rule 424") a supplement to the
form of prospectus included in the registration statement relating
to the initial offering of the Shares and the Depositary Shares and
the plan of distribution thereof and has previously advised you of
all further information (financial and other) with respect to the
Company to be set forth therein. The term "Registration Statement"
means the registration statement, as amended at the date of this
Agreement, including the exhibits thereto, financial statements, and
all documents incorporated therein by reference pursuant to Item 12
of Form S-3 (the "Incorporated Documents"), and such prospectus as
then amended, including the Incorporated Documents, is hereinafter
referred to as the "Basic Prospectus"; and such supplemented form of
prospectus, in the form in which it shall be filed with the
Commission pursuant to Rule 424 (including the Basic Prospectus as
so supplemented), is hereinafter called the "Final Prospectus". Any
preliminary form of the Basic Prospectus which has heretofore been
filed pursuant to Rule 424 is hereinafter called the "Interim
Prospectus". Any reference herein to the Registration Statement,
the Basic Prospectus, any Interim Prospectus or the Final Prospectus
shall be deemed to refer to and include the Incorporated Documents
which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the date of this
Agreement or the issue date of the Basic Prospectus, any Interim
Prospectus or the Final Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus,
any Interim Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any Incorporated Documents under
the Exchange Act after the date of this Agreement or the issue date
of the Basic Prospectus, any Interim Prospectus or the Final
2
<PAGE>
Prospectus, as the case may be, and deemed to be incorporated
therein by reference.
(b) As of the date hereof, when the Final Prospectus is first
filed with the Commission pursuant to Rule 424, when, before either
Delivery Date (hereinafter defined), any amendment to the
Registration Statement becomes effective, when, before either
Delivery Date, any Incorporated Document is filed with the
Commission, when any supplement to the Final Prospectus is filed
with the Commission and at each Delivery Date, the Registration
Statement, the Final Prospectus and any such amendment or supplement
will comply in all material respects with the applicable
requirements of the Securities Act and the Rules, and the
Incorporated Documents will comply in all material respects with the
requirements of the Exchange Act or the Securities Act, as
applicable, and the rules and regulations adopted by the Commission
thereunder, on the date it became effective, the Registration
Statement did not, and, on the date that any post-effective
amendment to the Registration Statement becomes effective, the
Registration Statement as amended by such post-effective amendment
did not or will not, as the case may be, contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statement therein not
misleading; on the date the Final Prospectus is filed with the
Commission pursuant to Rule 424 and on each Delivery Date, the Final
Prospectus, as it may be amended or supplemented, will not include
an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading; and
on said dates, the Incorporated Documents will comply in all
material respects with the applicable provisions of the Exchange Act
and rules and regulations of the Commission thereunder, and, when
read together with the Final Prospectus, or the Final Prospectus as
it may be then amended or supplemented, will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made,
not misleading; provided that the foregoing representations and
warranties in this paragraph (b) shall not apply to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company by or through the
Representatives on behalf of any Underwriter specifically for use in
connection with the preparation of the Registration Statement or the
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Final Prospectus, as they may be amended or supplemented.
(c) The Basic Prospectus and any Interim Prospectus, as of
their respective dates, complied in all material respects with the
requirements of the Securities Act and of the Rules and did not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The Commission has not issued an order preventing or
suspending the use of the Basic Prospectus or any Interim Prospectus.
(d) The nationally recognized firm of independent public
accountants whose report appears in the Company's most recent Annual
Report on Form 10-K, which is incorporated by reference in the Final
Prospectus, are independent public accountants as required by the
Securities Act and the Rules.
(e) In the event that a report of a nationally recognized firm
of independent public accounts regarding historical financial
information with respect to any entity acquired by the Company is
required to be incorporated by reference in the Final Prospectus,
such independent public accountants were independent public
accountants, as required by the Securities Act and the Rules, during
the period of their engagement to examine the financial statements
being reported on and at the date of their report.
(f) The audited consolidated financial statements of the
Company in the Final Prospectus and the Registration Statement
present fairly on a consolidated basis the financial position, the
results of operations, changes in common stock and other
stockholder's equity and cash flows of the Company and its
subsidiaries, as of the respective dates and for the respective
periods indicated, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the
periods involved. The unaudited consolidated financial statements
of the Company, if any, included in the Final Prospectus and the
Registration Statement and the related notes are true, complete and
correct, subject to normally recurring changes resulting from
year-end audit adjustments, and have been prepared in accordance
with the instructions to Form 10-Q.
(g) Except as described in or contemplated by the Registration
Statement and the Final Prospectus, there has not been any material
adverse change in or any adverse development which materially
affects the
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business, properties, financial condition or results of the Company
or the Company and its subsidiaries taken as whole, from the dates as
of which information is given in the Registration Statement and Final
Prospectus.
(h) The Shares conform to the description thereof contained in
the Final Prospectus, are duly and validly authorized, and, when
issued and delivered against payment therefor as provided in this
Agreement, will be validly issued, fully paid and non-assessable. The
Depositary Shares representing the Shares have been duly and validly
authorized by the Company; and assuming the due execution by the
Depositary of the Deposit Agreement and the due execution by the
Depositary and, if required by the Deposit Agreement, the Registrar
of the Depositary Receipts in accordance with the terms of the Deposit
Agreement and upon the deposit by or on behalf of the Underwriters of
the Shares with the Depositary pursuant to the Deposit Agreement, the
Depositary Shares will represent legal and valid interests in the
Shares and the Depositary Receipts will constitute valid evidence of
such interests in the Shares and will be entitled to the benefits of
the Deposit Agreement.
(i) The Company does not have any subsidiaries having business
or properties that are material to the business and properties of
the Company and its subsidiaries taken as a whole with the exception
of Lehman Brothers Inc. ("Lehman") and the possible exception of
Lehman Commercial Paper Inc. (the "Named Subsidiaries"). Neither
the Company nor any of the Named Subsidiaries is in violation of its
corporate charter or by-laws or in default under any agreement,
indenture or instrument, the effect of which violation or default
would be material to the Company and its subsidiaries taken as a
whole. The execution, delivery and performance of this Agreement or
the Deposit Agreement will not constitute a breach of, result in the
creation or imposition of any material lien, charge or encumbrance
upon any of the assets of the Company or any of its subsidiaries
pursuant to the terms of, or constitute a default under, any
material agreement, indenture or instrument, or result in a
violation of the corporate charter or by-laws of the Company or any
of its subsidiaries or any order, rule or regulation of any court or
governmental agency having jurisdiction over the Company, any of the
Named Subsidiaries or their property. Except as set forth in the
Final Prospectus or as required by the Securities Act, the Exchange
Act and applicable state securities laws, no consent, authorization
or order of, or filing or registration with, any court or
governmental agency is required for the execution, deliver and
performance of this Agreement or the Deposit Agreement.
(j) The Company and each of the Named Subsidiaries have been
duly organized, are validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, are duly
qualified to do business and in good standing as foreign
corporations and are fully registered as a broker-dealer, broker,
dealer or investment advisor, as the case may be, in each
jurisdiction in which their respective ownership of property or the
conduct of their respective businesses requires such qualification
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or registration and in which the failure to qualify or register
would be reasonably likely, individually or in the aggregate, to
have a material adverse effect on the business, condition or
properties of the Company and its subsidiaries taken as a whole.
Each of the Company and its Named Subsidiaries holds all material
licenses, permits, and certificates from governmental authorities
necessary for the conduct of its business and owns, or possesses
adequate rights to use, all material rights necessary for the
conduct of such business and has not received any notice of conflict
with the asserted rights of others in respect thereof; and each of
the Company and its Named Subsidiaries has the corporate power and
authority necessary to own or hold its properties and to conduct the
businesses in which it is engaged. Except as may be disclosed in the
Registration Statement and the Final Prospectus, all outstanding
shares of capital stock of the Named Subsidiaries are owned by the
Company, directly or indirectly through subsidiaries, free and clear
of any lien, pledge and encumbrance or any claim of any third party
and are duly authorized, validly issued and outstanding, fully paid
and non-assessable.
(k) Except as described in the Registration Statement and the
Final Prospectus, there is no material litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries which might
reasonably be expected to result in any material adverse change in
the business, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole or
which is required to be disclosed in the Registration Statement and
the Final Prospectus.
(l) The certificates delivered pursuant to paragraph (g) of
Section 6 hereof and all other documents delivered by the Company
or its representatives in connection with the issuance and sale
of the Shares and the Depositary Shares were on the dates on
which they were delivered, or will be on the dates on which they
are to be delivered, in all material respects true and complete.
2. SALE AND PURCHASE OF THE SHARES. The Company agrees to sell to
each Underwriter, and each Underwriter, on the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein stated, agrees to purchase from the Company the number of
Firm Shares set forth opposite the name of Underwriter in Schedule II hereto.
The obligations of the Underwriters under this Agreement are several and not
joint.
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In addition, the Company grants to the Underwriters an option to
purchase up to an additional number of Option Shares indicated in Schedule I
hereto. Such option is granted solely for the purpose of covering
over-allotments in the sale of Firm Shares and is exercisable as provided in
Section 3 hereof. Option Shares shall be purchased severally for the account
of the Underwriters in proportion to the number of Firm Shares set forth
opposite the name of such Underwriters in Schedule II hereto. The respective
purchase obligations of each Underwriter with respect to the Option Shares
shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Shares other than in 100 share amounts. The
price of both the Firm Shares and any Option Shares shall be the price per
share indicated in Schedule I hereto.
3. DELIVERY AND PAYMENT. Delivery by the Company of the Firm
Shares to the Representatives for the respective accounts of the several
Underwriters and payment by the Underwriters therefor by certified or
official bank check or checks payable in, or by wire transfer of, immediately
available (federal) funds to or upon the order of the Company shall take
place at the office, on the date and at the time specified in Schedule I
hereto, which date and time may be postponed by agreement between the
Representatives and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the Firm Shares being herein called the
"First Delivery Date").
The Firm Shares will be registered in such names and in such
authorized denominations as the Representatives may request no less than two
full business days in advance of the First Delivery Date. The Company agrees
to have the Firm Shares available for inspection, checking and packaging by
the Representatives at such place as is designated by the Representatives,
not later than 1:00 p.m., New York City time, on the business day prior to
the First Delivery Date.
The certificates representing the Firm Shares will be delivered by
the Representatives to, and deposited with, the Depositary against delivery
of Depositary Receipts representing Depositary Shares issued in respect of
such Firm Shares. Such Depositary Receipts shall be issued in such
denominations and registered in such names as the Representatives shall
request, and will be made available for checking and packaging at the above
office of the Company at least twenty-four hours prior to the First Delivery
Date.
At any time on or before the thirtieth day after the date as of
which the Registration Statement is declared effective by the Commission, the
option granted in Section 2 may be exercised by written notice being given to
the Company by the Representatives. Such notice shall set forth the
aggregate number of Option Shares as to which the option is being exercised,
the names in which the Option Shares are to be
7
<PAGE>
registered, the denominations in which the Option Shares are to be issued and
the date and time, as determined by the Representatives, when the Option
Shares are to be delivered provided, however, that this date and time shall
not be earlier than the First Delivery Date nor earlier than the second
business day after the date on which the option shall have been exercised nor
later than the fifth business day after the date on which the option shall
have been exercised. The date and time the Option Shares are delivered are
sometimes referred to as the "Second Delivery Date" and the First Delivery
Date and the Second Delivery Date are sometimes referred to as a "Delivery
Date".
Delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the several Underwriters and payment by the
Underwriters therefor by certified or official bank check or checks payable
in, or by wire transfer of, immediately available (federal) funds to or upon
the order of the Company shall take place at the office and at the time
specified in Schedule I hereto, on the Second Delivery Date, which date and
time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof.
The Option Shares will be registered in such names and in such
authorized denominations as the Representatives may request in the aforesaid
written notice. The Company agrees to have the Option Shares available for
inspection, checking and packaging by the Representatives at such place as is
designated by the Representatives, not later than 1:00 p.m., New York City
time, on the business day prior to the Second Delivery Date.
The certificates representing the Option Shares will be delivered by
the Representatives to, and deposited with, the Depositary against delivery
of Depositary Receipts representing Depositary Shares issued in respect of
such Option Shares. Such Depositary Receipts shall be issued in such
denominations and registered in such names as the Representatives shall
request, and will be made available for checking and packaging at the above
office of the Company at least twenty-four hours prior to the Second Delivery
Date.
4. OFFERING BY UNDERWRITERS. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed any Interim Prospectus and are authorized to distribute the Final
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters). The
Representatives agree that, as soon as the Representatives believe the
offering of the Depositary Shares has been terminated, the Representatives
will so advise the Company.
5. AGREEMENT. The Company agrees with the several Underwriters
that:
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<PAGE>
(a) The Company will cause the Final Prospectus to be filed with
the Commission pursuant to Rule 424 not later than 10:00 a.m., New York
City time, on the business day following the date of this Agreement and
will promptly advise the Representatives (A) when the Final Prospectus
shall have been filed with the Commission pursuant to Rule 424, (B) when
any amendment to the Registration Statement relating to the Shares and
the Depositary Shares shall have become effective, (C) of any request by
the Commission for any amendment of the Registration Statement, the Final
Prospectus, the Basic Prospectus or any Interim Prospectus, or for any
additional information, (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceedings for that purpose and (E) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares and the Depositary Shares
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. After the date of this Agreement and prior
to the termination of the offering of the Shares and the Depositary
Shares, the Company will not file any amendment of the Registration
Statement or amendment or supplement to the Final Prospectus (except an
amendment to the Final Prospectus that is deemed to be incorporated by
reference in the Final Prospectus pursuant to Item 12 of Form S-3)
without the consent of the Representatives and will use its best efforts
to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof. Prior to receipt of the
advice to be given by the Representatives pursuant to Section 4, the
Company will not file any document that would be deemed to be
incorporated by reference in the Final Prospectus pursuant to Item 12 of
Form S-3 without delivering to the Representatives a copy of the document
proposed to be so filed, such delivery to be made at least twenty-four
hours prior to such filing, and the Company will consult with the
Representatives as to any comments which the Representatives make in a
timely manner with respect to the document so delivered.
(b) Subject to the last sentence of the immediately preceding
paragraph, if, at any time during which a prospectus relating to the
Shares and the Depositary Shares is required to be delivered under the
Securities Act, any event occurs as a result of which the Final
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall
be necessary at any time to amend or supplement the Final Prospectus to
comply with the Securities Act or the Rules, the Company promptly will
prepare and file with the Commission an amendment or
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<PAGE>
supplement which will correct such statement or omission or an amendment
which will effect such compliance and will use its best efforts to cause
any amendment of the Registration Statement containing an amended Final
Prospectus to be made effective as soon as possible.
(c) The Company will deliver to the Representatives, without
charge, (i) signed copies of the Registration Statement relating to the
Shares and the Depositary Shares and of any amendments thereto (including
all exhibits filed with, or incorporated by reference in, any such
document) and (ii) as many conformed copies of the Registration Statement
and of any amendments thereto which shall become effective on or before
the First Delivery Date (excluding exhibits) as the Representatives may
reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an Underwriter or dealer, the Company will deliver, without
charge to the Representatives and to Underwriters and dealers, at such
office or offices as the Representatives may designate, as many copies of
the Basic Prospectus, any Interim Prospectus and the Final Prospectus as
the Representatives may reasonably request.
(e) The Company will make generally available to its security
holders and to the Representatives as soon as practicable an earnings
statement (which need not be audited) of the Company and its
subsidiaries, covering a period of at least 12 months beginning after the
date the Final Prospectus is filed with the Commission pursuant to Rule
424, which will satisfy the provisions of Section 11(a) of the Securities
Act.
(f) The Company will furnish such information, execute such
instruments and take such actions as may be required to qualify the
Shares and the Depositary Shares for offering and sale under the laws of
such jurisdictions as the Representatives may designate and will maintain
such qualifications in effect so long as required for the distribution of
the Shares and the Depositary Shares; provided, however, that the Company
shall not be required to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action which would subject it
to general or unlimited service of process in any jurisdiction where it
is not now so subject.
(g) So long as any Depositary Shares are outstanding, the Company
will furnish or cause to be furnished to the Representatives copies of
all annual reports and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission.
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(h) If the Company has applied for the listing of the Shares or
Depositary Shares on the New York Stock Exchange Inc. (the "NYSE"), it
will use its best efforts to cause such listing to be approved as soon as
possible.
(i) For a period beginning at the time of execution of this
Agreement and ending on the later of the business day following either
the Second Delivery Date or following the date on which any price
restrictions on the sale of the Shares or the Depositary Shares are
terminated, without the prior consent of the Representatives, the Company
will not offer, sell, contract to sell or otherwise dispose of any shares
of Preferred Stock (other than the Shares and the Depositary Shares), or
sell or grant options, rights or warrants with respect to any shares of
Preferred Stock covered by the Registration Statement or any other
registration statement filed under the Securities Act.
(j) The Company will use its best efforts to do and perform all
things to be done and performed hereunder prior to each Delivery Date and
to satisfy all conditions precedent to the delivery of the Shares and the
Depositary Shares.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Shares shall be subject to
the accuracy in all material respects of the representations and warranties
on the part of the Company contained herein as of the date hereof and each
Delivery Date, to the accuracy of any material statements made in any
certificates, opinions, affidavits, written statements or letters furnished
to the Representatives or to Simpson Thacher & Bartlett ("Underwriters'
Counsel") pursuant to this Section 6, to the performance by the Company of
its respective obligations hereunder and to the following additional
conditions:
(a) The Final Prospectus shall have been filed with the
Commission pursuant to Rule 424 not later than 10:00 a.m., New York
City time, on the business day following the date of this Agreement or
such later date and time as shall be consented to in writing by the
Representatives.
(b) No order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall be in effect and no
proceedings for such purpose shall be pending before or threatened by
the Commission and any requests for additional information on the part
of the Commission (to be included in the Registration Statement or the
Final Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of the Representatives.
(c) Since the respective dates as of which information is given
in the Registration Statement and the Final Prospectus, there shall
not have been any change or decrease
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<PAGE>
specified in the letter referred to in paragraph (h) of this Section 6
which, in the judgment of the Representatives, makes it impracticable or
inadvisable to proceed with the offering and delivery of the Depositary
Shares representing such Shares as contemplated by the Registration
Statement and the Final Prospectus.
(d) The Company shall have furnished to the Representatives the
opinion of a Deputy General Counsel or the Chief Legal Officer for the
Company, dated the day of each Delivery Date to the effect that:
(i) The Company has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of
its incorporation with all requisite corporate power and authority
to own and operate its properties and to conduct its business as
described in the Final Prospectus.
(ii) The Deposit Agreement, the Shares, the Depositary Shares
and the Depositary Receipts conform in all material respects to the
descriptions thereof contained in the Final Prospectus.
(iii) The Company has an authorized capitalization as set
forth in the Final Prospectus, and all of the issued shares of
capital stock of the Company (including the Shares being delivered on
such Delivery Date) have been duly and validly authorized and issued,
are fully paid and non-assessable and conform to the description
thereof contained in the Prospectus; the Depositary Shares representing
the Shares delivered on such Delivery Date have been duly and validly
authorized by the Company; and assuming the due execution by the
Depositary of the Deposit Agreement and the due execution by the
Depositary and, if required by the Deposit Agreement, the Registrar
of the Depositary Receipts in accordance with the terms of the
Deposit Agreement and upon the deposit by or on behalf of the
Underwriters of the Shares with the Depositary pursuant to the
Deposit Agreement, such Depositary Shares will represent legal and
valid interests in the Shares delivered on such Delivery Date and the
Depositary Receipts will constitute valid evidence of such interests
in such Shares and will be entitled to the benefits of the Deposit
Agreement.
(iv) There are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of,
any Shares pursuant to the Company's charter or by-laws or any
agreement or other instrument known to such counsel;
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(v) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated in this Agreement or
the compliance by the Company with the provisions of the Deposit
Agreement, except for such consents, approvals, authorizations or
orders as have been obtained under the Securities Act and such as
may be required under the Exchange Act and the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Shares and the Depositary Shares by the Underwriters.
(vi) Such counsel does not know of any contracts or other
documents which are required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which
have not been filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules.
(vii) To the best of such counsel's knowledge, neither the
Company nor any of its Named Subsidiaries is in violation of its
corporate charter or by-laws, or in default under any material
agreement, indenture or instrument known to such counsel, the
effect of which violation or default would be material to the
Company and its subsidiaries taken as a whole.
(viii) This Agreement and the Deposit Agreement have been duly
authorized, executed and delivered by the Company; the execution,
delivery and performance of this Agreement and the Deposit Agreement
by the Company will not constitute a breach of, or result in the
creation or imposition of any material lien, charge or encumbrance
upon any of the assets of the Company or any of its Named
Subsidiaries pursuant to the terms of, or constitute a default
under, any material agreement, indenture or instrument known to such
counsel and to which the Company or any of its Named Subsidiaries is
a party of is bound, or result in a violation of the corporate
charter or by-laws of the Company or any of its Named Subsidiaries
or any order, rule or regulation known to such counsel of any court
or governmental agency having jurisdiction over the Company, any of
its Named Subsidiaries or any of their respective properties, the
effect of which would be material to the Company and its
subsidiaries taken as a whole.
(ix) Assuming due authorization, execution and delivery by
the Depositary, the Deposit Agreement constitutes a valid and
binding agreement, enforceable in accordance with its terms subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws
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relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and by an implied covenant of good faith
and fair dealing.
(x) The Registrations Statement has become effective under
the Securities Act, and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose is pending or threatened by the Commission.
(xi) The Registration Statement, the Final Prospectus and
each amendment thereof or supplement thereto (except that no opinion
need be expressed as to the financial statements or other financial
or statistical data included or incorporated by reference therein)
comply as to form in all material respects with the requirements of
the Securities Act and the Rules.
(xii) If the Shares or the Depositary Shares, as the case may
be, are to be listed on the NYSE, authorization therefor has been
given, subject to official notice of issuance and evidence of
satisfactory distribution, or the Company has filed a preliminary
listing application and all required supporting documents with
respect to the Shares or the Depositary Shares, as the case may be,
with the NYSE, and such counsel has no reason to believe that the
Shares or the Depositary Shares, as the case may be, will not be
authorized for listing, subject to official notice of issuance and
evidence of satisfactory distribution.
(xiii) Each of the Named Subsidiaries is a duly organized and
validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate power
and authority to own and operate its properties and to conduct its
business as described in the Final Prospectus. Each of the Company
and its Named Subsidiaries is duly qualified to do business as a
foreign corporation, is in good standing and is duly registered as a
broker-dealer, broker, dealer or investment advisor, as the case may
be, in each jurisdiction in which the nature of the business
conducted by it or in which the ownership or holding by lease of the
properties owned or held by it require such qualification or
registration and where the failure to so qualify or register would
have a material adverse effect on the Company and its subsidiaries
taken as a whole.
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(xiv) All the outstanding shares of capital stock of each of
the Company's Named Subsidiaries have been duly and validly
authorized and issued and are fully paid and non-assessable and,
except for directors' qualifying shares, are owned by the Company or
a subsidiary of the Company free and clear of any claims, liens,
encumbrances and security interests.
(xv) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company
or any of its subsidiaries which would affect the subject matter
of this Agreement or the Deposit Agreement or is required to be
disclosed in the Final Prospectus which is not disclosed and
correctly summarized therein.
Such opinion shall also contain a statement that although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Final Prospectus (except as to those matters
stated in paragraph (ii) of such opinion), such counsel has no reason to
believe that (i) the Registration Statement, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or (ii) the Final Prospectus contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that no
opinion need be expressed as to the financial statements or other financial
or statistical data included or incorporated by reference therein).
In rendering such opinion, such counsel may rely upon opinions of
local counsel satisfactory to the Representatives for matters not governed by
New York law and may rely as to matters of fact, to the extent such counsel
deems proper, upon certificates or affidavits of officers of the Company and
public officials.
(e) The Representatives shall have received from Underwriters'
Counsel such opinion or opinions, dated the day of such Delivery Date, with
respect to the issuance and sale of the Shares and the Depositary Shares, the
Depositary Agreement, the Registration Statement, the Final Prospectus and
other related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(f) You shall have received an opinion of _________, counsel for
the Depositary, dated the day of such Delivery Date, to the effect that:
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(i) The Deposit Agreement has been duly authorized, executed and
delivered by the Depositary and is a valid and binding agreement of the
Depositary; and
(ii) The Depositary Receipts, when issued in accordance with the
provisions of the Deposit Agreement against the deposit of duly and
validly authorized and issued, fully paid and non-assessable Shares, will
be validly issued and will entitle the holders thereof to the rights
specified therein and in the Deposit Agreement.
(g) The Company shall have furnished to the Representatives a
certificate of its Chief Executive Officer, its President or any Managing
Director or Vice President and its Chief Financial Officer or its Treasurer,
dated the day of each Delivery Date, to the effect that, to the best of their
knowledge after due inquiry:
(i) The representations and warranties of the Company in
this Agreement are true and correct in all material respects on and
as of such Delivery Date with the same effect as if made on such
Delivery Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Delivery Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened.
(iii) (x) The Registration Statement does not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, (y) the Final Prospectus does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (z) since the effective
date of the Registration Statement there has not occurred any event
required to be set forth in an amended or supplemented prospectus
which has not been so set forth.
(h) At each Delivery Date, a nationally recognized firm of
independent public accountants shall have furnished to the Representatives a
letter, dated the day of such Delivery Date, in form and substance
satisfactory to the Representatives, confirming that they are independent
auditors with respect to the Company within the meaning of the Securities Act
and stating in effect that:
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(i) In their opinion, the consolidated financial statements
of the Company and its subsidiaries, and the supporting schedules,
included in the Registration Statement and the Final Prospectus and
audited by them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder.
(ii) On the basis of a reading of the unaudited consolidated
financial statements of the Company and its subsidiaries, if any,
included in the Registration Statement and the Final Prospectus and
of the latest unaudited consolidated financial statements made
available by the Company and Lehman, carrying out certain specified
procedures (but not an audit in accordance with generally accepted
auditing standards), a reading of the minutes of the meetings of the
directors of the Company and Lehman, and inquiries of certain
officials of the Company and its subsidiaries, who have responsibility
for financial and accounting matters of the Company and its
subsidiaries, as to transactions and events subsequent to the date of
the most recent audited consolidated financial statements included in
the Registration Statement and the Final Prospectus, nothing came to
their attention that caused them to believe that:
(A) any material modifications should be made to the
unaudited consolidated financial statements of the Company and its
subsidiaries, if any, included in the Registration Statement and the
Final Prospectus for them to be in conformity with generally accepted
accounting principles; and such financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the published instructions,
rules and regulations thereunder.
(B) the unaudited capsule information of the Company and its
subsidiaries, if any, included in the Registration Statement and the
Final Prospectus does not agree with the amounts set forth in the
unaudited consolidated financial statements of the Company from
which it was derived or was not determined on a basis substantially
consistent with that of the corresponding financial information in
the latest audited financial statements of the Company included in
the Registration Statement and the Final Prospectus.
(C)(I) as of the latest date as of which the Company and its
subsidiaries have monthly financial statements, there was any
decrease in the capital stock, additional paid-in capital or
retained earnings,
17
<PAGE>
or increase in long-term indebtedness of the Company and its
subsidiaries, as compared with the amounts shown in the most recent
consolidated statement of financial condition of the Company and its
subsidiaries included in the Registration Statement and the Final
Prospectus, (II) with respect to the period subsequent to the date
of the most recent financial statements included in the Registration
Statement and the Final Prospectus and extending through the latest
date as of which the Company and its subsidiaries have monthly
financial statements, there was a consolidated net loss or (III)
with respect to the amounts of net capital or excess net capital of
Lehman determined pursuant to Commission Rule 15c3-1 and shown in
the most recent financial statement of Lehman filed pursuant to
Commission Rule 17a-5, there has been any decrease in such amounts
as compared with the amounts shown in the most recent consolidated
financial statements included in the Registration Statement and the
Final Prospectus;
(D) as of a specified date not more than three business
days prior to the date of the letter, there was any decrease in
the capital stock or additional paid-in capital, or increase in
long-term indebtedness of the Company and its subsidiaries, as
compared with the amounts shown in the most recent consolidated
statement of financial condition of the Company and its
subsidiaries included in the Registration Statement and the Final
Prospectus;
except in all instances for increase or decreases set forth in such letter,
in which case the letter shall be accompanied by an explanation by the
Company as to the significance thereof, unless said explanation is not deemed
necessary by the Representatives.
(iii) If pro forma financial statements are included in the
Registration Statement or the Final Prospectus, (x) they have read such
pro forma financial statements, (y) they have made inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company as to the basis for their determination
of the pro forma adjustments and whether such pro forma financial
statements comply as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X and (z) they have
proved in the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts; and as a result thereof, nothing
came to their attention that caused them to believe that such pro forma
financial statements do not so comply with Rule 11-02 of Regulation S-X and
that such pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements.
18
<PAGE>
(iv) They have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is expressed in dollars, or
percentages derived from dollar amounts, and has been obtained from the
general accounting records of the Company) set forth in the Registration
Statement, as amended, and the Final Prospectus, as amended or
supplemented, and in Exhibit 12 to the Registration Statement, including
specified information, if any, included or incorporated from the Company's
Annual Report on Form 10-K incorporated therein or specified information,
if any, included or incorporated from any of the Company's Quarterly
Reports on Form 10-Q or its Current Reports on Form 8-K incorporated
therein, agrees with the accounting records of the Company and its
subsidiaries or computations made therefrom, excluding any questions of
legal interpretation.
(i) Subsequent to the execution of this Agreement, there shall not
have been any decrease in the ratings of any of the Company's debt securities
by Moody's Investors Service, Inc. or Standard & Poor's Corporation.
Prior to each Delivery Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives or Underwriters' Counsel may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates or opinions furnished to the Representatives or Underwriters'
Counsel pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and to
Underwriters' Counsel, this Agreement and all obligations of the Underwriters
hereunder may be cancelled at, or at any time prior to, each Delivery Date by
the Representatives. Notice of such cancellation shall be given to the
Company in writing, or by telegraph confirmed in writing.
7. EXPENSES. (a) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company will
pay all costs and expenses incident to the performance of the obligations of
the Company hereunder, including, without limiting the generality of the
foregoing, all costs, taxes and expenses incident to the issuance, sale and
delivery of the Shares to the Underwriters, all fees and expenses of the
Company's counsel and accountants, all costs and expenses incident to the
preparing, printing and filing of the Registration Statement (including all
exhibits thereto), any Interim Prospectus, the Basic Prospectus, the Final
Prospectus and any amendments thereof or supplements thereto, and the rating
of the Shares or the Depositary Shares by one or more
19
<PAGE>
rating agencies, all costs and expenses (including fees of Underwriters'
Counsel and their disbursements) incurred in connection with blue sky
qualifications, advising on the legality of the Shares or the Depositary
Shares for investment, the filing requirements, if any, of the National
Association of Securities Dealers, Inc. in connection with its review of
corporate financings, the fee for listing the Shares or the Depositary Shares
on the NYSE, all fees of the Depositary, for all taxes in connection with the
deposit of the Shares with the Depositary and the issuance of the Depositary
Receipts as provided in Section 3 hereof and all costs and expenses of the
printing and distribution of all documents in connection with such offering.
Except as provided in this Section 7, the Company will have no responsibility
to the Underwriters for the Underwriters' own costs and expenses, including
the fees of Underwriters' Counsel and any advertising expenses in connection
with any offer the Underwriters may make.
(b) If the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied or because of any refusal,
inability or failure on the part of the Company to perform any agreement
herein or comply with any provision hereof, the Company will, subject to
demand by the Representatives, reimburse the Underwriters for all
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Shares.
8. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person who controls such Underwriter
within the meaning of the Securities Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, as
originally filed or in any amendment thereof, or in any Interim Prospectus,
the Basic Prospectus or the Final Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i)
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written
20
<PAGE>
information furnished to the Company as herein stated by the Representatives
on behalf of any Underwriter specifically for use in connection with the
preparation thereof, and (ii) such indemnity with respect to the Basic
Prospectus or any Interim Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Depositary
Shares which is the subject thereof if such person did not receive a copy of
the Final Prospectus at or prior to the confirmation of the sale of such
Depositary Shares to such person in any case where such delivery is required
by the Securities Act and the untrue statement or omission of a material fact
contained in the Basic Prospectus or any Interim Prospectus was corrected in
the Final Prospectus, unless such failure to deliver the Final Prospectus was
a result of noncompliance by the Company with Section 5(d) hereof. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person, if any, who controls the Company
within the meaning of the Securities Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Basic Prospectus, any Interim Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that the same
was made therein in reliance upon and in conformity with written information
furnished to the Company as herein stated by the Representatives on behalf of
such Underwriter specifically for use in the preparation thereof, and agrees
to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have.
The statements set forth in the last paragraph of the cover page and under
the heading "Underwriting" in the Final Prospectus constitute the only
information furnished in writing by or on behalf of the several Underwriters
for inclusion in the Registration Statement and the Final Prospectus, as the
case may be, and you, as the Representatives, confirm that such statements
are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action,
21
<PAGE>
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 8. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent that it may elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
party and the indemnifying party and either (i) the indemnifying party or
parties and the indemnified party or parties mutually agree or (ii)
representation of both the indemnifying party or parties and the indemnified
party or parties by the same counsel is inappropriate under applicable
standards of professional conduct due to actual or potential differing
interests between them, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Representatives in the case
of subparagraph (a) representing the indemnified parties under subparagraph
(a), as the case may be, who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subparagraph (a)
of this Section 8 is due in accordance with its terms but is for any reason
held by a court to be unavailable from the Company on grounds of policy or
other similar grounds, the Company and the Underwriters shall contribute to
the aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating or
defending same) to
22
<PAGE>
which the Company and one or more of the Underwriters may be subject in such
proportion so that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discounts appearing on
the cover page of the Final Prospectus bear to the public offering prices
appearing thereon and the Company is responsible for the balance; provided,
however, that (i) in no case shall any Underwriter (except as may be provided
in any agreement among underwriters) be responsible for any amount in excess
of the underwriting discounts applicable to the Shares purchased by such
Underwriter hereunder and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(i) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person
who controls an Underwriter within the meaning of the Securities Act shall
have the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Securities Act or the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i)
and (ii) of this subparagraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution
may be made against another party or parties under this subparagraph (d),
notify such party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this subparagraph (d).
9. DEFAULT BY AN UNDERWRITER. If, on either Delivery Date, any one
or more Underwriters shall fail to purchase and pay for all of the Shares
agreed to be purchased by such Underwriter or Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions
which the number of Firm Shares set forth opposite their names in Schedule II
hereto bear to the aggregate number of Firm Shares set opposite the names of
the remaining Underwriters) the Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date; provided,
however, that in the event that the aggregate number of Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date shall exceed 10% of the aggregate number of the Shares, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Shares, and if such
non-defaulting Underwriters do not purchase all the Shares, this Agreement
(or, with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option Shares) will
terminate without liability to any
23
<PAGE>
non-defaulting Underwriters or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the particular Delivery Date
shall be postponed for such period, not exceeding seven days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the Final Prospectus or in any other documents or
arrangements may be effected. Nothing herein contained shall relieve any
defaulting Underwriter of its liability, if any, to the Company and any
non-defaulting Underwriter for damages occasioned by its default hereunder.
10. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the
Company at or prior to delivery of and payment for all the Firm Shares, if,
prior to such time (i) trading in securities generally on the NYSE or the
over-the-counter market shall have been suspended or limited or minimum
prices shall have been established on the NYSE or the over-the-counter
market, (ii) a banking moratorium shall have been declared either by federal
or New York State authorities, (iii) any new restriction materially affecting
the distribution of the Shares shall have become effective or trading in any
securities of the Company shall have been suspended or halted by any national
securities exchange, the National Association of Securities Dealers, Inc. or
the Commission, (iv) the United States becomes engaged in hostilities or
there is an escalation in hostilities involving the United States or there is
a declaration of a national emergency or war by the United States, or (v)
there shall have been such a material adverse change in national or
international political, financial or economic conditions, national or
international equity markets or currency exchange rates or controls as to
make it, in the judgment of the Representatives, inadvisable or impracticable
to proceed with the payment for and delivery of the Shares.
11. REPRESENTATION AND INDEMNITIES TO SURVIVE DELIVERY. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers (as such officers) and of the
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of its officers or directors or any
controlling person within the meaning of the Securities Act, and will survive
delivery of the payment for the Shares.
12. NOTICES. All communications hereunder will be in writing, and,
if sent to the Representatives will be mailed, delivered, telegraphed or
telexed and confirmed to them, at the address specified in Schedule I hereto;
or, if sent to the Company will be mailed, delivered, telegraphed or telexed
and confirmed to it at 3 World Financial Center, New York, New York 10285,
Attention: Chief Financial Officer.
24
<PAGE>
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their successors and, to the extent and
only to the extent stated in Section 8 hereof, the officers and directors and
controlling persons referred to in Section 8 hereof, and except as provided
in Section 8 hereof, no person other than the parties hereto and their
respective successors will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
LEHMAN BROTHERS HOLDINGS INC.
By:______________________________
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
By:
_____________________________
Title:
Acting on behalf of the Representatives
named in Schedule I annexed hereto and
the several Underwriters named in
Schedule II annexed hereto.
25
<PAGE>
SCHEDULE I
Date of Underwriting Agreement:
Registration Statement No. 333-
Representative and Address: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Description of Shares:
Title:
Number of shares of Firm Shares: _________shares
Maximum number of shares of Option Shares: _________shares
Price per share: $
Time of payment of dividends:
Sinking fund provisions:
Redemption provisions:
Repayment provisions:
Other provisions:
Listing:
Depositary Shares Each Representing One - _________ of a Share of _________.
Price to Public:
First Delivery Date, Time and Location:
Date:
Time:
Location:
<PAGE>
SCHEDULE II
NUMBER DEPOSITARY
OF FIRM SHARES IN
SHARES TO BE RESPECT OF SUCH
PURCHASED FIRM SHARES
------------ ---------------
UNDERWRITERS
Lehman Brothers Inc.................................
<PAGE>
[THIS EXHIBIT 1(d) IS THE FORM OF UNDERWRITING AGREEMENT TO BE USED BY EACH OF
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST I, LEHMAN BROTHERS HOLDINGS CAPITAL TRUST
II AND LEHMAN BROTHERS HOLDINGS CAPITAL TRUST III IN CONNECTION WITH THEIR
ISSUANCE AND SALE OF PREFERRED SECURITIES]
EXHIBIT 1(d)
PREFERRED SECURITIES
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST __
UNDERWRITING AGREEMENT
New York, New York
Dated the date set forth
In Schedule I hereto
To the Representative(s)
named in Schedule I
hereto, of the Underwriters
named in Schedule II hereto
Ladies and Gentlemen:
Lehman Brothers Holdings Capital Trust ____, a Delaware statutory
business trust (the "Trust"), proposes to issue and sell to you and the other
underwriters named in Schedule II hereto (the "Underwriters"), for whom you are
acting as representatives (the "Representatives"), the aggregate liquidation
amount (the "Firm Securities") identified in Schedule I hereto of the Trust's
preferred securities (the "Preferred Securities") guaranteed (the "Guarantee";
together with the Preferred Securities, the "Securities") by the Company (as
defined herein) to the extent set forth in the Guarantee Agreement (the
"Guarantee Agreement") identified in such Schedule I, to be entered into between
the Company and the guarantee trustee (the "Guarantee Trustee") identified
therein. In addition, the Trust proposes to grant to the Underwriters an option
to purchase up to an additional aggregate liquidation amount of the Preferred
Securities identified in Schedule I hereto on the terms and for the purposes set
forth in Section 3 hereof (the "Option Securities"). The Firm Securities and the
Option Securities, if purchased, are hereinafter collectively called "Preferred
Securities". Lehman Brothers Holdings Inc., a Delaware corporation (the
"Company"), will be the owner of all of the beneficial ownership interests
represented by common securities (the "Common Securities") of the Trust.
Concurrently with the issuance of the Securities and the Company's purchase of
all of the Common Securities of the Trust, the Trust will invest the proceeds of
each in the Company's debt securities identified in Schedule I hereto (the
"Debentures"). The Debentures are to be issued under the indenture (the
"Indenture") identified in such Schedule I, between the Company and the
indenture trustee (the "Indenture Trustee") identified therein. If the firm or
firms listed in Schedule II hereto include only the firm or firms listed in
Schedule I hereto, then the terms "Underwriters" and "Representatives" shall
each be deemed to refer to such firm or firms.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to each Underwriter that:
<PAGE>
(a) The Company meets the requirements for the use of Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations promulgated thereunder (the "Rules"), and has
carefully prepared and filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (the file number
of which is set forth in Schedule I hereto), which has become effective,
for the registration of the Securities under the Securities Act. The
registration statement, as amended at the date of this Agreement, meets
the requirements set forth in Rule 415(a)(1)(x) under the Securities Act
and complies in all other material respects with such rule. The Company
proposes to file with the Commission pursuant to Rule 424 under the
Securities Act ("Rule 424") a supplement to the form of prospectus
included in the registration statement relating to the initial offering of
the Securities and the plan of distribution thereof and has previously
advised you of all further information (financial and other) with respect
to the Company to be set forth therein. The term "Registration Statement"
means the registration statement, as amended at the date of this
Agreement, including the exhibits thereto, financial statements, and all
documents incorporated therein by reference pursuant to Item 12 of Form
S-3 (the "Incorporated Documents"), and such prospectus as then amended,
including the Incorporated Documents, is hereinafter referred to as the
"Basic Prospectus"; and such supplemented form of prospectus, in the form
in which it shall be filed with the Commission pursuant to Rule 424
(including the Basic Prospectus as so supplemented), is hereinafter called
the "Final Prospectus". Any preliminary form of the Basic Prospectus which
has heretofore been filed pursuant to Rule 424 is hereinafter called the
"Interim Prospectus". Any reference herein to the Registration Statement,
the Basic Prospectus, any Interim Prospectus or the Final Prospectus shall
be deemed to refer to and include the Incorporated Documents which were
filed under the Securities Exchange Act of 1934 (the "Exchange Act"), on
or before the date of this Agreement or the issue date of the Basic
Prospectus, any Interim Prospectus or the Final Prospectus, as the case
may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Basic
Prospectus, any Interim Prospectus or the Final Prospectus shall be deemed
to refer to and include the filing of any Incorporated Documents under the
Exchange Act after the date of this Agreement or the issue date of the
Basic Prospectus, any Interim Prospectus or the Final Prospectus, as the
case may be, and deemed to be incorporated therein by reference.
(b) As of the date hereof, when the Final Prospectus is first
filed with the Commission pursuant to Rule 424, when, before either
Closing Date (hereinafter defined), any amendment to the Registration
Statement becomes effective, when, before either Closing Date, any
Incorporated Document is filed with the Commission, when any supplement to
the Final Prospectus is filed with the Commission and at each Closing
Date, the Registration Statement, the Final
<PAGE>
3
Prospectus and any such amendment or supplement will comply in all
material respects with the applicable requirements of the Securities Act
and the Rules, and the Incorporated Documents will comply in all material
respects with the requirements of the Exchange Act or the Securities Act,
as applicable, and the rules and regulations adopted by the Commission
thereunder; on the date hereof and on each Closing Date, the Indenture
shall have been qualified under and will comply in all material respects
with the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"); on the date it became effective, the Registration Statement did
not, and, on the date that any post-effective amendment to the
Registration Statement becomes effective, the Registration Statement as
amended by such post-effective amendment did not or will not, as the case
may be, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; on the date the Final Prospectus is
filed with the Commission pursuant to Rule 424 and on each Closing Date,
the Final Prospectus, as it may be amended or supplemented, will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading; and on said
dates, the Incorporated Documents will comply in all material respects
with the applicable provisions of the Exchange Act and rules and
regulations of the Commission thereunder, and, when read together with the
Final Prospectus, or the Final Prospectus as it may be then amended or
supplemented, will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they are made, not misleading; PROVIDED THAT the foregoing representations
and warranties in this paragraph (b) shall not apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company by or through the Representatives on behalf of
any Underwriter specifically for use in connection with the preparation of
the Registration Statement or the Final Prospectus, as they may be amended
or supplemented, or to any statements in or omissions from the statements
of eligibility and qualification on Form T-1 of the Indenture Trustee, the
Property Trustee (the "Property Trustee") identified in Schedule I hereto
and the Guarantee Trustee under the Trust Indenture Act (the "Forms T-1").
(c) The Basic Prospectus and any Interim Prospectus, as of
their respective dates, complied in all material respects with the
requirements of the Securities Act and of the Rules and did not include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
<PAGE>
4
circumstances under which they were made, not misleading. The Commission
has not issued an order preventing or suspending the use of the Basic
Prospectus or any Interim Prospectus.
(d) The nationally recognized firm of independent public
accountants whose report appears in the Company's most recent Annual
Report on Form 10-K, which is incorporated by reference in the Final
Prospectus, are independent public accountants as required by the
Securities Act and the Rules.
(e) In the event that a report of a nationally recognized firm
of independent public accountants regarding historical financial
information with respect to any entity acquired by the Company is required
to be incorporated by reference in the Final Prospectus, such independent
public accountants were independent public accountants, as required by the
Securities Act and the Rules, during the period of their engagement to
examine the financial statements being reported on and at the date of
their report.
(f) The audited consolidated financial statements of the
Company in the Final Prospectus and the Registration Statement present
fairly on a consolidated basis the financial position, the results of
operations, changes in common stock and other stockholder's equity and
cash flows of the Company and its subsidiaries, as of the respective dates
and for the respective periods indicated, all in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved. The unaudited consolidated financial statements of
the Company, if any, included in the Final Prospectus and the Registration
Statement and the related notes are true, complete and correct, subject to
normally recurring changes resulting from year-end audit adjustments, and
have been prepared in accordance with the instructions to Form 10-Q.
(g) Except as described in or contemplated by the Registration
Statement and the Final Prospectus, there has not been any material
adverse change in or any adverse development which materially affects the
business, properties, financial condition or results of the Company or the
Company and its subsidiaries taken as whole, from the dates as of which
information is given in the Registration Statement and Final Prospectus.
(h) This Agreement has been duly and validly authorized,
executed and delivered by the Company; the Guarantee Agreement has been
duly and validly authorized by the Company and, when duly executed and
delivered by the proper officers of the Company (assuming due execution
and delivery by the Guarantee Trustee) will constitute a valid and legally
binding agreement of the Company enforceable
<PAGE>
5
against the Company in accordance with its terms; the Indenture has been
duly and validly authorized, executed and delivered by the Company and
(assuming due execution and delivery by the Indenture Trustee) constitutes
a valid and legally binding agreement of the Company, enforceable against
the Company in accordance with its terms; and the Debentures have been
duly and validly authorized, and, when validly authenticated, issued and
delivered in accordance with the Indenture against payment of the purchase
price therefor as provided in this Agreement, will be validly issued and
outstanding obligations of the Company entitled to the benefits of the
Indenture; and the Debentures and the Guarantee, when issued and
delivered, will conform to the descriptions thereof contained in the Final
Prospectus.
(i) The Company does not have any subsidiaries having business
or properties that are material to the business and properties of the
Company and its subsidiaries taken as a whole with the exception of Lehman
Brothers Inc. ("Lehman") and the possible exception of Lehman Commercial
Paper Inc. (the "Named Subsidiaries"). Neither the Company nor either of
the Named Subsidiaries is in violation of its corporate charter or by-laws
or in default under any agreement, indenture or instrument, the effect of
which violation or default would be material to the Company and its
subsidiaries taken as a whole. The execution, delivery and performance of
this Agreement, the Guarantee Agreement, the Indenture and the Debentures
by the Company, the purchase of the Common Securities by the Company from
the Trust, and the consummation by the Company of the transactions
contemplated hereby (the "Company Transactions") will not violate, result
in the creation or imposition of any material lien, charge or encumbrance
upon any of the assets of the Company or any of its subsidiaries pursuant
to the terms of, or constitute a default under, any material agreement,
indenture or instrument, or result in a violation of the corporate charter
or by-laws of the Company or any of its subsidiaries or any order, rule or
regulation of any court or governmental agency having jurisdiction over
the Company, the Named Subsidiaries or their property. Except as set forth
in the Final Prospectus or as required by the Securities Act, the Exchange
Act, the Trust Indenture Act and applicable state securities laws, no
consent, authorization or order of, or filing or registration with, any
court or governmental agency is required for the Company Transactions.
(j) The Company and the Named Subsidiaries have been duly
organized, are validly existing and in good standing under the laws of
their respective jurisdictions of incorporation, are duly qualified to do
business and in good standing as foreign corporations and are fully
registered as a broker-dealer, broker, dealer or investment advisor, as
the case may be, in each jurisdiction in which their
<PAGE>
6
respective ownership of property or the conduct of their respective
businesses requires such qualification or registration and in which the
failure to qualify or register would be reasonably likely, individually or
in the aggregate, to have a material adverse effect on the business,
condition or properties of the Company and its subsidiaries taken as a
whole. Each of the Company and its Named Subsidiaries holds all material
licenses, permits, and certificates from governmental authorities
necessary for the conduct of its business and owns, or possesses adequate
rights to use, all material rights necessary for the conduct of such
business and has not received any notice of conflict with the asserted
rights of others in respect thereof; and each of the Company and its Named
Subsidiaries has the corporate power and authority necessary to own or
hold its properties and to conduct the businesses in which it is engaged.
Except as may be disclosed in the Registration Statement and the Final
Prospectus, all outstanding shares of capital stock of the Named
Subsidiaries are owned by the Company, directly or indirectly through
subsidiaries, free and clear of any lien, pledge and encumbrance or any
claim of any third party and are duly authorized, validly issued and
outstanding, fully paid and non-assessable.
(k) Except as described in the Registration Statement and the
Final Prospectus, there is no material litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries which might reasonably be expected
to result in any material adverse change in the business, properties,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole or which is required to be disclosed in the
Registration Statement and the Final Prospectus.
(l) The certificates delivered pursuant to paragraph (h) of
Section 7 hereof and all other documents delivered by the Company or its
representatives in connection with the issuance and sale of the Securities
were on the dates on which they were delivered, or will be on the dates on
which they are to be delivered, in all material respects true and
complete.
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
COMPANY AND THE TRUST. The Company and the Trust, jointly and severally,
represent, warrant and agree that:
(a) The Trust has been duly created, is validly existing as a
statutory business trust and in good standing under the Business Trust Act
of the State of Delaware (the "Delaware Business Trust Act") with the
trust power and authority to own property and conduct its business as
described in the Registration Statement and the Final Prospectus, and has
conducted and will conduct no business
<PAGE>
7
other than the transactions contemplated by this Agreement as described in
the Registration Statement and the Final Prospectus; the Trust is not and
will not be a party to or bound by any agreement or instrument other than
this Agreement, the Declaration of Trust of the Trust identified in
Schedule I hereto, among the Company, as Sponsor, and the regular trustees
identified in Schedule I hereto (the "Regular Trustees"), the Property
Trustee and the Delaware Trustee identified in Schedule I hereto (the
"Delaware Trustee" and, together with the Regular Trustees and the
Property Trustee, the "Trustees"), and the Amended and Restated
Declaration of Trust of the Trust (the "Declaration") identified in
Schedule I hereto, among the Company, as Sponsor, and the Trustees; the
Trust has no and will not have any liabilities or obligations other than
those arising out of the transactions contemplated by this Agreement, such
Declaration of Trust and the Declaration and described in the Final
Prospectus; and the Trust is not a party to or subject to any action, suit
or proceeding of any nature.
(b) The Declaration is duly and validly authorized and, when
duly executed and delivered by the Company, as Sponsor, and the Trustees,
and (assuming due authorization, execution and delivery of the Declaration
by the Property Trustee and the Delaware Trustee), will constitute a valid
and legally binding agreement of the Company and the Trust, and will
conform to the description thereof contained in the Final Prospectus.
(c) All of the outstanding beneficial ownership interests in
the Trust have been, and the Preferred Securities and the Common
Securities, upon issuance and delivery and payment therefor in the manner
described herein, will be, duly authorized, validly issued and
outstanding, fully paid and non-assessable and will conform to the
descriptions of the Preferred Securities and the Common Securities
contained in the Final Prospectus.
(d) This Agreement has been duly and validly authorized,
executed and delivered by the Trust.
(e) The execution, delivery and performance of this
Agreement, the Declaration, the Common Securities and the Preferred
Securities by the Trust, the purchase of the Debentures by the Trust from
the Company, the distribution of the Debentures upon the liquidation of
the Trust in the circumstances contemplated by the Declaration and
described in the Final Prospectus, and the consummation by the Trust of
the transactions contemplated hereby and by the Declaration (the "Trust
Transactions") will not result in a violation of any order, rule or
regulation of any court or governmental agency having jurisdiction over
the Trust or its property. Except as set forth in the Final Prospectus
<PAGE>
8
or as required by the Securities Act, the Exchange Act, the Trust
Indenture Act and applicable state securities laws, no consent,
authorization or order of, or filing or registration with, any court or
governmental agency is required for the Trust Transactions.
(f) The Trust is not required to be registered as an
"investment company" under the Investment Company Act of 1940, as
amended.
3. SALE AND PURCHASE OF THE PREFERRED SECURITIES.
(a) The Trust agrees to sell to each Underwriter, and each
Underwriter, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions
herein stated, agrees to purchase from the Trust, at a purchase price
equal to 100% of the liquidation amount of the Preferred Securities, the
aggregate liquidation amount of Firm Securities set forth opposite the
name of such Underwriter in Schedule II hereto. The obligations of the
Underwriters under this Agreement are several and not joint.
(b) In addition, the Trust grants to the Underwriters an
option to purchase from the Trust, at a purchase price equal to 100% of
the liquidation amount of the Preferred Securities, up to an additional
aggregate liquidation amount of Option Securities indicated in Schedule I
hereto. Such option is granted solely for the purpose of covering
over-allotments in the sale of Firm Securities and is exercisable as
provided in Section 4 hereof. Option Securities shall be purchased
severally for the account of the Underwriters in proportion to the
liquidation amounts of Firm Securities set forth opposite the name of such
Underwriters in Schedule II hereto. The respective purchase obligations of
each Underwriter with respect to the Option Securities shall be adjusted
by the Representatives so that no Underwriter shall be obligated to
purchase Option Securities other than in a liquidation amount of $1,000 or
an integral multiple thereof.
(c) As compensation to the Underwriters, the Company shall, on
the First Closing Date and the Second Closing Date (as defined in Section
4 hereof) pay to the Representatives for the accounts of the several
Underwriters a commission equal to __% of the aggregate liquidation amount
of the Preferred Securities sold by the Trust on such Closing Date.
4. DELIVERY AND PAYMENT. (a) Delivery by the Trust of the Firm
Securities to the Representatives for the respective accounts of the several
Underwriters and payment by the Underwriters therefor by wire transfer in
federal (same day) funds to such account as the Company shall specify on behalf
of the Trust, shall take place at the office, on the date and at the
<PAGE>
9
time specified in Schedule I hereto, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
10 hereof (such date and time of delivery and payment for the Firm Securities
being herein called the "First Closing Date").
(b) The Firm Securities will be in the form of one or more global
Firm Securities registered in the name of Cede & Co., as nominee of the
Depository Trust Company ("DTC").
(c) At any time on or before the thirtieth day after the date
hereof, the option granted in Section 3 may be exercised by written notice being
given to the Trust by the Representatives. Such notice shall set forth the
aggregate liquidation amount of Option Securities as to which the option is
being exercised and the date and time, as determined by the Representatives,
when the Option Securities are to be delivered; PROVIDED, HOWEVER, that this
date and time shall not be earlier than the First Closing Date nor earlier than
the third business day after the date on which the option shall have been
exercised nor later than the fifth business day after the date on which the
option shall have been exercised. The date and time the Option Securities are
delivered are sometimes referred to as the "Second Closing Date" and the First
Closing Date and the Second Closing Date are sometimes referred to as a "Closing
Date".
(d) Delivery by the Trust of the Option Securities to the
Representatives for the respective accounts of the several Underwriters and
payment by the Underwriters therefor by wire transfer in federal (same day)
funds to such account as the Company will specify on behalf of the Trust, shall
take place at the office and at the time agreed to in advance by the
Underwriters and the Company, on the Second Closing Date, which date and time
may be postponed by agreement between the Representatives and the Company or as
provided in Section 10 hereof.
(e) The Option Securities will be in the form of one or more global
Option Securities registered in the name of Cede & Co., as nominee of DTC.
(f) On the First Closing Date and the Second Closing Date, the
Company shall pay, or cause to be paid, the commission payable on such Closing
Date to the Representatives for the accounts of the Underwriters under Section 3
by wire transfer in federal (same day) funds to such account as the
Representatives shall specify.
5. OFFERING BY UNDERWRITERS. The Company and the Trust hereby
confirm that the Underwriters and dealers have been authorized to distribute or
cause to be distributed any Interim Prospectus and are authorized to distribute
the Final Prospectus (as from time to time amended or supplemented if the
Company
<PAGE>
10
furnishes amendments or supplements thereto to the Underwriters). The
Representatives agree that, as soon as the Representatives believe the offering
of the Preferred Securities has been terminated, the Representatives will so
advise the Company and the Trust.
6. AGREEMENTS. Each of the Company and the Trust
agrees with the several Underwriters:
(a) To cause the Final Prospectus to be filed with the
Commission pursuant to Rule 424 as required thereby and promptly to advise
the Representatives when (A) the Final Prospectus shall have been filed
with the Commission pursuant to Rule 424, (B) when any amendment to the
Registration Statement relating to the Securities shall have become
effective, (C) of any request by the Commission for any amendment of the
Registration Statement, the Final Prospectus, the Basic Prospectus or any
Interim Prospectus, or for any additional information, (D) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the qualification of the Declaration, the
Guarantee Agreement or the Indenture or the institution or threatening of
any proceedings for that purpose and (E) of the receipt by the Company or
the Trust of any notification with respect to the suspension of the
qualification of the Securities or the Debentures for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; after the date of this Agreement and prior to the termination of
the offering of these Preferred Securities, not to file any amendment of
the Registration Statement or amendment or supplement to the Final
Prospectus (except an amendment or supplement to the Final Prospectus that
is deemed to be incorporated by reference in the Final Prospectus pursuant
to Item 12 of Form S-3) without the consent of the Representatives and to
use its best efforts to prevent the issuance of any such stop order and,
if issued, to obtain as soon as possible the withdrawal thereof; prior to
receipt of the advice to be given by the Representatives pursuant to
Section 5, not to file any document that would be deemed to be
incorporated by reference in the Final Prospectus pursuant to Item 12 of
Form S-3 without delivering to the Representatives a copy of the document
proposed to be so filed, such delivery to be made at least twenty-four
hours prior to such filing, and to consult with the Representatives as to
any comments which the Representatives make in a timely manner with
respect to the document so delivered.
(b) Subject to the last sentence of the immediately preceding
paragraph, if, at any time when a prospectus relating to the Securities is
required to be delivered under the Securities Act, any event occurs as a
result of which the Final Prospectus as then amended or supplemented would
<PAGE>
11
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it shall be necessary at any time to amend or supplement the Final
Prospectus to comply with the Securities Act or the Rules, to promptly
prepare and file with the Commission an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance and to use its best efforts to cause any amendment of the
Registration Statement containing an amended Final Prospectus to be made
effective as soon as possible.
(c) To deliver to the Representatives, without charge, (i)
signed copies of the Registration Statement relating to the Securities
and of any amendments thereto (including all exhibits filed with, or
incorporated by reference in, any such document) and (ii) as many
conformed copies of the Registration Statement and of any amendments
thereto which shall become effective on or before each Closing Date
(excluding exhibits) as the Representatives may reasonably request.
(d) During such period as a prospectus is required by law to
be delivered by an Underwriter or dealer, to deliver, without charge to
the Representatives and to Underwriters and dealers, at such office or
offices as the Representatives may designate, as many copies of the Basic
Prospectus, any Interim Prospectus and the Final Prospectus as the
Representatives may reasonably request.
(e) To make generally available to the Company's security
holders and to the Representatives as soon as practicable an earnings
statement (which need not be audited) of the Company and its subsidiaries,
covering a period of at least 12 months beginning after the date the Final
Prospectus is filed with the Commission pursuant to Rule 424, which will
satisfy the provisions of Section 11(a) of the Securities Act.
(f) To furnish such information, execute such instruments and
take such actions as may be required to qualify the Securities and the
Debentures for offering and sale under the laws of such jurisdictions as
the Representatives may designate and to maintain such qualifications in
effect so long as required for the distribution of the Preferred
Securities; PROVIDED, HOWEVER, that neither the Company nor the Trust
shall be required to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action which would subject it to
general or unlimited service of process in any jurisdiction where it is
not now so subject.
<PAGE>
12
(g) So long as any Preferred Securities are outstanding, to
furnish or cause to be furnished to the Representatives copies of all
annual reports and current reports filed with the Commission on Forms
10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission.
(h) If the Company or the Trust has applied for the listing of
the Preferred Securities on the New York Stock Exchange Inc. (the "NYSE"),
to use its best efforts to cause such listing to be approved as soon as
possible.
(i) For a period beginning at the time of execution of this
Agreement and ending on the later of the business day following the First
Closing Date or following the date on which any price restrictions on the
sale of the Preferred Securities are terminated, without the prior consent
of the Representatives, not to offer, sell, contract to sell or otherwise
dispose of any preferred stock of the Company or any securities of any
business trust or other entity controlled by the Company substantially
similar to the Preferred Securities or any securities thereof convertible
into or exchangeable for or that represent the right to receive any such
securities.
(j) To use its best efforts to do and perform all things to be
done and performed hereunder prior to each Closing Date and to satisfy all
conditions precedent to the delivery of the Preferred Securities to be
purchased hereunder.
(k) To take such steps as shall be necessary to ensure that
neither the Company nor the Trust shall become subject to registration as
an "investment company" under the Investment Company Act of 1940, as
amended.
7. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Securities shall be subject to
the accuracy in all material respects of the representations and warranties on
the part of the Company and the Trust contained herein as of the date hereof and
each Closing Date, to the accuracy of any material statements made in any
certificates, opinions, affidavits, written statements or letters furnished to
the Representatives or to Simpson Thacher & Bartlett ("Underwriters' Counsel")
pursuant to this Section 7, to the performance by the Company and the Trust of
their respective obligations hereunder and to the following additional
conditions:
(a) The Final Prospectus shall have been filed with the
Commission pursuant to Rule 424 not later than 5:00 p.m., New York City
time, on the second business day following the date of this Agreement or
such later date and time as shall be consented to in writing by the
Representatives.
<PAGE>
13
(b) No order suspending the effectiveness of the Registration
Statement, as amended from time to time, or suspending the qualification
of the Declaration, the Guarantee Agreement or the Indenture, shall be in
effect and no proceedings for such purpose shall be pending before or
threatened by the Commission and any requests for additional information
on the part of the Commission (to be included in the Registration
Statement or the Final Prospectus or otherwise) shall have been complied
with to the reasonable satisfaction of the Representatives.
(c) Since the respective dates as of which information is
given in the Registration Statement and the Final Prospectus, there shall
not have been any change or decrease specified in the letter or letters
referred to in paragraphs (h) or (i) of this Section 7 which, in the
judgment of the Representatives, makes it impracticable or inadvisable to
proceed with the offering and delivery of the Preferred Securities as
contemplated by the Registration Statement and the Final Prospectus.
(d) The Company shall have furnished to the Representatives
the opinion of a Deputy General Counsel or the Chief Legal Officer for the
Company, dated the applicable Closing Date, to the effect that:
(i) The Company has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of
its incorporation with all requisite corporate power and authority
to own and operate its properties and to conduct its business as
described in the Final Prospectus.
(ii) The statements made in the Final Prospectus under
the captions "Description of Debentures", "The Trust", "Description
of Preferred Securities", "Description of Guarantee" and
"Relationship Among the Preferred Securities, the Debentures and
the Guarantee", insofar as such statements purport to constitute
summaries of the terms of the Preferred Securities, the
Debentures and the Guarantee, constitute accurate summaries of
the terms of the Preferred Securities, the Debentures and the
Guarantee in all material respects.
(iii) The Indenture has been duly authorized, executed
and delivered by the Company, has been duly qualified under the
Trust Indenture Act and constitutes a legal, valid and binding
instrument enforceable against the Company in accordance with its
terms; and the Debentures have been duly authorized, executed and
issued by the Company, and assuming due authentication by the
Indenture Trustee and upon payment and delivery in accordance with
this Agreement, will constitute
<PAGE>
14
legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture; and the Guarantee Agreement has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Guarantee Trustee, will
constitute a legal, valid and binding obligation of the Company;
provided however, that the foregoing is subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and by an implied
covenant of good faith and fair dealing.
(iv) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated by this Agreement,
except for (1) such consents, approvals, authorizations or orders as
have been obtained under the Securities Act and such as may be
required under the Exchange Act and the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters, and (2) the qualification of the
Indenture, the Declaration and the Guarantee Agreement under the
Trust Indenture Act, which has been obtained.
(v) Such counsel does not know of any contracts or
other documents which are required to be filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which
have not been filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules.
(vi) To the best of such counsel's knowledge, neither
the Company nor either of its Named Subsidiaries is in violation of
its corporate charter or by-laws, or in default under any material
agreement, indenture or instrument known to such counsel, the effect
of which violation or default would be material to the Company and
its subsidiaries taken as a whole.
(vii) This Agreement and the Declaration have been duly
authorized, executed and delivered by the Company; the execution,
delivery and performance of this Agreement, the Declaration, the
Indenture and the Guarantee Agreement (collectively the "Transaction
Documents") by the Company and the Trust will not conflict with, or
result in the creation or imposition of any material lien, charge or
encumbrance upon any of the assets of the Company or its Named
Subsidiaries pursuant to the terms of, or constitute a default
<PAGE>
15
under, any material agreement, indenture or instrument known to such
counsel and to which the Company or either of its Named Subsidiaries
is a party or is bound, or result in a violation of the corporate
charter or by-laws of the Company or either of its Named
Subsidiaries or any order, rule or regulation known to such counsel
of any court or governmental agency having jurisdiction over the
Company, its Named Subsidiaries or any of their respective
properties, the effect of which would be material to the Company and
its subsidiaries taken as a whole.
(viii) The Registration Statement has become effective under
the Securities Act, and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose is pending or threatened by the Commission.
(ix) The Registration Statement, the Final Prospectus and each
amendment thereof or supplement thereto (except that no opinion need
be expressed as to the financial statements or other financial or
statistical data or the Forms T-1 included or incorporated by
reference therein) comply as to form in all material respects with
the requirements of the Securities Act and the Rules.
(x) If the Preferred Securities are to be listed on the
NYSE, authorization therefor has been given, subject to official
notice of issuance and evidence of satisfactory distribution, or the
Company has filed a preliminary listing application and all required
supporting documents with respect to the Preferred Securities with
the NYSE, and such counsel has no reason to believe that the
Preferred Securities will not be authorized for listing, subject to
official notice of issuance and evidence of satisfactory
distribution.
(xi) Each of the Named Subsidiaries is a duly organized and
validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation with all requisite corporate power
and authority to own and operate its properties and to conduct its
business as described in the Final Prospectus. Each of the Company
and its Named Subsidiaries is duly qualified to do business as a
foreign corporation, is in good standing and is duly registered as a
broker-dealer, broker, dealer or investment advisor, as the case may
be, in each jurisdiction in which the nature of the business
conducted by it or in which the ownership or holding by lease of the
properties owned or held by it require
<PAGE>
16
such qualification or registration and where the failure to so
qualify or register would have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(xii) All the outstanding shares of capital stock of the
Company's Named Subsidiaries have been duly and validly authorized
and issued and are fully paid and non-assessable and, except for
directors' qualifying shares, are owned by the Company or a
subsidiary of the Company free and clear of any claims, liens,
encumbrances and security interests.
(xiii) Such counsel does not know of any litigation or any
governmental proceeding pending or threatened against the Company or
any of its subsidiaries which would affect the subject matter of
this Agreement or is required to be disclosed in the Final
Prospectus which is not disclosed and correctly summarized therein.
(xiv) To such counsel's knowledge, the Trust is not a party to
or otherwise bound by any agreement other than those described in
the Final Prospectus.
(xv) The Trust is not subject to registration as an
"investment company" under the Investment Company Act of 1940, as
amended.
Such opinion shall also contain a statement that although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Final Prospectus (except as to those matters
stated in paragraph (ii) of such opinion), such counsel has no reason to believe
that (i) the Registration Statement, as of its effective date, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading or (ii) the Final Prospectus contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (except that no opinion need be expressed
as to the financial statements or other financial or statistical data or the
Forms T-1 included or incorporated by reference therein).
In rendering such opinion, such counsel may rely upon opinions of
local counsel satisfactory to the Representatives for matters not governed by
New York law and may rely as to matters of fact, to the extent he or she deems
proper, upon certificates or affidavits of officers of the Company, the
Trustees, the Guarantee Trustee or the Indenture Trustee and public officials.
Such counsel may rely on a certificate of the Indenture Trustee
<PAGE>
17
and the Guarantee Trustee with respect to the execution of the Debentures and
the Guarantee, respectively, by the Company, the authentication of the
Debentures by the Indenture Trustee, and the execution of the Guarantee by the
Guarantee Trustee.
(e) Richards, Layton & Finger, special Delaware counsel for the
Company and the Trust, shall have furnished to the Representatives its
opinion, on certain matters of Delaware law relating to the validity of
the Preferred Securities, dated the applicable Closing Date, to the effect
that:
(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Trust Act with
the business trust power and authority to own property and to
conduct its business as described in the Final Prospectus and to
enter into and perform its obligations under each of this Agreement,
the Preferred Securities, the Common Securities and the Declaration;
the Trust is a party to this Agreement and the Declaration and, to
such counsel's knowledge, the Trust is not a party to or otherwise
bound by any agreement other than those described in the Final
Prospectus.
(ii) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the
Company against payment therefor as described in the Final
Prospectus, will be validly issued and (subject to the terms of the
Declaration) fully paid undivided beneficial ownership interests in
the assets of the Trust (such counsel may note that the holders of
Common Securities will be subject to the withholding provisions of
Section 10.4 of the Declaration, will be required to make payment or
provide indemnity or security as set forth in the Declaration and
will be liable for the debts and obligations of the Trust to the
extent provided in Section 9.1(b) of the Declaration); under the
Delaware Trust Act and the Declaration the issuance of the Common
Securities is not subject to preemptive or other similar rights.
(iii) The Preferred Securities have been duly authorized by
the Declaration and, when issued and delivered against payment of
the consideration as set forth in this Agreement, the Preferred
Securities will be validly issued and (subject to the terms of the
Declaration) fully paid and non-assessable undivided beneficial
ownership interests in the Trust, the holders of the Preferred
Securities will be entitled to the benefits of the Declaration
(subject to the limitations set forth in clause (v) below) and will
be entitled to the same limitation of personal liability
<PAGE>
18
under Delaware law as extended to stockholders of private
corporations for profit (such counsel may note that the holders of
Preferred Securities will be subject to the withholding provisions
of Section 10.4 of the Declaration and will be required to make
payment or provide indemnity or security as set forth in the
Declaration).
(iv) All necessary trust action has been taken to duly
authorize the execution and delivery by the Trust of this Agreement.
(v) Assuming the Declaration has been duly authorized by the
Company and has been duly executed and delivered by the Company and
the Regular Trustees, and assuming due authorization, execution and
delivery of the Declaration by the Property Trustee and the Delaware
Trustee, the Declaration constitutes a valid and binding obligation
of the Company and the Regular Trustees, enforceable against the
Company and the Regular Trustees in accordance with its terms;
provided however, that the foregoing is subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and by an implied
covenant of good faith and fair dealing.
(vi) The issuance and sale by the Trust of the Preferred
Securities, the purchase by the Trust of the Debentures, the
execution, delivery and performance by the Trust of this Agreement,
the consummation by the Trust of the transactions contemplated by
this Agreement and compliance by the Trust with its obligations
thereunder will not violate (i) any of the provisions of the
Certificate of Trust or the Declaration or (ii) any applicable
Delaware law or administrative regulation.
(vii) Assuming that the Trust derives no income from or
connected with services provided within the State of Delaware and
has no assets, activities (other than having a Delaware Trustee as
required by the Delaware Trust Act and the filing of documents with
the Secretary of State of Delaware) or employees in the State of
Delaware, no filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any
Delaware court or Delaware governmental authority or agency (other
that as may be required under the securities or blue sky laws of the
State of Delaware, as to which such counsel need express no opinion)
is necessary or required in connection with the due authorization,
execution and
<PAGE>
19
delivery of this Agreement or the offering, issuance, sale or
delivery of the Preferred Securities.
In rendering such opinion, such counsel may state that its opinion
is limited to matters governed by the law of the State of Delaware.
(f) Simpson Thacher & Bartlett, special tax counsel to the
Company and the Trust, shall have furnished to the Representatives its opinion,
dated the applicable Closing Date, to the effect that:
(i) The Trust will be characterized as a grantor trust
for United States federal income tax purposes and not as an
association taxable as a corporation; and
(ii) Subject to the qualifications set forth in the opinion
and the Final Prospectus, the statements made in the Final
Prospectus under the caption "Certain United States Federal Income
Tax Consequences" insofar as they purport to constitute summaries of
matters of United States federal tax law and regulations or legal
conclusions with respect thereto, constitute accurate summaries of
the matters described therein in all material respects.
(g) The Representatives shall have received from the
Underwriters' Counsel such opinion or opinions, dated the applicable Closing
Date, with respect to the issuance and sale of the Preferred Securities, the
Guarantee, the Debentures, the Registration Statement, the Final Prospectus and
other related matters as the Representatives may reasonably require, and the
Company and the Trust shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(h) The Company shall have furnished to the Representatives a
certificate of its Chief Executive Officer, its President or any Managing
Director or Vice President and its Chief Financial Officer or its Treasurer,
dated the applicable Closing Date, to the effect that, to the best of their
knowledge after due inquiry:
(i) The representations and warranties of the Company in
this Agreement are true and correct in all material respects on and
as of such Closing Date with the same effect as if made on such
Closing Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no
<PAGE>
20
proceedings for that purpose have been instituted or threatened.
(iii) (x) The Registration Statement does not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, (y) the Final Prospectus does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (z) since the effective
date of the Registration Statement there has not occurred any event
required to be set forth in an amended or supplemented prospectus
which has not been so set forth.
(i) The Trust shall have furnished to the Representatives a
certificate of its Regular Trustees, dated the applicable Closing Date, to the
effect that, to the best of their knowledge after due inquiry:
(i) The representations and warranties of the Trust in
this Agreement are true and correct in all material respects on and
as of such Closing Date with the same effect as if made on such
Closing Date, and the Trust has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened.
(iii) (x) The Registration Statement does not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, (y) the Final Prospectus does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (z) since the effective
date of the Registration Statement there has not occurred any event
required to be set forth in an amended or supplemented prospectus
which has not been so set forth.
(j) At each Closing Date, a nationally recognized firm of
independent public accountants shall have furnished to the
<PAGE>
21
Representatives a letter, dated the day of such Closing Date, in form and
substance satisfactory to the Representatives, which states in effect that:
(i) In their opinion, any consolidated financial statements of
the Company and its subsidiaries, and the supporting schedules,
included in the Registration Statement and the Final Prospectus and
audited by them comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder.
(ii) On the basis of a reading of the unaudited consolidated
financial statements of the Company and its subsidiaries, if any,
included in the Registration Statement and the Final Prospectus and
of the latest unaudited consolidated financial statements made
available by the Company and Lehman, carrying out certain specified
procedures (but not an audit in accordance with generally accepted
auditing standards), a reading of the minutes of the meetings of the
directors of the Company, and inquiries of certain officials of the
Company and its subsidiaries, who have responsibility for financial
and accounting matters of the Company and its subsidiaries, as to
transactions and events subsequent to the date of the most recent
audited consolidated financial statements included in the
Registration Statement and the Final Prospectus, nothing came to
their attention that caused them to believe that:
(A) any material modifications should be made to the
unaudited consolidated financial statements of the Company and
its subsidiaries, if any, included in the Registration
Statement and the Final Prospectus and not covered by their
letter delivered pursuant to paragraph (i) of this Section 7,
for them to be in conformity with generally accepted
accounting principles; and such financial statements do not
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the
published instructions, rules and regulations thereunder.
(B) the unaudited capsule information of the Company and
its subsidiaries, if any, included in the Registration
Statement and the Final Prospectus does not agree with the
amounts set forth in the unaudited consolidated financial
statements of the Company from which it was derived or was not
determined on a basis substantially consistent with that of
the
<PAGE>
22
corresponding financial information in the latest audited
financial statements of the Company included in the
Registration Statement and the Final Prospectus.
(C)(I) as of the latest date as of which the Company and
its subsidiaries have monthly financial statements, there was
any decrease in the capital stock, additional paid-in capital
or retained earnings, or increase in long-term indebtedness of
the Company and its subsidiaries, as compared with the amounts
shown in the most recent consolidated statement of financial
condition of the Company and its subsidiaries included in the
Registration Statement and the Final Prospectus, (II) with
respect to the period subsequent to the date of the most
recent financial statements included in the Registration
Statement and the Final Prospectus and extending through the
latest date as of which the Company and its subsidiaries have
monthly financial statements, there was a consolidated net
loss or (III) with respect to the amounts of net capital or
excess net capital of Lehman determined pursuant to Commission
Rule 15c3-1 and shown in the most recent financial statement
of Lehman filed pursuant to Commission Rule 17a-5, there has
been any decrease in such amounts as compared with the amounts
shown in the most recent consolidated financial statements
included in the Registration Statement and the Final
Prospectus;
(D) as of a specified date not more than three business
days prior to the date of the letter, there was any decrease
in the capital stock or additional paid-in capital, or
increase in long-term indebtedness of the Company and its
subsidiaries as compared with the amounts shown in the most
recent consolidated statement of financial condition of the
Company and its subsidiaries included in the Registration
Statement and the Final Prospectus;
except in all instances for increases or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof, unless
said explanation is not deemed necessary by the Representatives.
(iii) If pro forma financial statements are included in the
Registration Statement or the Final Prospectus and are not covered
by their letter delivered pursuant to paragraph (i) of this Section
7, (x) they have read such pro forma financial statements,
<PAGE>
23
(y) they have made inquiries of certain officials of the Company who
have responsibility for financial and accounting matters of the
Company as to the basis for their determination of the pro forma
adjustments and whether such pro forma financial statements comply
as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X and (z) they have
proved the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts; and as a result thereof,
nothing came to their attention that caused them to believe that
such pro forma financial statements do not so comply with Rule 11-02
of Regulation S-X and that such pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements.
(iv) To the extent not covered by their letter delivered
pursuant to paragraph (i) of this Section 7, they have performed
certain other specified procedures as a result of which they
determined that certain information of an accounting, financial or
statistical nature (which is expressed in dollars, or percentages
derived from dollar amounts, and has been obtained from the general
accounting records of the Company) set forth in the Registration
Statement, as amended, and the Final Prospectus, as amended or
supplemented, and in Exhibit 12 to the Registration Statement,
including specified information, if any, included or incorporated
from the Company's Annual Report on Form 10-K incorporated therein
or specified information, if any, included or incorporated from any
of the Company's Quarterly Reports on Form 10-Q or its Current
Reports on Form 8-K incorporated therein, agrees with the accounting
records of the Company and its subsidiaries or computations made
therefrom, excluding any questions of legal interpretation.
(k) Subsequent to the execution of this Agreement, there
shall not have been any decrease in the ratings of any of the Company's debt
securities by Moody's Investors Service, Inc. or Standard & Poor's
Corporation.
(l) Prior to each Closing Date, the Company shall have
furnished to the Representatives such further information, certificates and
documents as the Representatives or Underwriters' Counsel may reasonably
request.
If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates or opinions furnished to the Representatives or Underwriters'
Counsel pursuant to this Section 7 shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and to
<PAGE>
24
Underwriters' Counsel, this Agreement and all obligations of the Underwriters
hereunder may be cancelled at, or at any time prior to, each Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company in
writing, or by telegraph confirmed in writing.
8. EXPENSES. (a) Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, the Company
will pay all costs and expenses incident to the performance of the obligations
of the Company and the Trust hereunder, including, without limiting the
generality of the foregoing, all costs, taxes and expenses incident to the
issuance, sale and delivery of the Preferred Securities to the Underwriters, all
fees and expenses of the Company's counsel and accountants, all costs and
expenses incident to the preparing, printing and filing of the Registration
Statement (including all exhibits thereto), any Interim Prospectus, the Basic
Prospectus, the Final Prospectus and any amendments thereof or supplements
thereto and the Declaration, the Guarantee Agreement and the Indenture, and the
rating of the Preferred Securities by one or more rating agencies, all costs and
expenses (including fees of Underwriters' Counsel and their disbursements)
incurred in connection with blue sky qualifications, advising on the legality of
the Securities for investment, the filing requirements, if any, of the National
Association of Securities Dealers, Inc. in connection with its review of
corporate financings, the fee for listing the Securities on the NYSE, the fees
and expenses of the Property Trustee, the Guarantee Trustee and the Indenture
Trustee and all costs and expenses of the printing and distribution of all
documents in connection with such offering. Except as provided in this Section
8, the Company will have no responsibility to the Underwriters for the
Underwriters' own costs and expenses, including the fees of Underwriters'
Counsel and any advertising expenses in connection with any offer the
Underwriters may make.
(b) If the sale of the Preferred Securities provided for
herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 7 hereof is not satisfied or because of any
refusal, inability or failure on the part of the Company or the Trust to perform
any agreement herein or comply with any provision hereof, the Company will,
subject to demand by the Representatives, reimburse the Underwriters for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Preferred Securities.
9. INDEMNIFICATION. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person who controls such Underwriter
within the meaning of the Securities Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, the Exchange Act or other federal or
<PAGE>
25
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, as originally filed or in
any amendment thereof, or in any Interim Prospectus, the Basic Prospectus or the
Final Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, however, that (i) the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company as herein stated by the Representatives on
behalf of any Underwriter specifically for use in connection with the
preparation thereof, and (ii) such indemnity with respect to the Basic
Prospectus or any Interim Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Securities
which are the subject thereof if such person did not receive a copy of the Final
Prospectus at or prior to the confirmation of the sale of such Securities to
such person in any case where such delivery is required by the Securities Act
and the untrue statement or omission of a material fact contained in the Basic
Prospectus or any Interim Prospectus was corrected in the Final Prospectus,
unless such failure to deliver the Final Prospectus was a result of
noncompliance by the Company with Section 6(d) hereof. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, the Trust and each Trustee, and each person, if any, who
controls the Company or the Trust within the meaning of the Securities Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, the Basic Prospectus, any Interim Prospectus or the Final Prospectus,
or in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
<PAGE>
26
misleading, in each case to the extent, but only to the extent, that the same
was made therein in reliance upon and in conformity with written information
furnished to the Company as herein stated by the Representatives on behalf of
such Underwriter specifically for use in the preparation thereof, and agrees to
reimburse each such indemnified party for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which any Underwriter may otherwise have. The statements set
forth in the last paragraph of the cover page and under the heading
"Underwriting" in the Final Prospectus constitute the only information furnished
to the Company in writing by or on behalf of the several Underwriters for
inclusion in the Registration Statement and the Final Prospectus, as the case
may be, and you, as the Representatives, confirm that such statements are
correct.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 9. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party; PROVIDED, HOWEVER, if the defendants in any such action
include both the indemnified party and the indemnifying party and either (i) the
indemnifying party or parties and the indemnified party or parties mutually
agree or (ii) representation of both the indemnifying party or parties and the
indemnified party or parties by the same counsel is inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the next preceding sentence (it
<PAGE>
27
being understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel, approved by the Representatives
in the case of subparagraph (a) representing the indemnified parties under
subparagraph (a), as the case may be, who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subparagraph (a) of
this Section 9 is due in accordance with its terms but is for any reason held by
a court to be unavailable from the Company on grounds of policy or other similar
grounds, the Company and the Underwriters shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to which
the Company, the Trust and one or more of the Underwriters may be subject in
such proportion so that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discounts appearing on the
cover page of the Final Prospectus bear to the public offering prices appearing
thereon and the Company is responsible for the balance; PROVIDED, HOWEVER, that
(i) in no case shall any Underwriter (except as may be provided in any agreement
among underwriters) be responsible for any amount in excess of the underwriting
discounts applicable to the Preferred Securities purchased by such Underwriter
hereunder and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person who controls an
Underwriter within the meaning of the Securities Act shall have the same rights
to contribution as such Underwriter, and each person who controls the Company
within the meaning of either the Securities Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement each
director of the Company, the Trust and each Trustee shall have the same rights
to contribution as the Company, subject in each case to clauses (i) and (ii) of
this subparagraph (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this subparagraph (d), notify such party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this subparagraph (d).
<PAGE>
28
10. DEFAULT BY AN UNDERWRITER. If, on either Closing Date, any
one or more Underwriters shall fail to purchase and pay for all of the Preferred
Securities agreed to be purchased by such Underwriter or Underwriters hereunder
and such failure to purchase shall constitute a default in the performance of
its or their obligations under this Agreement, the remaining Underwriters shall
be obligated severally to take up and pay for (in the respective proportions
which the aggregate liquidation amount of Preferred Securities set forth
opposite their names in Schedule II hereto bear to the aggregate liquidation
amount of Firm Securities set opposite the names of the remaining Underwriters)
the Firm Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase on such Closing Date; PROVIDED, HOWEVER, that in the event
that the aggregate liquidation amount of Preferred Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Closing Date shall exceed 10% of the aggregate liquidation amount of Preferred
Securities, the remaining Underwriters shall have the right to purchase all, but
shall not be under any obligation to purchase any, of the Preferred Securities,
and if such non-defaulting Underwriters do not purchase all the Preferred
Securities, this Agreement (or, with respect to the Second Closing Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Securities) will terminate without liability to any non-defaulting
Underwriters or the Company or the Trust. In the event of a default by any
Underwriter as set forth in this Section 10, the applicable Closing Date shall
be postponed for such period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the Registration Statement
and the Final Prospectus or in any other documents or arrangements may be
effected. Nothing herein contained shall relieve any defaulting Underwriter of
its liability, if any, to the Company or the Trust and any non-defaulting
Underwriter for damages occasioned by its default hereunder.
11. TERMINATION. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice
given to the Company at or prior to delivery of and payment for all of the
Firm Securities, if, prior to such time (i) trading in securities generally
on the NYSE or the over-the-counter market shall have been suspended or
limited or minimum prices shall have been established on the NYSE or the
over-the-counter market, (ii) a banking moratorium shall have been declared
either by federal or New York State authorities, (iii) any new restriction
materially affecting the distribution of the Preferred Securities shall have
become effective; (iv) trading in any securities of the Company shall have
been suspended or halted by any national securities exchange, the National
Association of Securities Dealers, Inc. or the Commission, (v) the United
States becomes engaged in hostilities or there is an escalation in
hostilities involving the United States or there is a declaration of a
national emergency or war
<PAGE>
29
by the United States, or (vi) there shall have been such a material adverse
change in national or international political, financial or economic
conditions, national or international equity markets or currency exchange
rates or controls as to make it, in the judgment of the Representatives,
inadvisable or impracticable to proceed with the payment for and delivery of
the Preferred Securities.
12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers (as such officers) or the Trust and of
the Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or the Company or the Trust or any of their respective officers,
directors or trustees or any controlling person within the meaning of the
Securities Act, and will survive delivery of the payment for the Preferred
Securities.
13. NOTICES. All communications hereunder will be in
writing, and, if sent to the Representatives will be mailed, delivered,
telegraphed or telexed and confirmed to them, at the address specified in
Schedule I hereto; or, if sent to the Trust or the Company, will be mailed,
delivered, telegraphed or telexed and confirmed to the Trust or the Company
at Lehman Brothers Holdings Inc., 3 World Financial Center, New York, New
York 10285, Attention: Chief Financial Officer.
14. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their successors and, to the extent
and only to the extent stated in Section 9 hereof, the officers and directors
and controlling persons referred to in Section 9 hereof, and except as provided
in Section 9 hereof, no person other than the parties hereto and their
respective successors will have any right or obligation hereunder.
15. APPLICABLE LAW. This Agreement will be governed by
and construed in accordance with the laws of the State of New York.
<PAGE>
30
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST __
By:
-----------------------------
Title: Regular Trustee
By:
-----------------------------
Title: Regular Trustee
LEHMAN BROTHERS HOLDINGS INC.
By:
-----------------------------
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
LEHMAN BROTHERS INC.
By:
------------------------------
Title:
Acting on behalf of the
Representatives named in Schedule I
annexed hereto and the several
Underwriters named in Schedule II
annexed hereto.
<PAGE>
SCHEDULE I
Date of Underwriting Agreement:
Registration Statement No. 333-
Representative and Address: Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Declaration of Trust, Declaration, Title, Purchase Price and Description of
Preferred Securities:
Declaration of Trust:
Declaration:
Title:
Aggregate liquidation amount:
Price to public:
Purchase price:
Distribution rate:
Time of payment of
distributions:
Redemption
provisions:
Repayment:
Indenture, Title, Purchase Price and Description of Debentures:
Indenture:
Title:
Principal Amount:
Price to Trust:
Interest rate:
Time of payment of
interest:
Maturity:
Redemption
provisions:
Repayment:
Guarantee Agreement:
Commission payable by Company:
First Closing Date, Time and Location:
Date:
Time:
Location:
<PAGE>
SCHEDULE II
LIQUIDATION
AMOUNT OF
SECURITIES
TO BE
UNDERWRITERS PURCHASED
Lehman Brothers Inc. ........................................... $
Total..................................................... $
==============
<PAGE>
EXHIBIT 4(i)
[Form of Senior Debt Security-Fixed Rate Note]
[FORM OF FACE OF SECURITY]
LEHMAN BROTHERS HOLDINGS INC.
$ CUSIP
% NOTE DUE
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company"), for value received, hereby promises to pay to or
registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, the principal sum of Dollars, on
, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, and to pay interest (computed on the basis of a 360-day year of twelve
30-day months), semiannually on and of each year,
commencing , on said principal sum at said office or agency, in
like coin or currency, at the rate per annum specified in the title of this
Note, [and (to the extent that the payment of such interest shall be legally
enforceable), at such rate per annum on any overdue principal and premium and on
any overdue installment of interest] from the or the ,
as the case may be, next preceding the date of this Note to which interest has
been paid or duly provided for, unless the date hereof is a date to which
interest has been paid or duly provided for, in which case from the date of this
Note, or, if no interest has been paid or duly provided for on the Notes, from
, until payment of said principal sum has been made or duly provided
for.
The interest so payable on any or will, subject
to certain exceptions provided in the Indenture referred to on the reverse
hereof, be paid to the person in whose name this Note is registered at the close
of business on the [last] [fifteenth] day of the calendar month preceding such
or . Interest may at the option of the Company be paid
by check mailed to the person entitled thereto at such person's address as it
appears on the registry books of the Company.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE
REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
1
<PAGE>
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the Trustee
under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, LEHMAN BROTHERS HOLDINGS INC. has caused this
instrument to be signed by its Chairman of the Board, any Vice Chairman, its
President, its Chief Financial Officer or its Treasurer by manual or facsimile
signature, under its corporate seal, attested by its Secretary or one of its
Assistant Secretaries by manual or facsimile signature.
Dated:
LEHMAN BROTHERS HOLDINGS INC.
By ___________________________
[Title]
Attest:
___________________________
[Title]
2
<PAGE>
[FORM OF REVERSE OF SECURITY]
LEHMAN BROTHERS HOLDINGS INC.
% NOTE DUE
This Note is one of a duly authorized series of Notes of the Company
designated as the % Notes Due of the Company (herein called
the "Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $ . The Notes are one of an
indefinite number of series of debt securities of the Company (herein
collectively called the "Securities") issued or issuable under and pursuant to
an indenture dated as of (herein called the "Indenture"), duly
executed and delivered by the Company and . Trustee (herein called
the "Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Securities. The separate series of Securities may be issued
in various aggregate principal amounts, may mature at different times, may bear
interest (if any) at different rates, may be subject to different redemption
provisions or repayment or repurchase rights (if any), may be subject to
different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided.
In case an Event of Default with respect to the Notes, as defined in the
Indenture, shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66 2/3% in aggregate principal
amount of each series of the Securities at the time Outstanding to be affected
(each series voting as a class), evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) extend the fixed maturity of any
Security, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon or reduce any premium payable on
redemption, or make the principal thereof, or premium, if any, or interest
thereon payable in any coin or currency other than that hereinabove provided,
without the consent of the holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected. It is also
provided in the Indenture that, prior to any declaration accelerating the
maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or Event
3
<PAGE>
of Default under the Indenture with respect to such series and its consequences,
except a default in the payment of interest, if any, on or the principal of, or
premium, if any, on any of the Securities of such series, or in the payment of
any sinking fund installment or analogous obligation with respect to Securities
of such series. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Note and any Notes which may be issued in exchange or substitution
herefor, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the place, at the respective times, at the rate, and in
the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in denominations
of $ and any multiple of $ . At the option of the holders
thereof, either at the office or agency to be designated and maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York,
pursuant to the provisions of the Indenture or at any of such other offices or
agencies as may be designated and maintained by the Company for such purpose
pursuant to the provisions of the Indenture, and in the manner and subject to
the limitations provided in the Indenture, but without the payment of any
service charge, except for any tax or other governmental charges imposed in
connection therewith, Notes may be exchanged for an equal aggregate principal
amount of Notes of other authorized denominations.
[The Notes may not be redeemed before , . On and after
that date and prior to maturity the Company may, at its option, redeem the
Notes, either as a whole or from time to time in part, at the redemption price
of 100% of the principal amount of the Notes being redeemed, together with
accrued interest to the date fixed for redemption.]
[Other Alternative Redemption or Sinking Fund Provisions.]
[As provided in the Indenture, notice of redemption to the holders of
Notes to be redeemed as a whole or in part shall be given by mailing a notice of
redemption not less than 30 nor more than 60 days prior to the date fixed for
redemption to their last addresses as they appear on the registry books of the
Company.]
The Company, the Trustee, and any agent of the Company or of the Trustee
may deem and treat the registered holder hereof as the absolute owner of this
Note (whether or not this Note shall be overdue and notwithstanding any notation
of ownership or other writing hereon), for the purpose of receiving payment
hereof, or on account hereof, and for all other purposes, and neither the
Company nor the Trustee nor any agent of the Company or of the Trustee shall be
affected by any notice to the contrary. All such payments made to or upon the
order of such registered holder shall, to the extent of the sum or sums paid,
effectually satisfy and discharge liability for moneys payable on this Note.
4
<PAGE>
No recourse for the payment of the principal of, premium, if any, or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
5
<PAGE>
EXHIBIT 4.(j)
[Form of Variable Rate Note]
[FORM OF FACE OF SECURITY]
LEHMAN BROTHERS HOLDINGS INC.
$ CUSIP
VARIABLE RATE NOTE DUE
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized
and existing under the laws of the State of Delaware (herein referred to as
the "Company"), for value received, hereby promises to pay to or
registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, the principal sum of Dollars, on
, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, and to pay interest (computed on the basis of a 360-day year of twelve
30-day months), semi-annually(1) on and of each year,
commencing , on said principal sum at said office or agency, in like
coin or currency, at the rate per annum from time to time in effect as
described below, [and (to the extent that the payment of such interest shall be
legally enforceable), at such rate per annum on any overdue principal and
premium and on any overdue installment of interest] from the or
the , as the case may be, next preceding the date to which interest
has been paid or duly provided for, unless the date hereof is a date to which
interest has been paid or duly provided for, in which case from the date of
this Note, or, if no interest has been paid or duly provided for on the Notes,
from , until payment of said principal sum has been made or duly
provided for. Such interest payments will include interest accrued through
the last day of the preceding calendar month, provided that the interest
payment to be made at maturity will include interest accrued through the day
preceding the maturity date.
The interest so payable on any or will, subject to certain
exceptions provided in the Indenture referred to on the reverse hereof, be
paid to the person in whose name this Note is registered at the close
- ----------
(1) This form provides for semi-annual interest payments. The
form, as used, may be modified to provide, alternatively, for annual,
quarterly or other periodic interest payments.
1
<PAGE>
of business on the [last] [fifteenth] day of the calendar month preceding
such or . Interest may at the option of the Company be paid by
check mailed to the person entitled thereto at such person's address as it
appears on the registry books of the Company.
[Provisions for the determination of the interest rate.]
The interest rate applicable to each [insert interest payment period]
will be determined as promptly as practicable by the Company as described
herein and the Company will furnish the Trustee with an Officers' Certificate
setting forth the interest rate applicable to each [insert interest payment
period] promptly after such rate has been determined. The resulting rate will
be rounded to the nearest five decimal places.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON
THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, SHEARSON LEHMAN BROTHERS HOLDINGS INC. has caused
this instrument to be signed by its Chairman of the Board, any Vice Chairman,
its President, its Chief Financial Officer or its Treasurer by manual or
facsimile signature, under its corporate seal, attested by its Secretary or
one of its Assistant Secretaries by manual or facsimile signature.
Dated:
LEHMAN BROTHERS HOLDINGS INC.
By
--------------------------
[Title]
Attest:
- ----------------------------
[Title]
2
<PAGE>
[FORM OF REVERSE OF SECURITY]
LEHMAN BROTHERS HOLDINGS INC
VARIABLE RATE NOTE DUE
This Note is one of a duly authorized series of Notes of the Company
designated as the Variable Rate Notes Due of the Company (herein
called the "Notes"), limited (except as otherwise provided in the Indenture
referred to below) in aggregate principal amount to $ . The Notes are
one of an indefinite number of series of debt securities of the Company
(herein collectively called the "Securities") issued or issuable under and
pursuant to an indenture dated as of (herein called the "Indenture"),
duly executed and delivered by the Company and , Trustee (herein
called the "Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities thereunder of the Trustee,
the Company and the holders of the Securities. The separate series of
Securities may be issued in various aggregate principal amounts, may mature
at different times, may bear interest (if any) at different rates, may be
subject to different redemption provisions or repayment or repurchase rights
(if any), may be subject to different sinking, purchase or analogous funds
(if any), may be subject to different covenants and Events of Default and may
otherwise vary as in the Indenture provided.
In the case an Event of Default with respect to the Notes, as defined
in the Indenture, shall have occurred and be continuing, the principal hereof
may be declared, and upon such declaration shall become, due and payable, in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than 66 2/3% in
aggregate principal amount of each series of the Securities at the time
Outstanding to be affected (each series voting as a class), evidenced as in
the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or modifying in any manner
the rights of the holders of the securities of all such series; provided,
however, that no such supplemental indenture shall, among other things, (i)
extend the fixed maturity of any Security, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon
or reduce any premium payable on redemption, or make the principal thereof,
or premium, if any, or interest thereon payable in any coin or currency other
than that hereinabove provided, without the consent of the holder of each
Security so affected, or (ii) change the place of payment on any Security, or
impair the right to institute suit for payment on any Security, or reduce the
aforesaid percentage of Securities, the holders of which are required to
consent to any such supplemental indenture, without the consent of the
holders of each Security so affected. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of any series of
Securities, the holders of a majority in aggregate principal amount of the
Securities of such series Outstanding may on behalf of the holders of all the
Securities waive any past default or Event of Default
3
<PAGE>
under the Indenture with respect to such series and its consequences, except
a default in the payment of interest on or the principal of, or premium, if
any, on any of the Securities of such series, or in the payment of any
sinking fund installment or analogous obligation with respect to Securities
of such series. Any such consent or waiver by the holder of this Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of this Note and any Notes which may be issued in exchange or
substitution herefor, irrespective of whether or not any notation thereof is
made upon this Note or such other Notes.
No reference herein to the Indenture and no provisions of this Note or
of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the place, at the respective times, at the rate, and
in the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in
denominations of $ and any multiple of $ . At the option of the
holders thereof, either at the office or agency to be designated and
maintained by the Company for such purpose in the Borough of Manhattan, The
City of New York pursuant to the provisions of the Indenture or at any of
such other offices or agencies as may be designated and maintained by the
Company for such purpose pursuant to the provisions of the Indenture, and in
the manner and subject to the limitations provided in the Indenture, but
without the payment of any service charge, except for any tax or other
governmental charges imposed in connection therewith, Notes may be exchanged
for an equal aggregate principal amount of Notes of other authorized
denominations.
[Alternative Redemption or Repayment Options Provisions]
[As Provided in the Indenture, notice of redemption to the holders of Notes to
be redeemed as a whole or in part shall be given by mailing a notice of
redemption not less than nor more than 60 days prior to the date fixed for
redemption to their last addresses as they appear on the registry books of the
Company.]
The Company, the Trustee, and any agent of the Company or of the
Trustee may deem and treat the registered holder hereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding
any notation of ownership or other writing hereon), for the purpose of
receiving payment hereof, or on account hereof, and for all other purposes,
and neither the Company nor the Trustee nor any agent of the Company or of
the Trustee shall be affected by any notice to the contrary. All such
payments made to or upon the order of such registered holder shall, to the
extent of the sum or sums paid, effectually satisfy and discharge liability
for moneys payable on this Note.
No recourse for the payment of the principal of, premium, if any, or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement
of the Company in the Indenture or any indenture supplemental thereto or in
any Note; or because of the creation of any indebtedness represented thereby,
shall be had against an incorporator, stockholder, officer or director, as
such, past,
4
<PAGE>
present or future, of the Company or of any successor corporation, either
directly or through the Company of any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue here of,
expressly waived and released.
All terms used in this Note which are defined in Indenture shall have
the meanings assigned to them in the Indenture.
5
<PAGE>
Exhibit 4(l)
CUSIP NO. ___________
REGISTERED FACE AMOUNT:.
No. ___
If this Note is an OID Note (as defined below) the following legend is
applicable:
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS
NOTE IS _____% OF ITS PRINCIPAL AMOUNT, AND THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT, THE YIELD TO MATURITY COMPOUNDED _____________, THE
ISSUE DATE AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ALLOCABLE TO THE
SHORT PERIOD DETERMINED USING THE EXACT METHOD WITHIN THE MEANING OF
PROPOSED TREASURY REGULATION SECTION 1.1272- 1(c)(2)(ii) ARE AS SET
FORTH BELOW.
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES E
(FIXED RATE)
If the registered owner of this Note (as indicated below) is The
Depository Trust Company (the "Depository") or a nominee of the Depository,Note
is a Note in global form (a "Global Security") and the followingare applicable
except as specified on the reverse hereof:
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF
THE DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO
CEDE& CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TODEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.
<PAGE>
2
<TABLE>
<S> <C> <C>
ISSUE PRICE: $ OPTION TO RECEIVE PAYMENTS OPTIONAL REPAYMENT PRICES:
IN THE SPECIFIED CURRENCY:
ISSUE DATE: [ ] YES [ ] NO OPTIONAL INTEREST RATE RESET:
[ ] YES [ ] NO
MATURITY DATE: SPECIFIED CURRENCY:
OPTIONAL RESET DATES:
INTEREST RATE: AMORTIZING NOTE:
[ ] YES [ ] NO OPTIONAL REDEMPTION:
INTEREST PAYMENT DATES: [ ] YES [ ] NO
SINKING FUND:
REGULAR RECORD DATES: INITIAL REDEMPTION DATE:
TOTAL AMOUNT OF OID:
EXCHANGE RATE AGENT: INITIAL REDEMPTION
YIELD TO MATURITY: PERCENTAGE: %
DEPOSITORY:
INITIAL ACCRUAL PERIOD OID: APPLICABILITY OF ANNUAL REDEMPTION
DUAL CURRENCY NOTE: PERCENTAGE REDUCTION:
[ ] YES [ ] NO AUTHORIZED DENOMINATIONS: [ ] YES [ ] NO
If yes, state Annual Percentage
OPTION ELECTION DATES: EXTENDIBLE NOTE: Reduction: %
[ ] YES [ ] NO
OPTIONAL PAYMENT RENEWABLE NOTE:
CURRENCY: EXTENSION PERIOD: [ ] YES [ ] NO
DESIGNATED EXCHANGE NUMBER OF EXTENSION PERIODS: INITIAL MATURITY DATE:
RATE:
OPTION TO ELECT REPAYMENT: SPECIAL ELECTION INTERVAL:
OPTION VALUE CALCULATION [ ] YES [ ] NO
AGENT: RENEWABLE IN PART:
OPTIONAL REPAYMENT DATES: [ ] YES [ ] NO
OTHER PROVISIONS:
AUTHORIZED RENEWABLE AMOUNTS:
SPECIAL ELECTION PERIOD:
</TABLE>
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the"Company",
which term includes any successor corporation under the Indentureto on the
reverse hereof), for value received, hereby promises to pay to ___________,
or registered assigns, on the Maturity Date the Principal Amount hereof (as
defined below) and, if so specified above, to pay interest thereon from the
Issue Date specified above or from the most recent Interest Payment Date
specified above to which interest has been paid or duly provided for at the
Interest Rate specified above until the principal hereof is paid or made
available for payment and (to the extent that the payment of such interest
shall be legally enforceable) at such rate per annum on any overdue principal
and premium and on any overdue instalment of interest. Unless otherwise
specified above, and except as provided in Section 8 on the reverse hereof if
this Note is a Dual Currency Note (as hereinafter defined), payments of
principal, premium, if any, and interest hereon will be made in U.S. dollars;
if the Specified Currency set forth above is a currency other than U.S.
dollars(a "Foreign Currency"), such payments will be made in U.S. dollars
based on the equivalent of that Foreign Currency converted into U.S. dollars
in the manner set forth in Section 2 on the reverse hereof. If the Specified
<PAGE>
3
Currency is a Foreign Currency and it is so provided above, the Holder may
elect to receive such payments in that Foreign Currency by delivery of a
written request to the Trustee (or to any duly appointed Paying Agent) at the
Corporate Trust Office (as defined below) not later than 10 calendar days
prior to the applicable payment date, and such election will remain in effect
for the Holder until revoked by written notice to the Trustee (or to any such
Paying) at the Corporate Trust Office received not later than 10 calendar
days prior to the applicable payment date; provided, however, no such
election or revocation may be made if, with respect to this Note, (i) an
Event of Default has occurred, (ii) the Company has exercised any discharge
or defeasance options or (iii) the Company has given a notice of redemption.
In the event the Holder makes any such election pursuant to the preceding
sentence, such election will not be effective on any transferee of such
Holder and such transferee shall be paid in U.S. dollars unless such
transferee makes an election pursuant to the preceding sentence; provided,
however, that such election, if in effect while funds are on deposit with the
Trustee to satisfy and discharge this Note, will be effective on any such
transferee unless otherwise specified above. The "Principal Amount" of this
Note at any time means (i) if this Note is an OID Note, the Amortized Face
Amount at such time as described in Section 7 on the reverse hereof, (ii) if
this Note is an Amortizing Note, the Outstanding Face Amount at such time as
described in Section 4 on the reverse hereof, (iii) in all other cases, the
Face Amount hereof.
If this Note is subject to an Annual Percentage Reduction as
specified above, the Redemption Price shall initially be the Initial
Redemption Percentage of the Principal Amount of this Note on the Initial
Redemption Date and shall decline at each anniversary of the Initial
Redemption Date (each such date, a "Redemption Date") by the Annual
Percentage Reduction of such Principal Amount until the Redemption Price is
100% of such Principal Amount.
In the event of any optional redemption by the Company, any repayment
at the option of the Holder, acceleration of the maturity of this Note or other
prepayment of this Note prior to the Maturity Date specified, the term
"Maturity" when used herein shall refer, where applicable, to the date of
redemption, repayment, acceleration or other prepayment of this Note.
An "OID Note" is any Note (a) that has been issued at an Issue Price
lower, by more than a de minimis amount (as determined under United States
federal income tax rules applicable to original issue discount), than the Face
Amount thereof and (b) any other Note that for United States federal income tax
purposes would be considered an original issue discount instrument.
Except as provided in the following paragraph, the Company will pay
interest semiannually on February 15 and August
<PAGE>
4
15 of each year (unless other Interest Payment Dates are specified above)
(each an "Interest Payment Date"), commencing with the first Interest Payment
Date next succeeding the Issue Date, and at Maturity; provided that any
payment of principal, premium, if any, or interest to be made on any Interest
Payment Date or on a date of Maturity that is not a Business Day shall be
made on the next succeeding Business Day with the same force and effect as if
made on such Interest Payment Date or such date of Maturity, as the case may
be, and no additional interest shall accrue as a result of such delayed
payment. The term "Business Day" means any day, other than a Saturday or
Sunday, that meets each of the following applicable requirements: such day
is (a) not a day on which banking institutions in the Borough of Manhattan,
The City of New York are authorized or required by law or regulation to
close; (b) if the Specified Currency is a Foreign Currency other than
European Currency Units ("ECU"), (x) not a day on which banking institutions
are authorized or required by law or regulation to close in the principal
financial center of the country issuing the Foreign Currency and (y) a day on
which banking institutions in such principal financial center are carrying
out transactions in such Foreign Currency; and (c) if the Specified Currency
is ECU, (x) not a day on which banking institutions are authorized or
required by law or regulation to close in Luxembourg and (y) an ECU clearing
day, as determined by the ECU Banking Association in Paris. Each payment of
interest hereon shall include interest accrued through the day before the
Interest Payment Date or date of Maturity, as the case may be. Unless
otherwise specified above, interest on this Note will be computed on the
basis of a 360-day year of twelve 30-day months. In no event shall the
interest rate of this Note be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application.
Unless otherwise specified above, the interest payable on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Note (or one or more predecessor Notes) is registered at the
close of business on the Regular Record Date indicated above (whether or not a
Business Day) next preceding such Interest Payment Date; provided that,
notwithstanding any provision of the Indenture to the contrary, interest
payable on any date of Maturity shall be payable to the Person to whom
principal shall be payable; and provided, further, that, unless otherwise
specified above, in the case of a Note initially issued between a Regular
Record Date and the Interest Payment Date relating to such Regular Record Date,
interest for the period beginning on the Issue Date and ending on such Interest
Payment Date shall be paid on the Interest Payment Date following the next
succeeding Regular Record Date to the registered Holder on such next succeeding
Regular Record Date.
Unless otherwise indicated above, and except as provided below if this
Note is a Global Security, all payments of interest on this Note and all
principal payments hereon if this Note is an Amortizing Note (other than
interest and, in the case
<PAGE>
5
of Amortizing Notes, principal payable at Maturity) will be made by check
(unless otherwise provided above, from an account at a bank located outside the
United States if such amount is payable in a Foreign Currency); provided that,
if the Holder hereof is the Holder of U.S. $10,000,000 or more in aggregate
Principal Amount of Notes of this series of like tenor and term (or a Holder of
the equivalent thereof in a Foreign Currency determined as provided in Section
2 on the reverse hereof), such Holder shall be entitled to receive interest
payments (and principal payments, if this Note is an Amortizing Note) in
immediately available funds, but only if complete and appropriate instructions
have been received in writing by the Trustee (or any such Paying Agent) on or
prior to the applicable Regular Record Date. Simultaneously with any election
by the Holder hereof to receive payments in respect hereof in a Foreign
Currency, such Holder may, if so entitled (as provided above), elect to receive
such payments in immediately available funds by providing complete and
appropriate instructions to the Trustee (or any such Paying Agent), and all such
payments will be made in immediately available funds to an account maintained by
the payee with a bank located outside the United States or as otherwise provided
above.
Unless otherwise indicated above, and except as provided below if
this Note is a Global Security, payments of principal, premium, if any, and
interest payable at Maturity will be made in immediately available funds
(unless otherwise indicated above, payable to an account at a bank located
outside the United States if payable in a Foreign Currency) upon surrender of
this Note at the corporate trust office or agency of the Trustee (or any duly
appointed Paying Agent) maintained for that purpose in the Borough of
Manhattan, The City of New York (the "Corporate Trust Office";), provided
that this Note is presented to the Trustee (or any such Paying Agent) in time
for the Trustee (or any such Paying Agent) to make such payments in such
funds in accordance with its normal procedures.
Unless otherwise specified above, if this Note is a Global Security,
payments of interest hereon and principal hereon if this Note is an Amortizing
Note (in each case, other than at Maturity), will be made in same-day funds in
accordance with existing arrangements between the Trustee (or any duly appointed
Paying Agent) and the Depository. Unless otherwise specified above, if this
Note is a Global Security, any principal, premium and/or interest payable hereon
at Maturity will be paid by wire transfer in immediately available funds to an
account specified by the Depository (which account, unless otherwise provided
above, will be at a bank located outside the United States if payable in a
Foreign Currency).
The Company will pay any administrative costs imposed by banks in
making payments in immediately available funds, but any tax, assessment or
governmental charge imposed upon payments hereunder, including, without
limitation, any withholding tax, will be borne by the Holder hereof.
<PAGE>
6
References herein to "U.S. dollars" or "U.S. $" or "$" are to the coin
or currency of the United States as at the time of payment is legal tender for
the payment of public and private debts.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture.
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this
instrument to be signed by its Chairman of the Board, its President, its Vice
Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer, by manual or facsimile signature under its corporate seal, attested
by its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.
Dated:
[SEAL] LEHMAN BROTHERS HOLDINGS INC.
By:
------------------------------
Chairman of the Board
Attest:
--------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to in
the within-mentioned Indenture.
CITIBANK, N.A.
as Trustee
By:
-------------------------
Authorized Officer
<PAGE>
7
[REVERSE OF NOTE]
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES E
(Fixed Rate)
Section 1. General. This Note is one of a duly authorized
series of Notes of the Company designated as the Medium-Term Notes, Series E
(Fixed Rate) of the Company (herein called the "Notes"), limited in aggregate
principal amount to $2,500,000,000 (or (i) the equivalent thereof in Foreign
Currencies or (ii) such greater amount, if OID Notes are issued, as shall
result in aggregate gross proceeds to the Company of $2,500,000,000), subject
to reduction as a result of the sale under certain circumstances of other debt
securities of the Company. The foregoing limit, however, may be increased by
the Company if in the future it determines that it may wish to sell additional
Notes. The Notes are one of an indefinite number of series of debt securities
of the Company (collectively, the "Securities") issued or issuable under and
pursuant to an indenture dated as of September 1, 1987, as amended (the
"Indenture"), duly executed and delivered by the Company and Citibank, N.A., as
Trustee (herein called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Securities. The separate series of
Securities may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject
to different redemption provisions or repayment or repurchase rights (if any),
may be subject to different sinking, purchase or analogous funds (if any), may
be subject to different covenants and Events of Default and may otherwise vary
as in the Indenture provided.
Section 2. Currency Exchanges and Payments. If the Specified
Currency hereof is a Foreign Currency and the Holder is either not entitled to
elect to receive payments in respect hereof in such Foreign Currency or any
such election is not in effect, the amount of any U.S. dollar payment to be
made in respect hereof will be determined by the Exchange Rate Agent specified
on the face hereof or a successor thereto (the "Exchange Rate Agent"), based on
the indicative quotation in The City of New York selected by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date that yields the least number of U.S.
dollars upon conversion of such Foreign Currency. Unless otherwise provided on
the face hereof, such selection shall be made from among the quotations
appearing on the bank composite or multi- contributor pages of the Reuters
Monitor Foreign Exchange Service or, if not available, the Telerate Monitor
Foreign Exchange Service. If such quotations
<PAGE>
8
are unavailable from either such foreign exchange service, unless otherwise
provided on the face hereof, such selection shall be made from the quotations
received by the Exchange Rate Agent from no more than three nor less than two
recognized foreign exchange dealers in The City of New York selected by the
Exchange Rate Agent and approved by the Company (one of which may be the
Exchange Rate Agent) for the purchase by the quoting dealer, for settlement on
such payment date, of the aggregate amount of such Foreign Currency payable on
such payment date in respect of all Notes denominated in such Foreign Currency
and for which the applicable dealer commits to execute a contract. If no such
bid quotations are available, payments will be made in the Foreign Currency.
Unless otherwise specified on the face hereof, if payment
hereon is required to be made in a Foreign Currency and such currency is
unavailable to the Company for making payments thereof due to the imposition of
exchange controls or other circumstances beyond the Company's control, or is no
longer used by the government of the country which issued such currency or for
the settlement of transactions by public institutions of or within the
international banking community, then the Company will be entitled to make
payments with respect hereto in U.S. dollars until such Foreign Currency is
again available or so used. The amount so payable on any date in such Foreign
Currency shall be converted into U.S. dollars at a rate determined by the
Exchange Rate Agent on the basis of the noon buying rate in The City of New
York for cable transfers in the Foreign Currency as certified for customs
purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate")
for such Foreign Currency on the second Business Day prior to such payment
date, or on such other basis as may be specified on the face hereof. In the
event such Market Exchange Rate is not then available, the Company will be
entitled to make payments in U.S. dollars (i) if such Foreign Currency is not a
composite currency, on the basis of the most recently available Market Exchange
Rate for such Foreign Currency or (ii) if such Foreign Currency is a composite
currency, including, without limitation, the ECU, in an amount determined by
the Exchange Rate Agent to be the sum of the results obtained by multiplying
the number of units of each component currency of such composite currency, as
of the most recent date on which such composite currency was used, by the
Market Exchange Rate for such component currency on the second Business Day
prior to such payment date (or if such Market Exchange Rate is not then
available, by the most recently available Market Exchange Rate for such
component currency, or as otherwise specified on the face hereof). Any payment
in respect hereof made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
If the official unit of any component currency of a composite
currency is altered by way of combination or subdivision, the number of units
of that currency as a component shall be divided or multiplied in the same
proportion. If two or
<PAGE>
9
more component currencies are consolidated into a single currency, the amounts
of those currencies as components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that original component
currency as a component shall be replaced by amounts of such two or more
currencies having an aggregate value on the date of division equal to the
amount of the former component currency immediately before such division.
In the event of an official redenomination of the Specified
Currency or the Optional Payment Currency (including, without limitation, an
official redenomination of any such currency that is a composite currency), the
obligations of the Company to make payments in or with reference to such
currency shall, in all cases, be deemed immediately following such
redenomination to be obligations to make payments in or with reference to that
amount of redenominated currency representing the amount of such currency
immediately before such redenomination. In no event shall any adjustment be
made to any amount payable hereunder as a result of any redenomination of any
component currency of any composite currency (unless such composite currency is
itself officially redenominated).
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion (except to the extent expressly provided
herein that any determination is subject to approval by the Company) and, in
the absence of manifest error, shall be conclusive for all purposes and binding
on the Holder hereof, and the Exchange Rate Agent shall have no liability
therefor.
All currency exchange costs will be borne by the Holder hereof
by deduction from the payments made hereon.
Section 3. Redemption. If so specified on the face hereof,
the Company may at its option redeem this Note in whole or from time to time in
part on or after the date designated as the Initial Redemption Date on the face
hereof at either a price based on a constant percentage of the Principal Amount
of this Note as specified on the face hereof or at prices declining from the
premium specified on the face hereof, if any, to 100% of the Principal Amount
hereof, together, in each case, with accrued interest to the Redemption Date.
The Company may exercise such option by causing the Trustee to mail by
first-class mail to the Holder hereof a notice of such redemption at least 30
but not more than 60 days prior to the Redemption Date. In the event of
redemption of this Note in part only, a new Note or Notes of this series for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof in accordance with the terms of the Indenture.
Unless otherwise specified on the face hereof, if less than all of the Notes
with like tenor and terms to this Note are to be redeemed, the Notes
<PAGE>
10
to be redeemed shall be selected by the Trustee by such method as the Trustee
shall deem fair and appropriate.
Section 4. Sinking Funds and Amortizing Notes. Unless
otherwise specified on the face hereof or unless this Note is an Amortizing
Note, this Note will not be subject to any sinking fund. If it is specified on
the face hereof that this Note is an Amortizing Note, the Company will make
payments combining principal and interest on the dates and in the amounts set
forth in the table appearing in Schedule I, attached to this Note. If this
Note is an Amortizing Note, payments made hereon will be applied first to
interest due and payable on each such payment date and then to the reduction of
the Outstanding Face Amount. The term "Outstanding Face Amount" means, at any
time, the amount of unpaid principal hereof at such time.
Section 5. Optional Repayment. If so specified on the face
hereof, this Note will be repayable prior to the Maturity Date at the option of
the Holder on the Optional Repayment Dates specified on the face hereof at the
Optional Repayment Prices specified on the face hereof, together with accrued
interest to the applicable Optional Repayment Date. Unless otherwise specified
on the face hereof, in order for this Note to be so repaid, the Company must
receive, at least 30 but not more than 45 days prior to an Optional Repayment
Date, either (i) this Note with the form below entitled "Option to Elect
Repayment"; duly completed or (ii) a telegram, telex, facsimile transmission
or letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
in the United States setting forth the name of the Holder hereof, the Face
Amount hereof, the Face Amount to be repaid, the certificate number hereof or a
description of the tenor and terms of this Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that this Note with
the form below entitled "Option to Elect Repayment"; duly completed
will be received by the Paying Agent not later than five Business Days after the
date of such telegram, telex, facsimile transmission or letter and this Note and
form duly completed are received by the Paying Agent by such fifth Business
Day. Exercise of this repayment option shall be irrevocable, except as
otherwise provided under Section 6 or Section 9. The repayment option may be
exercised by the Holder of this Note with respect to less than the Face Amount
then outstanding provided that the Face Amount of the Note remaining
outstanding after repayment is an authorized denomination. Upon such partial
repayment this Note shall be cancelled and a new Note or Notes for the
remaining Face Amount hereof shall be issued in the name of the Holder of this
Note.
Section 6. Optional Interest Reset. If so specified on the
face hereof, the Interest Rate on this Note may be reset at the option of the
Company, in the manner set forth below (unless otherwise specified on the face
hereof), on the Optional Reset Date or Optional Reset Dates specified on the
face hereof.
<PAGE>
11
The Company may exercise such option by notifying the Trustee of such exercise
at least 45 but not more than 60 days prior to an Optional Reset Date. Not
later than five Business Days after receipt thereof, the Trustee will mail by
first-class mail to the Holder of this Note a notice (the "Reset Notice")
setting forth (i) the election of the Company to reset the interest rate, (ii)
such new interest rate and (iii) the provisions, if any, for redemption during
the period from such Optional Reset Date to the next Optional Reset Date or, if
there is no such next Optional Reset Date, to the Maturity Date of this Note
(each such period a "Subsequent Interest Period"), including the date or dates
on which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period. The Reset
Notice shall be substantially in the form of Exhibit A to this Note. Upon the
transmittal by the Trustee of a Reset Notice to the Holder of this Note, such
new interest rate shall take effect automatically, and, except as modified by
the Reset Notice and as described in the next paragraph, this Note will have
the same terms as prior to the transmittal of such Reset Notice.
Notwithstanding the foregoing, not later than 20 days prior to
an Optional Reset Date, the Company may, at its option, revoke the interest
rate provided for in the Reset Notice and establish an interest rate that is
higher than the interest rate provided for in the Reset Notice for the
Subsequent Interest Period commencing on such Optional Reset Date by causing
the Trustee to mail by first-class mail notice of such higher interest rate to
the Holder of this Note. Such notice shall be irrevocable and shall be mailed
by the Trustee within five Business Days after receipt thereof. All Notes with
respect to which the interest rate is reset on an Optional Reset Date will bear
such higher interest rate for the Subsequent Interest Period.
If the Company elects to reset the interest rate of this Note,
the Holder of this Note will have the option to elect repayment by the Company
of this Note, or any portion hereof, on any Optional Reset Date at a price
calculated with reference to the Face Amount hereof to be repaid, plus any
interest accrued to, such Optional Reset Date. In order to obtain repayment on
an Optional Reset Date, the Holder must follow the procedures set forth above
in Section 5 for optional repayment except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
prior to such Optional Reset Date and except that, if the Holder has tendered
this Note for repayment pursuant to the Reset Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth day prior to such Optional Reset Date; provided,
however, that if such day is not a Business Day, then such notice may be given
on the next succeeding Business Day.
<PAGE>
12
Section 7. OID Notes. If this Note is an OID Note, unless
otherwise specified on the face hereof, the amount payable in the event of
redemption by the Company, repayment at the option of the Holder or
acceleration of Maturity shall be the Amortized Face Amount of this Note as of
the date of such redemption, repayment or acceleration rather than the Face
Amount hereof. The "Amortized Face Amount" of this Note shall be the amount
equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that
portion of the difference between the Issue Price and the Face Amount hereof
that has accrued at the Yield to Maturity set forth on the face hereof
(computed in accordance with generally accepted United States bond yield
computation principles) at the date as of which the Amortized Face Amount is
calculated, but in no event shall the Amortized Face Amount of this Note exceed
the Face Amount.
Section 8. Dual Currency Notes. If it is specified on the
face hereof that this Note is a Dual Currency Note, the Company has a one time
option, exercisable on any one of the Option Election Dates specified on the
face hereof in whole, but not in part, with respect to all Dual Currency Notes
issued on the same day and having the same terms as this Note (this "Tranche"),
of thereafter making all payments of principal, premium, if any, and interest
(which payments would otherwise be made in the Specified Currency of such
Notes) in the Optional Payment Currency specified on the face hereof. If the
Company makes such an election, the amount of Optional Payment Currency payable
in respect hereof shall be determined by the Exchange Rate Agent by converting
the amount of Specified Currency that would otherwise be payable into the
Optional Payment Currency at the Designated Exchange Rate specified on the face
hereof.
The Company may exercise such option by notifying the Trustee
of such exercise on or prior to the Option Election Date. The Trustee will
mail by first-class mail to each holder of a Note of this Tranche a notice of
such election within five Business Days of the Option Election Date which shall
state (i) the first date, whether an Interest Payment Date and/or the Maturity
Date, on which scheduled payments in the Optional Payment Currency will be made
and (ii) the Designated Exchange Rate. Any such notice by the Company, once
given, may not be withdrawn.
If this Note is a Dual Currency Note, unless otherwise
specified on the face hereof and notwithstanding any prior election made by the
Company, the amount payable hereon in the event of any optional redemption by
the Company, any repayment at the option of the Holder, any acceleration of the
Maturity of this Note or other prepayment of this Note prior to the Maturity
Date shall be an amount equal to the Principal Amount hereof otherwise due and
payable plus accrued interest to but excluding the date of redemption,
repayment, acceleration or other prepayment minus the Total Option Value
multiplied by a fraction, the numerator of which is the Principal Amount hereof
and the
<PAGE>
13
denominator of which is the aggregate Principal Amount of all Dual Currency
Notes of this Tranche. In no event will such payment be less than zero.
Notwithstanding any prior election made by the Company, such payment shall be
made in the Specified Currency unless otherwise provided on the face hereof.
The term "Total Option Value" means, with respect to any Dual
Currency Note on any date, an amount (calculated as of such date by the
Option Value Calculation Agent) equal to the sum of the Option Values
(calculated as of such date by the Option Value Calculation Agent) for all
Interest Payment Dates occurring after the date of calculation up to and
including the Maturity Date. The term "Option Value" means, with respect to
an Interest Payment Date or the Maturity Date, the amount calculated by the
Option Value Calculation Agent to be the arithmetic average of the prices
quoted on the date of calculation by three reference banks (which banks shall
be selected by the Option Value Calculation Agent and shall be reasonably
acceptable to the Company) for the right on the Option Election Date
immediately preceding such Interest Payment Date or Maturity Date to purchase
for value on such Interest Payment Date or Maturity Date from such reference
banks (A) the aggregate amount of the Specified Currency due on such Interest
Payment Date or Maturity Date with respect to all of the Dual Currency Notes
of this Tranche in exchange for (B) the amount of the Optional Payment
Currency that would be received if the amount in clause (A) were converted
into the Optional Payment Currency at the Designated Exchange Rate.
All determinations referred to above made by the Exchange Rate
Agent or the Option Value Calculation Agent shall be at their sole discretion
(except to the extent expressly provided herein that any determination is
subject to approval by the Company) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder hereof, and
neither the Exchange Rate Agent nor the Option Value Calculation Agent shall
have any liability therefor.
Section 9. Extendible Notes. If it is specified on the face
hereof that this Note is an Extendible Note, the Company has the option to
extend the Maturity Date hereof for the number of Extension Periods set forth
on the face hereof, each of which Extension Periods shall be a period of from
one to five whole years. Unless otherwise specified on the face hereof, the
following procedures shall apply if this Note is an Extendible Note.
The Company may exercise its option by notifying the Trustee
of such exercise at least 45 but not more than 60 days prior to the Maturity
Date hereof in effect prior to the exercise of such option (the "Original
Stated Maturity"). Not later than five Business Days after receipt thereof,
the Trustee will mail to the Holder a notice (the "Extension Notice"), first
class, postage prepaid, setting forth (i) the election of the Company to extend
the Maturity Date, (ii) the new Maturity Date, (iii) the
<PAGE>
14
Interest Rate applicable to the Extension Period and (iv) the provisions, if
any, for redemption during the Extension Period, including the date on which or
the period or periods during which and the price at which such redemption may
occur during the Extension Period. Upon the mailing by the Trustee of an
Extension Notice to the Holder, the Maturity Date hereof shall be extended
automatically, and, except as modified by the Extension Notice and as described
in the next paragraph, this Note will have the same terms as prior to the
mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to
the Original Stated Maturity hereof, the Company may, at its option, revoke the
interest rate provided for in the Extension Notice and establish a higher
interest rate for the Extension Period by causing the Trustee to mail notice of
such higher interest rate, first class, postage prepaid, to the Holder. Such
notice shall be irrevocable and shall be mailed by the Trustee within three
Business Days after receipt thereof. This Note will bear such higher interest
rate for the Extension Period, whether or not tendered for repayment.
If the Company extends the Maturity Date of this Note, the
Holder will have the option to elect repayment by the Company of this Note, or
any portion hereof, on the Original Stated Maturity at a price calculated with
reference to the Face Amount hereof to be repaid plus any accrued interest to
such date. In order for this Note to be so repaid on the Original Stated
Maturity, the Holder must follow the procedures set forth in Section 5 hereof
for optional repayment, except that the period for delivery of this Note or
notification to the Trustee shall be at least 25 but not more than 35 days
prior to the Original Stated Maturity and except that the Holder may, by
written notice to the Trustee, revoke any such tender for repayment until the
close of business on the tenth day prior to the Original Stated Maturity;
provided, however, that if such day is not a Business Day, then such notice may
be given on the next succeeding Business Day.
Section 10. Renewable Notes. If it is specified on the face
hereof that this Note is a Renewable Note, this Note will mature on the Initial
Maturity Date specified on the face hereof unless the Maturity of all or any
portion of this Note is extended in accordance with the procedures described
below.
On the Interest Payment Date occurring in the sixth month
(unless a different Special Election Interval is specified on the face hereof)
prior to the Initial Maturity Date hereof (the "Initial Maturity Extension
Date") and on the Interest Payment Date occurring in each sixth month (or the
last month of each Special Election Interval) after such Initial Maturity
Extension Date (each, together with the Initial Maturity Extension Date, a
"Maturity Extension Date"), the Maturity of this Note will be extended to the
Interest Payment Date occurring
<PAGE>
15
in the twelfth month (or, if a Special Election Interval is specified on the
face hereof, the last month in a period equal to twice the Special Election
Interval) after such Maturity Extension Date, unless the Holder elects to
terminate the automatic extension of the Maturity hereof or any portion hereof
as described below.
If the Holder elects to terminate the automatic extension of
the Maturity of any portion of the principal amount of this Note during the
specified period prior to any Maturity Extension Date, such portion will become
due and payable on the Interest Payment Date occurring in the sixth month (or
the last month in the Special Election Interval) after such Maturity Extension
Date (the "Extended Maturity Date").
The Holder may elect to terminate the automatic extension of
the Maturity of this Note, or if so specified above, any portion hereof, by
delivering a notice to such effect to the Trustee (or any duly appointed Paying
Agent) at the Corporate Trust Office not less than 15 nor more than 30 days
prior to such Maturity Extension Date (unless another period is specified on
the face hereof as the "Special Election Period"). Such election will be
irrevocable and will be binding upon each subsequent Holder of this Note. An
election to terminate the automatic extension of the Maturity of this Note may
be exercised with respect to less than the entire Face Amount hereof only if so
specified on the face hereof and only in such Face Amount, or any integral
multiple in excess thereof, as is specified on the face hereof.
Notwithstanding the foregoing, the Maturity of this Note will not be extended
beyond the Maturity Date specified on the face hereof.
Unless otherwise specified above, any such election to
terminate will be effective only if this Note, with the "Option to Elect
Termination of Automatic Extension" included herein duly executed, is presented
to the Trustee (or any duly appointed Paying Agent) simultaneously with notice
of such election (or, in the event notice of such election, together with a
guarantee of delivery within five Business Days, is transmitted on behalf of
the Holder from a member of a national securities exchange, the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
in the United States, within five Business Days of the date of such notice).
As soon as practicable following receipt of this Note the Trustee (or any duly
appointed Paying Agent) shall issue in exchange herefor in the name of the
Holder (i) a Note, in a face amount equal to the face amount of this Note for
which the election to terminate the automatic extension of Maturity was
exercised, with terms identical to those specified herein (except for the Issue
Date and the Initial Interest Rate and except that such Note shall have a
fixed, non- extendable Maturity on the Extended Maturity Date) and (ii) if such
election is made with respect to less than the full Face Amount hereof, a
replacement Renewable Note, in a face amount
<PAGE>
16
equal to the Face Amount of this Note for which no election was made, with
terms identical to this Note.
Section 11. Principal Amount For Indenture Purposes. For the
purpose of determining whether Holders of the requisite amount of Notes
outstanding under the Indenture have made a demand, given a notice or waiver or
taken any other action, the outstanding principal amount of this Note will be
deemed to be the Principal Amount, provided, however, if this Note is an OID
Note, the outstanding, principal amount of this Note will be deemed to be the
Face Amount set forth above.
Section 12. Modification and Waivers. The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than 66-2/3% in aggregate principal amount of each series
of the Securities at the time Outstanding to be affected, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities of all such series; provided, however, that no such
supplemental indenture shall, among other things, (i) extend the fixed maturity
of any Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon or reduce any premium payable on
redemption, or make the principal thereof, or premium, if any, or interest
thereon payable in any coin or currency other than that hereinabove provided,
without the consent of the holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected. It is also
provided in the Indenture that, prior to any declaration accelerating the
Maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on or the
principal of, or premium if any, on any of the Securities of such series, or in
the payment of any sinking fund installment or analogous obligation with
respect to Securities of such series. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Note and any Notes which may be issued in
exchange or substitution herefor, irrespective of whether or not any notation
thereof is made upon this Note or such other Notes.
Section 13. Obligations Unconditional. No reference herein
to the Indenture and no provisions of this Note or of the Indenture shall alter
or impair the obligation of the Company,
<PAGE>
17
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest, if any, on this Note at the place, at the respective times, at
the rate, and in the coin or currency herein prescribed.
Section 14. Defeasance. The Indenture contains provisions
for the discharge of the Indenture and defeasance at any time of the
indebtedness on this Note upon compliance by the Company with certain
conditions set forth therein, which provisions apply to this Note.
Section 15. Authorized Form and Denominations. The Notes of
this series are issuable in registered form, without coupons. Unless otherwise
set forth on the face hereof, Notes denominated in U.S. dollars will be issued
in Face Amount denominations of U.S. $100,000 and any integral multiple of U.S.
$1,000 in excess thereof. Notes denominated in a Foreign Currency will be
issued in the denomination or denominations set forth on the face hereof. Each
Note will be issued initially as either a Global Security or a Certificated
Note, at the option of the holders thereof, either at the office or agency to
be designated and maintained by the Company for such purpose in the Borough of
Manhattan, The City of New York, pursuant to the provisions of the Indenture or
at any of such other offices or agencies as may be designated and maintained by
the Company for such purpose pursuant to the provisions of the Indenture, and
in the manner and subject to the limitations provided in the Indenture, but
without the payment of any service charge, except for any tax or other
governmental charges imposed in connection therewith. Notes of this series are
exchangeable for a like aggregate Face Amount of Notes of this series of a
different authorized denomination, except that Global Securities will not be
exchangeable for Certificated Notes.
Section 16. Registration of Transfer. As provided in the
Indenture and subject to certain limitations as therein set forth, the transfer
of this Note is registrable in the Security Register, upon surrender of this
Note for registration of transfer, at the Corporate Trust Office or agency in a
Place of Payment for this Note, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar requiring such written instrument of transfer duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series, of authorized denominations and for the same
aggregate Face Amount, will be issued to the designated transferee or
transferees.
If this Note is a Global Security and if at any time the
Depository notifies the Company that it is unwilling or unable to continue as
Depository or if at any time the Depository shall no longer be eligible under
the Indenture, the Company shall appoint a successor Depository. If a
successor Depository for the Securities of such series is not appointed by the
Company
<PAGE>
18
within 90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company will issue, and the Trustee will authenticate and
deliver, Notes in definitive form in an aggregate Face Amount equal to the Face
Amount hereof.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
Prior to due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name this Note is registered as the owner hereof
for all purposes, and neither the Company nor the Trustee nor any agent of the
Company or of the Trustee shall be affected by any notice to the contrary.
Section 17. Events of Default. If an Event of Default with
respect to Notes of this series shall occur and be continuing, the principal of
the Notes of this series may be declared due and payable in the manner and with
the effect provided in the Indenture. In the event that this Note is an OID
Note or a Dual Currency Note, the amount of principal of this Note that becomes
due and payable upon such acceleration shall be equal to the amount calculated
as set forth in Section 7 or Section 8, respectively, hereof. Upon payment (i)
of the aggregate applicable amounts of principal of the Notes of this series so
declared due and payable and (ii) of interest on any overdue principal and
overdue interest (in each case to the extent that the payment of such interest
shall be legally enforceable), all of the Company's obligations in respect of
the payment of the principal of and interest, if any, on the Notes of this
series shall terminate.
Section 18. No Recourse Against Certain Persons. No recourse
for the payment of the principal of, premium, if any, or interest on this Note,
or for any claim based hereon or otherwise in respect hereof, and no recourse
under or upon any obligation, covenant or agreement of the Company in the
Indenture or any Indenture supplemental thereto or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly waived and released.
Section 19. Defined Terms. All terms used but not defined in
this Note are used herein as defined in the Indenture.
<PAGE>
19
Section 20. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
20
OPTION TO ELECT REPAYMENT
The undersigned owner of this Note hereby irrevocably elects
to have the Company repay the Face Amount of this Note or portion hereof below
designated at (i) the Optional Repayment Percentage multiplied by the Principal
Amount of this Note to be repaid in respect of such Face Amount plus accrued
interest to the Optional Repayment Date, if this Note is to be repaid pursuant
to the Optional Repayment provision described in Section 5 hereof, or (ii) 100%
of the Principal Amount of this Note to be repaid in respect of such Face
Amount plus accrued interest to the Optional Reset Date, if this Note is to be
repaid pursuant to the Optional Interest Reset provision described in Section 6
hereof or the Extendible Notes provision described in Section 9 hereof. Any
such election is irrevocable except as provided in Section 6 or Section 9
hereof.
Dated:_________________ _______________________________
Signature
Sign exactly as name appears on the front of
this Note [SIGNATURE GUARANTEED - required
only if Notes are to be issued and delivered
to other than the registered Holder]
Face Amount to be Fill in for registration of
repaid, if amount to be Notes if to be issued otherwise
repaid is less than the than to the registered Holder:
Face Amount of this
Note (Face Amount Name: ___________________________
remaining must be an Address: ________________________
authorized denomination) ______________________
(Please print name
$_______________________ and address including
zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID
NUMBER
_________________________________
<PAGE>
21
OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION
The undersigned owner of this Note hereby irrevocably elects
to terminate the automatic extension of this Note or of the portion of the Face
Amount of this Note below designated. Any such election is irrevocable and
will be binding on any subsequent Holder hereof.
Dated:_________________ _______________________________
Signature
Sign exactly as name appears on the front of
this Note [SIGNATURE GUARANTEED - required
only if Notes are to be issued and delivered
to other than the registered Holder]
Face Amount to be Fill in for registration of
terminated, if amount to be Notes if to be issued otherwise
terminated is less than the than to the registered Holder:
Face Amount of this
Note (such Face Amount Name: ___________________________
must be an authorized Address: ________________________
denomination) ______________________
(Please print name
$_______________________ and address including
zip code)
SOCIAL SECURITY OR OTHER TAXPAYER
ID NUMBER
_________________________________
<PAGE>
22
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenant by the entireties
JT TEN - as joint tenants with right of
survivorship and not as
tenants in common
UNIF GIFT
MIN ACT - __________Custodian__________
(Cust) (Minor)
Under Uniform Gifts to
Minors Act
_____________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________________________________
Please print or type name and address, including zip code of assignee
__________________________________________________________________
the within Note of LEHMAN BROTHERS HOLDINGS INC. and all rights thereunder and
does hereby irrevocably constitute and appoint
<PAGE>
23
______________________________________________________Attorney to transfer the
said Note on the books of the within-named Company, with full power of
substitution in the premises.
Dated:______________________________
SIGNATURE GUARANTEED:__________________________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular,
without alteration or enlargement or
any change whatsoever.
<PAGE>
SCHEDULE I
Amortization Table
Date Payment
---- -------
<PAGE>
EXHIBIT A
RESET NOTICE
LEHMAN BROTHERS HOLDINGS INC.
Medium-Term Notes, Series E
(Fixed Rate)
CUSIP No. ___________
Registered Nos. ___-___
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized
and existing under the laws of the State of Delaware (the "Company"), is the
issuer of the above-referenced Notes (the "Notes"). Capitalized terms used
herein and not defined are used as defined in the Notes.
The Company hereby elects to reset the Interest Rate set forth
on the face of the Notes. On and after _________________1/, the Interest Rate
shall be _______________.
Each Holder of a Note has the option to elect repayment by the
Company of such Note, or any portion thereof, on any Optional Reset Date
pursuant to the terms of such Note. The Notes may be repaid on the dates and
at the prices set forth below:
Date Redemption Price
---- ----------------
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused
this Reset Notice to be signed by its Chairman of the Board, its President, its
Vice Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer and to be attested by its Secretary or one of its Assistant
Secretaries.
Dated: LEHMAN BROTHERS HOLDINGS INC.
By:
-------------------------------
Title:
Attest:
---------------------------
Title:
- --------------------------
1/ Insert applicable Optional Reset Date.
<PAGE>
Exhibit 4(m)
CUSIP NO. ___________
REGISTERED FACE AMOUNT:.
No. ___
If this Note is an OID Note (as defined below) the following legend is
applicable:
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS
NOTE IS _____% OF ITS PRINCIPAL AMOUNT, AND THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT, THE YIELD TO MATURITY COMPOUNDED _____________, THE
ISSUE DATE AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ALLOCABLE TO THE
SHORT PERIOD DETERMINED USING THE EXACT METHOD WITHIN THE MEANING OF
PROPOSED TREASURY REGULATION SECTION 1.1272- 1(c)(2)(ii) ARE AS SET
FORTH BELOW.
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES E
(FLOATING RATE)
If the registered owner of this Note (as indicated below) is The
Depository Trust Company (the "Depository") or a nominee of the Depository,
this Note is a Note in global form (a "Global Security") and the following
legends are applicable except as specified on the reverse hereof:
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF
THE DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO
CEDE& CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.
<PAGE>
2
<TABLE>
<S> <C> <C>
ISSUE PRICE: $ OPTION TO RECEIVE PAYMENTS OPTIONAL REPAYMENT PRICES:
IN THE SPECIFIED CURRENCY:
ISSUE DATE: [ ] YES [ ] NO OPTIONAL INTEREST RATE RESET:
[ ] YES [ ] NO
MATURITY DATE: SPECIFIED CURRENCY:
OPTIONAL RESET DATES:
INTEREST RATE: AMORTIZING NOTE:
[ ] YES [ ] NO OPTIONAL REDEMPTION:
INTEREST PAYMENT DATES: [ ] YES [ ] NO
SINKING FUND:
REGULAR RECORD DATES: INITIAL REDEMPTION DATE:
TOTAL AMOUNT OF OID:
EXCHANGE RATE AGENT: INITIAL REDEMPTION
YIELD TO MATURITY: PERCENTAGE: %
DEPOSITORY:
INITIAL ACCRUAL PERIOD OID: APPLICABILITY OF ANNUAL REDEMPTION
DUAL CURRENCY NOTE: PERCENTAGE REDUCTION:
[ ] YES [ ] NO AUTHORIZED DENOMINATIONS: [ ] YES [ ] NO
If yes, state Annual Percentage
OPTION ELECTION DATES: EXTENDIBLE NOTE: Reduction: %
[ ] YES [ ] NO
OPTIONAL PAYMENT RENEWABLE NOTE:
CURRENCY: EXTENSION PERIOD: [ ] YES [ ] NO
DESIGNATED EXCHANGE NUMBER OF EXTENSION PERIODS: INITIAL MATURITY DATE:
RATE:
OPTION TO ELECT REPAYMENT: SPECIAL ELECTION INTERVAL:
OPTION VALUE CALCULATION [ ] YES [ ] NO
AGENT: RENEWABLE IN PART:
OPTIONAL REPAYMENT DATES: [ ] YES [ ] NO
OTHER PROVISIONS:
AUTHORIZED RENEWABLE AMOUNTS:
SPECIAL ELECTION PERIOD:
</TABLE>
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the"Company",
which term includes any successor corporation under the Indenture referred to
on the reverse hereof), for value received, hereby promises to pay to
___________, or registered assigns, on the Maturity Date the Principal Amount
hereof (as defined below) and, if so specified above, to pay interest thereon
from the Issue Date specified above or from the most recent Interest Payment
Date specified above to which interest has been paid or duly provided for at
the rate per annum determined in accordance with the provisions on the
reverse hereof, depending on the Interest Rate Basis specified above, until
the principal hereof is paid or made available for payment and (to the extent
that the payment of such interest shall be legally enforceable) at such rate
per annum on any overdue principal and premium and on any overdue instalment
of interest. Unless otherwise specified above, and except as provided in
Section 9 on the reverse hereof if this Note is a Dual Currency Note (as
hereinafter defined), payments of principal, premium, if any, and interest
hereon will be made in U.S. dollars; if the Specified Currency set forth
above is a currency other than U.S. dollars (a "Foreign Currency"), such
<PAGE>
3
payments will be made in U.S. dollars based on the equivalent of that Foreign
Currency converted into U.S. dollars in the manner set forth in Section 2 on
the reverse hereof. If the Specified Currency is a Foreign Currency and it is
so provided above, the Holder may elect to receive such payments in that
Foreign Currency by delivery of a written request to the Trustee (or to any
duly appointed Paying Agent) at the Corporate Trust Office (as defined below)
not later than 10 calendar days prior to the applicable payment date, and
such election will remain in effect for the Holder until revoked by written
notice to the Trustee (or to any such Paying Agent) at the Corporate Trust
Office received not later than 10 calendar days prior to the applicable
payment date; provided, however, no such election or revocation may be made
if, with respect to this Note, (i) an Event of Default has occurred, (ii) the
Company has exercised any discharge or defeasance options or (iii) the
Company has given a notice of redemption. In the event the Holder makes any
such election pursuant to the preceding sentence, such election will not be
effective on any transferee of such Holder and such transferee shall be paid
in U.S. dollars unless such transferee makes an election pursuant to the
preceding sentence; provided, however, that such election, if in effect while
funds are on deposit with the Trustee to satisfy and discharge this Note,
will be effective on any such transferee unless otherwise specified above.
The "Principal Amount" of this Note at any time means (i) if this Note is an
OID Note, the Amortized Face Amount at such time as described in Section 8 on
the reverse hereof and (ii) in all other cases, the Face Amount hereof.
If this Note is subject to an Annual Percentage Reduction as specified
above, the Redemption Price shall initially be the Initial Redemption Percentage
of the Principal Amount of this Note on the Initial Redemption Date and shall
decline at each anniversary of the Initial Redemption Date (each such, a
"Redemption Date") by the Annual Percentage Reduction of such Principal Amount
until the Redemption Price is 100% of such Principal Amount.
In the event of any optional redemption by the Company, any repayment
at the option of the Holder, acceleration of the maturity of this Note or other
prepayment of this Note prior to the Maturity Date specified, the term
"Maturity" when used herein shall refer, where applicable, to the date of
redemption, repayment, acceleration or other prepayment of this Note.
An "OID Note" is any Note (a) that has been issued at an Issue Price
lower, by more than a de minimis amount (as determined under United States
federal income tax rules applicable to original issue discount), than the Face
Amount thereof and (b) any other Note that for United States federal income tax
purposes would be considered an original issue discount instrument.
Except as provided in the following paragraph, the Company will pay
interest on each Interest Payment Date specified above, commencing with the
<PAGE>
4
first Interest Payment Date next succeeding the Issue Date, and at Maturity;
provided that any payment of principal, premium, if any, or interest to be
made on any Interest Payment Date or on a date of Maturity that is not a
Business Day shall be made on the next succeeding Business Day with the same
force and effect as if made on such Interest Payment Date or such date of
Maturity, as the case may be, and no additional interest shall accrue as a
result of such delayed payment, except that if this Note is a LIBOR Note (as
defined in Section 3 on the reverse hereof) and such next succeeding Business
Day falls in the next calendar month, such payment shall be made on the
preceding day that is a London Banking Day. The term "Business Day" means any
day, other than a Saturday or Sunday, that meets each of the following
applicable requirements: such day is (a) not a day on which banking
institutions in the Borough of Manhattan, The City of New York are authorized
or required by law or regulation to close; (b) if the Specified Currency is a
Foreign Currency other than European Currency Units ("ECU"), (x) not a day on
which banking institutions are authorized or required by law or regulation to
close is the principal financial center of the country issuing the Foreign
Currency and (y) a day on which banking institutions in such principal
financial center are carrying out transactions in such Foreign Currency; (c)
if the Specified Currency is ECU, (x) not a day on which banking institutions
are authorized or required by law or regulation to close in Luxembourg and
(y) an ECU clearing day, as determined by the ECU Banking Association in
Paris; and (d) if this Note is a LIBOR Note, a London Banking Day. The term
"London Banking Day" means any day on which dealings in deposits in the
Specified Currency are transacted in the London interbank market. Unless
otherwise specified above, the interest payable on each Interest Payment Date
or at Maturity will be the amount of interest accrued from and including the
Issue Date or from and including the last Interest Payment Date to which
interest has been paid, as the case may be, to, but excluding, such Interest
Payment Date or the date of Maturity, as the case may be; provided, however,
that if interest on this Note is reset daily or weekly, interest payable on
each Interest Payment Date will be the amount of interest accrued from and
including the Issue Date or from and excluding the last date to which
interest has been paid, as the case may be, to, and including, the Regular
Record Date immediately preceding such Interest Payment Date, except that at
Maturity the interest payable will include interest accrued to, but
excluding, the date of Maturity.
Unless otherwise specified above, the interest payable on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Note (or one or more predecessor Notes) is registered at the
close of business on the Regular Record Date indicated above (whether or not a
Business Day) next preceding such Interest Payment Date; provided that,
notwithstanding any provision of the Indenture to the contrary, interest
payable on any date of Maturity shall be payable to the Person to whom
principal shall be payable; and provided, further, that, unless otherwise
specified above, in the case of a Note initially issued between a Regular
Record Date and the Interest Payment Date relating to such Regular Record Date,
interest for the period beginning on the Issue Date and ending on such Interest
Payment Date shall be paid on the Interest Payment Date following the next
succeeding Regular Record Date to the registered Holder on such next succeeding
Regular Record Date.
Unless otherwise indicated above, and except as provided below if
this Note is a Global Security, all payments of interest on this Note (other
than interest payable at Maturity) will be made by check (unless otherwise
<PAGE>
5
provided above, from an account at a bank located outside the United States
if such amount is payable in a Foreign Currency); provided that, if the
Holder hereof is the Holder of U.S.$10,000,000 or more in aggregate Principal
Amount of Notes of this series of like tenor and term (or a Holder of the
equivalent thereof in a Foreign Currency determined as provided in Section 2
on the reverse hereof), such Holder shall be entitled to receive interest
payments in immediately available funds, but only if complete and appropriate
instructions have been received in writing by the Trustee (or any such Paying
Agent) on or prior to the applicable Regular Record Date. Simultaneously with
any election by the Holder hereof to receive payments in respect hereof in a
Foreign Currency, such Holder may, if so entitled (as provided above), elect
to receive such payments in immediately available funds by providing complete
and appropriate instructions to the Trustee (or any such Paying Agent), and
all such payments will be made in immediately available funds to an account
maintained by the payee with a bank located outside the United States or as
otherwise provided above.
Unless otherwise indicated above, and except as provided below if
this Note is a Global Security, payments of principal, premium, if any, and
interest payable at Maturity will be made in immediately available funds
(unless otherwise indicated above, payable to an account at a bank located
outside the United States if payable in a Foreign Currency) upon surrender of
this Note at the corporate trust office or agency of the Trustee (or any duly
appointed Paying Agent) maintained for that purpose in the Borough of
Manhattan, The City of New York (the "Corporate Trust Office"), provided
that this Note is presented to the Trustee (or any such Paying Agent) in time
for the Trustee (or any such Paying Agent) to make such payments in such
funds in accordance with its normal procedures.
Unless otherwise specified above, if this Note is a Global
Security, payments of interest hereon (other than at Maturity) will be made
in same-day funds in accordance with existing arrangements between the
Trustee (or any duly appointed Paying Agent) and the Depository. Unless
otherwise specified above, if this Note is a Global Security, any principal,
premium and/or interest payable hereon at Maturity will be paid by wire
transfer in immediately available funds to an account specified by the
Depository (which account, unless otherwise provided above, will be at a bank
located outside the United States if payable in a Foreign Currency).
The Company will pay any administrative costs imposed by banks in
making payments in immediately available funds, but any tax, assessment or
governmental charge imposed upon payments hereunder, including, without
limitation, any withholding tax, will be borne by the Holder hereof.
<PAGE>
6
References herein to "U.S. dollars" or "U.S. $" or "$" are to the coin
or currency of the United States as at the time of payment is legal tender for
the payment of public and private debts.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture.
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this
instrument to be signed by its Chairman of the Board, its President, its Vice
Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer, by manual or facsimile signature under its corporate seal, attested
by its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.
Dated:
[SEAL] LEHMAN BROTHERS HOLDINGS INC.
By:
------------------------------
Chairman of the Board
Attest:
--------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to in
the within-mentioned Indenture.
CITIBANK, N.A.
as Trustee
By:
-------------------------
Authorized Officer
<PAGE>
7
[REVERSE OF NOTE]
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES E
(Floating Rate)
Section 1. General. This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series E
(Floating Rate) of the Company (herein called the "Notes"), limited in
aggregate principal amount to $2,500,000,000 (or (i) the equivalent thereof
in Foreign Currencies or (ii) such greater amount, if OID Notes are issued,
as shall result in aggregate gross proceeds to the Company of
$2,500,000,000), subject to reduction as a result of the sale under certain
circumstances of other debt securities of the Company. The foregoing limit,
however, may be increased by the Company if in the future it determines that
it may wish to sell additional Notes. The Notes are one of an indefinite
number of series of debt securities of the Company (collectively, the
"Securities") issued or issuable under and pursuant to an indenture dated as
of September 1, 1987, as amended (the "Indenture"), duly executed and
delivered by the Company and Citibank, N.A., as Trustee (herein called the
"Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Securities. The separate series of Securities
may be issued in various aggregate principal amounts, may mature at different
times, may bear interest (if any) at different rates, may be subject to
different redemption provisions or repayment or repurchase rights (if any),
may be subject to different sinking, purchase or analogous funds (if any),
may be subject to different covenants and Events of Default and may otherwise
vary as in the Indenture provided.
Section 2. Currency Exchanges and Payments. If the Specified
Currency hereof is a Foreign Currency and the Holder is either not entitled to
elect to receive payments in respect hereof in such Foreign Currency or any
such election is not in effect, the amount of any U.S. dollar payment to be
made in respect hereof will be determined by the Exchange Rate Agent specified
on the face hereof or a successor thereto (the "Exchange Rate Agent"), based on
the indicative quotation in The City of New York selected by the Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date that yields the least number of U.S.
dollars upon conversion of such Foreign Currency. Unless otherwise provided on
the face hereof, such selection shall be made from among the quotations
appearing on the bank composite or multi- contributor pages of the Reuters
Monitor Foreign Exchange Service or, if not available, the Telerate Monitor
Foreign Exchange Service. If such quotations
<PAGE>
8
are unavailable from either such foreign exchange service, unless otherwise
provided on the face hereof, such selection shall be made from the quotations
received by the Exchange Rate Agent from no more than three nor less than two
recognized foreign exchange dealers in The City of New York selected by the
Exchange Rate Agent and approved by the Company (one of which may be the
Exchange Rate Agent) for the purchase by the quoting dealer, for settlement on
such payment date, of the aggregate amount of such Foreign Currency payable on
such payment date in respect of all Notes denominated in such Foreign Currency
and for which the applicable dealer commits to execute a contract. If no such
bid quotations are available, payments will be made in the Foreign Currency.
Unless otherwise specified on the face hereof, if payment
hereon is required to be made in a Foreign Currency and such currency is
unavailable to the Company for making payments thereof due to the imposition of
exchange controls or other circumstances beyond the Company's control, or is no
longer used by the government of the country which issued such currency or for
the settlement of transactions by public institutions of or within the
international banking community, then the Company will be entitled to make
payments with respect hereto in U.S. dollars until such Foreign Currency is
again available or so used. The amount so payable on any date in such Foreign
Currency shall be converted into U.S. dollars at a rate determined by the
Exchange Rate Agent on the basis of the noon buying rate in The City of New
York for cable transfers in the Foreign Currency as certified for customs
purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate")
for such Foreign Currency on the second Business Day prior to such payment
date, or on such other basis as may be specified on the face hereof. In the
event such Market Exchange Rate is not then available, the Company will be
entitled to make payments in U.S. dollars (i) if such Foreign Currency is not a
composite currency, on the basis of the most recently available Market Exchange
Rate for such Foreign Currency or (ii) if such Foreign Currency is a composite
currency, including, without limitation, the ECU, in an amount determined by
the Exchange Rate Agent to be the sum of the results obtained by multiplying
the number of units of each component currency of such composite currency, as
of the most recent date on which such composite currency was used, by the
Market Exchange Rate for such component currency on the second Business Day
prior to such payment date (or if such Market Exchange Rate is not then
available, by the most recently available Market Exchange Rate for such
component currency, or as otherwise specified on the face hereof). Any payment
in respect hereof made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
If the official unit of any component currency of a composite
currency is altered by way of combination or subdivision, the number of units
of that currency as a component shall be divided or multiplied in the same
proportion. If two or
<PAGE>
9
more component currencies are consolidated into a single currency, the amounts
of those currencies as components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that original component
currency as a component shall be replaced by amounts of such two or more
currencies having an aggregate value on the date of division equal to the
amount of the former component currency immediately before such division.
In the event of an official redenomination of the Specified
Currency or the Optional Payment Currency (including, without limitation, an
official redenomination of any such currency that is a composite currency), the
obligations of the Company to make payments in or with reference to such
currency shall, in all cases, be deemed immediately following such
redenomination to be obligations to make payments in or with reference to that
amount of redenominated currency representing the amount of such currency
immediately before such redenomination. In no event shall any adjustment be
made to any amount payable hereunder as a result of any redenomination of any
component currency of any composite currency (unless such composite currency is
itself officially redenominated).
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion (except to the extent expressly provided
herein that any determination is subject to approval by the Company) and, in
the absence of manifest error, shall be conclusive for all purposes and binding
on the Holder hereof, and the Exchange Rate Agent shall have no liability
therefor.
All currency exchange costs will be borne by the Holder hereof
by deduction from the payments made hereon.
<PAGE>
10
Section 3. Determination of Interest Rate. For the period
from the Issue Date to the first Interest Reset Date set forth on the face
hereof, the interest rate hereon shall be the Initial Interest Rate specified
on the face hereof. Thereafter, the interest rate hereon will be reset on
each Interest Reset Date; provided, however, that the interest rate in effect
for the ten days immediately prior to Maturity will be that in effect on the
tenth day preceding such Maturity. If any Interest Reset Date would otherwise
be a day that is not a Business Day (or, if this Note is a LIBOR Note, to the
next day that is a London Banking Day), except that if this Note is a LIBOR
Note and such London Banking Day is in the next succeeding calendar month,
such Interest Reset Date shall be the immediately preceeding London Banking
Day. If this Note is a Treasury Rate Note (as defined below) and an auction
date for Treasury bills shall fall on any Reset Date, then such Interest
Reset Date shall instead be the first Business Day immediately following such
auction date. Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date, the rate of interest on this NOte on and
after the first Interest Reset Date shall be the rate determined in
accordance with the provisions of the heading below which has been designated
as the Interest Rate Basis on the face hereof plus or minus the Spread, if
any, specified on the face hereof or multiplied by the Spread Multiplier, if
any, specified on the face hereof.
Commercial Paper Rate Notes
If the Interest Rate Basis is the Commercial Paper Rate, this Note
is a "Commercial Paper Rate Note." A Commercial Paper Rate Note will bear
interest at the interest rate calculated with reference to the Commercial
Paper Rate and the Spread or Spread Multiplier, if any. Unless otherwise
specified on the face hereof, "Commercial Paper Rate" means, with respect
to any Interest Determination Date, the Money Market Yield (calculated as
described below) of the rate on that date for commercial paper having the
applicable Index Maturity as such rate is published in the publication
entitled "Statistical Release H.15(519), Selected Interest Rates," or any
successor publication, published by the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "Commercial Paper". If
such rate is not published by 9:00 A.M., New York City time, on the
Calculation Date (as defined below) pertaining to such Interest Determination
Date, then the Commercial Paper Rate shall be the Money Market Yield of the
rate on such Interest Determination Date for commercial paper having the
applicable Index Maturity as published in the daily statistical release
entitled "Composite 3:30 P.M. Quotations for U.S. Government Securities"
(or any succesor publication) published by the Federal Reserve Bank of New
York ("Composite Quotations") under the heading "Commercial Paper". If
such rate is not yet published in either H.15(519) or Composite Quotations by
3:00 P.M., New York City time, on such Calculation Date, then the Commercial
Paper Rate for such Interest Determination Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic mean
of the offered rates as of 11:00 A.M., New York City time, on such Interest
Determination Date of three leading dealers of commercial paper in The City
of New York selected by the Calculation Agent after consultation with the
Company for commercial paper having the applicable Index Maturity, placed for
industrial issuers whose bond rating is "AA", or the equivalent, from a
nationally recognized securities rating agency; provided, however, that if
the dealers selected as aforesaid by the Calculatin Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate for the applicable
period will be Commercial Paper Rate in effect on such Interest Determination
Date.
<PAGE>
11
"Money Market Yield" shall be a yield calculated in accordance with
the following formula:
D X 360
Money Market Yield= ------------- x 100
360 - (D X M)
where "D" refers to the per annum rate for the commercial paper,
quoted on a bank discount basis expressed as a decimal; and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Federal Funds Effective Rate Notes
If the Interest Rate Basis is the Federal Funds Effective Rate,
this Note is a "Federal Funds Effective Rate Note." A Federal Funds Effective
Rate Note will bear interest at the interest rate calculated with reference
to the Federal Funds Effective Rate and the Spread or Spread Multiplier, if
any. Unless otherwise specified on the face hereof, "Federal Funds Effective
Rate" means, with respect to any Interest Determination Date, the rate on
that day for Federal Funds as published in H.15(519) under the heading
"Federal Funds (Effective Rate)" or, if not so published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Effective Rate will be the rate on such
Interest Determination Date as published in Composite Quotations under the
heading "Federal Funds/Effective Rate." If such rate is not yet published in
either H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Interest determination Date, then the
Federal Funds Effective Rate for such Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
rates as of 11:00 A.M., New York City time, on such Interest Determination
Date for the last transactions in overnight Federal Funds arranged by three
leading brokers of Federal Funds transactions in The City of New York
selected by the Calculation Agent after consultation with the Company;
provided, however, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Effective Rate for the applicable period will be the Federal Funds
Effective Rate in effect on such Interest Determination Date.
CD Rate Notes
If the Interest Rate Basis is the CD Rate, this Note is a "CD Rate
Note." A CD Rate Note will bear interest at the interest rate calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any. Unless
otherwise specified on the face hereof, "CD Rate" means, with respect to any
Interest Determination Date, the rate on such date for negotiable
certificates of deposit having the applicable Index Maturity as published in
H.15(519) under the heading "CDs (Secondary Market)" or, if not so published
by 9:00 A.M., New York City time, on the
<PAGE>
12
Calculation Date pertaining to such Interest Determination Date, the CD Rate
will be the rate on such Interest Determination Date for negotiable
certificates of deposit of the applicable Index Maturity as published in
Composite Quotations under the heading "Certificates of Deposit". If such
rate is not yet published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on such Calculation Date, then the CD Rate for such
Interest Determination Date will be calculated by the Calculation Agent and
will be the arithmetic mean of the secondary market offered rates as of the
opening of business, New York City time, on such Interest Determination Date,
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent after
consultation with the Company for negotiable certificates of deposit of major
United States money center banks of the highest credit standing (in the
market for negotiable certificates of deposit) with a remaining maturity
closest to the applicable Index Maturity in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the CD Rate
for the applicable period will be the CD Rate in effect on such Interest
Determination Date.
LIBOR Notes
If the Interest Rate Basis is LIBOR, this Note is a "LIBOR Note." A
LIBOR Note will bear interest at the interest rate calculated with reference
to LIBOR and the Spread or Spread Multiplier, if any. Unless otherwise
indicated on the face hereof, "LIBOR" means the rate determined by the
Calculation Agent as follows:
(a) With respect to an Interest Determination Date, LIBOR will be,
as specified on the face hereof, either (i) the arithmetic mean of the
offered rates for deposits in U.S. dollars for the period (commencing on the
Interest Reset Date) of the applicable Index Maturity which appears on the
display designated as page "LIBO" on the Reuters Monitor Money Rates Service,
or such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks (the
"Reuters Screen LIBO Page"), at approximately 11:00 A.M., London time, on such
Interest Determination Date, if at least two such offered rates appear on the
Reuters Screen LIBO Page ("LIBOR Reuters"), or (ii) the offered rate for
deposits in U.S. dollars or the applicable Foreign Currency specified on the
face hereof for the period (commencing on the Interest Reset Date) of the
applicable Index Maturity which appears on the Telerate Page 3740 (as defined
below) or the Telerate Page 3750 (as defined below), as applicable, at
approximately 11:00 A.M., London time, on such Interest Determination Date
("LIBOR Telerate"). If neither LIBOR Reuters nor LIBOR Telerate is specified
on the face hereof, LIBOR will be determined as if LIBOR Telerate had been
specified.
<PAGE>
13
(b) With respect to an Interest Determination Date on which fewer than two
offered rates appear on the Renters Screen LIBO Page as specified in (a)(i)
above, or on which no rate appears on Telerate Page 3740 or the Telerate Page
3750, as applicable, as specified in a (a)(ii) above, as applicable, the
Calculation Agent will request the principal London office of each of four
major banks in the London interbank market, as selected by the Calculation
Agent after consolation with the Company, to provide the Calculation Agent
with its offered quotation for deposits in the applicable currency for the
period (commencing on the Interest Reset Date) of the applicable Index
Maturity to prime banks in the London interbank market at approximately 11:00
A.M., London time, on such Interest Determination Date and in a principal
amount equal to an amount of not less than $1,000,000 (or the equivalent
thereof in the applicable currency if such currency is a Foreign Currency)
that is representative of a single transaction in such market at such
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two such quotations are provided, LIBOR in respect of such
Interest Determination Date will be the arithmetic mean of the rates quoted
at approximately 11:00 A.M., New York City time, on such Interest
Determination Date by three major banks in The City of New York selected by the
Calculation Agent after consultation with the Company for loans in the
applicable currency to leading European banks, for the period (commencing on
the Interest Reset Date) of the applicable Index Maturity and in a principal
amount equal to an amount of not less than $1,000,000 (or the equivalent
thereof in the applicable currency if such currency is a Foreign
Currency) that is representative of a single transaction in such market at
such time, provided, however, that if the banks in The City of New York
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, LIBOR for the applicable period will be LIBOR as in effect
on such Interest Determination Date.
The term "Telerate Page 3740" means the display designated as page
"3740" on the Telerate Service, or such other page as may replace the 3740
page on that service or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying London
interbank offered rates for deposits in Australian Dollars, French Francs,
Canadian Dollars, Italian Lira, Spanish Pesetas and Dutch Guilders. Thar term
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service, or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying London
interbank offered rates for deposits in U.S. Dollars, British Pounds
Sterling, German Deutsche Marks, Swill Francs, Japanese Yen and ECU.
<PAGE>
14
Prime Rate Notes
If the Interest Rate Basis is the Prime Rate, this Note is a "Prime Rate
Note." A Prime Rate Note will bear interest at the interest rate calculated
with reference to the Prime Rate and the Spread or Spread Multiplier, if any.
Unless otherwise specified on the face hereof, "Prime Rate" means, with
respect to any Interest Determination Date, the rate on that day as published
in H.15(519) under the heading "Bank Prime Loan" or, if not so published by
9:00 A.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Prime rate will be determined by the
Calculation Agent and will be the arithmetic mean of the rates of interest
publicly announced by each bank named on the display designated as page
"NYMF" on the Reuters Monitor Money Rates Service, or such other page as
may replace the NYMF page on the service for the purpose of displaying prime
rates or base lending rates of major United States banks (the "Reuters
Screen NYMF Page"), as such bank's prime rate or base lending rate as in
effect for such Interest Determination Date. If fewer than four such rates but
more than one such rate appear on the Reuters Screen NYMF Page for such
Interest Determination Date, the Prime Rate will be determined by the
Calculation Agent and will be the arithmetic mean of the Prime rates quoted
on the basis of the actual number of days in the year divided by 360 as of the
close of business on such Interest Determination Date by four major money
center banks in The City of New york selected by the Calculation Agent after
consultation with the Company. If fewer than two such rates appear on the
Reuters Screen NYMF Page, the Prime Rate will be calculated by the Calculation
Agent and will be the arithmetic mean of the prime rates in effect for such
Interest Determination Date as furnished in The City of New York by at least
three substitute banks or trust companies organized and doing business under
the laws of the United States, or any state thereof, in each case having
total equity capital of at least $500,000,000 and being subject to
supervision or examination by federal or state authority, selected by the
Calculation Agent after consultation with the Company to provide such rate or
rates; provided, however, that if the banks or trust companies selected as
aforesaid are not quoting as mentioned in this sentence, the Prime Rate for
the applicable period will be the Prime Rate in effect on such Interest
Determination Date.
Treasury Rate Notes
If the Interest Rate Basis is the Treasury Rate, this Note is a "Treasury
Rate Note." A Treasury Rate Note will bear interest at the interest rate
calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any. Unless otherwise specified on the face hereof "Treasury
Rate" means, with respect to any Interest Determination Date, the rate for
the auction held on such Interest Determination Date of direct obligations of
the United States ("Treasury bills") having the applicable Index Maturity as
published in H.15(519) under the
<PAGE>
15
heading "U.S. Government Securities--Treasury bills--auction average
(investment)" or, if not so published by 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date, the
auction average rate (expressed as a bond equivalent, on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. In the event that
the results of the auction of Treasury bills having the applicable Index
Maturity are not published or reported as provided by 3:00 P.M., New York
City time, on such Calculation Date or if no such auction is held on such
Interest Determination Date, then the Treasury Rate shall be calculated by
the Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent after consultation with
the Company for the issue of Treasury bills with a remaining maturity closest
to the applicable Index Maturity; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned
in this sentence, the Treasury Rate for the applicable period will be the
Treasury Rate in effect on such Interest Determination Date.
The term "Calculation Date" means the date on which the Calculation
Agent is to calculate an interest rate for this Note, which shall be the
tenth calendar day after the related Interest Determination Date or if such
day is not a Business Day, the next succeeding Business Day, unless otherwise
specified on the face hereof.
Notwithstanding the foregoing, the Interest rate hereof shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, shown on the face hereof. The interest rate on this
Note will in no event be higher than the maximum rate permitted by New York
law as the same may be modified by United States law of general
applicability.
The Calculation Agent will, upon the request of the Holder of this
Note, provide the interest rate then in effect and, if determined, the
interest rate which will become effective as a result of a determination made
on the most recent Interest Determination Date with respect to this Note.
Unless otherwise specified on the face hereof, the Interest
Determination Date pertaining to an Interest Reset Date will be (a) such
Interest Reset Date for a Prime Rate Note and (b) the Business Day preceding
such Interest Reset Date for a Commercial Paper Rate Note, a Federal Funds
Effective Rate Note or a CD Rate Note. Unless otherwise specified on the face
<PAGE>
16
hereof, the Interest Determination Date pertaining to an Interest Reset Date
for a LIBOR Note will be the second London Banking Day preceding such
Interest Reset Date. Unless otherwise specified on the face hereof, the
Interest Determination Date pertaining to an Interest Reset Date for a
Treasury Rate Note will be the day of the week in which such Interest Reset
Date falls on which Treasury bills of the applicable Index Maturity would
normally be auctioned. Treasury bills are usually sold at auction on Monday
of each week, unless that day is a legal holiday, in which case the auction
is usually held on the following Tuesday, except that such auction may be
held on the preceding Friday. If, as the result of a legal holiday, an
auction is so held on the preceding Friday, such Friday will be the Interest
Determination Date pertaining to the Interest Reset Date occurring in the
next succeeding week.
Accrued interest from the Issue Date or from the last date to which
interest has been paid shall be calculated by multiplying the face amount of
this Note by an accrued interest factor. This accrued interest factor shall
be computed by adding the interest factors calculated for each day from the
Issue Date or from the last date to which interest has been paid, to the date
for which accrued interest is being calculated. The interest factor for each
such day is computed by dividing the interest rate applicable to such date by
360, in the case of Commercial Paper Rate Notes, Federal Funds Effective Rate
Notes, CD Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual
number of days in the year, in the case of Treasury Rate Notes. The interest
rate applicable to any day that is an Interest Reset Date is the interest
rate as determined, in accordance with the procedures set forth above, with
respect to the Interest Determination Date pertaining to such Interest Reset
Date. The interest rate applicable to any other day is the interest rate for
the immediately preceding Interest Reset Date (or, if none, the Initial
Interest Rate).
Unless otherwise specified on the face hereof, all percentages
resulting from any calculation of the rate of interest on this Note will be
rounded, if necessary, to the nearest one hundred-thousandth of a percent
(.0000001), with five one- millionths of a percentage point rounded upward,
and all currency amounts used in or resulting from such calculation will be
rounded to the nearest one-hundredth of a unit (with five one-thousandths of
a unit being rounded upwards).
Section 4. Redemption. If so specified on the face hereof, the
Company may at its option redeem this Note in whole or from time to time in
part on or after the date designated as the Initial Redemption Date on the
face hereof at either a price based on a constant percentage of the Principal
Amount of this Note as specified on the face hereof or at prices declining
from the premium specified on the face hereof, if any, to 100% of the
Principal Amount hereof, together, in each case, with accrued interest to the
Redemption Date. The Company may exercise such to be redeemed shall be
selected by the Trustee by such method as the Trustee shall deem fair and
appropriate.
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17
Section 5. Sinking Funds and Amortizing Notes. Unless
otherwise specified on the face hereof this Note will not be subject to any
sinking fund.
Section 6. Optional Repayment. If so specified on the face
hereof, this Note will be repayable prior to the Maturity Date at the option of
the Holder on the Optional Repayment Dates specified on the face hereof at the
Optional Repayment Prices specified on the face hereof, together with accrued
interest to the applicable Optional Repayment Date. Unless otherwise specified
on the face hereof, in order for this Note to be so repaid, the Company must
receive, at least 30 but not more than 45 days prior to an Optional Repayment
Date, either (i) this Note with the form below entitled "Option to Elect
Repayment" duly completed or (ii) a telegram, telex, facsimile transmission
or letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
in the United States setting forth the name of the Holder hereof, the Face
Amount hereof, the Face Amount to be repaid, the certificate number hereof or a
description of the tenor and terms of this Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that this Note with
the form below entitled "Option to Elect Repayment" duly completed
will be received by the Paying Agent not later than five Business Days after the
date of such telegram, telex, facsimile transmission or letter and this Note and
form duly completed are received by the Paying Agent by such fifth Business
Day. Exercise of this repayment option shall be irrevocable, except as
otherwise provided under Section 7 or Section 10. The repayment option may be
exercised by the Holder of this Note with respect to less than the Face Amount
then outstanding provided that the Face Amount of the Note remaining
outstanding after repayment is an authorized denomination. Upon such partial
repayment this Note shall be cancelled and a new Note or Notes for the
remaining Face Amount hereof shall be issued in the name of the Holder of this
Note.
Section 7. Optional Interest Reset or Spread Multiplier Reset. If
so specified on the face hereof, the Spread or Spread Multiplier, if any, set
forth on the face hereof may be reset at the option of the Company, in the
manner set forth below (unless otherwise specified on the face hereof), on
the Optional Reset Date or Optional Reset Dates specified on the face hereof.
<PAGE>
18
The Company may exercise such option by notifying the Trustee in writing
of such exercise at least 45 but not more than 60 days prior to an Optional
Reset Date. Not later than five Business Days after receipt thereof, the
Trustee will mail by first-class mail to the Holder of this Note a notice
(the "Reset Notice") setting forth (i) the election of the Company to reset
the Spread or Spread Multiplier, (ii) such new Spread or Spread Multiplier
and (iii) the provisions, if any, for redemption during the period from
such Optional Reset Date to the next Optional Reset Date or, if there
is no such next Optional Reset Date, to the Maturity Date of this Note
(each such period a "Subsequent Interest Period"), including the date or dates
on which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period. The Reset
Notice shall be substantially in the form of Exhibit A to this Note. Upon the
transmittal by the Trustee of a Reset Notice to the Holder of this Note, such
new Spread or Spread Multiplier shall take effect automatically, and, except
as modified by the Reset Notice and as described in the next paragraph, this
Note will have the same terms as prior to the transmittal of such Reset Notice.
Notwithstanding the foregoing, not later than 20 days prior to
an Optional Reset Date, the Company may, at its option, revoke the Spread or
Spread Multiplier provided for in the Reset Notice and establish Spread or
Spread Multiplier that is higher than the interest rate provided for in the
Reset Notice for the Subsequent Interest Period commencing on such Optional
Reset Date by causing the Trustee to mail by first-class mail notice of such
higher Spread or Spread Multiplier to the Holder of this Note. Such notice
shall be irrevocable and shall be mailed by the Trustee within five Business
Days after receipt thereof. All Notes with respect to which the Spread or
Spread Multiplier is reset on an Optional Reset Date will bear
such higher Spread or Spread Multiplier for the Subsequent Interest Period.
If the Company elects to reset the Spread or Spread Multiplier of
this Note, the Holder of this Note will have the option to elect repayment by
the Company of this Note, or any portion hereof, on any Optional Reset Date at
a price calculated with reference to the Face Amount hereof to be repaid, plus
any interest accrued to, such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth above in Section 6 for optional repayment except that the period for
delivery or notification to the Trustee shall be at least 25 but not more than
35 days prior to such Optional Reset Date and except that, if the Holder has
tendered this Note for repayment pursuant to the Reset Notice, the Holder may,
by written notice to the Trustee, revoke such tender for repayment until the
close of business on the tenth day prior to such Optional Reset Date; provided,
however, that if such day is not a Business Day, then such notice may be given
on the next succeeding Business Day.
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19
Section 8. OID Notes. If this Note is an OID Note, unless
otherwise specified on the face hereof, the amount payable in the event of
redemption by the Company, repayment at the option of the Holder or
acceleration of Maturity shall be the Amortized Face Amount of this Note as of
the date of such redemption, repayment or acceleration rather than the Face
Amount hereof. The "Amortized Face Amount" of this Note shall be the amount
equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that
portion of the difference between the Issue Price and the Face Amount hereof
that has accrued at the Yield to Maturity set forth on the face hereof
(computed in accordance with generally accepted United States bond yield
computation principles) at the date as of which the Amortized Face Amount is
calculated, but in no event shall the Amortized Face Amount of this Note exceed
the Face Amount.
Section 9. Dual Currency Notes. If it is specified on the
face hereof that this Note is a Dual Currency Note, the Company has a one time
option, exercisable on any one of the Option Election Dates specified on the
face hereof in whole, but not in part, with respect to all Dual Currency Notes
issued on the same day and having the same terms as this Note (this "Tranche"),
of thereafter making all payments of principal, premium, if any, and interest
(which payments would otherwise be made in the Specified Currency of such
Notes) in the Optional Payment Currency specified on the face hereof. If the
Company makes such an election, the amount of Optional Payment Currency payable
in respect hereof shall be determined by the Exchange Rate Agent by converting
the amount of Specified Currency that would otherwise be payable into the
Optional Payment Currency at the Designated Exchange Rate specified on the face
hereof.
The Company may exercise such option by notifying the Trustee
of such exercise on or prior to the Option Election Date. The Trustee will
mail by first-class mail to each holder of a Note of this Tranche a notice of
such election within five Business Days of the Option Election Date which shall
state (i) the first date, whether an Interest Payment Date and/or the Maturity
Date, on which scheduled payments in the Optional Payment Currency will be made
and (ii) the Designated Exchange Rate. Any such notice by the Company, once
given, may not be withdrawn.
If this Note is a Dual Currency Note, unless otherwise
specified on the face hereof and notwithstanding any prior election made by the
Company, the amount payable hereon in the event of any optional redemption by
the Company, any repayment at the option of the Holder, any acceleration of the
Maturity of this Note or other prepayment of this Note prior to the Maturity
Date shall be an amount equal to the Principal Amount hereof otherwise due and
payable plus accrued interest to but excluding the date of redemption,
repayment, acceleration or other prepayment minus the Total Option Value
multiplied by a fraction, the numerator of which is the Principal Amount hereof
and the
<PAGE>
20
denominator of which is the aggregate Principal Amount of all Dual Currency
Notes of this Tranche. In no event will such payment be less than zero.
Notwithstanding any prior election made by the Company, such payment shall be
made in the Specified Currency unless otherwise provided on the face hereof.
The term "Total Option Value" means, with respect to any Dual
Currency Note on any date, an amount (calculated as of such date by the Option
Value Calculation Agent) equal to the sum of the Option Values (calculated as
of such date by the Option Value Calculation Agent) for all Interest Payment
Dates occurring after the date of calculation up to and including the Maturity
Date. The term "Option Value: means, with respect to an Interest Payment Date
or the Maturity Date, the amount calculated by the Option Value Calculation
Agent to be the arithmetic average of the prices quoted on the date of
calculation by three reference banks (which banks shall be selected by the
Option Value Calculation Agent and shall be reasonably acceptable to the
Company) for the right on the Option Election Date immediately preceding such
Interest Payment Date or Maturity Date to purchase for value on such Interest
Payment Date or Maturity Date from such reference banks (A) the aggregate
amount of the Specified Currency due on such Interest Payment Date or Maturity
Date with respect to all of the Dual Currency Notes of this Tranche in exchange
for (B) the amount of the Optional Payment Currency that would be received if
the amount in clause (A) were converted into the Optional Payment Currency at
the Designated Exchange Rate.
All determinations referred to above made by the Exchange Rate
Agent or the Option Value Calculation Agent shall be at their sole discretion
(except to the extent expressly provided herein that any determination is
subject to approval by the Company) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder hereof, and
neither the Exchange Rate Agent nor the Option Value Calculation Agent shall
have any liability therefor.
Section 10. Extendible Notes. If it is specified on the face
hereof that this Note is an Extendible Note, the Company has the option to
extend the Maturity Date hereof for the number of Extension Periods set forth
on the face hereof, each of which Extension Periods shall be a period of from
one to five whole years. Unless otherwise specified on the face hereof, the
following procedures shall apply if this Note is an Extendible Note.
The Company may exercise its option by notifying the Trustee
of such exercise at least 45 but not more than 60 days prior to the Maturity
Date hereof in effect prior to the exercise of such option (the "Original
Stated Maturity"). Not later than five Business Days after receipt thereof,
the Trustee will mail to the Holder a notice (the "Extension Notice"), first
class, postage prepaid, setting forth (i) the election of the Company to extend
the Maturity Date, (ii) the new Maturity Date, (iii) the
<PAGE>
21
Spread or Spread Multiplier applicable to the Extension Period and (iv) the
provisions, if any, for redemption during the Extension Period, including the
date on which or the period or periods during which and the price at which
such redemption may occur during the Extension Period. Upon the mailing by
the Trustee of an Extension Notice to the Holder, the Maturity Date hereof
shall be extended automatically, and, except as modified by the Extension
Notice and as described in the next paragraph, this Note will have the same
terms as prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to
the Original Stated Maturity hereof, the Company may, at its option, revoke the
interest rate provided for in the Extension Notice and establish a higher
interest rate for the Extension Period by causing the Trustee to mail notice of
such higher interest rate, first class, postage prepaid, to the Holder. Such
notice shall be irrevocable and shall be mailed by the Trustee within three
Business Days after receipt thereof. This Note will bear such higher interest
rate for the Extension Period, whether or not tendered for repayment.
If the Company extends the Maturity Date of this Note, the
Holder will have the option to elect repayment by the Company of this Note, or
any portion hereof, on the Original Stated Maturity at a price calculated with
reference to the Face Amount hereof to be repaid plus any accrued interest to
such date. In order for this Note to be so repaid on the Original Stated
Maturity, the Holder must follow the procedures set forth in Section 5 hereof
for optional repayment, except that the period for delivery of this Note or
notification to the Trustee shall be at least 25 but not more than 35 days
prior to the Original Stated Maturity and except that the Holder may, by
written notice to the Trustee, revoke any such tender for repayment until the
close of business on the tenth day prior to the Original Stated Maturity;
provided, however, that if such day is not a Business Day, then such notice may
be given on the next succeeding Business Day.
Section 11. Renewable Notes. If it is specified on the face
hereof that this Note is a Renewable Note, this Note will mature on the Initial
Maturity Date specified on the face hereof unless the Maturity of all or any
portion of this Note is extended in accordance with the procedures described
below.
On the Interest Payment Date occurring in the sixth month
(unless a different Special Election Interval is specified on the face hereof)
prior to the Initial Maturity Date hereof (the "Initial Maturity Extension
Date") and on the Interest Payment Date occurring in each sixth month (or the
last month of each Special Election Interval) after such Initial Maturity
Extension Date (each, together with the Initial Maturity Extension Date, a
"Maturity Extension Date"), the Maturity of this Note will be extended to the
Interest Payment Date occurring
<PAGE>
22
in the twelfth month (or, if a Special Election Interval is specified on the
face hereof, the last month in a period equal to twice the Special Election
Interval) after such Maturity Extension Date, unless the Holder elects to
terminate the automatic extension of the Maturity hereof or any portion hereof
as described below.
If the Holder elects to terminate the automatic extension of
the Maturity of any portion of the principal amount of this Note during the
specified period prior to any Maturity Extension Date, such portion will become
due and payable on the Interest Payment Date occurring in the sixth month (or
the last month in the Special Election Interval) after such Maturity Extension
Date (the "Extended Maturity Date").
The Holder may elect to terminate the automatic extension of
the Maturity of this Note, or if so specified above, any portion hereof, by
delivering a notice to such effect to the Trustee (or any duly appointed Paying
Agent) at the Corporate Trust Office not less than 15 nor more than 30 days
prior to such Maturity Extension Date (unless another period is specified on
the face hereof as the "Special Election Period"). Such election will be
irrevocable and will be binding upon each subsequent Holder of this Note. An
election to terminate the automatic extension of the Maturity of this Note may
be exercised with respect to less than the entire Face Amount hereof only if so
specified on the face hereof and only in such Face Amount, or any integral
multiple in excess thereof, as is specified on the face hereof.
Notwithstanding the foregoing, the Maturity of this Note will not be extended
beyond the Maturity Date specified on the face hereof.
Unless otherwise specified above, any such election to
terminate will be effective only if this Note, with the "Option to Elect
Termination of Automatic Extension" included herein duly executed, is presented
to the Trustee (or any duly appointed Paying Agent) simultaneously with notice
of such election (or, in the event notice of such election, together with a
guarantee of delivery within five Business Days, is transmitted on behalf of
the Holder from a member of a national securities exchange, the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
in the United States, within five Business Days of the date of such notice).
As soon as practicable following receipt of this Note the Trustee (or any duly
appointed Paying Agent) shall issue in exchange herefor in the name of the
Holder (i) a Note, in a face amount equal to the face amount of this Note for
which the election to terminate the automatic extension of Maturity was
exercised, with terms identical to those specified herein (except for the Issue
Date and the Initial Interest Rate and except that such Note shall have a
fixed, non- extendable Maturity on the Extended Maturity Date) and (ii) if such
election is made with respect to less than the full Face Amount hereof, a
replacement Renewable Note, in a face amount
<PAGE>
23
equal to the Face Amount of this Note for which no election was made, with
terms identical to this Note.
Section 12. Principal Amount For Indenture Purposes. For the
purpose of determining whether Holders of the requisite amount of Notes
outstanding under the Indenture have made a demand, given a notice or waiver or
taken any other action, the outstanding principal amount of this Note will be
deemed to be the Principal Amount, provided, however, if this Note is an OID
Note, the outstanding, principal amount of this Note will be deemed to be the
Face Amount set forth above.
Section 13. Modification and Waivers. The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than 66-2/3% in aggregate principal amount of each series
of the Securities at the time Outstanding to be affected, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities of all such series; provided, however, that no such
supplemental indenture shall, among other things, (i) extend the fixed maturity
of any Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon or reduce any premium payable on
redemption, or make the principal thereof, or premium, if any, or interest
thereon payable in any coin or currency other than that hereinabove provided,
without the consent of the holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected. It is also
provided in the Indenture that, prior to any declaration accelerating the
Maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on or the
principal of, or premium if any, on any of the Securities of such series, or in
the payment of any sinking fund installment or analogous obligation with
respect to Securities of such series. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Note and any Notes which may be issued in
exchange or substitution herefor, irrespective of whether or not any notation
thereof is made upon this Note or such other Notes.
Section 13. Obligations Unconditional. No reference herein
to the Indenture and no provisions of this Note or of the Indenture shall alter
or impair the obligation of the Company,
<PAGE>
24
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest, if any, on this Note at the place, at the respective times, at
the rate, and in the coin or currency herein prescribed.
Section 15. Defeasance. The Indenture contains provisions
for the discharge of the Indenture and defeasance at any time of the
indebtedness on this Note upon compliance by the Company with certain
conditions set forth therein, which provisions apply to this Note.
Section 16. Authorized Form and Denominations. The Notes of
this series are issuable in registered form, without coupons. Unless otherwise
set forth on the face hereof, Notes denominated in U.S. dollars will be issued
in Face Amount denominations of U.S. $100,000 and any integral multiple of U.S.
$1,000 in excess thereof. Notes denominated in a Foreign Currency will be
issued in the denomination or denominations set forth on the face hereof. Each
Note will be issued initially as either a Global Security or a Certificated
Note, at the option of the holders thereof, either at the office or agency to
be designated and maintained by the Company for such purpose in the Borough of
Manhattan, The City of New York, pursuant to the provisions of the Indenture or
at any of such other offices or agencies as may be designated and maintained by
the Company for such purpose pursuant to the provisions of the Indenture, and
in the manner and subject to the limitations provided in the Indenture, but
without the payment of any service charge, except for any tax or other
governmental charges imposed in connection therewith. Notes of this series are
exchangeable for a like aggregate Face Amount of Notes of this series of a
different authorized denomination, except that Global Securities will not be
exchangeable for Certificated Notes.
Section 17. Registration of Transfer. As provided in the
Indenture and subject to certain limitations as therein set forth, the transfer
of this Note is registrable in the Security Register, upon surrender of this
Note for registration of transfer, at the Corporate Trust Office or agency in a
Place of Payment for this Note, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar requiring such written instrument of transfer duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series, of authorized denominations and for the same
aggregate Face Amount, will be issued to the designated transferee or
transferees.
If this Note is a Global Security and if at any time the
Depository notifies the Company that it is unwilling or unable to continue as
Depository or if at any time the Depository shall no longer be eligible under
the Indenture, the Company shall appoint a successor Depository. If a
successor Depository for the Securities of such series is not appointed by the
Company
<PAGE>
25
within 90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company will issue, and the Trustee will authenticate and
deliver, Notes in definitive form in an aggregate Face Amount equal to the Face
Amount hereof.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
Prior to due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name this Note is registered as the owner hereof
for all purposes, and neither the Company nor the Trustee nor any agent of the
Company or of the Trustee shall be affected by any notice to the contrary.
Section 18. Events of Default. If an Event of Default with
respect to Notes of this series shall occur and be continuing, the principal of
the Notes of this series may be declared due and payable in the manner and with
the effect provided in the Indenture. In the event that this Note is an OID
Note or a Dual Currency Note, the amount of principal of this Note that becomes
due and payable upon such acceleration shall be equal to the amount calculated
as set forth in Section 8 or Section 9, respectively, hereof. Upon payment (i)
of the aggregate applicable amounts of principal of the Notes of this series so
declared due and payable and (ii) of interest on any overdue principal and
overdue interest (in each case to the extent that the payment of such interest
shall be legally enforceable), all of the Company's obligations in respect of
the payment of the principal of and interest, if any, on the Notes of this
series shall terminate.
Section 19. No Recourse Against Certain Persons. No recourse
for the payment of the principal of, premium, if any, or interest on this Note,
or for any claim based hereon or otherwise in respect hereof, and no recourse
under or upon any obligation, covenant or agreement of the Company in the
Indenture or any Indenture supplemental thereto or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly waived and released.
Section 20. Defined Terms. All terms used but not defined in
this Note are used herein as defined in the Indenture.
<PAGE>
26
Section 21. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
27
OPTION TO ELECT REPAYMENT
The undersigned owner of this Note hereby irrevocably elects
to have the Company repay the Face Amount of this Note or portion hereof below
designated at (i) the Optional Repayment Percentage multiplied by the Principal
Amount of this Note to be repaid in respect of such Face Amount plus accrued
interest to the Optional Repayment Date, if this Note is to be repaid pursuant
to the Optional Repayment provision described in Section 5 hereof, or (ii) 100%
of the Principal Amount of this Note to be repaid in respect of such Face
Amount plus accrued interest to the Optional Reset Date, if this Note is to be
repaid pursuant to the Optional Interest Reset provision described in Section 7
hereof or the Extendible Notes provision described in Section 10 hereof. Any
such election is irrevocable except as provided in Section 7 or Section 10
hereof.
Dated:_________________ _______________________________
Signature
Sign exactly as name appears on the front of
this Note [SIGNATURE GUARANTEED - required
only if Notes are to be issued and delivered
to other than the registered Holder]
Face Amount to be Fill in for registration of
repaid, if amount to be Notes if to be issued otherwise
repaid is less than the than to the registered Holder:
Face Amount of this
Note (Face Amount Name: ___________________________
remaining must be an Address: ________________________
authorized denomination) ________________________
(Please print name
$_______________________ and address including
zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID
NUMBER
_________________________________
<PAGE>
28
OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION
The undersigned owner of this Note hereby irrevocably elects
to terminate the automatic extension of this Note or of the portion of the Face
Amount of this Note below designated. Any such election is irrevocable and
will be binding on any subsequent Holder hereof.
Dated:_________________ _______________________________
Signature
Sign exactly as name appears on the front of
this Note [SIGNATURE GUARANTEED - required
only if Notes are to be issued and delivered
to other than the registered Holder]
Face Amount to be Fill in for registration of
terminated, if amount to be Notes if to be issued otherwise
terminated is less than the than to the registered Holder:
Face Amount of this
Note (such Face Amount Name: ___________________________
must be an authorized Address: ________________________
denomination) ______________________
(Please print name
$_______________________ and address including
zip code)
SOCIAL SECURITY OR OTHER TAXPAYER
ID NUMBER
_________________________________
<PAGE>
29
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenant by the entireties
JT TEN - as joint tenants with right of
survivorship and not as
tenants in common
UNIF GIFT
MIN ACT - __________Custodian__________
(Cust) (Minor)
Under Uniform Gifts to
Minors Act
_____________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________________________________
Please print or type name and address, including zip code of assignee
__________________________________________________________________
the within Note of LEHMAN BROTHERS HOLDINGS INC. and all rights thereunder and
does hereby irrevocably constitute and appoint
<PAGE>
30
______________________________________________________Attorney to transfer the
said Note on the books of the within-named Company, with full power of
substitution in the premises.
Dated:______________________________
SIGNATURE GUARANTEED:__________________________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular,
without alteration or enlargement or
any change whatsoever.
<PAGE>
EXHIBIT A
RESET NOTICE
LEHMAN BROTHERS HOLDINGS INC.
Medium-Term Notes, Series E
(Floating Rate)
CUSIP No. ___________
Registered Nos. ___-___
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized
and existing under the laws of the State of Delaware (the "Company"), is the
issuer of the above-referenced Notes (the "Notes"). Capitalized terms used
herein and not defined are used as defined in the Notes.
The Company hereby elects to reset the [Spread] [Spread Multiplier]
set forth on the face of the Notes. On and after _________________1/, the
[Spread] [Spread Multiplier] shall be _______________.
Each Holder of a Note has the option to elect repayment by the
Company of such Note, or any portion thereof, on any Optional Reset Date
pursuant to the terms of such Note. The Notes may be repaid on the dates and
at the prices set forth below:
Date Redemption Price
---- ----------------
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused
this Reset Notice to be signed by its Chairman of the Board, its President, its
Vice Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer and to be attested by its Secretary or one of its Assistant
Secretaries.
Dated: LEHMAN BROTHERS HOLDINGS INC.
By:
-------------------------------
Title:
Attest:
---------------------------
Title:
- --------------------------
1/ Insert applicable Optional Reset Date.
<PAGE>
Exhibit 4(n)
CUSIP NO. ___________
REGISTERED FACE AMOUNT:.
No. ___
If this Note is an OID Note (as defined below) the following legend is
applicable:
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES
INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE ISSUE PRICE OF THIS
NOTE IS _____% OF ITS PRINCIPAL AMOUNT, AND THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT, THE YIELD TO MATURITY COMPOUNDED _____________, THE
ISSUE DATE AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ALLOCABLE TO THE
SHORT PERIOD DETERMINED USING THE EXACT METHOD WITHIN THE MEANING OF
PROPOSED TREASURY REGULATION SECTION 1.1272- 1(c)(2)(ii) ARE AS SET
FORTH BELOW.
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTE, SERIES E
(CURRENCY INDEXED)
If the registered owner of this Note (as indicated below) is The
Depository Trust Company (the "Depository") or a nominee of the Depository,Note
is a Note in global form (a "Global Security") and the following legends are
applicable except as specified on the reverse hereof:
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF
THE DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO
CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.
<PAGE>
2
<TABLE>
<S> <C> <C>
ISSUE PRICE: $ OPTION TO RECEIVE PAYMENTS OPTIONAL REPAYMENT PRICES:
IN THE SPECIFIED CURRENCY:
ISSUE DATE: [ ] YES [ ] NO OPTIONAL INTEREST RATE RESET:
[ ] YES [ ] NO
MATURITY DATE: SPECIFIED CURRENCY:
OPTIONAL RESET DATES:
INTEREST RATE: AMORTIZING NOTE:
[ ] YES [ ] NO OPTIONAL REDEMPTION:
INTEREST PAYMENT DATES: [ ] YES [ ] NO
SINKING FUND:
REGULAR RECORD DATES: INITIAL REDEMPTION DATE:
TOTAL AMOUNT OF OID:
EXCHANGE RATE AGENT: INITIAL REDEMPTION
YIELD TO MATURITY: PERCENTAGE: %
DEPOSITORY:
INITIAL ACCRUAL PERIOD OID: APPLICABILITY OF ANNUAL REDEMPTION
PERCENTAGE REDUCTION:
REFERENCE DEALERS: [ ] YES [ ] NO
If yes, state Annual Percentage
AUTHORIZED DENOMINATIONS: Reduction: %
</TABLE>
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the
"Company", which term includes any successor corporation under the Indenture
referred to on the reverse hereof), for value received, hereby promises to
pay to ___________, or registered assigns, on the Maturity Date the principal
sum equal to the Face Amount hereof, plus or minus an amount determined by
the Determination Agent (as defined below) in accordance with the formula set
forth below (the "Principal Amount") and to pay interest on the Face Amount
as described below and on the reverse hereof until the Principal Amount is
paid or made available for payment and (to the extent that the payment of
such interest shall be legally enforceable) to pay interest on any overdue
principal and premium and on any overdue installment of interest. Unless
otherwise specified above, all payments in respect of this Note will be made
in the Denominated Currency.
The Principal Amount of this Note payable at Maturity shall equal:
(a) if the Spot Rate equals or exceeds the Base Exchange Rate,
Spot Rate - Base Exchange Rate
------------------------------
Face Amount + (Face Amount x Spot Rate ); or
<PAGE>
3
(b) if the Base Exchange Rate exceeds the Spot Rate,
Base Exchange Rate - Spot Rate
------------------------------
Face Amount + (Face Amount x Spot Rate );
provided, however, that in no event shall such Principal Amount be greater
than twice the Face Amount or less than zero. If this Note is an OID Note,
unless otherwise specified above, the term "Face Amount" when used in the
above formula shall refer to the Amortized Face Amount, as described on the
reverse hereof. An "OID Note" is any Note (a) that has been issued at an
Issue Price lower, by more than a de minimis amount (as determined under
United States federal income tax rules applicable to original issue discount
instruments), than the Face Amount thereof and (b) any other Note that for
United States federal income tax purposes would be considered an original
issue discount instrument.
The amount of interest, if any, payable on any Interest Payment
Date (as defined below) shall equal:
Interest Rate Base Exchange Rate
------------- -------------------------------
Face Amount x 2 x Spot Rate
If the Interest Rate on this Note may be reset at the option of the Company
as set forth on the reverse hereof, the term "Interest Rate" when used in the
above formula shall refer to the interest rate in effect during the relevant
period.
The terms used in the preceding formula shall have the following
meanings:
"Business Day" means any day, other than a Saturday or Sunday, that
meets each of the following applicable requirements: such day is
(a) not a day on which banking institutions in the Borough of
Manhattan, The City of New York are authorized or required by law
or regulation to close; (b) if the Denominated Currency specified
above is a Foreign Currency (as defined in Section 2 on the reverse
hereof) other than European Currency Units ("ECU"), (x) not a day
on which banking institutions are authorized or required by law or
regulation to close in the principal financial center of the
country issuing the Foreign Currency and (y) a day on which banking
institutions in such principal financial center are carrying out
transactions in such Foreign Currency; and (c) if the Denominated
Currency specified above is ECU, (x) not a day on which banking
institutions are authorized or required by law or regulation to
close in Luxembourg and (y) an ECU clearing day, as determined by
the ECU Banking Association in Paris.
"Determination Date" means the second Exchange Rate Day prior to
the date of Maturity.
<PAGE>
4
"Exchange Rate Day" means any day which is a Business Day in The
City of New York and in the principal financial center of the
country which recognizes the Denominated Currency as a unit of
domestic exchange and the principal financial center of the country
which recognizes the Indexed Currency as a unit of domestic
exchange.
"Reference Dealers" means the three banks or firms specified above
or, if any of them shall be unwilling or unable to provide the
requested quotations, such other major money center bank or banks
in The City or New York selected by the Company, in consultation
with the Determination Agent, to act as Reference Dealer or Dealers
in replacement therefor.
"Spot Rate" means the arithmetic means of the open market spot
offer quotations for the Indexed Currency (spot bid quotations for
the Denominated Currency) obtained by the Determination Agent from
the Reference Dealers in The City of New York at approximately
11:00 A.M., New York City time, on the Determination Date, for an
amount of Indexed Currency equal to the Face Amount multiplied by
the Base Exchange Rate, with settlement on the date of Maturity to
be in the Denominated Currency; provided that if such quotations
from the Reference Dealers are not available on the Determination
Date due to circumstances beyond the control of the Company or the
Determination Agent, the Spot Rate will be determined on the basis
of the most recently available quotations from the Reference
Dealers. The Spot Rate shall be expressed in units of the Indexed
Currency per one unit of Denominated Currency.
In the absence of manifest error, the determination by the
Determination Agent of the Spot Rate and of the amount of principal and
interest payable in respect of this Note shall be final and binding on the
Company and the Holder hereof.
If this Note is subject to an Annual Percentage Reduction as specified
above, the Redemption Price shall initially be the Initial Redemption Percentage
of the Principal Amount of this Note on the Initial Redemption Date and shall
decline at each anniversary of the Initial Redemption Date (each such, a
"Redemption Date") by the Annual Percentage Reduction of such Principal Amount
until the Redemption Price is 100% of such Principal Amount.
In the event of any optional redemption by the Company, any repayment
at the option of the Holder, acceleration of the maturity of this Note or other
prepayment of this Note prior to the Maturity Date specified, the term
"Maturity" when used herein shall
<PAGE>
5
refer, where applicable, to the date of redemption, repayment, acceleration
or other prepayment of this Note.
Interest shall be payable from the Issue Date specified above or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for until the principal hereof is paid or made available for
payment. Except as provided in the following paragraph, the Company will pay
interest semiannually on February 15 and August 15 of each year (unless other
Interest Payment Dates are specified above) (each an "Interest Payment
Date"), commencing with the first Interest Payment Date next succeeding
the Issue Date, and at Maturity; provided that any payment of principal,
premium, if any, or interest to be made on any Interest Payment Date or on a
date of Maturity that is not a Business Day shall be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or date of Maturity, as the case may be, and no
additional interest shall accrue as a result of such delayed payment. Each
payment of interest hereon shall include interest accrued through the day
before the Interest Payment Date or date of Maturity, as the case may be.
Unless otherwise specified above, interest on this Note will be computed on
the basis of a 360-day year of twelve 30-day months. In no event shall the
interest rate of this Note be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application.
Unless otherwise specified above, the interest payable on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Note (or one or more predecessor Notes) is registered at the
close of business on the Regular Record Date indicated above (whether or not a
Business Day) next preceding such Interest Payment Date; provided that,
notwithstanding any provision of the Indenture to the contrary, interest
payable on any date of Maturity shall be payable to the Person to whom
principal shall be payable; and provided, further, that, unless otherwise
specified above, in the case of a Note initially issued between a Regular
Record Date and the Interest Payment Date relating to such Regular Record Date,
interest for the period beginning on the Issue Date and ending on such Interest
Payment Date shall be paid on the Interest Payment Date following the next
succeeding Regular Record Date to the registered Holder on such next succeeding
Regular Record Date.
Unless otherwise indicated above, and except as provided below if
this Note is a Global Security, all payments of interest on this Note (other
than interest payable at Maturity) will be made by check (unless otherwise
provided above, from an account at a bank located outside the United States
if such amount is payable in a Foreign Currency); provided that, if the
Holder hereof is the Holder of U.S. $10,000,000 or more in aggregate Face
Amount of Notes of this series of like tenor and term (or a Holder of the
equivalent thereof in a Foreign Currency determined as provided in Section 2
on the reverse hereof), such
<PAGE>
6
Holder shall be entitled to receive interest payments in immediately
available funds, but only if complete and appropriate instructions have been
received in writing by the Trustee (or any such Paying Agent) on or prior to
the applicable Regular Record Date. Simultaneously with any election by the
Holder hereof to receive payments in respect hereof in U.S. dollars, such
Holder may, if so entitled (as provided above), elect to receive such
payments in immediately available funds by providing complete and appropriate
instructions to the Trustee (or any such Paying Agent), and all such payments
will be made in immediately available funds to an account maintained by the
payee with a bank located outside the United States or as otherwise provided
above.
Unless otherwise indicated above, and except as provided below if
this Note is a Global Security, payments of principal, premium, if any, and
interest payable at Maturity will be made in immediately available funds
(unless otherwise indicated above, payable to an account at a bank located
outside the United States if payable in a Foreign Currency) upon surrender of
this Note at the corporate trust office or agency of the Trustee (or any duly
appointed Paying Agent) maintained for that purpose in the Borough of
Manhattan, The City of New York (the "Corporate Trust Office"), provided that
this Note is presented to the Trustee (or any such Paying Agent) in time for
the Trustee (or any such Paying Agent) to make such payments in such funds in
accordance with its normal procedures.
Unless otherwise specified above, if this Note is a Global
Security, payments of interest (other than at Maturity), will be made in
same-day funds in accordance with existing arrangements between the Trustee
(or any duly appointed Paying Agent) and the Depository. Unless otherwise
specified above, if this Note is a Global Security, any principal, premium
and/or interest payable hereon at Maturity will be paid by wire transfer in
immediately available funds to an account specified by the Depository (which
account, unless otherwise provided above, will be at a bank located outside
the United States if payable in a Foreign Currency).
The Company will pay any administrative costs imposed by banks in
making payments in immediately available funds, but any tax, assessment or
governmental charge imposed upon payments hereunder, including, without
limitation, any withholding tax, will be borne by the Holder hereof.
References herein to "U.S. dollars" or "U.S. $" or "$" are to the coin
or currency of the United States as at the time of payment is legal tender for
the payment of public and private debts.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
<PAGE>
7
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture.
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this
instrument to be signed by its Chairman of the Board, its President, its Vice
Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer, by manual or facsimile signature under its corporate seal, attested
by its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.
Dated:
[SEAL] LEHMAN BROTHERS HOLDINGS INC.
By:
------------------------------
Chairman of the Board
Attest:
--------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to in
the within-mentioned Indenture.
CITIBANK, N.A.
as Trustee
By:
-------------------------
Authorized Officer
<PAGE>
8
[REVERSE OF NOTE]
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES E
(Currency Indexed)
Section 1. General. This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series E
(Currency Indexed) of the Company (herein called the "Notes"), limited in
aggregate principal amount to $2,500,000,000 (or (i) the equivalent thereof
in Foreign Currencies or (ii) such greater amount, if OID Notes are issued,
as shall result in aggregate gross proceeds to the Company of
$2,500,000,000), subject to reduction as a result of the sale under certain
circumstances of other debt securities of the Company. The foregoing limit,
however, may be increased by the Company if in the future it determines that
it may wish to sell additional Notes. The Notes are one of an indefinite
number of series of debt securities of the Company (collectively, the
"Securities") issued or issuable under and pursuant to an indenture dated as
of September 1, 1987, as amended (the "Indenture"), duly executed and
delivered by the Company and Citibank, N.A., as Trustee (herein called the
"Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Securities. The separate series of Securities
may be issued in various aggregate principal amounts, may mature at different
times, may bear interest (if any) at different rates, may be subject to
different redemption provisions or repayment or repurchase rights (if any),
may be subject to different sinking, purchase or analogous funds (if any),
may be subject to different covenants and Events of Default and may otherwise
vary as in the Indenture provided.
Section 2. Currency Exchanges and Payments. If the Denominated
Currency hereof is other than U.S. dollars (a Foreign Currency) and it is
specified on the face hereof that the Holder has the option to receive
payments in respect of this Note in U.S. dollars, the amount of any U.S.
dollar payment to be made in respect hereof will be determined by the
Exchange Rate Agent specified on the face hereof or a successor thereto (the
"Exchange Rate Agent"), based on the indicative quotation in The City of New
York selected by the Exchange Rate Agent at approximately 11:00 a.m., New
York City time, on the second Business Day preceding the applicable payment
date that yields the least number of U.S. dollars upon conversion of such
Foreign Currency. Unless otherwise provided on the face hereof, such
selection shall be made from among the quotations appearing on the bank
composite or multi- contributor pages of the Reuters Monitor Foreign Exchange
Service or, if not available, the Telerate Monitor Foreign Exchange Service.
If such quotations
<PAGE>
9
are unavailable from either such foreign exchange service, unless otherwise
provided on the face hereof, such selection shall be made from the quotations
received by the Exchange Rate Agent from no more than three nor less than two
recognized foreign exchange dealers in The City of New York selected by the
Exchange Rate Agent and approved by the Company (one of which may be the
Exchange Rate Agent) for the purchase by the quoting dealer, for settlement on
such payment date, of the aggregate amount of such Foreign Currency payable on
such payment date in respect of all Notes denominated in such Foreign Currency
and for which the applicable dealer commits to execute a contract. If no such
bid quotations are available, payments will be made in the Foreign Currency.
Unless otherwise specified on the face hereof, if payment
hereon is required to be made in a Foreign Currency and such currency is
unavailable to the Company for making payments thereof due to the imposition of
exchange controls or other circumstances beyond the Company's control, or is no
longer used by the government of the country which issued such currency or for
the settlement of transactions by public institutions of or within the
international banking community, then the Company will be entitled to make
payments with respect hereto in U.S. dollars until such Foreign Currency is
again available or so used. The amount so payable on any date in such Foreign
Currency shall be converted into U.S. dollars at a rate determined by the
Exchange Rate Agent on the basis of the noon buying rate in The City of New
York for cable transfers in the Foreign Currency as certified for customs
purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate")
for such Foreign Currency on the second Business Day prior to such payment
date, or on such other basis as may be specified on the face hereof. In the
event such Market Exchange Rate is not then available, the Company will be
entitled to make payments in U.S. dollars (i) if such Foreign Currency is not a
composite currency, on the basis of the most recently available Market Exchange
Rate for such Foreign Currency or (ii) if such Foreign Currency is a composite
currency, including, without limitation, the ECU, in an amount determined by
the Exchange Rate Agent to be the sum of the results obtained by multiplying
the number of units of each component currency of such composite currency, as
of the most recent date on which such composite currency was used, by the
Market Exchange Rate for such component currency on the second Business Day
prior to such payment date (or if such Market Exchange Rate is not then
available, by the most recently available Market Exchange Rate for such
component currency, or as otherwise specified on the face hereof). Any payment
in respect hereof made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
If the official unit of any component currency of a composite
currency is altered by way of combination or subdivision, the number of units
of that currency as a component shall be divided or multiplied in the same
proportion. If two or
<PAGE>
10
more component currencies are consolidated into a single currency, the amounts
of those currencies as components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that original component
currency as a component shall be replaced by amounts of such two or more
currencies having an aggregate value on the date of division equal to the
amount of the former component currency immediately before such division.
In the event of an official redenomination of the Specified
Currency or the Optional Payment Currency (including, without limitation, an
official redenomination of any such currency that is a composite currency), the
obligations of the Company to make payments in or with reference to such
currency shall, in all cases, be deemed immediately following such
redenomination to be obligations to make payments in or with reference to that
amount of redenominated currency representing the amount of such currency
immediately before such redenomination. In no event shall any adjustment be
made to any amount payable hereunder as a result of any redenomination of any
component currency of any composite currency (unless such composite currency is
itself officially redenominated).
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion (except to the extent expressly provided
herein that any determination is subject to approval by the Company) and, in
the absence of manifest error, shall be conclusive for all purposes and binding
on the Holder hereof, and the Exchange Rate Agent shall have no liability
therefor.
All currency exchange costs will be borne by the Holder hereof
by deduction from the payments made hereon.
Section 3. Redemption. If so specified on the face hereof,
the Company may at its option redeem this Note in whole or from time to time in
part on or after the date designated as the Initial Redemption Date on the face
hereof at either a price based on a constant percentage of the Principal Amount
of this Note as specified on the face hereof or at prices declining from the
premium specified on the face hereof, if any, to 100% of the Principal Amount
hereof, together, in each case, with accrued interest to the Redemption Date.
The Company may exercise such option by causing the Trustee to mail by
first-class mail to the Holder hereof a notice of such redemption at least 30
but not more than 60 days prior to the Redemption Date. In the event of
redemption of this Note in part only, a new Note or Notes of this series for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof in accordance with the terms of the Indenture.
Unless otherwise specified on the face hereof, if less than all of the Notes
with like tenor and terms to this Note are to be redeemed, the Notes
<PAGE>
11
to be redeemed shall be selected by the Trustee by such method as the Trustee
shall deem fair and appropriate.
Section 4. Sinking Funds. Unless otherwise specified on the face
hereof, this Note will not be subject to any sinking fund.
Section 5. Optional Repayment. If so specified on the face
hereof, this Note will be repayable prior to the Maturity Date at the option
of the Holder on the Optional Repayment Dates specified on the face hereof at
the Optional Repayment Prices specified on the face hereof, together with
accrued interest to the applicable Optional Repayment Date. Unless otherwise
specified on the face hereof, in order for this Note to be so repaid, the
Company must receive, at least 30 but not more than 45 days prior to an
Optional Repayment Date, either (i) this Note with the form below entitled
"Option to Elect Repayment" duly completed or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States setting forth the name
of the Holder hereof, the Face Amount hereof, the Face Amount to be repaid,
the certificate number hereof or a description of the tenor and terms of this
Note, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note with the form below entitled "Option
to Elect Repayment" duly completed will be received by the Paying Agent not
later than five Business Days after the date of such telegram, telex,
facsimile transmission or letter and this Note and form duly completed are
received by the Paying Agent by such fifth Business Day. Exercise of this
repayment option shall be irrevocable, except as otherwise provided under
Section 6. The repayment option may be exercised by the Holder of this Note
with respect to less than the Face Amount then outstanding provided that the
Face Amount of the Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment this Note shall be
cancelled and a new Note or Notes for the remaining Face Amount hereof shall
be issued in the name of the Holder of this Note.
Section 6. Optional Interest Reset. If so specified on the face
hereof, the Interest Rate on this Note may be reset at the option of the
Company, in the manner set forth below (unless otherwise specified on the
face hereof), on the Optional Reset Date or Optional Reset Dates specified on
the face hereof. The Company may exercise such option by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to an
Optional Reset Date. Not later than five Business Days after receipt
thereof, the Trustee will mail by first-class mail to the Holder of this Note
a notice (the "Reset Notice") setting forth (i) the election of the Company
to reset the interest rate, (ii) such new interest rate and (iii) the
provisions, if any, for redemption during the period from such Optional Reset
Date to the next Optional Reset Date or, if there
<PAGE>
12
is no such next Optional Reset Date, to the Maturity Date of this Note (each
such period a "Subsequent Interest Period"), including the date or dates on
which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period. The Reset
Notice shall be substantially in the form of Exhibit A to this Note. Upon
the transmittal by the Trustee of a Reset Notice to the Holder of this Note,
such new interest rate shall take effect automatically, and, except as
modified by the Reset Notice and as described in the next paragraph, this
Note will have the same terms as prior to the transmittal of such Reset
Notice.
Notwithstanding the foregoing, not later than 20 days prior to
an Optional Reset Date, the Company may, at its option, revoke the interest
rate provided for in the Reset Notice and establish an interest rate that is
higher than the interest rate provided for in the Reset Notice for the
Subsequent Interest Period commencing on such Optional Reset Date by causing
the Trustee to mail by first-class mail notice of such higher interest rate to
the Holder of this Note. Such notice shall be irrevocable and shall be mailed
by the Trustee within five Business Days after receipt thereof. All Notes with
respect to which the interest rate is reset on an Optional Reset Date will bear
such higher interest rate for the Subsequent Interest Period.
If the Company elects to reset the interest rate of this Note,
the Holder of this Note will have the option to elect repayment by the Company
of this Note, or any portion hereof, on any Optional Reset Date at a price
calculated with reference to the Face Amount hereof to be repaid, plus any
interest accrued to, such Optional Reset Date. In order to obtain repayment on
an Optional Reset Date, the Holder must follow the procedures set forth above
in Section 5 for optional repayment except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
prior to such Optional Reset Date and except that, if the Holder has tendered
this Note for repayment pursuant to the Reset Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth day prior to such Optional Reset Date; provided,
however, that if such day is not a Business Day, then such notice may be given
on the next succeeding Business Day.
Section 7. OID Notes. If this Note is an OID Note, unless
otherwise specified on the face hereof, the amount payable in the event of
redemption by the Company, repayment at the option of the Holder or
acceleration of Maturity shall be the Amortized Face Amount of this Note as of
the date of such redemption, repayment or acceleration rather than the Face
Amount hereof. The "Amortized Face Amount" of this Note shall be the amount
equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that
portion of the difference between the Issue Price and the
<PAGE>
13
Face Amount hereof that has accrued at the Yield to Maturity set forth on the
face hereof (computed in accordance with generally accepted United States
bond yield computation principles) at the date as of which the Amortized Face
Amount is calculated, but in no event shall the Amortized Face Amount of this
Note exceed the Face Amount.
Section 8. Principal Amount For Indenture Purposes. For the
purpose of determining whether Holders of the requisite amount of Notes
outstanding under the Indenture have made a demand, given a notice or waiver
or taken any other action, the outstanding principal amount of this Note will
be deemed to be the Face Amount.
Section 9. Modification and Waivers. The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than 66-2/3% in aggregate principal amount of each series
of the Securities at the time Outstanding to be affected, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities of all such series; provided, however, that no such
supplemental indenture shall, among other things, (i) extend the fixed maturity
of any Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon or reduce any premium payable on
redemption, or make the principal thereof, or premium, if any, or interest
thereon payable in any coin or currency other than that hereinabove provided,
without the consent of the holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected. It is also
provided in the Indenture that, prior to any declaration accelerating the
Maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on or the
principal of, or premium if any, on any of the Securities of such series, or in
the payment of any sinking fund installment or analogous obligation with
respect to Securities of such series. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Note and any Notes which may be issued in
exchange or substitution herefor, irrespective of whether or not any notation
thereof is made upon this Note or such other Notes.
<PAGE>
14
Section 10. Obligations Unconditional. No reference herein to the
Indenture and no provisions of this Note or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, premium, if any, and interest, if any, on this Note at
the place, at the respective times, at the rate, and in the coin or currency
herein prescribed.
Section 11. Defeasance. The Indenture contains provisions
for the discharge of the Indenture and defeasance at any time of the
indebtedness on this Note upon compliance by the Company with certain
conditions set forth therein, which provisions apply to this Note.
Section 12. Authorized Form and Denominations. The Notes of this
series are issuable in registered form, without coupons. Unless otherwise
set forth on the face hereof, Notes denominated in U.S. dollars will be
issued in Face Amount denominations of U.S. $100,000 and any integral
multiple of U.S. $1,000 in excess thereof. Notes denominated in a Foreign
Currency will be issued in the denomination or denominations set forth on the
face hereof. Each Note will be issued initially as either a Book-Entry Note
or a Certificated Note, at the option of the holders thereof, either at the
office or agency to be designated and maintained by the Company for such
purpose in the Borough of Manhattan, The City of New York, pursuant to the
provisions of the Indenture or at any of such other offices or agencies as
may be designated and maintained by the Company for such purpose pursuant to
the provisions of the Indenture, and in the manner and subject to the
limitations provided in the Indenture, but without the payment of any service
charge, except for any tax or other governmental charges imposed in
connection therewith. Notes of this series are exchangeable for a like
aggregate Face Amount of Notes of this series of a different authorized
denomination, except that Book-Entry Notes will not be exchangeable for
Certificated Notes.
Section 13. Registration of Transfer. As provided in the
Indenture and subject to certain limitations as therein set forth, the transfer
of this Note is registrable in the Security Register, upon surrender of this
Note for registration of transfer, at the Corporate Trust Office or agency in a
Place of Payment for this Note, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar requiring such written instrument of transfer duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series, of authorized denominations and for the same
aggregate Face Amount, will be issued to the designated transferee or
transferees.
If this Note is a Global Security and if at any time the
Depository notifies the Company that it is unwilling or unable to continue as
Depository or if at any time the Depository
<PAGE>
15
shall no longer be eligible under the Indenture, the Company shall appoint a
successor Depository. If a successor Depository for the Securities of such
series is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such ineligibility, the Company will
issue, and the Trustee will authenticate and deliver, Notes in definitive
form in an aggregate Face Amount equal to the Face Amount hereof.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
Prior to due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name this Note is registered as the owner hereof
for all purposes, and neither the Company nor the Trustee nor any agent of the
Company or of the Trustee shall be affected by any notice to the contrary.
Section 14. Events of Default. If an Event of Default with
respect to Notes of this series shall occur and be continuing, the principal
of the Notes of this series may be declared due and payable in the manner and
with the effect provided in the Indenture. In the event that this Note is an
OID Note or a Dual Currency Note, the amount of principal of this Note that
becomes due and payable upon such acceleration shall be equal to the amount
calculated as set forth in Section 7 hereof. Upon payment (i) of the
aggregate applicable amounts of principal of the Notes of this series so
declared due and payable and (ii) of interest on any overdue principal and
overdue interest (in each case to the extent that the payment of such
interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and interest, if any, on the Notes
of this series shall terminate.
Section 15. No Recourse Against Certain Persons. No recourse
for the payment of the principal of, premium, if any, or interest on this Note,
or for any claim based hereon or otherwise in respect hereof, and no recourse
under or upon any obligation, covenant or agreement of the Company in the
Indenture or any Indenture supplemental thereto or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly waived and released.
<PAGE>
16
Section 16. Defined Terms. All terms used but not defined in
this Note are used herein as defined in the Indenture.
Section 17. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
17
OPTION TO ELECT REPAYMENT
The undersigned owner of this Note hereby irrevocably elects
to have the Company repay the Face Amount of this Note or portion hereof below
designated at (i) the Optional Repayment Percentage multiplied by the Principal
Amount of this Note to be repaid in respect of such Face Amount plus accrued
interest to the Optional Repayment Date, if this Note is to be repaid pursuant
to the Optional Repayment provision described in Section 5 hereof, or (ii) 100%
of the Principal Amount of this Note to be repaid in respect of such Face
Amount plus accrued interest to the Optional Reset Date, if this Note is to be
repaid pursuant to the Optional Interest Reset provision described in Section 6
hereof. Any such election is irrevocable except as provided in Section 6
hereof.
Dated:_________________ _______________________________
Signature
Sign exactly as name appears on the front of
this Note [SIGNATURE GUARANTEED - required
only if Notes are to be issued and delivered
to other than the registered Holder]
Face Amount to be Fill in for registration of
repaid, if amount to be Notes if to be issued otherwise
repaid is less than the than to the registered Holder:
Face Amount of this
Note (Face Amount Name: ___________________________
remaining must be an Address: ________________________
authorized denomination) ________________________
(Please print name
$_______________________ and address including
zip code)
SOCIAL SECURITY OR OTHER TAXPAYER ID
NUMBER
_________________________________
<PAGE>
18
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenant by the entireties
JT TEN - as joint tenants with right of
survivorship and not as
tenants in common
UNIF GIFT
MIN ACT - __________Custodian__________
(Cust) (Minor)
Under Uniform Gifts to
Minors Act
_____________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________________________________________
Please print or type name and address, including zip code of assignee
__________________________________________________________________
the within Note of LEHMAN BROTHERS HOLDINGS INC. and all rights thereunder and
does hereby irrevocably constitute and appoint
<PAGE>
19
______________________________________________________Attorney to transfer the
said Note on the books of the within-named Company, with full power of
substitution in the premises.
Dated:______________________________
SIGNATURE GUARANTEED:__________________________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular,
without alteration or enlargement or
any change whatsoever.
<PAGE>
EXHIBIT A
RESET NOTICE
LEHMAN BROTHERS HOLDINGS INC.
Medium-Term Notes, Series E
(Currency Indexed)
CUSIP No. ___________
Registered Nos. ___-___
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized
and existing under the laws of the State of Delaware (the "Company"), is the
issuer of the above-referenced Notes (the "Notes"). Capitalized terms used
herein and not defined are used as defined in the Notes.
The Company hereby elects to reset the Interest Rate set forth
on the face of the Notes. On and after _________________1/, the Interest Rate
shall be _______________.
Each Holder of a Note has the option to elect repayment by the
Company of such Note, or any portion thereof, on any Optional Reset Date
pursuant to the terms of such Note. The Notes may be repaid on the dates and
at the prices set forth below:
Date Redemption Price
---- ----------------
IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused
this Reset Notice to be signed by its Chairman of the Board, its President, its
Vice Chairman, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer and to be attested by its Secretary or one of its Assistant
Secretaries.
Dated: LEHMAN BROTHERS HOLDINGS INC.
By:
-------------------------------
Title:
Attest:
---------------------------
Title:
- --------------------------
1/ Insert applicable Optional Reset Date.
<PAGE>
EXHIBIT 4(q)
[FORM OF FACE OF DEBENTURE]
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT THE FOLLOWING:
THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS DEBENTURE IS EXCHANGEABLE FOR DEBENTURES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
DEBENTURE (OTHER THAN A TRANSFER OF THIS DEBENTURE AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
DEBENTURE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE CO., HAS AN INTEREST HEREIN.]
NO. D- $____________
CUSIP NO.
LEHMAN BROTHERS HOLDINGS INC.
[___% QUARTERLY INCOME CAPITAL SECURITIES
(SERIES _ SUBORDINATED
INTEREST DEFERRABLE DEBENTURE DUE ____]
[____% JUNIOR SUBORDINATED DEBENTURE DUE ___]]
Lehman Brothers Holdings Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein referred to as the
"Company"), for value received, hereby promises to pay to ____________, at
the office or agency of the Company in the Borough of Manhattan, the City of
New York, the principal sum of _________________ DOLLARS on ________ __,
____, in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts,
and to pay interest on said principal sum at said office or agency, in like
coin or currency, at the rate per annum specified in the title of this
Debenture until the principal hereof becomes due and payable, and on any
overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at
the same rate per annum during the period in which such principal is overdue,
compounded [quarterly], to the registered holder of this Debenture, until
payment of said principal sum has been made or duly provided for. Interest
on this Debenture, (computed as set forth herein) shall be payable [quarterly]
[If the Debenture is a QUICs Debenture, insert the following: (subject to
deferral as set forth herein)] in arrears on [______ __, ______ __,
______ __ and ______ __] of each year (each an "Interest Payment
Date"), commencing ______ __, ____, from the Interest Payment Date next
preceding the date of this Debenture to which interest has been paid or duly
provided for, unless the date hereof is a date to which interest has been paid
or duly provided for, in which case from the date of this Debenture, or, if no
interest has been paid or duly provided for on this Debenture, from
______ __,____.
<PAGE>
The interest so payable on any Interest Payment Date will, subject to
certain exceptions provided in the Indenture referred to on the reverse hereof,
be paid to the person in whose name this Debenture (or one or more Predecessor
Securities, as defined in said Indenture) is registered at the close of business
on the fifteenth day of the calendar month (each a "Record Date") in which such
Interest Payment Date occurs. Interest may, at the option of the Company, be
paid by check mailed to the person entitled thereto at such person's address as
it appears in the registry books of the Company.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS DEBENTURE SET FORTH ON
THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
This Debenture shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, LEHMAN BROTHERS HOLDINGS INC. has caused this
instrument to be signed by its Chairman of the Board, its Vice Chairman, its
President, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer by manual or facsimile signature under its corporate seal, attested by
its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.
` LEHMAN BROTHERS HOLDINGS INC.
By:________________________________
Name:
Title:
Attest:
_____________________________________
Name:
Title:
2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
By:___________________________
Name:
Title:
3
<PAGE>
[FORM OF REVERSE OF DEBENTURE]
(Reverse of Debenture)
LEHMAN BROTHERS HOLDINGS INC.
[___% QUARTERLY INCOME CAPITAL SECURITIES
(SERIES _ SUBORDINATED INTEREST DEFERRABLE DEBENTURE, DUE ____)]
[___% JUNIOR SUBORDINATED DEBENTURE, DUE ____]
This Debenture is one of a duly authorized series of Debentures of the
Company designated as the [If this Debenture is a QUICs Debenture, insert
the following: ____% Quarterly Income Capital Securities (Series _
Subordinated Interest Deferrable Debentures, Due ____)] [If this Debenture is
not a QUICs Debenture, insert the following: ___% Junior Subordinated
Debenture, Due ____] of the Company (herein called the "Debentures"), limited
(except as otherwise provided in the Indenture referred to below) in aggregate
principal amount to $____________. The Debentures are one of an indefinite
number of series of debt securities of the Company (herein collectively called
the "Securities"), issued or issuable under and pursuant to an indenture, dated
as of February 1, 1996, as amended and supplemented (herein called the
"Indenture"), between the Company and Chase Manhattan Bank, formerly known as
Chemical Bank, as Trustee (herein called the "Trustee"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Debentures. The separate series of Securities may be issued in various
aggregate principal amounts, may mature at different times, may bear
interest (if any) at different rates, may be subject to different redemption
provisions or repayment or repurchase rights (if any), may be subject to
different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default, as defined in the Indenture, and
may otherwise vary as provided in the Indenture.
Payment of the principal of and interest on this Debenture is, to the
extent provided in the Indenture, subordinated and subject in right of payment
to the prior payment in full when due of the principal of (and premium, if any)
and interest, if any, on all Senior Debt, as defined in the Indenture, of the
Company and this Debenture is issued subject to the provisions of the Indenture
with respect thereto. Each registered holder of this Debenture, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and expressly directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee as his or her attorney-in-fact for any and all such
purposes. Each registered holder hereof, by his or her acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Debt, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
4
<PAGE>
Subject to Article Eleven of the Indenture, at any time on or after
_________ __,____ and prior to maturity, the Company shall have the right to
redeem this Debenture at the option of the Company, in whole or in part, at a
redemption price equal to 100% of the principal amount redeemed plus accrued
and unpaid interest thereon to the date fixed for redemption. Any redemption
pursuant to this paragraph shall be made upon not less than 30 nor more than
60 days notice to the Trustee and Holders of the Debentures. If less than
all the Debentures are to be redeemed by the Company, the Debentures to be
redeemed will be selected by lot or by such other method as the Trustee shall
deem fair and appropriate. The Debentures are not subject to a sinking fund.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for the unredeemed portion hereof will
be issued in the name of the registered holder hereof upon the surrender
hereof at a Place of Payment (as defined in the Indenture).
In case an Event of Default (as defined in the Indenture) with respect to
the Debentures shall have occurred and be continuing, the principal hereof may
be declared, and upon such declaration shall become due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The omission by the Company to pay interest during a Deferral Period (as defined
below) as permitted hereby shall not constitute an Event of Default under
Section 501 of the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66-2/3% in aggregate principal
amount of each series of the Securities at the time Outstanding to be affected
(each series voting as a class), evidenced as provided in the Indenture, to
execute supplemental indentures adding any provisions to, or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; PROVIDED, HOWEVER, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon or reduce any premium payable on
redemption, or make the principal thereof, or premium, if any, or interest
thereon payable in any coin or currency other than that hereinabove provided, or
amend the Indenture to modify its provisions relating to the subordination of
each Security in a manner adverse to the holder thereof, without the consent of
the holder of each Security so affected, or (ii) change the place of payment on
any Security, or impair the right to institute suit for payment on any Security,
or reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of each Security so affected. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of any series of
Securities, the holders of a majority in aggregate principal amount of the
Securities of such series Outstanding may on behalf of the holders of all the
Securities of such series waive any past default or Event of Default under the
Indenture with respect to such series and its consequences, except a default in
the payment of interest, if any, on or the principal of, or premium, if any, on
any of the Securities of such series. Any such consent or waiver by the holder
of this Debenture shall be conclusive and binding upon such holder and upon all
future holders and owners of this Debenture and any Debentures which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Debenture or such other Debentures.
5
<PAGE>
No reference herein to the Indenture and no provisions of this Debenture or
of the Indenture shall alter or impair the obligations of the Company, which is
absolute and unconditional, to pay the principal of this Debenture at the place,
at the time and in the coin or currency herein prescribed.
The amount of interest payable for any period will be computed on the
basis of twelve 30-day months and a 360-day year and for any period shorter
than a full quarterly interest period, on the basis of the actual number of
days elapsed in such period divided by 360 days. In the event that any date
on which interest is payable on this Debenture is not a Business Day (as
defined in the Indenture), then payment of the amount payable on such date
will be made on the next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such delay) except that, if
such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on the original Interest Payment Date [,If this
Debenture is a QUICs Debenture, insert the following: subject to certain rights
of deferral described below].
[If this Debenture is a QUICs Debenture, insert the following: The
Company shall have the right at any time, on one or more occasions,
so long as an Event of Default has not occurred and is not continuing under
the Indenture, to extend any interest payment period on this Debenture for a
period (a "Deferral Period") not to exceed [20 consecutive quarterly]
interest payment periods; provided that the date on which such Deferral
Period ends must be on an Interest Payment Date and must be no later than
________ __, ____ or any date on which any Debentures are fixed for
redemption, and, as a consequence, the [quarterly] interest payment on the
Debentures would be deferred (but would continue to accrue with interest
thereon compounded [quarterly] at the rate of interest on the Debentures,
except to the extent payment of such interest is prohibited by law) during
any such Deferral Period. On the Interest Payment Date at the end of each
Deferral Period, the Company shall pay all interest then accrued and unpaid
(compounded [quarterly], at the rate of interest on the Debentures, except to
the extent payment of such interest is prohibited by law) to the date of
payment, to the persons in whose name the Debentures are registered on the
Record Date immediately preceding the Interest Payment Date at the end of
such Deferral Period. The Company shall give the Trustee and the registered
holders of Debentures (with the Trustee to be notified at least three days
prior to notice to such holders) written notice of its election to defer
interest payments or to extend the Deferral Period prior to the earlier of
(i) the next scheduled [quarterly] Interest Payment Date or (ii) the date the
Company is required to give notice of the record date of such related
interest payment to the New York Stock Exchange or other applicable
self-regulatory organization or to the registered holders of the Debentures
but in ny event not less than two Business Days prior to such Record Date.
During the Deferral Period, the Company will not, and will not permit any
subsidiary to, (x) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect
to, any of the Company's capital stock or (y) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank on a parity with or junior in interest to
this Debenture or make any guarantee payments with respect to any guarantee by
the Company of the debt securities of any Subsidiary of the Company if such
guarantee ranks on a parity with or junior in interest to this Debenture
(other than (a) dividends or distributions in common stock of the Company, (b)
any declaration of a dividend in connection with the implementation of a
shareholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant
thereto, and (c) purchases of common stock related to the issuance of common
6
<PAGE>
stock or rights under any of the Company's benefit plans). During any
Deferral Period, the Company may continue to extend the interest payment
period by extending the Deferral Period, on one or more occasions by giving
notice as aforesaid; provided that such Deferral Period, as extended, must
end on an Interest Payment Date and in no event shall the aggregate Deferral
Period, as extended, exceed [20 consecutive quarterly] interest payment
periods or extend beyond __________ __, ____ or any date on which any of the
Debentures are fixed for redemption. No interest shall be due and payable on
the Debentures during a Deferral Period except at the end thereof.]
Notwithstanding the provisions of Section 401(a)(B) of the Indenture, the
Company may satisfy and discharge the entire indebtedness on all the Debentures
as provided therein only when the Debentures are by their terms due and payable
within one year.
The Debentures are issuable in registered form without coupons in
denominations of $__ and any multiple of $__. At the option of the holders
thereof, either at the office or agency to be designated and maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York,
pursuant to the provisions of the Indenture or at any of such other offices or
agencies as may be designated and maintained by the Company for such purpose
pursuant to the provisions of the Indenture, and in the manner and subject to
the limitations provided in the Indenture, but without the payment of any
service charge, except for any tax or other governmental charges imposed in
connection therewith. Debentures may be exchanged for an equal aggregate
principal amount of Debentures of like tenor and of other authorized
denominations.
The Company, the Trustee, and any agent of the Company or of the Trustee
may deem and treat the registered holder hereof as the absolute owner of this
Debenture (whether or not this Debenture shall be overdue and notwithstanding
any notation of ownership or other writing hereon), for the purpose of receiving
payment hereof, or on account hereof, and for all other purposes, and neither
the Company nor the Trustee nor any agent of the Company or of the Trustee shall
be affected by any notice to the contrary. All such payments made to or upon
the order of such registered holder shall, to the extent of the sum or sums
paid, effectually satisfy and discharge liability for moneys payable on this
Debenture.
No recourse for the payment of the principal of or the interest on this
Debenture, or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any indenture supplemental thereto or in any Debenture, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
7
<PAGE>
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Debenture is registrable in the Security Register,
upon surrender of this Debenture for registration of transfer at the office or
agency of the Company in any place where the principal of this Debenture is
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Security Registrar duly executed by,
the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Debentures of this series of like tenor and of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.
THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All items used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
______________________________________
The following abbreviations, when used in the inscription on the face of
the within Debenture, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by their entireties
JT TEN - as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT - ___________ Custodian __________ under Uniform Gifts to
(Cust) (Minor)
Minors Act__________________
(State)
Additional abbreviations may also be used though not in the above list.
____________________________
8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please insert social security or other identifying number of Assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Name and address of Assignee, including zip code, must be printed or
typewritten.)
the within Debenture, and all rights thereunder, hereby irrevocably constituting
and appointing
________________________________________________________________________________
________________________________________________________________________________
_____________ to transfer the said Debenture on the books of the Company, with
full power of substitution in the premises.
Date:_____________
Signature:_______________________________________
NOTICE: The signature to this assignment must correspond
with the name as it appears upon the face of the within
Debenture in every particular, without alteration or
enlargement or any change whatever.
Signature(s) Guaranteed:_____________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
9
<PAGE>
[THIS EXHIBIT 4(r) IS THE FORM OF SUBORDINATED DEBT SECURITY TO BE ISSUED TO
EACH OF LEHMAN BROTHERS HOLDINGS CAPITAL TRUST I, LEHMAN BROTHERS HOLDINGS
CAPITAL TRUST II AND LEHMAN BROTHERS HOLDINGS CAPITAL TRUST III]
EXHIBIT 4(r)
[FORM OF FACE OF DEBENTURE]
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT THE FOLLOWING:
THIS DEBENTURE IS A GLOBAL DEBENTURE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS DEBENTURE IS EXCHANGEABLE FOR DEBENTURES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
DEBENTURE (OTHER THAN A TRANSFER OF THIS DEBENTURE AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
DEBENTURE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE CO., HAS AN INTEREST HEREIN.]
NO. D- $____________
CUSIP NO.
LEHMAN BROTHERS HOLDINGS INC.
____% JUNIOR SUBORDINATED DEBENTURE DUE 20__
Lehman Brothers Holdings Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein referred to as the
"Company"), for value received, hereby promises to pay to
[If the Debenture is held by Lehman Brothers Holdings Capital Trust __: THE
CHASE MANHATTAN BANK, as Property Trustee (the "Property Trustee") for LEHMAN
BROTHERS HOLDINGS CAPITAL TRUST __ (the "Trust")] [If the Debenture is not held
by the Trust: _______________], at the office or agency of the Company in the
Borough of Manhattan, the City of New York, the principal sum of
_________________ DOLLARS on __________ __, 20__, in such coin or currency of
the Untied States of America as at the time of payment shall be legal tender
<PAGE>
for the payment of public and private debts, and to pay interest on said
principal sum at said office or agency, in like coin or currency, at the rate
per annum specified in the title of this Debenture until the principal hereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum during the period in which
such principal is overdue, compounded [semi-annually], to the registered
holder of this Debenture, until payment of said principal sum has been made
or duly provided for. Interest on this Debenture, (computed as set forth
herein) shall be payable [semi-annually] (subject to deferral as set forth
herein) in arrears on [__________ __ and __________ __] of each year (each an
"Interest Payment Date"), commencing ___________ __, ____, from the Interest
Payment Date next preceding the date of this Debenture to which interest has
been paid or duly provided for, unless the date hereof is a date to which
interest has been paid or duly provided for, in which case from the date of
this Debenture, or, if no interest has been paid or duly provided for on this
Debenture, from _____________ __, ____.
The interest so payable on any Interest Payment Date will, subject to
certain exceptions provided in the Indenture referred to on the reverse hereof,
be paid to the person in whose name this Debenture (or one or more Predecessor
Securities, as defined in said Indenture) is registered at [If the Debentures
are held only by the Property Trustee or if this is a Global Debenture: the
close of business on the Business Day prior to the relevant Interest Payment
Date] [Otherwise: the date selected by the Company and in any event at least one
Business Day before the relevant Interest Payment Date] (each a "Regular Record
Date"). Interest may, at the option of the Company, be paid by check mailed to
the person entitled thereto at such person's address as it appears in the
registry books of the Company.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS DEBENTURE SET FORTH ON
THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE
SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
This Debenture shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
2
<PAGE>
IN WITNESS WHEREOF, LEHMAN BROTHERS HOLDINGS INC. has caused this
instrument to be signed by its Chairman of the Board, its Vice Chairman, its
President, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer by manual or facsimile signature under its corporate seal, attested by
its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.
LEHMAN BROTHERS HOLDINGS INC.
By:________________________________
Name:
Title:
Attest:
_____________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated:
THE CHASE MANHATTAN BANK,
as Trustee
By:___________________________
Name:
Title:
3
<PAGE>
[FORM OF REVERSE OF DEBENTURE]
(Reverse of Debenture)
LEHMAN BROTHERS HOLDINGS INC.
____% JUNIOR SUBORDINATED DEBENTURE DUE 20__
This Debenture is one of a duly authorized series of Debentures of the
Company designated as the ____% Junior Subordinated Debentures Due 20__ of
the Company (herein called the "Debentures"), limited (except as otherwise
provided in the Indenture referred to below) in aggregate principal amount to
$______________. The Debentures are one of an indefinite number of series of
debt securities of the Company (herein collectively called the "Securities"),
issued or issuable under and pursuant to an indenture, dated as of February
1, 1996, as amended and supplemented (herein called the "Indenture"), between
the Company and The Chase Manhattan Bank, formerly known as Chemical Bank, as
Trustee (herein called the "Trustee") to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Debentures. The separate series
of Securities may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions or repayment or repurchase
rights (if any), may be subject to different sinking, purchase or analogous
funds (if any), may be subject to different covenants and Events of Default,
as defined in the Indenture, and may otherwise vary as provided in the
Indenture.
Payment of the principal of and interest on this Debenture is, to the
extent provided in the Indenture, subordinated and subject in right of payment
to the prior payment in full when due of the principal of (and premium, if any)
and interest, if any, on all Senior Debt, as defined in the Indenture, of the
Company and this Debenture is issued subject to the provisions of the Indenture
with respect thereto. Each registered holder of this Debenture, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and expressly directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee as his or her attorney-in-fact for any and all such
purposes. Each registered holder hereof, by his or her acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Debt, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
4
<PAGE>
Subject to Article Eleven of the Indenture, at any time on or after
_________ __, ____, and prior to maturity, the Company shall have the right to
redeem this Debenture at the option of the Company, in whole or in part, at the
Redemption Prices (expressed as a percentage of the principal amount of such
Debentures) set forth below, plus any accrued but unpaid interest, to the
Redemption Date, if redeemed during the twelve-month period beginning on the
________ __ of the years indicated below:
YEAR PERCENTAGE
........................................................................ %
........................................................................ %
........................................................................ %
........................................................................ %
........................................................................ %
........................................................................ %
........................................................................ %
........................................................................ %
........................................................................ %
and thereafter.......................................................... 100%
If an Investment Company Event (as defined in the Amended and Restated
Declaration of Trust of the Trust, dated ______ __, _____, among the Company,
as Sponsor, the Trust, and the trustees of the Trust named thereto (the
"Declaration") shall occur and be continuing, the Company may, at any time
within 90 days following the occurrence of such Investment Company Event,
redeem the Debentures (in whole but not in part) at a Redemption Price equal
to 100% of the principal amount thereof, plus accrued and unpaid interest
thereon to the Redemption Date. Subject to certain conditions described in
the Indenture, in the event of the occurrence and continuation of a Tax Event
(as defined in the Declaration), in certain circumstances the Company may (a)
shorten the Stated Maturity of the Debentures to a date not earlier than
_______ __, ____ or (b) redeem the Debentures, in whole but not in part, at
any time within 90 days following the occurrence of a Tax Event at a
Redemption Price equal to 100% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon to the Redemption Date. Any
redemption pursuant to this paragraph shall be made upon not less than 30 nor
more than 60 days' notice to the trustee and holders of the Debentures. Any
redemption pursuant to this paragraph shall be made upon not less than 30 nor
more than 60 days notice to the Trustee and Holders of the Debentures. If
less than all the Debentures are to be redeemed by the Company, the
Debentures to be redeemed will be selected by lot or by such other method as
the Trustee shall deem fair and appropriate. The Debentures are not subject
to a sinking fund.
In the event of redemption of this Debenture in part only, a new Debenture
or Debentures of this series for the unredeemed portion hereof will be issued in
the name of the registered holder hereof upon the surrender hereof at a Place of
Payment (as defined in the Indenture).
In case an Event of Default with respect to the Debentures shall have
occurred and be continuing, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture. The omission by the
Company to pay interest during an Extension Period (as defined below) as
permitted hereby shall not constitute an Event of Default under Section 501 of
the Indenture. An "Event of Default" means any of those events set forth in
Section 501 of the Indenture, and the event that, when the Property Trustee is
the Holder of the Debentures, the Trust shall have voluntarily or involuntarily
dissolved, wound-up its business or otherwise terminated its existence except in
connection with the (i) distribution of Debentures to holders of Preferred
Securities and Common Securities in liquidation of their
5
<PAGE>
interests in the Trust, (ii) the redemption of all of the outstanding Preferred
Securities and Common Securities, or (iii) certain mergers, consolidations or
amalgamation, each as permitted by the Declaration.
If the Debentures are held by the Trust, the Company, as borrower,
hereby covenants to pay all debts and obligations (other than with respect to
the Preferred Securities and Common Securities of the Trust) and all costs
and expenses of the Trust (including, but not limited to, all costs and
expenses relating to the organization of the Trust, the fees and expenses of
the trustees of the Trust and all costs and expenses relating to the
operation of the Trust) and to pay any and all taxes, duties, assessments or
governmental charges of whatever nature (other than United States withholding
taxes) imposed on the Trust by the United States, or any other taxing
authority, so that the net amounts received and retained by the Trust and the
Property Trustee after paying such debts, obligations, costs, expenses, taxes,
duties, assessments, or other governmental charges, will be equal to the
amounts the Trust and the Property Trustee would have received had no such
debts, obligations, costs, expenses, taxes, duties, assessments, or other
governmental charges been incurred by or imposed on the Trust. The foregoing
obligations of the Company are for the benefit of, and shall be enforceable
by, any person to whom any such debts, obligations, costs, expenses and taxes
are owed (each, a "Creditor") whether or not such Creditor has received
notice thereof. Any such Creditor may enforce such obligations of the
Company directly against the Company, and the Company irrevocably waives any
right or remedy to require that any such Creditor take any action against the
Trust or any other person before proceeding against the Company. The Company
shall execute such additional agreements as may be necessary or desirable to
give full effect to the foregoing.
The Company hereby covenants that, so long as any Preferred Securities
and Common Securities of the Trust remain outstanding, if (i) there shall
have occurred any Event of Default under the Indenture with respect to the
Debentures, (ii) the Company shall be in default with respect to its payment
of any obligations under its Guarantee (as defined in the Declaration) with
respect to the Trust or (iii) the Company shall have given notice of its
election of an Extension Period as provided herein and shall not have
rescinded such notice, or such Extension Period or any extension thereof
shall be continuing, then the Company will not, and will not permit any
Subsidiary to (x) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
of the Company's capital stock or (y) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
the Company that rank on a parity with or junior in interest to this
Debenture or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any Subsidiary of the Company if such
guarantee ranks on a parity with or junior in interest to this Debenture
(other than (a)
6
<PAGE>
dividends or distributions in common stock of the Company, (b) payments under
the Guarantee made by the Company in respect of the Preferred Securities and
Commom Securities of the Trust, (c) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans).
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66-2/3% in aggregate principal
amount of each series of the Securities at the time Outstanding to be affected
(each series voting as a class), evidenced as provided in the Indenture, to
execute supplemental indentures adding any provisions to, or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; PROVIDED, HOWEVER, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon or reduce any premium payable on
redemption, or make the principal thereof, or premium, if any, or interest
thereon payable in any coin or currency other than that hereinabove provided, or
amend the Indenture to modify its provisions relating to the subordination of
each Security in a manner adverse to the holder thereof, without the consent of
the holder of each Security so affected, or (ii) change the place of payment on
any Security, or impair the right to institute suit for payment on any Security,
or reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of each Security so affected. It is also provided in the Indenture
that, prior to any declaration accelerating the maturity of any series of
Securities, the holders of a majority in aggregate principal amount of the
Securities of such series Outstanding may on behalf of the holders of all the
Securities of such series waive any past default or Event of Default under the
Indenture with respect to such series and its consequences, except a default in
the payment of interest, if any, on or the principal of, or premium, if any, on
any of the Securities of such series. Any such consent or waiver by the holder
of this Debenture shall be conclusive and binding upon such holder and upon all
future holders and owners of this Debenture and any Debentures which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Debenture or such other Debentures.
No reference herein to the Indenture and no provisions of this Debenture or
of the Indenture shall alter or impair the obligations of the Company, which is
absolute and unconditional, to pay the principal of this Debenture at the place,
at the time and in the coin or currency herein prescribed.
The amount of interest payable for any period will be computed (i) for
any full 180-day semi-annual interest payment period, on the basis of a
360-day year of twelve 30-day months, (ii) for any period shorter than a full
180-day semi-annual interest payment period for
7
<PAGE>
which interest payments are computed, on the basis of a 30-day month and (iii)
for periods of less than a month, the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on this
Debenture is not a Business Day (as defined in the Indenture), then payment of
the amount payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the original Interest
Payment Date, subject to certain rights of deferral described below.
The Company shall have the right at any time, on one or more occasions,
so long as an Event of Default has not occurred and is not continuing under
the Indenture, to extend any interest payment period on this Debenture for a
period (an "Extension Period") not to exceed [ten consecutive semi-annual]
interest payment periods; provided that the date on which such Extension
Period ends must be on an Interest Payment Date and must be no later than
___________ __, ____ or any date on which any Debentures are fixed for
redemption, and, as a consequence, the [semi-annual] interest payment on the
Debentures would be deferred (but would continue to accrue with interest
thereon compounded [semi-annually] at the rate of interest on the Debentures,
except to the extent payment of such interest is prohibited by law) during
any such Extension Period. On the Interest Payment Date at the end of each
Extension Period, the Company shall pay all interest then accrued and unpaid
(compounded [semi-annually], at the rate of interest on the Debentures,
except to the extent payment of such interest is prohibited by law) to the
date of payment, to the persons in whose name the Debentures are registered
8
<PAGE>
on the Regular Record Date immediately preceding the Interest Payment Date at
the end of such Extension Period. [If the Property Trustee is the only holder
of Debentures: The Company shall give written notice to the Regular Trustees
(as defined in the Declaration), the Property Trustee and the Trustee of its
election of such Extension Period one Business Day before the earlier of (i)
the next succeeding date on which distributions on the Preferred Securities of
the Trust are payable or (ii) the date the Trust is required to give notice of
the record date or the date such distributions are payable to the New York
Stock Exchange or other applicable self-regulatory organization or to holders
of the Preferred Securities issued by the Trust, but in any event at least one
Business Day before such record date.] [If the Property Trustee is not the only
registered holder of Debentures: The Company shall give the registered holders
of Debentures (with the Trustee to be notified at least three days prior to
notice to such holders) written notice of its election to defer interest
payments or to extend the Extension Period ten Business Days prior to the
earlier of (i) the next scheduled [semi-annual] Interest Payment Date or (ii)
the date the Company is required to give notice of the record date of such
related interest payment to the New York Stock Exchange or other applicable
self-regulatory organization or to the registered holders of the
Debentures but in any event not less than two Business Days prior to such
Regular Record Date.] During any Extension Period, the Company may continue
to extend the interest payment period by extending the Extension Period, on
one or more occasions by giving notice as aforesaid; provided that such
Extension Period, as extended, must end on an Interest Payment Date and in no
event shall the aggregate Extension Period, as extended, exceed
[ten consecutive semi-annual] interest payment periods or extend beyond
___________ __, ____ or any date on which any of the Debentures are fixed for
redemption. No interest shall be due and payable on the Debentures during an
Extension Period except at the end thereof.
Notwithstanding the provisions of Section 401(a)(B) of the Indenture, the
Company may satisfy and discharge the entire indebtedness on all the Debentures
as provided therein only when the Debentures are by their terms due and payable
within one year.
The Debentures are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000. At the option of the
holders thereof, either at the office or agency to be designated and maintained
by the Company for such purpose in the Borough of Manhattan, The City of New
York, pursuant to the provisions of the Indenture or at any of such other
offices or agencies as may be designated and maintained by the Company for such
purpose pursuant to the provisions of the Indenture, and in the manner and
subject
9
<PAGE>
to the limitations provided in the Indenture, but without the payment of
any service charge, except for any tax or other governmental charges imposed in
connection therewith, Debentures may be exchanged for an equal aggregate
principal amount of Debentures of like tenor and of other authorized
denominations.
The Company, the Trustee, and any agent of the Company or of the Trustee
may deem and treat the registered holder hereof as the absolute owner of this
Debenture (whether or not this Debenture shall be overdue and notwithstanding
any notation of ownership or other writing hereon), for the purpose of receiving
payment hereof, or on account hereof, and for all other purposes, and neither
the Company nor the Trustee nor any agent of the Company or of the Trustee shall
be affected by any notice to the contrary. All such payments made to or upon
the order of such registered holder shall, to the extent of the sum or sums
paid, effectually satisfy and discharge liability for moneys payable on this
Debenture.
No recourse for the payment of the principal of or the interest on this
Debenture, or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any indenture supplemental thereto or in any Debenture, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer or director as such, past,
present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Debenture is registrable in the Security
Register, upon surrender of this Debenture for registration of transfer at
the office or agency of the Company in any place where the principal of this
Debenture is payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Debentures of this
series of like tenor and of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees.
THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
All items used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
10
<PAGE>
______________________________________
The following abbreviations, when used in the inscription on the face of
the within Debenture, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by their entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - ___________ Custodian __________ under Uniform Gifts to
(Cut) (Minor)
Minors Act__________________
(State)
Additional abbreviations may also be used though not in the above list.
______________________________________
11
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please insert social security or other identifying number of Assignee)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Name and address of Assignee, including zip code, must be printed or
typewritten.)
the within Debenture, and all rights thereunder, hereby irrevocably constituting
and appointing
________________________________________________________________________________
________________________________________________________________________________
_____________ to transfer the said Debenture on the books of the Company, with
full power of substitution in the premises.
Date:_____________
Signature:_______________________________________
NOTICE: The signature to this assignment must correspond
with the name as it appears upon the face of the within Debenture in every
particular, without alteration or enlargement or any change whatever.
Signature(s) Guaranteed:_____________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
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EXHIBIT 4.(s)
CERTIFICATE OF DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
____ % CUMULATIVE PREFERRED STOCK, SERIES _
($25.00 initial 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 1209 Orange Street, in the City of Wilmington, in the
County of New Castle (the "Corporation"), HEREBY CERTIFIES that resolutions
were duly adopted by the Board of Directors of the Corporation 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,
and by the Executive Committee thereof pursuant to the authority duly
delegated thereto by the Board of Directors of the Corporation, as follows:
RESOLVED, that the Corporation be, and it hereby is, authorized to
offer, issue and sell preferred stock, par value $1.00, with a liquidation
preference, in the aggregate, of up to $400,000,000 (the "New Preferred
Stock") in one or more series, on such terms, and with such designations,
preferences, relative, participating, optional, redemption, exchange or
other special rights, and such dividend periods, method of determining
dividend rates and such other terms and conditions as the Executive
Committee of the Board of Directors may approve; provided, however, that
the Executive Committee shall have no power or authority to alter the
voting rights of the New Preferred Stock as set forth in these resolutions;
and be it further
RESOLVED, that the designations, preferences, relative, participating,
optional, redemption, exchange or other special rights, and dividend
periods, method of determining dividend rates and such other terms and
conditions are hereby established as follows:
1. DESIGNATION AND AMOUNT; FRACTIONAL SHARES. The Executive Committee
of Board of Directors has authorized the issuance of a series of preferred
stock designated as the "_____ % Cumulative Preferred Stock, Series _"
(the"Series _ Preferred Stock"). The Series _ Preferred Stock shall be
perpetual and the authorized number of shares of Series _ Preferred Stock
shall be eight million (8,000,000) shares. The Series _ Preferred Stock is
issuable in whole shares only.
2. DIVIDENDS. Holders of shares of Series _ Preferred Stock shall be
entitled to receive, when, as and if declared by the Board or a duly
authorized committee thereof out of assets of the Corporation legally
available for payment, cumulative cash dividends at the rate of ____% per
annum per share on the initial liquidation preference of $25.00 per share.
Dividends on the Series_ Preferred Stock shall be payable quarterly, in
arrears on _____, _____, ______, and ______ of each year, commencing _____,
1995 (each a "Dividend Payment Date").
<PAGE>
If any date on which dividends would otherwise be payable shall be or be
declared a national or New York State holiday, or if banking institutions in
the State of New York shall be closed because of a banking moratorium or
otherwise on such date, then the Dividend Payment Date shall be the next
succeeding day on which such banks shall be open. Dividends on shares of the
Series _ Preferred Stock shall be fully cumulative and shall accumulate
(whether or not earned or declared), on a daily basis, without interest, from
the previous Dividend Payment Date, except that the first dividend shall
accumulate, without interest, from the date of initial issuance of the Series
_ Preferred Stock. Accumulated and unpaid dividends shall not bear interest.
Dividends shall be payable, in arrears, to holders of record as they appear
on the stock books of the Corporation on each record date, which shall be the
15th day immediately preceding each such Dividend Payment Date(each of which
dates being a "Dividend Payment Record Date"), Dividends payable on the
Series _ Preferred Stock for the first dividend period and any partial
dividend period shall be computed on the basis of a 360 day year consisting
of twelve 30-day months. Dividends shall cease to accumulate on the Series _
Preferred Stock on the date of their earlier redemption pursuant to Section
6, unless the Corporation shall default in providing funds for the payment of
redemption price on the shares called for redemption pursuant thereto.
No dividends may be declared or paid or set apart for payment on
any Parity Preferred Stock ( as defined in Section 8 below), with regard to
the payment of dividends unless there shall also be or have been declared and
paid or set apart for payment on the Series _ Preferred Stock, dividends for
all dividend payment periods of the Series _ Preferred Stock ending on or
before the dividend payment date of such Parity Preferred Stock, ratably in
proportion to the respective amounts of dividends (x) accumulated and unpaid
or payable on such Parity Preferred Stock, on the one hand, and (y)
accumulated and unpaid through the dividend payment period or periods of the
Series _ Preferred Stock next preceeding such dividend payment date, on the
other hand.
Except as set forth in the preceding sentence, unless full
cumulative dividends on the Series _ Preferred Stock have been paid through
the most recently completed quarterly dividend period for the Series _
Preferred Stock,dividends (other than in common stock of the Corporation) may
be paid or declared and set aside for payment or other distribution made upon
the common stock or on any other stock of the Corporation ranking junior to
or on a parity with the Series _ Preferred Stock as to dividends, nor may any
common stock or any other stock of the Corporation ranking junior to or on a
parity with the Series _ Preferred Stock as to dividends be redeemed, purchased
or otherwise acquired for any consideration (or any payment be made to or
available for a sinking fund for the redemption of any shares of such stock;
PROVIDED, HOWEVER, that any moneys theretofore deposited in any sinking fund
with respect to any preferred stock of the Corporation in compliance with the
provisions of such sinking fund may thereafter be applied to the purchase or
redemption of such preferred stock in accordance with the terms of such
sinking fund, regardless of whether at the time of such application full
cumulative dividends upon shares of Series _ Preferred Stock outstanding to
the last dividend payment date shall have been paid or declared and set apart
for payment) by the Corporation; PROVIDED that any such junior or parity
stock or common stock may be converted into or exchanged for stock of the
Corporation ranking junior to the Series _ Preferred Stock as to dividends.
-2-
<PAGE>
3. LIQUIDATION PREFERENCE. The shares of Series _ Preferred Stock
shall, rank as to liquidation, dissolution or winding up of the Corporation,
prior to the shares of common stock and any other stock of the Corporation
ranking junior to the Series _ Preferred Stock as to rights upon liquidation,
dissolution or winding up of the Corporation, so that in the event of any
liquidation,or winding up of the Corporation, whether voluntary or
involuntary, the holders of the Series _ 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, before any
distribution is made to holders of shares of common stock or any other such
junior stock, an amount equal to $25.00 per share (the "Liquidation
Preference" of a share of Series _ Preferred Stock) plus an amount equal to
all dividends (whether or not earned or declared) accrued and accumulated and
unpaid on the shares of Series _ Preferred Stock to the date of final
distribution. The holders of the Series _ Preferred Stock shall not be
entitled to receive the Liquidation Preference until the liquidation
preference of any other stock of the Corporation ranking senior to the Series
_ Preferred Stock as to rights upon liquidation, dissolution or winding up
shall have been paid (or a sum set aside therefor sufficient to proceeds for
payment) in full. After payment of the full amount of the Liquidation
Preference and such dividends, the holders of shares of Series _ Preferred
Stock will not be entitled to any further participation in any of assets by
the Corporation. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation, or provide thereof, distributable
among the holders of shares of Parity Preferred Stock shall be insufficient
to pay in full the preferential amount aforesaid, then such assets, or the
proceeds thereof, shall be distributable among such holders ratably in
accordance with the respective amounts which would be payable on such shares
if all amounts payable thereon were paid in full. For the purposes hereof,
neither a consolidation or merger of the Corporation with or into any other
corporation, nor a merger of any other corporation with or into the
Corporation, nor a sale or transfer of all or any part of the Corporation's
assets shall be considered a liquidation, dissolution or winding up of the
Corporation.
4. CONVERSION. The Series _ Preferred Stock is not convertible into,
or exchangeable for, other securities or property.
5. VOTING RIGHTS. The Series _ Preferred Stock, except as provided
herein or as otherwise from time to time required by law, shall have no
voting rights. Whenever, at any time or times, dividends payable on the
shares of Series _ Preferred Stock or on any Parity Preferred Stock shall be
in arrears for an aggregate number of days equal to six calendar quarters or
more, whether or not consecutive, the authorized number of directors of the
Corporation shall automatically be increased by two and the holders of the
Series _ Preferred Stock shall have the right, with holders of shares of any
one or more other classes or series of Parity Preferred Stock outstanding at
the time upon which like voting rights have been conferred and are
exercisable ("Voting Parity Stock"), voting together as a class, to elect two
directors (hereinafter the"Preferred Directors" and each a "Preferred
Director")
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<PAGE>
to fill such newly created directorships at the Corporation's next annual
meeting of stockholders and at each subsequent annual meeting of stockholders
until such arrearages have been paid or set aside for payment, at which time
such right shall terminate, except as herein or by law expressly provided,
subject to revesting in the event of each and every subsequent default of the
character above mentioned. Upon any termination of the right of the holders
of shares of Series _ Preferred Stock and Voting Parity Stock as a class to
vote for directors as provided above, the term of office of all Preferred
Directors then in office shall terminate immediately and the authorized
number of directors shall be reduced by the number of Preferred Directors
elected pursuant hereto. Any Preferred Director may be removed at any time,
with or without cause. Any vacancy created thereby may be filled only by the
affirmative vote of the holders of shares of Series _ Preferred Stock voting
separately as a class (together with the holders of shares of Voting Parity
Stock). If the office of any Preferred Director becomes vacant for any
reason other than removal from office as aforesaid, the remaining
Director may choose a successor who shall hold office for the unexpired term
in respect of which such vacancy occurred. At elections for such directors,
each holder of shares of Series _ Preferred Stock shall be entitle to done
vote for each share held (the holders of shares of any other class or Series
of Voting Parity Stock being entitled to such number of votes, if any, each
share of such stock held as may be granted to them.
So long as any shares of any Series _ Preferred Stock remain
outstanding, the Corporation shall not, without the affirmative vote of the
holders of at least a majority of the shares of such Series _ Preferred
Stock(i) authorize, create or issue any capital stock of the Corporation
ranking, as to dividends or upon liquidation, dissolution or winding up,
prior to such Series _ Preferred Stock, or reclassify any authorized capital
stock of Holdings into any such shares of such capital stock or issue any
obligation or security convertible into or evidencing the right to purchase
any such shares of capital stock, or (ii) amend, alter or repeal the
certificate of designations for such Series _ Preferred Stock, or the
Restated Certificate of Incorporation of the Corporation, whether by merger,
consolidation or otherwise, so as to adversely affect the powers, preferences
or special rights of such Series _ Preferred Stock. Any increase in the
amount of authorized common stock or authorized preferred stock, or any
increase or decrease in the number of shares of any series of preferred stock
or the authorization, creation and issuance of other classes or series of
common stock or other stock, in each case ranking on a parity with or junior
to the shares of Series _ Preferred Stock with respect to the payment of
dividends and the distribution of assets upon liquidation, or winding up,
shall not be deemed to adversely affect such powers, preferences or special
rights.
The foregoing voting provisions shall not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required or upon which the holders of Series _ Preferred Stock shall be
entitled to vote shall be effected, all outstanding shares of Series _
Preferred Stock shall have been redeemed or called for redemption and
sufficient funds shall have been deposited in trust to effect such redemption.
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<PAGE>
6. REDEMPTION. The shares of Series _ Preferred Stock shall not be
redeemable prior to _________, 2000 on and after such date, the Corporation,
at its option, may redeem shares of the Series _ Preferred Stock, as a whole
or in part, at any time or from time to time, at a redemption price equal to
$25.00 per share, plus, in each case, an amount equal to all dividends
(whether or not earned or declared) and accumulated and unpaid to, but
excluding, the date fixed for redemption.
The holders of shares of Series _ Preferred Stock at the close of
business on a Dividend Payment Record Date shall be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the call for redemption thereof (except that holders of
shares called for redemption on a date occurring between such Record Date and
the Dividend Payment Date shall not be entitled to receive such dividend on
such Dividend Payment Date) or the Corporation's default in payment of the
dividend due on such Dividend Payment Date.
In the event that fewer than all the outstanding shares of Series _
Preferred Stock are to be redeemed, the number of shares to be redeemed shall
be determined by the Board of Directors and the shares to be redeemed shall
be selected pro rata (as nearly as may be practicable without creating
fractional shares) or by any other means determined by the Board of Directors
in its sole discretion to be equitable, except the Corporation may redeem all
shares held by any holders of a number of shares not to exceed 100, including
all shares held by holders who, after giving effect to such redemption, would
hold less than 100 shares, as may be specified by the Corporation.
If full cumulative dividends on the Series _ Preferred Stock have
not been paid, the Series _ Preferred Stock may not be redeemed in part and
the Corporation may not purchase or acquire any shares of the Series _
Preferred Stock otherwise than pursuant to a purchase or exchange offer made
on the same terms to all holders of the Series _ Preferred Stock.
In the event the Corporation shall redeem shares of Series _
Preferred Stock, written notice of such redemption shall be given by first
class mail, postabe prepaid, mailed not less than 30 days nor more than 60
days prior to the redemption date, to each holder of record of the shares to be
redeemed at such holder's address as the same appears on the stock books of
the Corporation; provided, however, that no failure to give such notice nor
any defect therein shall affect the validity of the proceeding for the
redemption of any shares of Series _ Preferred Stock to be redeemed except as
to the holder to whom the Corporation has failed to mail said notice or
except as to the holder whose notice was defective. Each such notice shall
state: (a) the redemption date;(b) the number of shares of Series _ Preferred
Stock to be redeemed and, if less than all the shares held by such holder are
to be redeemed from such holder, the number of shares to be redeemed from
such holder; (c) the redemption price and any number accumulated and unpaid
dividends to the redemption date; (d) the place or places where certificates
for such shares are to be surrendered for payment of the redemption price;
and (e) that dividends on the shares to be redeemed will cease to accrue on
such redemption date (unless the Corporation shall default in providing funds
for the payment of the redemption price of the shares called for redemption
at the time and place specified in such notice).
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<PAGE>
If a notice of redemption has been given pursuant to this Paragraph
6 and if, on or before the date fixed for redemption, the funds necessary for
such redemption shall have been set aside by the Corporation, separate and
apart from its other funds, in trust for the pro rata benefit of the holders
of the shares of Series _ Preferred Stock so called for redemption, then,
notwithstanding that any certificates for such shares have not been
surrendered for cancellation, on the redemption date dividends shall cease to
accrue on the shares to be redeemed, and at the close of business on the
redemption date the holders of such shares shall cease to be stockholders
with respect to such shares and shall have no interest in or claims against
the Corporation by virtue thereof and shall have no voting or other rights
with respect to such shares, except the right to receive the moneys payable
upon surrender (and endorsement, if required by the Corporation) of their
certificates, and the shares evidenced thereby shall no longer be
outstanding. The Corporation's obligation to provide funds for the payment
of the redemption price (and any accumulated and unpaid dividends to the
redemption date) of the shares called for redemption shall be deemed
fulfilled if, on or before a redemption date, the Corporation shall deposit,
with a bank or trust company, or an affiliate of a bank or trust company,
having an office or agency in New York City and having a capital and surplus
of at least $50,000,000, such funds sufficient to pay the redemption price
(and any accumulated and unpaid dividends to the redemption date) of the
shares called for redemption, in trust for the account of the holders of the
shares to be redeemed (and so as to be and continue to be available
therefor),irrevocable instructions and authority to such bank or trust
company that such funds be delivered upon redemption of the shares of Series _
Preferred Stock so called for redemption.
Subject to applicable escheat laws, any moneys so set aside by the
Corporation and unclaimed at the end of two years from the redemption date
shall revert to the general funds of the Corporation, after which reversion
the holders of such shares so called for redemption shall look only to the
general funds of the Corporation for the payment of the amounts payable upon
such redemption. Any interest accrued on funds so deposited shall be paid to
the Corporation from time to time.
Shares of Series _ Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed, shall (upon
compliance with any applicable provisions of the laws of the State of
Delaware) have the status of authorized and unissued shares of the class of
Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of the preferred stock.
7. AMENDMENT OF RESOLUTION. The Board reserves the right by from time
to time to increase or decrease the number of shares that constitute the
Series _ Preferred Stock (but not below the number of shares thereof then
outstanding) and in other respects to amend this Certificate of Designations
within the limitations provided by law, this resolution and the Restated
Certificate of Incorporation.
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<PAGE>
8. RANK. Any stock of any class or classes or series of the
Corporation be deemed to rank:
(a) prior to shares of the Series _ Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up, or both, if the
holders of stock of such class or classes or series shall be entitled by the
terms thereof to the receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case may be, in preference or
priority to the holders of shares of the Series _ Preferred Stock;
(b) on a parity with shares of the Series _ Preferred Stock, either
as to dividends or upon liquidation, dissolution or winding up, or both, whether
or not to the dividend rates, dividend payment dates, or redemption or
liquidation prices per share thereof be different from those of the Series _
Preferred Stock, if the holders of stock of such class or classes shall be
entitled by the terms thereof to the receipt of dividends or of amounts
distributed upon liquidation, dissolution or winding up, as the case may be,
in proportion to their respective dividend rates or liquidation prices,
without preference or priority of one over the other as between the holders
of such stock and the holders of shares of Series _ Preferred Stock; (the
term "Parity Preferred" being used to refer to any stock on a parity with the
shares of Series _ Preferred Stock, either as to dividend or upon
liquidation dissolution or winding up, or both, as the content may require,;
and
(c) junior to shares of the Series _ Preferred Stock, either as to
dividends or upon liquidation, dissolution or winding up, or both, if such
class or classes or series shall be common stock or if the holders of the
Series _ Preferred Stock shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of stock of such class
or classes or series.
The Series _ Preferred Stock shall rank, as to dividends and upon
liquidation, dissolution or winding up, on a parity with the Corporation's
Redeemable Voting Preferred Stock, the Corporation's Cumulative Convertible
Voting Preferred Stock, Series A and the Corporation's Cumulative Voting
Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be dulyon
its behalf by its undersigned Treasurer and attested to by its Secretary this
day of , 1995.
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<PAGE>
EXHIBIT 4(t)
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LEHMAN BROTHERS HOLDINGS INC.,
___________________, As Depositary
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
---------------------
Deposit Agreement
[Insert designation of preferred stock]
---------------------
Dated
----------------
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<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
ARTICLE II
Form of Receipts, Deposit of Stock, Execution and Delivery, Transfer,
Surrender and Redemption of Receipts
Page
SECTION 2.01. Form and Transfer of Receipts............................ 2
SECTION 2.02. Deposit of Stock; Execution and Delivery of Receipts
in Respect Thereof.................................. 3
SECTION 2.03. Redemption of Stock...................................... 4
SECTION 2.04. Registration of Transfer of Receipts..................... 5
SECTION 2.05. Split-ups and Combinations of Receipts;
Surrender of Receipts and Withdrawal of Stock....... 6
SECTION 2.06. Limitations on Execution and Delivery,
Transfer, Surrender and Exchange of Receipts........ 7
SECTION 2.07. Lost Receipts, etc....................................... 8
SECTION 2.08. Cancellation and Destruction of
Surrendered Receipts................................ 8
ARTICLE III
Certain Obligations of Holders
of Receipts and the Company
SECTION 3.01. Filing Proofs, Certificates and Other
Information......................................... 8
SECTION 3.02. Payment of Taxes or Other Governmental
Charges............................................. 9
SECTION 3.03. Warranty as to Stock..................................... 9
ARTICLE IV
The Deposited Securities; Notices
SECTION 4.01. Cash Distributions....................................... 9
SECTION 4.02. Distributions Other than Cash, Rights,
Preferences or Privileges........................... 9
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SECTION 4.03. Subscription Rights, Preferences or
Privileges.......................................... 10
SECTION 4.05. Voting Rights............................................ 12
SECTION 4.06. Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations,
etc................................................. 12
SECTION 4.07. Inspection of Reports.................................... 13
SECTION 4.08. Lists of Record Holders of Receipts...................... 13
ARTICLE V
The Depositary, the Depositary's Agents,
the Registrar and the Company
SECTION 5.01. Maintenance of Offices, Agencies and Transfer
Books by the Depositary; Registrar.................. 13
SECTION 5.02. Prevention of or Delay in Performance by
the Depositary, the Depositary's Agents,
the Registrar, the Transfer Agent or the
Company............................................. 14
SECTION 5.03. Obligations of the Depositary, the
Depositary's Agents, the Registrar, the
Transfer Agent and the Company...................... 15
SECTION 5.04. Resignation and Removal of the
Depositary; Appointment of Successor
Depositary.......................................... 15
SECTION 5.05. Corporate Notices and Reports............................ 16
SECTION 5.06. Indemnification by the Company........................... 17
SECTION 5.07. Charges and Expenses..................................... 17
ARTICLE VI
Amendment and Termination
SECTION 6.01. Amendment................................................ 17
SECTION 6.02. Termination.............................................. 18
ARTICLE VII
Miscellaneous
SECTION 7.01. Counterparts............................................. 18
SECTION 7.02. Exclusive Benefit of Parties............................. 18
SECTION 7.03. Invalidity of Provisions................................. 18
SECTION 7.04. Notices.................................................. 19
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SECTION 7.05. Depositary's Agents...................................... 19
SECTION 7.06. Holders of Receipts Are Parties.......................... 20
SECTION 7.07. GOVERNING LAW............................................ 20
SECTION 7.08. Inspection of Deposit Agreement.......................... 20
SECTION 7.09. Headings................................................. 20
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DEPOSIT AGREEMENT dated as of ____________, among LEHMAN
BROTHERS HOLDINGS INC., a Delaware corporation, ___________, a
________ corporation, and the holders from time to time of the
Receipts described herein.
WHEREAS it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of [insert designation of preferred
stock], par value $1.00 per share, of LEHMAN BROTHERS HOLDINGS INC. with the
Depositary for the purposes set forth in this Deposit Agreement and for the
issuance hereunder of Receipts evidencing Depositary Shares in respect of the
Stock so deposited; and
WHEREAS the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modifications and omissions, as
hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
Definitions
The following definitions shall for all purposes, unless otherwise
indicated, apply to the respective capitalized terms used in this Deposit
Agreement:
"Certificate" shall mean the Certificate of Designations filed with
the Secretary of State of Delaware establishing the Stock as a series of
preferred stock of the Company.
"Company" shall mean Lehman Brothers Holdings Inc., a Delaware
corporation, and its successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time in accordance with the terms hereof.
"Depositary" shall mean ____________, and any successor as Depositary
hereunder.
<PAGE>
"Depositary Shares" shall mean Depositary Shares, each representing
one _________ of a share of Stock and evidenced by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the Depositary
pursuant to Section 7.05.
"Depositary's Office" shall mean the principal office of the
Depositary in New York City, at which at any particular time its depositary
receipt business shall be administered.
"Receipt" shall mean one of the Depositary Receipts issued hereunder,
whether in definitive or temporary form.
"record holder" as applied to a Receipt shall mean the person in whose
name a Receipt is registered on the books of the Depositary maintained for such
purpose.
"Registrar" shall mean any bank or trust company which shall be
appointed pursuant to Section 7.05 to register ownership and transfers of
Receipts as herein provided.
"Stock" shall mean shares of the Company's [insert designation of
preferred stock], par value $1.00 per share.
"Transfer Agent" shall be as defined in Section 7.05.
ARTICLE II
Form of Receipts, Deposit of Stock, Execution and Delivery, Transfer, Surrender
and Redemption of Receipts
SECTION 2.01. Form and Transfer of Receipts. Definitive Receipts
shall be engraved or printed or lithographed on steel-engraved borders and shall
be substantially in the form set forth in Exhibit A annexed to this Deposit
Agreement, with appropriate insertions, modifications and omissions, as
hereinafter provided. Pending the preparation of definitive Receipts, the
Depositary, upon the written order of the Company or any holder of Stock, as the
case may be, delivered in compliance with Section 2.02, shall execute and
deliver temporary Receipts which are printed, lithographed, typewritten,
mimeographed or otherwise substantially of the tenor of the definitive Receipts
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the persons executing such
Receipts may determine,
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<PAGE>
as evidenced by their execution of such Receipts. If temporary Receipts are
issued, the Company and the Depositary will cause definitive Receipts to be
prepared without unreasonable delay. After the preparation of definitive
Receipts, the temporary Receipts shall be exchangeable for definitive
Receipts upon surrender of the temporary Receipts at any office described in
the third paragraph of Section 2.02, without charge to the holder. Upon
surrender for cancellation of any one or more temporary Receipts, the
Depositary shall execute and deliver in exchange therefor definitive Receipts
representing the same number of Depositary Shares as represented by the
surrendered temporary Receipt or Receipts. Such exchange shall be made at
the Company's expense and without any charge therefor. Until so exchanged,
the temporary Receipts shall in all respects be entitled to the same benefits
under this Agreement, and with respect to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual signature
of a duly authorized officer of the Depositary; provided, that such signature
may be a facsimile if a Registrar for the Receipts (other than the Depositary)
shall have been appointed and such Receipts are countersigned by manual
signature of a duly authorized officer of the Registrar. No Receipt shall be
entitled to any benefits under this Deposit Agreement or be valid or obligatory
for any purpose unless it shall have been executed manually by a duly authorized
officer of the Depositary or, if a Registrar for the Receipts (other than the
Depositary) shall have been appointed, by manual or facsimile signature of a
duly authorized officer of the Depositary and countersigned manually by a duly
authorized officer of such Registrar. The Depositary shall record on its books
each Receipt so signed and delivered as hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange upon which the Stock, the Depositary
Shares or the Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special
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<PAGE>
limitations or restrictions to which any particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt which is properly
endorsed, or accompanied by a properly executed instrument of transfer, shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the Depositary as provided in Section 2.04, the
Depositary may, notwithstanding any notice to the contrary, treat the record
holder thereof at such time as the absolute owner thereof for the purpose of
determining the person entitled to distributions of dividends or other
distributions or to any notice provided for in this Deposit Agreement and for
all other purposes.
SECTION 2.02. Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
the Company or any holder of Stock may from time to time deposit shares of Stock
by delivery to the Depositary of a certificate or certificates representing the
Stock to be deposited, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement, in form
satisfactory to the Depositary, together with all such certifications as may be
required by the Depositary in accordance with the provisions of this Deposit
Agreement, and together with a written order of the Company or such holder, as
the case may be, directing the Depositary to execute and deliver to, or upon the
written order of, the person or persons stated in such order a Receipt or
Receipts for the number of Depositary Shares representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary's Office or at
such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates
representing the Stock to be deposited in accordance with the provisions of this
Section, together with the other documents required as above specified, and upon
recordation of such Stock on the books of the registrar for the Stock in the
name of the Depositary or its nominee, the Depositary, subject to the terms and
conditions of this Deposit Agreement, shall execute and deliver, to or upon the
order of the person or persons named in the written order delivered to the
Depositary referred to in
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the first paragraph of this Section, a Receipt or Receipts for the number of
Depositary Shares representing the Stock so deposited and registered in such
name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt or Receipts at
the Depositary's Office or such other offices, if any, as the Depositary may
designate. Delivery at other offices shall be at the risk and expense of the
person requesting such delivery.
SECTION 2.03. Redemption of Stock. Whenever the Company shall elect
to redeem shares of Stock in accordance with the provisions of the Certificate,
it shall (unless otherwise agreed in writing with the Depositary) give the
Depositary not less than 40 nor more than 70 days' notice of the date of such
proposed redemption of Stock, which notice shall be accompanied by a certificate
from the Company stating that such redemption of Stock is in accordance with the
provisions of the Certificate. Such notice, if given more than 60 days prior to
the redemption date, shall be in addition to the notice required to be given for
redemption pursuant to the Certificate. On the date of such redemption,
provided that the Company shall then have paid in full to the Depositary the
redemption price of the Stock held by the Depositary to be redeemed, plus any
accrued and unpaid dividends thereon, the Depositary shall redeem the number of
Depositary Shares representing such Stock. The Depositary shall mail notice of
such redemption and the proposed simultaneous redemption of the number of
Depositary Shares representing the Stock to be redeemed, first-class postage
prepaid, not less than 30 and not more than 60 days prior to the date fixed for
redemption of such Stock and Depositary Shares (the "Redemption Date"), to the
record holders of the Receipts evidencing the Depositary Shares to be so
redeemed, at the addresses of such holders as they appear on the records of the
Depositary; but neither failure to mail any such notice to one or more such
holders nor any defect in any notice to one or more such holders shall affect
the sufficiency of the proceedings for redemption as to other holders. Each
such notice shall state: (i) the Redemption Date; (ii) the number of Depositary
Shares to be redeemed and, if less than all the Depositary Shares held by any
such holder are to be redeemed, the number of such Depositary Shares held by
such holder to be so redeemed; (iii) the redemption price; (iv) the place or
places where Receipts
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evidencing Depositary Shares are to be surrendered for payment of the
redemption price; and (v) that dividends in respect of the Stock represented
by the Depositary Shares to be redeemed will cease to accumulate on such
Redemption Date. In case less than all the outstanding Depositary Shares are
to be redeemed, the Depositary Shares to be so redeemed shall be selected by
lot or pro rata (subject to rounding to avoid fractions of the Depositary
Shares) as may be determined by the Depositary to be equitable.
Notice having been mailed by the Depositary as aforesaid, from and
after the Redemption Date (unless the Company shall have failed to redeem the
shares of Stock to be redeemed by it as set forth in the Company's notice
provided for in the preceding paragraph) all dividends in respect of the shares
of Stock so called for redemption shall cease to accumulate, the Depositary
Shares being redeemed from such proceeds shall be deemed no longer to be
outstanding, all rights of the holders of Receipts evidencing such Depositary
Shares (except the right to receive the redemption price, including any accrued
and unpaid dividends thereon) shall, to the extent of such Depositary Shares,
cease and terminate and, upon surrender of the Receipts evidencing any such
Depositary Shares (properly endorsed or assigned for transfer, if the Depositary
shall so require) in accordance with such notice, such Depositary Shares shall
be redeemed by the Depositary at a redemption price per Depositary Share equal
to one _________ of the redemption price per share paid in respect of the shares
of Stock, plus accrued and unpaid dividends thereon to the date fixed for
redemption.
If less than all the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with the redemption payment, a
new Receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption.
SECTION 2.04. Registration of Transfer of Receipts. Subject to the
terms and conditions of this Deposit Agreement, the Depositary shall register on
its books from time to time transfers of Receipts upon any surrender thereof by
the holder in person or by duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer. Thereupon the
Depositary and the Registrar shall execute a new
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Receipt or Receipts evidencing the same aggregate number of Depositary Shares
as those evidenced by the Receipt or Receipts surrendered and deliver such
new Receipt or Receipts to or upon the order of the person entitled thereto.
SECTION 2.05. Split-ups and Combinations of Receipts; Surrender of
Receipts and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at
the Depositary's Office or at such other offices as it may designate for the
purpose of effecting a split-up or combination of such Receipt or Receipts, and
subject to the terms and conditions of this Deposit Agreement, the Depositary
shall execute and deliver a new Receipt or Receipts in the authorized
denomination or denominations requested, evidencing the aggregate number of
Depositary Shares evidenced by the Receipt or Receipts surrendered.
Any holder of a Receipt or Receipts representing any number of whole
shares of Stock may withdraw the Stock by surrendering such Receipt or Receipts,
at the Depositary's Office or at such other offices as the Depositary may
designate for such withdrawals. Thereafter, without unreasonable delay, the
Depositary shall deliver to such holder, or to the person or persons designated
by such holder as hereinafter provided, the number of whole shares of Stock
represented by the Receipt or Receipts so surrendered for withdrawal, but
holders of such whole shares of Stock will not thereafter be entitled to deposit
such Stock hereunder or to receive Depositary Shares therefor; provided,
however, that a record holder who withdraws Stock in order to demand appraisal
rights available under Delaware General Corporation Law ("DGCL"), will, subject
to certain conditions described below, be entitled to redeposit such Stock with
the Depositary and to receive Receipts evidencing Depositary Shares therefor in
the event (i) such record holder subsequently withdraws such demand for
appraisal pursuant to Section 262(e) of the DGCL, (ii) appraisal rights are not
available for such Stock pursuant to Section 262 of the DGCL or (iii) such
record holder loses or otherwise fails to perfect his rights to appraisal. In
order to redeposit Stock with the Depositary, such a record holder must deliver
the certificates for such Stock, properly endorsed or accompanied, if required
by the Depositary, by a duly executed instrument of transfer or endorsement, in
form satisfactory to the Depositary, together with instructions that such Stock
be so deposited, to the Depositary's office or to such other offices as the
Depositary may designate by not later than
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the 30th day after the earlier of (i) the withdrawal of such demand for
appraisal by such record holder, (ii) notice by the Company that appraisal
rights are not available for such Stock or (iii) the date on which such
record holder loses or otherwise fails to perfect his rights to appraisal.
The Company will notify any record holder of Receipts who so withdraws Stock
in the event appraisal rights in respect of Stock are not available. Any
shares so redeposited must be free and clear of any lien, security interest
or pledge and a holder may be required to provide certification of the
foregoing and such other certifications as may be required by the Depositary
in accordance with this Agreement. In addition, if required by the
Depositary, Stock presented for redeposit shall also be accompanied by (A) an
agreement or assignment, or other instrument satisfactory to the Depositary,
which will provide for the prompt transfer to the Depositary of any dividend
or right to subscribe for additional Stock or to receive other property which
such record holder may thereafter receive upon or in respect of such
redeposited Stock, or in lieu thereof, such agreement of indemnity or other
agreement as shall be satisfactory to the Depositary, and (B) a proxy or
proxies entitling the Depositary to vote such redeposited Stock for any and
all purposes until the Stock is transferred and recorded on the register of
stockholders of the Company in the name of the Depositary or its nominee. If
a Receipt delivered by the holder to the Depositary in connection with such
withdrawal shall evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of Stock
to be so withdrawn, the Depositary shall at the same time, in addition to
such number of whole shares of Stock to be so withdrawn, deliver to such
holder a new Receipt evidencing such excess number of Depositary Shares.
Delivery of the Stock being withdrawn may be made by the delivery of such
certificates, documents of title and other instruments as the Depositary may
deem appropriate.
If the Stock being withdrawn is to be delivered to a person or persons
other than the record holder of the Receipt or Receipts being surrendered for
withdrawal of Stock, such holder shall execute and deliver to the Depositary a
written order so directing the Depositary and the Depositary may require that
the Receipt or Receipts surrendered by such holder for withdrawal of such shares
of Stock be properly endorsed in blank or accompanied by a properly executed
instrument of transfer in blank.
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Delivery of the Stock represented by Receipts surrendered for
withdrawal shall be made by the Depositary at the Depositary's office or at
such other offices as the Depositary may designate, except that, at the
request, risk and expense of the holder surrendering such Receipt or Receipts
and for the account of the holder thereof, such delivery may be made at such
other place as may be designated by such holder.
SECTION 2.06. Limitations on Execution and Delivery, Transfer,
Surrender and Exchange of Receipts. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, any of the Depositary's Agents or the
Company may require (a) payment to it of a sum sufficient for the payment (or,
in the event that the Depositary or the Company shall have made such payment,
the reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Section 5.07, (b) the production of evidence satisfactory to
it as to the identity and genuineness of any signature and (c) compliance with
such regulations, if any, as the Depositary or the Company may establish
consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against
Stock may be suspended, the registration of transfer of Receipts may be refused
and the registration of transfer, surrender or exchange of outstanding Receipts
may be suspended (i) during any period when the register of stockholders of the
Company is closed or (ii) if any such action is deemed necessary or advisable by
the Depositary, any Depositary's Agents or the Company, at any time or from time
to time, because of any requirement of law or of any government or governmental
body or commission or under any provision of this Deposit Agreement.
SECTION 2.07. Lost Receipts, etc. In case any Receipt shall be
mutilated, destroyed, lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt, or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, upon (i) the filing by the holder
thereof with the Depositary of evidence satisfactory to the Depositary of such
destruction or loss or theft of such Receipt, of the authenticity thereof and of
his or her ownership thereof and (ii) the
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furnishing of the Depositary with reasonable indemnification satisfactory to
it.
SECTION 2.08. Cancellation and Destruction of Surrendered Receipts.
All Receipts surrendered to the Depositary or any Depositary's Agent shall be
canceled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all Receipts so canceled.
ARTICLE III
Certain Obligations of Holders
of Receipts and the Company
SECTION 3.01. Filing Proofs, Certificates and Other Information. Any
holder of a Receipt may be required from time to time to file such proof of
residence, or other matters or other information, to execute such certificates
and to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper. The Depositary or the Company may
withhold the delivery, or delay the registration of transfer, redemption or
exchange, of any Receipt or the withdrawal of the Stock represented by the
Depositary Shares evidenced by any Receipt or the distribution of any dividend
or other distribution or the sale of any rights or of the proceeds thereof until
such proof or other information is filed or such certificates are executed or
such representations and warranties are made.
SECTION 3.02. Payment of Taxes or Other Governmental Charges.
Holders of Receipts shall be obligated to make payments to the Depositary of
certain charges and expenses, as provided in Section 5.07. Registration of
transfer of any Receipt or any withdrawal of Stock represented by the Depositary
Shares evidenced by such Receipt may be refused until any such payment due is
made, and any dividends, interest payments or other distributions may be
withheld or any part of or all the Stock or other property represented by the
Depositary Shares evidenced by such Receipt and not theretofore sold may be sold
for the account of the holder thereof (after attempting by reasonable means to
notify such holder prior to such sale), and such dividends, interest payments or
other distributions or the proceeds of any such sale may be applied to any
payment of such charges or
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expenses, the holder of such Receipt remaining liable for any deficiency.
SECTION 3.03. Warranty as to Stock. The Company hereby represents
and warrants that the Stock, when issued, will be validly issued, fully paid and
nonassessable. Such representation and warranty shall survive the deposit of
the Stock and the issuance of Receipts.
ARTICLE IV
The Deposited Securities; Notices
SECTION 4.01. Cash Distributions. Whenever the Depositary shall
receive any cash dividend or other cash distribution on Stock, the Depositary
shall, subject to Sections 3.01 and 3.02, distribute to record holders of
Receipts on the applicable record date fixed pursuant to Section 4.04 such
amounts of such dividend or distribution as are, as nearly as practicable, in
proportion to the respective numbers of Depositary Shares evidenced by the
Receipts held by such holders; provided, however, that in case the Company or
the Depositary shall be required to withhold and shall withhold from any cash
dividend or other cash distribution in respect of the Stock an amount on account
of taxes, the amount made available for distribution or distributed in respect
of Depositary Shares shall be reduced accordingly. The Depositary shall
distribute or make available for distribution, as the case may be, only such
amount, however, as can be distributed without attributing to any holder of
Depositary Shares a fraction of one cent, and any balance not so distributable
shall be held by the Depositary (without liability for interest thereon) and
shall be added to and be treated as part of the next sum received by the
Depositary for distribution to record holders of Receipts then outstanding.
SECTION 4.02. Distributions Other than Cash, Rights, Preferences or
Privileges. Whenever the Depositary shall receive any distribution other than
cash and other than any rights, preferences or privileges described in Section
4.03, upon Stock, the Depositary shall, subject to Sections 3.01 and 3.02,
distribute to record holders of Receipts on the applicable record date fixed
pursuant to Section 4.04 such amounts of the securities or property received by
it as are, as nearly as
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practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such record holders, in any manner that the
Depositary may deem equitable and practicable for accomplishing such
distribution. If in the opinion of the Depositary such distribution cannot
be made proportionately among such record holders, or if for any other reason
(including any requirement that the Company or the Depositary withhold an
amount on account of taxes) the Depositary deems, after consultation with the
Company, such distribution not to be feasible, the Depositary may, with the
approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the
sale (at public or private sale) of the securities or property thus received,
or any part thereof, at such place or places and upon such terms as it may
deem proper. The net proceeds of any such sale shall be, subject to Sections
3.01 and 3.02, distributed or made available for distribution, as the case
may be, by the Depositary to record holders of Receipts as provided by
Section 4.01 in the case of a distribution received in cash.
The Depositary shall not make any distribution of securities received
in respect of the Stock unless the Company shall have provided an opinion of
counsel stating that such securities have been registered under the Securities
Act of 1933 or do not need to be so registered.
SECTION 4.03. Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts in such manner as the Depositary may determine,
either by the issue to such record holders of warrants representing such rights,
preferences or privileges or by such other method as may be approved by the
Depositary in its discretion with the approval of the Company; provided,
however, that in case either (i) the Depositary determines that it is not lawful
or (after consultation with the Company) not feasible to make such rights,
preferences or privileges available to holders of Receipts by the issue of
warrants or otherwise, or (ii) with respect to any portion of the rights,
preferences or privileges of a holder of
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Receipts, the Depositary is instructed that such holder does not desire to
exercise such rights, preferences or privileges, then the Depositary, in its
discretion (with the approval of the Company, in any case where the
Depositary has determined that it is not feasible to make such rights,
preferences or privileges available), may (if applicable laws and the terms
of such rights, preferences or privileges permit such transfer) sell such
rights, preferences or privileges at public or private sale, at such place or
places and upon such terms as it may deem proper. The net proceeds of any
such sale shall be, subject to Sections 3.01 and 3.02, distributed by the
Depositary to the record holders of Receipts entitled thereto as provided by
Section 4.01 in the case of a distribution received in cash. The Depositary
shall not make any distribution of any such rights, preferences or privileges
unless the Company shall have provided an opinion of counsel stating that
such rights, preferences or privileges have been registered under the
Securities Act of 1933 or do not need to be so registered.
If registration under the Securities Act of 1933, as amended, of the
securities to which any rights, preferences or privileges relate is required in
order for holders of Receipts to be offered or sold the securities to which such
rights, preferences or privileges relate, the Company agrees with the Depositary
that it will file promptly a registration statement pursuant to such Act with
respect to such rights, preferences or privileges and securities and use its
best efforts and take all steps available to it to cause such registration
statement to become effective sufficiently in advance of the expiration of such
rights, preferences or privileges to enable such holders to exercise such
rights, preferences or privileges. In no event shall the Depositary make
available to the holders of Receipts any right, preference or privilege to
subscribe for or to purchase any securities unless and until such a registration
statement shall have become effective, or unless the offering and sale of such
securities to such holders are exempt from registration under the provisions of
such Act.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to holders
of Receipts, the Company agrees with the Depositary that the Company will use
its best efforts to take such action or obtain such authorization,
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consent or permit sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise such rights,
preferences or privileges.
SECTION 4.04. Notice of Dividends, etc.; Fixing of Record Date for
Holders of Receipts. Whenever any cash dividend or other cash distribution
shall become payable or any distribution other than cash shall be made, or if
rights, preferences or privileges shall at any time be offered, with respect to
Stock, or whenever the Depositary shall receive notice of any meeting at which
record holders of Stock are entitled to vote or of which holders of Stock are
entitled to notice, or whenever the Depositary and the Company shall decide it
is appropriate, the Depositary shall in each such instance fix a record date
(which shall be the same date as the record date fixed by the Company with
respect to the Stock) for the determination of the record holders of Receipts
who shall be entitled to receive such dividend, distribution, rights,
preferences or privileges or the net proceeds of the sale thereof, or to give
instructions for the exercise of voting rights at any such meeting, or who shall
be entitled to notice of such meeting or for any other appropriate reasons.
SECTION 4.05. Voting Rights. Upon receipt of notice of any meeting
at which the record holders of Stock are entitled to vote, the Depositary shall,
as soon as practicable thereafter, mail to the record holders of Receipts a
notice which shall contain (i) such information as is contained in such notice
of meeting and (ii) a statement that the record holders may, subject to any
applicable restrictions, instruct the Depositary as to the exercise of the
voting rights pertaining to the amount of Stock represented by their respective
Depositary Shares (including an express indication that instructions may be
given to the Depositary to give a discretionary proxy to a person designated by
the Company) and a brief statement as to the manner in which such instructions
may be given. Upon the written request of the record holders of Receipts on the
relevant record date, the Depositary shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of whole shares of Stock represented by the
Depositary Shares evidenced by all Receipts as to which any particular voting
instructions are received. The Company hereby agrees to take all action which
may be deemed necessary by the Depositary in order to enable the Depositary to
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vote such Stock or cause such Stock to be voted. In the absence of specific
instructions from the record holder of a Receipt, the Depositary will abstain
from voting (but, at its discretion, not from appearing at any meeting with
respect to such Stock unless directed to the contrary by the holders of all the
Receipts) to the extent of the Stock represented by the Depositary Shares
evidenced by such Receipt.
SECTION 4.06. Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations, etc. Upon any change in par or stated
value, split-up, combination or any other reclassification of the Stock, or upon
any recapitalization, reorganization, merger, amalgamation or consolidation
affecting the Company or to which it is a party, the Depositary may in its
discretion with the approval of, and shall upon the instructions of, the
Company, and (in either case) in such manner as the Depositary may deem
equitable, (i) make such adjustments as are certified by the Company in (x) the
fraction of an interest represented by one Depositary Share in one share of
Stock and (y) the ratio of the redemption price per Depositary Share to the
redemption price of a share of Stock, in each case as may be necessary fully to
reflect the effects of such change in par or stated value, split-up, combination
or other reclassification of Stock, or of such recapitalization, reorganization,
merger, amalgamation or consolidation and (ii) treat any securities which shall
be received by the Depositary in exchange for or upon conversion of or in
respect of the Stock as new deposited securities so received in exchange for or
upon conversion or in respect of such Stock. In any such case the Depositary
may in its discretion, with the approval of the Company, execute and deliver
additional Receipts, or may call for the surrender of all outstanding Receipts
to be exchanged for new Receipts specifically describing such new deposited
securities. Anything to the contrary herein notwithstanding, holders of
Receipts shall have the right from and after the effective date of any such
change in par or stated value, split-up, combination or other reclassification
of the Stock or any such recapitalization, reorganization, merger, amalgamation
or consolidation to surrender such Receipts to the Depositary with instructions
to convert, exchange or surrender the Stock represented thereby only into or
for, as the case may be, the kind and amount of shares of stock and other
securities and property and cash into which the Stock represented by such
Receipts might have been converted or
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for which such Stock might have been exchanged or surrendered immediately
prior to the effective date of such transaction.
SECTION 4.07. Inspection of Reports. The Depositary shall make
available for inspection by record holders of Receipts at the Depositary's
Office, and at such other places as it may from time to time deem advisable, any
reports and communications received from the Company which are received by the
Depositary as the holder of Stock.
SECTION 4.08. Lists of Record Holders of Receipts. Promptly upon
request from time to time by the Company, the Depositary shall furnish to it a
list, as of a recent date, of the names, addresses and holdings of Depositary
Shares of all persons in whose names Receipts are registered on the books of the
Depositary.
ARTICLE V
The Depositary, the Depositary's Agents,
the Registrar and the Company
SECTION 5.01. Maintenance of Offices, Agencies and Transfer Books by
the Depositary; Registrar. The Depositary shall maintain at the Depositary's
Office facilities for the execution, delivery, registration and registration of
transfer, surrender and exchange of Receipts, and at the offices of the
Depositary's Agents, if any, facilities for the delivery, registration of
transfer, surrender and exchange of Receipts, all in accordance with the
provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and registration of transfer of Receipts, which books at all
reasonable times shall be open for inspection by the record holders of Receipts;
provided, that any such holder requesting to exercise such right shall certify
to the Depositary that such inspection shall be for a proper purpose reasonably
related to such person's interest as an owner of Depositary Shares evidenced by
the Receipts.
The Depositary may close such books, at any time or from time to time,
when deemed expedient by it in connection with the performance of its duties
hereunder.
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The Depositary may, with the approval of the Company, appoint a
Registrar for registration of the Receipts or the Depositary Shares evidenced
thereby. If the Receipts or the Depositary Shares evidenced thereby or the
Stock represented by such Depositary Shares shall be listed on the New York
Stock Exchange, the Depositary will appoint a Registrar (acceptable to the
Company) for registration of such Receipts or Depositary Shares in accordance
with any requirements of such Exchange. Such Registrar (which may be the
Depositary if so permitted by the requirements of such Exchange) may be removed
and a substitute registrar appointed by the Depositary upon the request or with
the approval of the Company. If the Receipts, such Depositary Shares or such
Stock are listed on one or more other stock exchanges, the Depositary will, at
the request of the Company, arrange such facilities for the delivery,
registration, registration of transfer, surrender and exchange of such Receipts,
such Depositary Shares or such Stock as may be required by law or applicable
stock exchange regulation.
SECTION 5.02. Prevention of or Delay in Performance by the
Depositary, the Depositary's Agents, the Registrar, the Transfer Agent or the
Company. Neither the Depositary nor any Depositary's Agent nor any Registrar
nor any Transfer Agent nor the Company shall incur any liability to any holder
of any Receipt if by reason of any provision of any present or future law, or
regulation thereunder, of the United States of America or of any other
governmental authority or, in the case of the Depositary, the Depositary's Agent
or the Registrar, by reason of any provision, present or future, of the
Company's Certificate of Incorporation (including the Certificate) or by reason
of any act of God or war or other circumstance beyond the control of the
relevant party, the Depositary, the Depositary's Agent, the Registrar, the
Transfer Agent or the Company shall be prevented or forbidden from, or subjected
to any penalty on account of, doing or performing any act or thing which the
terms of this Deposit Agreement provide shall be done or performed; nor shall
the Depositary, any Depositary's Agent, any Registrar, any Transfer Agent or the
Company incur any liability to any holder of a Receipt (i) by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing which the terms of this Deposit Agreement provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to exercise, any
discretion provided for in this Deposit Agreement except, in case of any such
exercise or failure to exercise
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discretion not caused as aforesaid, if caused by the negligence or willful
misconduct of the party charged with such exercise or failure to exercise.
SECTION 5.03. Obligations of the Depositary, the Depositary's Agents,
the Registrar, the Transfer Agent and the Company. Neither the Depositary nor
any Depositary's Agent nor any Registrar nor any Transfer Agent nor the Company
assumes any obligation or shall be subject to any liability under this Deposit
Agreement to holders of Receipts other than for its negligence or willful
misconduct.
Neither the Depositary nor any Depositary's Agent nor any Registrar
nor any Transfer Agent nor the Company shall be under any obligation to appear
in, prosecute or defend any action, suit or other proceeding in respect of the
Stock, the Depositary Shares or the Receipts which in its opinion may involve it
in expense or liability unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor any Registrar
nor any Transfer Agent nor the Company shall be liable for any action or any
failure to act by it in reliance upon the written advice of legal counsel or
accountants, or information from any person presenting Stock for deposit, any
holder of a Receipt or any other person believed by it in good faith to be
competent to give such information. The Depositary, any Depositary's Agent, any
Registrar, any Transfer Agent and the Company may each rely and shall each be
protected in acting upon any written notice, request, direction or other
document believed by it to be genuine and to have been signed or presented by
the proper party or parties.
The Depositary and any Depositary's Agent shall not be responsible for
any failure to carry out any instruction to vote any of the shares of Stock or
for the manner or effect of any such vote made, as long as any such action or
non-action is in good faith. The Depositary undertakes, and any Registrar and
Transfer Agent shall be required to undertake, to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the
Depositary, any Registrar or any Transfer Agent. The Depositary will indemnify
the Company
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against any liability which may arise out of acts performed or omitted by the
Depositary or its agents due to its or their negligence or bad faith. The
Depositary, the Depositary's Agents, any Registrar and any Transfer Agent may
own and deal in any class of securities of the Company and its affiliates and
in Receipts. The Depositary may also act as transfer agent or registrar of
any of the securities of the Company and its affiliates.
SECTION 5.04. Resignation and Removal of the Depositary; Appointment
of Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by notice of its election to do so delivered to the Company, such
resignation to take effect upon the appointment of a successor Depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 60 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock to such successor, and
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shall deliver to such successor a list of the record holders of all
outstanding Receipts. Any successor Depositary shall promptly mail notice of
its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act, and notice thereof shall
not be required hereunder. Such successor Depositary may authenticate the
Receipts in the name of the predecessor Depositary or in the name of the
successor Depositary.
SECTION 5.05. Corporate Notices and Reports. The Company agrees that
it will transmit to the record holders of Receipts, in each case at the
addresses furnished to it pursuant to Section 4.08, all notices and reports
(including without limitation financial statements) required by law, by the
rules of any national securities exchange upon which the Stock, the Depositary
Shares or the Receipts are listed or by the Company's Certificate of
Incorporation (including the Certificate) to be furnished by the Company to
holders of Receipts. Such transmission will be at the Company's expense.
SECTION 5.06. Indemnification by the Company.
The Company shall indemnify the Depositary, any Depositary's Agent, any
Registrar and any Transfer Agent against, and hold each of them harmless from,
any loss, liability or expense (including the costs and expenses of defending
itself) which may arise out of (a) acts performed or omitted in connection with
this Agreement and the Receipts by (i) the Depositary, any Registrar, any
Transfer Agent or any of their respective agents (including any Depositary's
Agent), except for any liability arising out of negligence or bad faith on the
respective parts of any such person or persons, or (ii) the Company or any of
its agents, or (b) the offer, sale or registration of the Receipts or the Stock
pursuant to the provisions hereof. The obligations of the Company set forth in
this Section 5.06 shall survive any succession of any Depositary, Registrar,
Transfer Agent or Depositary's Agent.
SECTION 5.07. Charges and Expenses. The Company shall pay all
transfer and other taxes and governmental charges arising solely from the
existence of the depositary arrangements. The
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<PAGE>
Company shall pay all charges of the Depositary in connection with the
initial deposit of the Stock and the initial issuance of the Depositary
Shares and any redemption of the Stock at the option of the Company. All
other transfer and other taxes and governmental charges and fees for the
withdrawal of Stock upon surrender of Receipts shall be at the expense of
holders of Depositary Shares. The Depositary's fee for the withdrawal of
Stock shall be at the rate of $_____ per 100 Depositary Receipts. If, at the
request of a holder of Receipts, the Depositary incurs charges or expenses
for which it is not otherwise liable hereunder, such holder will be liable
for such charges and expenses. All other charges and expenses of the
Depositary and any Depositary's Agent hereunder and of any Registrar and
Transfer Agent (including, in each case, fees and expenses of counsel)
incident to the performance of their respective obligations hereunder will be
paid upon consultation and agreement between the Depositary and the Company
as to the amount and nature of such charges and expenses. The Depositary
shall present its statement for charges and expenses to the Company once
every three months or at such other intervals as the Company and the
Depositary may agree.
ARTICLE VI
Amendment and Termination
SECTION 6.01. Amendment. The form of the Receipts and any provisions
of this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; provided, however, that no such amendment (other
than any change in the fees of any Depositary, Registrar or Transfer Agent,
which shall go into effect not sooner than three months after notice thereof to
the record holders of the Receipts) which shall materially and adversely alter
the rights of the holders of Receipts shall be effective unless such amendment
shall have been approved by the record holders of at least a majority of the
Depositary Shares then outstanding. Every holder of an outstanding Receipt at
the time any such amendment becomes effective shall be deemed, by continuing to
hold such Receipt, to consent and agree to such amendment and to be bound by the
Deposit Agreement as amended thereby.
21
<PAGE>
SECTION 6.02. Termination. This Agreement may be terminated by the
Company or the Depositary only after (i) all outstanding Depositary Shares shall
have been redeemed pursuant to Section 2.03 or (ii) there shall have been made a
final distribution in respect of the Stock in connection with any liquidation,
dissolution or winding up of the Company and such distribution shall have been
distributed to the holders of Depositary Shares pursuant to Section 4.01 or
4.02, as applicable.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent, any Registrar and any
Transfer Agent under Sections 5.06 and 5.07.
ARTICLE VII
Miscellaneous
SECTION 7.01. Counterparts. This Deposit Agreement may be executed
in any number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 7.02. Exclusive Benefit of Parties. This Deposit Agreement
is for the exclusive benefit of the parties hereto, and their respective
successors hereunder, and shall not be deemed to give any legal or equitable
right, remedy or claim to any other person whatsoever.
SECTION 7.03. Invalidity of Provisions. In case any one or more of
the provisions contained in this Deposit Agreement or in the Receipts should be
or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04. Notices. Any and all notices to be given to the
Company hereunder or under the Receipts shall be in
22
<PAGE>
writing and shall be deemed to have been duly given if personally delivered
or sent by mail or telegram or telex confirmed by letter, addressed to the
Company at 3 World Financial Center, New York, New York 10285, to the
attention of the Secretary, or at any other address of which the Company
shall have notified the Depositary in writing.
Any and all notices to be given to the Depositary hereunder or under
the Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail or by telegram or telex confirmed by
letter, addressed to the Depositary at the Depositary's Office, at
_________________, or at any other address of which the Depositary shall have
notified the Company in writing.
Any and all notices to be given to any record holder of a Receipt
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail or by telegram or telex
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary, or if such holder
shall have filed with the Depositary a written request that notices intended for
such holder be mailed to some other address, at the address designated in such
request.
Delivery of a notice sent by mail or by telegram or telex shall be
deemed to be effected at the time when a duly addressed letter containing the
same (or a confirmation thereof in the case of a telegram or telex message) is
deposited, postage prepaid, in a post office letter box. The Depositary or the
Company may, however, act upon any telegram or telex message received by it from
the other or from any holder of a Receipt, notwithstanding that such telegram or
telex message shall not subsequently be confirmed by letter or as aforesaid.
SECTION 7.05. Depositary's Agents. Except as otherwise set forth
herein, the Depositary may from time to time appoint Depositary's Agents to act
in any respect for the Depositary for the purposes of this Deposit Agreement and
may at any time appoint additional Depositary's Agents and vary or terminate the
appointment of such Depositary's Agents. The Depositary will notify the Company
of any such action.
23
<PAGE>
The Company has authorized the appointment of, and has requested the
Depositary to appoint hereunder, _________________, as transfer agent (the
"Transfer Agent") for the Depositary Shares. The Depositary hereby appoints
____________ as Transfer Agent and Registrar for the Depositary Shares and
delegates to _____________ the duties of the Depositary hereunder customarily
performed by a transfer agent, a registrar and a depositary. Without otherwise
affecting the liability of the Depositary hereunder, it is hereby agreed that if
_____________ shall have agreed in writing to be bound by all the terms and
conditions of this Deposit Agreement and to assume the obligations of the
Depositary hereunder to be performed by it, then in no event shall the
Depositary be liable for any acts or omissions of ____________ as Transfer
Agent, Registrar or Depositary's Agent with respect to the Depositary Shares.
SECTION 7.06. Holders of Receipts Are Parties. The holders of
Receipts from time to time shall be parties to this Deposit Agreement and shall
be bound by all of the terms and conditions hereof and of the Receipts by
acceptance of delivery thereof.
SECTION 7.07. GOVERNING LAW. THIS DEPOSIT AGREEMENT AND THE RECEIPTS
AND ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 7.08. Inspection of Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Depositary's office and
the respective offices of the Depositary's Agents, if any, by any holder of a
Receipt.
24
<PAGE>
SECTION 7.09. Headings. The headings of articles and sections in
this Deposit Agreement and in the form of the Receipt set forth in Exhibit A
hereto have been inserted for convenience only and are not to be regarded as a
part of this Deposit Agreement or the Receipts or to have any bearing upon the
meaning or interpretation of any provision contained herein or in the Receipts.
IN WITNESS WHEREOF, the Company and the Depositary have duly executed
this Agreement as of the day and year first above set forth, and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
LEHMAN BROTHERS HOLDINGS INC.,
By:
---------------------------
_____________, as Depositary,
By:
---------------------------
25
<PAGE>
EXHIBIT A
[FORM OF DEPOSITARY RECEIPT]
DEPOSITARY RECEIPT
FOR
DEPOSITARY SHARES
EACH REPRESENTING A ONE-____ INTEREST
(SUBJECT TO ADJUSTMENT) IN A SHARE OF
________________, par value $1.00 per share
OF
LEHMAN BROTHERS HOLDINGS INC
(Incorporated under the laws of the State of Delaware)
______________________________
No. ____________________ EACH DEPOSITARY SHARE REPRESENTS
A ONE-________ INTEREST
(SUBJECT TO ADJUSTMENT) IN A
SHARE OF_________________,
_______________________________
_______________________________
1. _______________, a __________ corporation, as Depositary (the
"Depositary"), hereby certifies that
____________________________________________________ is the registered owner of
____________ Depositary Shares ("Depositary Shares"), each Depositary Share
representing a one-____ (as such fraction may from time to time be adjusted as
provided in the Deposit Agreement, as defined below) interest in a share of
__________ (the "Stock") of Lehman Brothers Holdings Inc, a corporation duly
organized and existing under the laws of the State of Delaware (the "Company")
deposited with, and held by, the Depositary. The rights, preferences and
limitations of the Stock are set forth in the Certificate of Designations
adopted by the Company's Board of Directors (the "Authorizing Resolutions"),
copies of which are on file at the Depositary's office at ____________.
2. THE DEPOSIT AGREEMENT. Depositary Receipts (the "Receipts"), of
which this Receipt is one, are made available upon the terms and conditions set
forth in the Deposit Agreement, dated as of __________ (the "Deposit
Agreement"), among the Company, the Depositary and all holders from time to time
of Receipts. The Deposit Agreement (copies of which are on file at the
Depositary's Office) sets forth the rights of holders of Receipts and the rights
and duties of the Depositary in respect
<PAGE>
2
of the Stock deposited, and any and all money and other property from time to
time held thereunder. The statements made in this Receipt are summaries of
certain provisions of the Deposit Agreement and are subject to the detailed
provisions thereof, to which reference is hereby made. The holder of this
Receipt from time to time shall be deemed to be a party to the Deposit
Agreement and shall be bound by, and entitled to all of the rights and
benefits under, all the terms and conditions hereof and of the Deposit
Agreement by acceptance of delivery of this Receipt. Unless otherwise
expressly herein provided, all defined terms shall have the meanings ascribed
thereto in the Deposit Agreement.
3. REDEMPTION. Wherever the Company shall be permitted and shall
elect, under the Certificate of Designation relating to the Stock (the
"Certificate"), to redeem shares of the Stock, it shall give the Depositary not
less than 40 nor more then 70 days' notice thereof. The Depositary shall mail
notice of such redemption and the simultaneous redemption of the corresponding
Depositary Shares not less than 30 and not more than 60 days prior to the date
fixed for redemption to the holders of record of Receipts representing the
number of Depositary Shares to be redeemed. Each such notice shall state: (a)
the date of such proposed redemption; (b) the number of Depositary Shares to be
redeemed; (c) the redemption price (which shall include full cumulative
dividends thereon to the redemption date); (d) the place or places where
Receipts evidencing Depositary Shares are to be surrendered for payment of the
redemption price; and (e) that dividends in respect of the Stock represented by
the Depositary Shares to be redeemed will cease to accumulate at the close of
business on such redemption date. In case less than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be so redeemed
shall be selected by lot or pro rata as may be determined by the Depositary to
be equitable. From and after the date set for redemption, all dividends in
respect of the Depositary Shares so called for redemption shall cease to accrue,
such Depositary Shares shall no longer be deemed outstanding and all rights of
the holders of Receipts representing such Depositary Shares (except the right to
receive the redemption price) shall cease and terminate. From and after the
redemption date, upon surrender in accordance with the redemption notice of the
Receipts representing any such Depositary Shares (properly endorsed or assigned
for transfer, if the Depositary shall so require), such Depositary Share shall
be redeemed by the Depositary at the redemption price per share equal to one-
________ (1/__th) of the redemption price per share paid in respect of the
shares of Stock plus any money or other property represented thereby.
4. TRANSFERS, SPLIT-UPS, COMBINATIONS. This Receipt is transferable
on the books of the Depositary upon surrender of this Receipt to the Depositary,
properly endorsed or accompanied by a properly executed instrument of transfer,
and upon such
<PAGE>
3
transfer the Depositary shall execute a new Receipt to or upon the order of the
person entitled thereto, as provided in the Deposit Agreement. This Receipt may
be split into other Receipts or combined with other Receipts into one Receipt,
representing the same aggregate number of Depositary Shares as the Receipt or
Receipts surrendered.
5. SUSPENSION OF DELIVERY, TRANSFER, ETC. The transfer or surrender
of this Receipt may be suspended during any period when the register of
stockholders of the Company is closed or if any such action is deemed necessary
or advisable by the Depositary, any agent of the Depositary, or the Company at
any time or from time to time because of any requirement of law or of any
government or governmental body or commission, or under any provision of the
Deposit Agreement.
6. PAYMENT OF TAXES OR OTHER GOVERNMENTAL CHARGES. If any tax or
other government charge shall become payable by or on behalf of the Depositary
with respect to this Receipt, such tax (including transfer taxes, if any) or
governmental charge shall be payable by the holder hereof. Transfer of this
Receipt may be refused until such payment is made, and any dividends, interest
payments or other distributions may be withheld or any part of or all the Stock
or other property represented by this Receipt and not theretofore sold may be
sold for the account of the holder thereof (after attempting by reasonable means
to notify such holder prior to such sale), and such dividends, interest payments
or other distributions or the proceeds of any such sale may be applied to any
payment of such tax or charge, the holder of this Receipt remaining liable for
any deficiency.
7. WARRANTY BY COMPANY. The Company has warranted that the Stock,
when issued, will be validly issued, fully paid and nonassessable.
8. AMENDMENT. The form of the Receipts and any provisions of the
Deposit Agreement may at any time and from time to time be amended by agreement
between the Company and the Depositary in any respect which they may deem
necessary or desirable; PROVIDED, HOWEVER, that no such amendment which shall
materially and adversely alter the rights of the holders of Receipts shall be
effective unless such amendment shall have been approved by the holders of at
least a majority of the Depositary Shares then outstanding. A holder of a
Receipt at the time any such amendment so becomes effective shall be deemed, by
continuing to hold such Receipt, to consent and agree to such amendment and to
be bound by the Deposit Agreement as amended thereby.
9. CHARGES OF DEPOSITARY. The Company will pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements, and all charges of the Depositary in connection with
the initial deposit of the Stock and the initial issuance of the Depositary
Shares
<PAGE>
4
and redemption of the Stock at the option of the Company. All other transfer
and other taxes and other governmental charges shall be at the expense of
holders of Depositary Shares. All other charges and expenses of the Depositary
and any agent of the Depositary will be paid in consultation and agreement
between the Depositary and the Company.
10. TITLE OF RECEIPTS. This Receipt (and the Depositary Shares
evidenced hereby), when properly endorsed or accompanied by a properly executed
instrument of transfer, is transferable by delivery with the same effect as in
the case of a negotiable instrument; PROVIDED, HOWEVER, that until transfer of a
Receipt shall be registered on the books of the Depositary, the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the person
entitled to distributions of dividends or other distributions or to any notice
provided for in the Deposit Agreement, and for all other purposes.
11. DIVIDENDS AND DISTRIBUTIONS. Whenever the Depositary receives
any cash dividend or other cash distribution on the Stock, the Depositary will,
subject to the provisions of the Deposit Agreement, make such distribution to
the Receipt holders as nearly as practicable in proportion to the number of
Depositary Shares held by them; PROVIDED, HOWEVER, that the amount distributed
will be reduced by any amounts required to be withheld by the Company or the
Depositary on account of taxes. Other distributions received on the Stock may
be distributed to holders of Receipts as provided in the Deposit Agreement.
12. FIXING OF RECORD DATE. Whenever any cash dividend or other cash
distribution shall become payable or any distribution other than cash shall be
made, or if rights, preferences or privileges shall at any time be offered, with
respect to Stock, or whenever the Depositary shall receive notice of any meeting
at which holders of Stock are entitled to vote or of which holders of Stock are
entitled to notice, the Depositary shall in each instance fix a record date
(which shall be the record date fixed by the Company with respect to the Stock),
for the determination of the holders of Receipts who shall be entitled to
receive such dividend, distribution, rights, preferences or privileges or the
net proceeds of the sale thereof, or to give instructions for the exercise of
voting rights at any such meeting, or who shall be entitled to notice of such
meeting.
13. VOTING RIGHTS. Upon receipt of notice of any meeting at which
holders of Stock are entitled to vote, the Depositary shall, as soon as
practicable thereafter, mail to the record holders of Receipts a notice which
shall contain (i) such information as is contained in such notice of meeting and
(ii) a statement informing holders of Receipts that they may instruct the
Depositary as to the exercise of the voting rights pertaining
<PAGE>
5
to the amount of Stock represented by their respective Depositary Shares and a
brief statement as to the manner in which such instructions may be given. Upon
the written request of a holder of a Receipt on such record date, the Depositary
shall endeavor insofar as practicable to vote or cause to be voted the amount of
Stock represented by such Receipt in accordance with the instructions set forth
in such request. In the absence of specific instructions from the holder of a
Receipt, the Depositary will abstain from voting (but, at its discretion, not
from appearing at any meeting with respect to such Stock unless directed to the
contrary by the holders of Receipts) to the extent of the Stock represented by
the Depositary Shares evidenced by such Receipt.
14. CHANGES AFFECTING DEPOSITED SECURITIES. Upon any change in par
or stated value, split-up, combination or any other reclassification of the
Stock or upon any recapitalization, reorganization, merger, amalgamation or
consolidation affecting the Company or to which it is a party, or upon the sale
of all or substantially all the Company's assets, the Depositary may in its
discretion with the approval of the Company, and in such manner as the
Depositary may deem equitable, (i) make such adjustments in (x) the fraction of
an interest represented by one Depositary Share in one share of Stock and (y)
the ratio of the redemption price of a share of Stock, in each case as may be
necessary fully to reflect the effect of such change and (ii) treat any
securities which shall be received by the Depositary in exchange for or upon
conversion or in respect of the Stock as new deposited securities so received in
exchange for or upon conversion or in respect of such Stock. In any such case
the Depositary may in its discretion, with the approval of the Company, execute
and deliver additional Receipts, or may call for the surrender of outstanding
Receipts to be exchanged for new Receipts specifically describing such new
deposited securities.
15. LIABILITY AND OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S
AGENTS OR THE COMPANY. Neither the Depositary nor any Depositary's Agent nor
any Registrar nor the Company assumes any obligation or shall be subject to any
liability under this Deposit Agreement to any holder of any Receipt, other than
for its gross negligence or willful misconduct. Neither the Depositary nor any
Depositary's Agent nor any Registrar nor the Company shall incur any liability
to any holder of any Receipt if by reason of any provision of any present or
future law or regulation thereunder of the United States of America or any other
governmental authority or, in the case of the Depositary, the Depositary's Agent
or the Registrar, by reason of any provision, present or future, of the
Company's Certificate of Incorporation (including the Certificate) or by reason
of any act of God or war or other circumstances beyond their control, the
Depositary, the Depositary's Agent, the Registrar or the Company shall be
prevented or forbidden from doing or performing any act or thing which the terms
of this Deposit Agreement provide shall be done or performed; nor shall the
Depositary, any Depositary's
<PAGE>
6
Agent, any Registrar or the Company incur any liability to any holder of a
Receipt by reason of nonperformance or delay, caused as aforesaid, in
performance of any act or thing which by the terms of the Deposit Agreement it
is provided shall or may be done or performed, or by reason of any exercise of,
or failure to exercise, any discretion provided for in the Deposit Agreement,
other than for its gross negligence or willful misconduct. Neither the
Depositary nor any Depositary's Agent nor the Company assumes any obligation or
shall be subject to any liability under the Deposit Agreement to holders of
Receipts other than to use its best judgment and good faith in the performance
of such duties as are specifically set forth in the Deposit Agreement. Neither
the Depositary nor any Depositary's Agent nor any Registrar nor the Company
shall be under any obligation to appear in, prosecute or defend any action, suit
or other proceeding in respect of the Stock, the Depositary Shares or the
Receipts, which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished.
The Deposit Agreement contains various other exculpancy, indemnification and
related provisions, to which reference is hereby made.
16. RESIGNATION AND REMOVAL OF DEPOSITARY. The Depositary may at
any time (a) resign by written notice of its election to do so delivered to the
Company, such resignation to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment, or (b) be removed by the
Company effective upon the appointment of a successor Depositary and its
acceptance of such appointment.
17. TERMINATION OF DEPOSIT AGREEMENT. The Deposit Agreement may be
terminated by the Company or the Depositary only upon or after the occurrence of
any of the following events: (i) all outstanding Depositary Shares shall have
been redeemed or (ii) there shall have been made a final distribution in respect
of the Stock in connection with any liquidation, dissolution or winding up of
the Company and such distribution shall have been distributed to the holders of
Receipts. Upon the termination of the Deposit Agreement, the Company shall be
discharged from all obligations thereunder except for its obligations to the
Depositary with respect to indemnification, charges and expenses.
18. GOVERNING LAW. This Receipt and the Deposit Agreement and all
rights hereunder and thereunder and provisions hereof and thereof shall be
governed by and construed in accordance with the laws of the State of New York.
This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose unless this Receipt shall
have been executed manually by a duly authorized signatory of the Depositary or,
if a Registrar for the Receipts (other than the Depositary) shall have been
appointed, by facsimile by the Depositary provided this Receipt
<PAGE>
7
is countersigned manually by the signature of a duly authorized signatory of
such Registrar.
The corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Dated: ___________________,
as Depositary and Registrar
By ______________________________
Authorized Officer
<PAGE>
EXHIBIT 4(u)
CERTIFICATE OF TRUST
OF
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST I
This Certificate of Trust is being duly executed as of
January 16, 1998 for the purposes of forming a business trust pursuant to
the Delaware Business Trust Act (12 DEL. C. Section 3801 ET. SEQ.) (the "Act").
1. NAME. The name of the business trust formed hereby is
"Lehman Brothers Holdings Capital Trust I" (the "Trust").
2. DELAWARE TRUSTEE. The name and business address of the
Delaware resident trustee of the Trust meeting the requirements of Section 3807
of the Act are as follows:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust, which may be executed
in counterparts, shall be effective immediately upon filing with the Secretary
of State of the State of Delaware.
[rest of page intentionally left blank]
<PAGE>
2
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have duly executed this Certificate of Trust as of the date first written
above.
THE CHASE MANHATTAN BANK,
as Property Trustee
BY: /s/ Francine Springer
-------------------------------
Name: Francine Springer
Title: Assistant Vice President
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
BY: /s/ Denis Kelly
-------------------------------
Name: Denis Kelly
Title: Authorized Officer
/s/ Karen M. Muller
-----------------------------------
Karen M. Muller, as Regular Trustee
/s/ Jennifer Marre
-----------------------------------
Jennifer Marre, as Regular Trustee
/s/ Oliver Budde
-----------------------------------
Oliver Budde, as Regular Trustee
<PAGE>
Exhibit 4(v)
CERTIFICATE OF TRUST
OF
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST II
This Certificate of Trust is being duly executed as of
January 16, 1998 for the purposes of forming a business trust pursuant to the
Delaware Business Trust Act (12 DEL. C. Section 3801 ET. SEQ.) (the "Act").
1. NAME. The name of the business trust formed hereby is
"Lehman Brothers Holdings Capital Trust II" (the "Trust").
2. DELAWARE TRUSTEE. The name and business address of the
Delaware resident trustee of the Trust meeting the requirements of Section 3807
of the Act are as follows:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust, which may be executed
in counterparts, shall be effective immediately upon filing with the Secretary
of State of the State of Delaware.
[rest of page intentionally left blank]
<PAGE>
2
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have duly executed this Certificate of Trust as of the date first written
above.
THE CHASE MANHATTAN BANK,
as Property Trustee
BY: /s/ Francine Springer
-------------------------------
Name: Francine Springer
Title: Assistant Vice President
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
BY: /s/ Denis Kelly
-------------------------------
Name: Denis Kelly
Title: Authorized Officer
/s/ Karen M. Muller
-----------------------------------
Karen M. Muller, as Regular Trustee
/s/ Jennifer Marre
-----------------------------------
Jennifer Marre, as Regular Trustee
/s/ Oliver Budde
-----------------------------------
Oliver Budde, as Regular Trustee
<PAGE>
Exhibit 4(w)
CERTIFICATE OF TRUST
OF
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST III
This Certificate of Trust is being duly executed as of
January 16, 1998 for the purposes of forming a business trust pursuant to the
Delaware Business Trust Act (12 DEL. C. Section 3801 ET. SEQ.) (the "Act").
1. NAME. The name of the business trust formed hereby is
"Lehman Brothers Holdings Capital Trust III" (the "Trust").
2. DELAWARE TRUSTEE. The name and business address of the
Delaware resident trustee of the Trust meeting the requirements of Section 3807
of the Act are as follows:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust, which may be executed
in counterparts, shall be effective immediately upon filing with the Secretary
of State of the State of Delaware.
[rest of page intentionally left blank]
<PAGE>
2
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have duly executed this Certificate of Trust as of the date first written
above.
THE CHASE MANHATTAN BANK,
as Property Trustee
BY: /s/ Francine Springer
-------------------------------
Name: Francine Springer
Title: Assistant Vice President
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
BY: /s/ Denis Kelly
-------------------------------
Name: Denis Kelly
Title: Authorized Officer
/s/ Karen M. Muller
-----------------------------------
Karen M. Muller, as Regular Trustee
/s/ Jennifer Marre
-----------------------------------
Jennifer Marre, as Regular Trustee
/s/ Oliver Budde
-----------------------------------
Oliver Budde, as Regular Trustee
<PAGE>
Exhibit 4(x)
DECLARATION OF TRUST
DECLARATION OF TRUST, dated as of January 16, 1998, between Lehman
Brothers Holdings Inc., a Delaware corporation, as Sponsor, Chase Manhattan
Bank Delaware, as the initial Delaware Trustee, The Chase Manhattan Bank, as
the initial Property Trustee, and Karen M. Muller, Jennifer Marre, and Oliver
Budde, as Regular Trustees (collectively with the Delaware Trustee and the
Property Trustee, the "Trustees"). The Sponsor and the Trustees hereby agree
as follows:
1. The trust created hereby (the "Trust") shall be known as "Lehman
Brothers Holdings Capital Trust I", in which name the Trustees, or the Sponsor
to the extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of Ten Dollars ($10.00). The Trustees hereby acknowledge
receipt of such amount in trust from the Sponsor, which amount shall constitute
the initial trust estate. The Trustees hereby declare that they will hold the
trust estate in trust for the Sponsor. It is the intention of the parties
hereto that the Trust created hereby constitute a business trust under Chapter
38 of Title 12 of the Delaware Code, 12 DEL C. Section 3801 ET SEQ. (the
"Business Trust Act"), and that this document constitute the governing
instrument of the Trust. The Trustees are hereby authorized and directed to
execute and file a certificate of trust with the Delaware Secretary of State in
the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and
restated Declaration of Trust, satisfactory to each such party (and
substantially in the form included as an exhibit to the 1933 Act Registration
Statement (as defined below)), to provide for the contemplated operation of
the Trust created hereby and the issuance of preferred securities (the
"Preferred Securities") and common securities by the Trust as such securities
will be described therein. Prior to the execution and delivery of such
amended and restated Declaration of Trust, the Trustees shall not have any
duty or obligation hereunder or with respect to the trust estate, except as
otherwise required by applicable law or as may be necessary to obtain prior
to such execution and delivery and licenses, consents or approvals required
by applicable law or otherwise.
4. The Sponsor and the Trustees hereby authorize and direct the
Sponsor, in each case on behalf of the Trust as sponsor of the Trust, (i) to
prepare for filing with the Securities and Exchange Commission (the
"Commission") (a) a Registration Statement on Form S-3 (the "1933 Act
Registration Statement"), including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement, relating to the
registration under the Securities Act of 1933, as amended, of the Preferred
Securities of the Trust and possibly certain other securities and (b) a
Registration Statement on Form 8-A (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments thereto) relating
to the registration of the Preferred Securities of the Trust under the
Securities Exchange Act of 1934, as amended; (ii) to file with the New York
Stock
<PAGE>
2
Exchange or any other national stock exchange or The Nasdaq National Market
(each, an "Exchange") and execute on behalf of the Trust one or more listing
applications and all other applications, statements, certificates, agreements
and other instruments as shall be necessary or desirable to cause the
Preferred Securities to be listed on any of the Exchanges; (iii) to negotiate
and execute an underwriting agreement among the Trust, the Sponsor and the
underwriter(s) thereto relating to the offer and sale of the Preferred
Securities, substantially in the form included or to be incorporated as an
exhibit to the 1993 Act Registration Statement and (iv) to execute and file
such applications, reports, surety bonds, irrevocable consents, appointments
of attorneys for service of process and other papers and documents as shall
be necessary or desirable to register the Preferred Securities under the
securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on behalf
of the Trust, may deem necessary or desirable.
It is hereby acknowledged and agreed that in connection with any
document referred to in clauses (i), (ii) and (iv) above, (A) any Regular
Trustee (or his attorneys-in-fact and agents or the Sponsor as permitted
herein) is authorized to execute such document on behalf of the Trust,
provided that the 1933 Act Registration Statement and the 1934 Act
Registration Statement shall be signed by all of the Regular Trustees, and
(B) The Chase Manhattan Bank and Chase Manhattan Bank Delaware, in their
capacities as Trustees of the Trust, shall not be required to join in any
such filing or execute on behalf of the Trust any such document unless
required by the rules and regulations of the Commission, the Exchanges or
state securities or blue sky laws, and in such case only to the extent so
required. In connection with all of the foregoing, each Regular Trustee,
solely in such Regular Trustee's capacity as Trustee of the Trust, hereby
constitutes and appoints Thomas A. Russo, Karen M. Muller and Marc A.
Silverman and each of them, as such Regular Trustee's true and lawful
attorneys-in-fact and agent, with full power of substitution and
resubstitution, for such Regular Trustee, in such Regular Trustee's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to the 1933 Act Registration Statement
and the 1934 Act Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Commission, the Exchanges and administrators of state securities or blue sky
laws, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as such Regular Trustee might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their respective substitute or substitutes, shall do or cause to be
done by virtue hereof.
5. This Declaration of Trust may be executed in one or more
counterparts.
6. The number of Trustees initially shall be five (5) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided that, to the extent required by the Business Trust
Act, one Trustee shall be an entity that has its principal place of business
in the State of Delaware. Subject to the foregoing, the Sponsor is entitled to
appoint or remove without cause any Trustee at any time. The Trustees may
resign upon thirty days prior notice to the Sponsor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
LEHMAN BROTHERS HOLDINGS INC.,
as Sponsor
By: /s/ Jennifer Marre
--------------------------------
Name: Jennifer Marre
Title: Vice President
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By: /s/ Denis Kelly
--------------------------------
Name: Denis Kelly
Title: Authorized Officer
THE CHASE MANHATTAN BANK,
as Property Trustee
By: /s/ Francine Springer
--------------------------------
Name: Francine Springer
Title: Assistant Vice President
/s/ Karen M. Muller
-----------------------------------
Karen M. Muller, as Regular Trustee
/s/ Jennifer Marre
-----------------------------------
Jennifer Marre, as Regular Trustee
/s/ Oliver Budde
-----------------------------------
Oliver Budde, as Regular Trustee
<PAGE>
Exhibit 4(y)
DECLARATION OF TRUST
DECLARATION OF TRUST, dated as of January 16, 1998, between Lehman
Brothers Holdings Inc., a Delaware corporation, as Sponsor, Chase Manhattan
Bank Delaware, as the initial Delaware Trustee, The Chase Manhattan Bank, as
the initial Property Trustee, and Karen M. Muller, Jennifer Marre, and Oliver
Budde, as Regular Trustees (collectively with the Delaware Trustee and the
Property Trustee, the "Trustees"). The Sponsor and the Trustees hereby agree
as follows:
1. The trust created hereby (the "Trust") shall be known as "Lehman
Brothers Holdings Capital Trust II", in which name the Trustees, or the Sponsor
to the extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of Ten Dollars ($10.00). The Trustees hereby acknowledge
receipt of such amount in trust from the Sponsor, which amount shall constitute
the initial trust estate. The Trustees hereby declare that they will hold the
trust estate in trust for the Sponsor. It is the intention of the parties
hereto that the Trust created hereby constitute a business trust under Chapter
38 of Title 12 of the Delaware Code, 12 DEL C. Section 3801 ET SEQ. (the
"Business Trust Act"), and that this document constitute the governing
instrument of the Trust. The Trustees are hereby authorized and directed to
execute and file a certificate of trust with the Delaware Secretary of State in
the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and
restated Declaration of Trust, satisfactory to each such party (and
substantially in the form included as an exhibit to the 1933 Act Registration
Statement (as defined below)), to provide for the contemplated operation of
the Trust created hereby and the issuance of preferred securities (the
"Preferred Securities") and common securities by the Trust as such securities
will be described therein. Prior to the execution and delivery of such
amended and restated Declaration of Trust, the Trustees shall not have any
duty or obligation hereunder or with respect to the trust estate, except as
otherwise required by applicable law or as may be necessary to obtain prior
to such execution and delivery and licenses, consents or approvals required
by applicable law or otherwise.
4. The Sponsor and the Trustees hereby authorize and direct the
Sponsor, in each case on behalf of the Trust as sponsor of the Trust, (i) to
prepare for filing with the Securities and Exchange Commission (the
"Commission") (a) a Registration Statement on Form S-3 (the "1933 Act
Registration Statement"), including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement, relating to the
registration under the Securities Act of 1933, as amended, of the Preferred
Securities of the Trust and possibly certain other securities and (b) a
Registration Statement on Form 8-A (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments thereto) relating
to the registration of the Preferred Securities of the Trust under the
Securities Exchange Act of 1934, as amended; (ii) to file with the New York
Stock Exchange or any other national stock exchange or The Nasdaq National
Market (each, an "Exchange") and
<PAGE>
2
execute on behalf of the Trust one or more listing applications and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred Securities to be
listed on any of the Exchanges; (iii) to negotiate and execute an
underwriting agreement among the Trust, the Sponsor and the underwriter(s)
thereto relating to the offer and sale of the Preferred Securities,
substantially in the form included or to be incorporated as an exhibit to the
1993 Act Registration Statement and (iv) to execute and file such
applications, reports, surety bonds, irrevocable consents, appointments of
attorneys for service of process and other papers and documents as shall be
necessary or desirable to register the Preferred Securities under the
securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on behalf
of the Trust, may deem necessary or desirable.
It is hereby acknowledged and agreed that in connection with any
document referred to in clauses (i), (ii) and (iv) above, (A) any Regular
Trustee (or his attorneys-in-fact and agents or the Sponsor as permitted
herein) is authorized to execute such document on behalf of the Trust,
provided that the 1933 Act Registration Statement and the 1934 Act
Registration Statement shall be signed by all of the Regular Trustees, and
(B) The Chase Manhattan Bank and Chase Manhattan Bank Delaware, in their
capacities as Trustees of the Trust, shall not be required to join in any
such filing or execute on behalf of the Trust any such document unless
required by the rules and regulations of the Commission, the Exchanges or
state securities or blue sky laws, and in such case only to the extent so
required. In connection with all of the foregoing, each Regular Trustee,
solely in such Regular Trustee's capacity as Trustee of the Trust, hereby
constitutes and appoints Thomas A. Russo, Karen M. Muller and Marc A.
Silverman and each of them, as such Regular Trustee's true and lawful
attorneys-in-fact and agent, with full power of substitution and
resubstitution, for such Regular Trustee, in such Regular Trustee's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to the 1933 Act Registration Statement
and the 1934 Act Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Commission, the Exchanges and administrators of state securities or blue sky
laws, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as such Regular Trustee might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their respective substitute or substitutes, shall do or cause to be
done by virtue hereof.
5. This Declaration of Trust may be executed in one or more
counterparts.
6. The number of Trustees initially shall be five (5) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided that, to the extent required by the Business Trust
Act, one Trustee shall be an entity that has its principal place of business in
the State of Delaware. Subject to the foregoing, the Sponsor is entitled to
appoint or remove without cause any Trustee at any time. The Trustees may
resign upon thirty days prior notice to the Sponsor.
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
LEHMAN BROTHERS HOLDINGS INC.,
as Sponsor
By: /s/ Jennifer Marre
--------------------------------
Name: Jennifer Marre
Title: Vice President
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By: /s/ Denis Kelly
--------------------------------
Name: Denis Kelly
Title: Authorized Officer
THE CHASE MANHATTAN BANK,
as Property Trustee
By: /s/ Francine Springer
--------------------------------
Name: Francine Springer
Title: Assistant Vice President
/s/ Karen M. Muller
-----------------------------------
Karen M. Muller, as Regular Trustee
/s/ Jennifer Marre
-----------------------------------
Jennifer Marre, as Regular Trustee
/s/ Oliver Budde
-----------------------------------
Oliver Budde, as Regular Trustee
<PAGE>
Exhibit 4(z)
DECLARATION OF TRUST
DECLARATION OF TRUST, dated as of January 16, 1998, between Lehman
Brothers Holdings Inc., a Delaware corporation, as Sponsor, Chase Manhattan
Bank Delaware, as the initial Delaware Trustee, The Chase Manhattan Bank, as
the initial Property Trustee, and Karen M. Muller, Jennifer Marre, and Oliver
Budde, as Regular Trustees (collectively with the Delaware Trustee and the
Property Trustee, the "Trustees"). The Sponsor and the Trustees hereby agree
as follows:
1. The trust created hereby (the "Trust") shall be known as "Lehman
Brothers Holdings Capital Trust III", in which name the Trustees, or the Sponsor
to the extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of Ten Dollars ($10.00). The Trustees hereby acknowledge
receipt of such amount in trust from the Sponsor, which amount shall constitute
the initial trust estate. The Trustees hereby declare that they will hold the
trust estate in trust for the Sponsor. It is the intention of the parties
hereto that the Trust created hereby constitute a business trust under Chapter
38 of Title 12 of the Delaware Code, 12 DEL C. Section 3801 ET SEQ. (the
"Business Trust Act"), and that this document constitute the governing
instrument of the Trust. The Trustees are hereby authorized and directed to
execute and file a certificate of trust with the Delaware Secretary of State in
the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and
restated Declaration of Trust, satisfactory to each such party (and
substantially in the form included as an exhibit to the 1933 Act Registration
Statement (as defined below)), to provide for the contemplated operation of
the Trust created hereby and the issuance of preferred securities (the
"Preferred Securities") and common securities by the Trust as such securities
will be described therein. Prior to the execution and delivery of such
amended and restated Declaration of Trust, the Trustees shall not have any
duty or obligation hereunder or with respect to the trust estate, except as
otherwise required by applicable law or as may be necessary to obtain prior
to such execution and delivery and licenses, consents or approvals required
by applicable law or otherwise.
4. The Sponsor and the Trustees hereby authorize and direct the
Sponsor, in each case on behalf of the Trust as sponsor of the Trust, (i) to
prepare for filing with the Securities and Exchange Commission (the
"Commission") (a) a Registration Statement on Form S-3 (the "1933 Act
Registration Statement"), including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement, relating to the
registration under the Securities Act of 1933, as amended, of the Preferred
Securities of the Trust and possibly certain other securities and (b) a
Registration Statement on Form 8-A (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments thereto) relating
to the registration of the Preferred Securities of the Trust under the
Securities Exchange Act of 1934, as amended; (ii) to file with the New York
Stock Exchange or any other national stock exchange or The Nasdaq National
Market (each, an "Exchange") and
<PAGE>
2
execute on behalf of the Trust one or more listing applications and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred Securities to be
listed on any of the Exchanges; (iii) to negotiate and execute an
underwriting agreement among the Trust, the Sponsor and the underwriter(s)
thereto relating to the offer and sale of the Preferred Securities,
substantially in the form included or to be incorporated as an exhibit to the
1993 Act Registration Statement and (iv) to execute and file such
applications, reports, surety bonds, irrevocable consents, appointments of
attorneys for service of process and other papers and documents as shall be
necessary or desirable to register the Preferred Securities under the
securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on behalf
of the Trust, may deem necessary or desirable.
It is hereby acknowledged and agreed that in connection with any
document referred to in clauses (i), (ii) and (iv) above, (A) any Regular
Trustee (or his attorneys-in-fact and agents or the Sponsor as permitted
herein) is authorized to execute such document on behalf of the Trust,
provided that the 1933 Act Registration Statement and the 1934 Act
Registration Statement shall be signed by all of the Regular Trustees, and
(B) The Chase Manhattan Bank and Chase Manhattan Bank Delaware, in their
capacities as Trustees of the Trust, shall not be required to join in any
such filing or execute on behalf of the Trust any such document unless
required by the rules and regulations of the Commission, the Exchanges or
state securities or blue sky laws, and in such case only to the extent so
required. In connection with all of the foregoing, each Regular Trustee,
solely in such Regular Trustee's capacity as Trustee of the Trust, hereby
constitutes and appoints Thomas A. Russo, Karen M. Muller and Marc A.
Silverman and each of them, as such Regular Trustee's true and lawful
attorneys-in-fact and agent, with full power of substitution and
resubstitution, for such Regular Trustee, in such Regular Trustee's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to the 1933 Act Registration Statement
and the 1934 Act Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Commission, the Exchanges and administrators of state securities or blue sky
laws, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as such Regular Trustee might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their respective substitute or substitutes, shall do or cause to be
done by virtue hereof.
5. This Declaration of Trust may be executed in one or more
counterparts.
6. The number of Trustees initially shall be five (5) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided that, to the extent required by the Business Trust
Act, one Trustee shall be an entity that has its principal place of business in
the State of Delaware. Subject to the foregoing, the Sponsor is entitled to
appoint or remove without cause any Trustee at any time. The Trustees may
resign upon thirty days prior notice to the Sponsor.
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
LEHMAN BROTHERS HOLDINGS INC.,
as Sponsor
By: /s/ Jennifer Marre
--------------------------------
Name: Jennifer Marre
Title: Vice President
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
By: /s/ Denis Kelly
--------------------------------
Name: Denis Kelly
Title: Authorized Officer
THE CHASE MANHATTAN BANK,
as Property Trustee
By: /s/ Francine Springer
--------------------------------
Name: Francine Springer
Title: Assistant Vice President
/s/ Karen M. Muller
-----------------------------------
Karen M. Muller, as Regular Trustee
/s/ Jennifer Marre
-----------------------------------
Jennifer Marre, as Regular Trustee
/s/ Oliver Budde
-----------------------------------
Oliver Budde, as Regular Trustee
<PAGE>
[THE FOLLOWING EXHIBIT 4(aa) IS THE FORM OF AMENDED AND RESTATED
DECLARATION OF TRUST TO BE USED BY EACH OF LEHMAN BROTHERS HOLDINGS
CAPITAL TRUST I, LEHMAN BROTHERS HOLDINGS CAPITAL TRUST II AND
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST III]
Exhibit 4(aa)
- --------------------------------------------------------------------------------
AMENDED AND RESTATED DECLARATION OF TRUST
Lehman Brothers Holdings Capital Trust __
Dated as of ____________ __, ____
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE*
Section of Trust
Indenture Act of Section of
1939, as Amended Agreement
- ---------------- ---------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.3
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3(c); 6.3(d)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.9(b); 3.10(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9(b)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .2.6; 7.5(b); 7.6(c)
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.16
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(c)
- --------------------------
* This Cross-Reference Table does not constitute part of the Agreement and
shall not have any bearing upon the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
INTERPRETATION AND DEFINITIONS . . . . . . . . . 1
SECTION 1.1 Interpretation and Definitions . . . . . . . . . . . . . . 1
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authorized Officer . . . . . . . . . . . . . . . . . . . . . . . . 2
Beneficial Owners. . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Trust Act . . . . . . . . . . . . . . . . . . . . . . . . 2
Cedel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Certificate of Trust . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities Holder . . . . . . . . . . . . . . . . . . . . . 3
Common Security. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Security Certificate. . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . 3
Covered Person . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Debenture Issuer . . . . . . . . . . . . . . . . . . . . . . . . . 3
Debenture Issuer Indemnified Person. . . . . . . . . . . . . . . . 3
Debenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 3
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary Participant . . . . . . . . . . . . . . . . . . . . . . 4
Direct Action. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Euroclear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Fiduciary Indemnified Person . . . . . . . . . . . . . . . . . . . 4
Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indemnified Person . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture Event of Default . . . . . . . . . . . . . . . . . . . . 4
Investment Company . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Company Act . . . . . . . . . . . . . . . . . . . . . . 5
i
<PAGE>
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Investment Company Event . . . . . . . . . . . . . . . . . . . . . 5
Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
List of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Majority in Liquidation Amount . . . . . . . . . . . . . . . . . . 5
New York Stock Exchange. . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate. . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Payment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Security . . . . . . . . . . . . . . . . . . . . . . . . 6
Preferred Security Certificate . . . . . . . . . . . . . . . . . . 6
Property Account . . . . . . . . . . . . . . . . . . . . . . . . . 6
Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 6
Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption/Distribution Notice . . . . . . . . . . . . . . . . . . 6
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . 6
Regular Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Related Party. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer. . . . . . . . . . . . . . . . . . . . . . . . 7
Rule 3a-5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Special Event. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Sponsor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Successor Delaware Trustee . . . . . . . . . . . . . . . . . . . . 7
Successor Entity . . . . . . . . . . . . . . . . . . . . . . . . . 7
Successor Property Trustee . . . . . . . . . . . . . . . . . . . . 7
Successor Security . . . . . . . . . . . . . . . . . . . . . . . . 7
Super Majority . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Tax Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10% in Liquidation Amount. . . . . . . . . . . . . . . . . . . . . 8
Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . . 8
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Enforcement Event. . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . 8
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2
TRUST INDENTURE ACT . . . . . . . . . . . . 8
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . 8
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . 9
SECTION 2.3 Reports by the Property Trustee. . . . . . . . . . . . . . 9
SECTION 2.4 Periodic Reports to the Property Trustee . . . . . . . . . 9
ii
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SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . 10
SECTION 2.6 Trust Enforcement Events; Waiver . . . . . . . . . . . . . 10
SECTION 2.7 Trust Enforcement Event; Notice. . . . . . . . . . . . . . 12
ARTICLE 3
ORGANIZATION. . . . . . . . . . . . . . 12
SECTION 3.1 Name and Organization. . . . . . . . . . . . . . . . . . . 12
SECTION 3.2 Office. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.3 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.4 Authority. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . . . . 13
SECTION 3.6 Powers and Duties of the Regular Trustees. . . . . . . . . 14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees . . . 16
SECTION 3.8 Powers and Duties of the Property Trustee. . . . . . . . . 17
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.10 Certain Rights of Property Trustee. . . . . . . . . . . . 21
SECTION 3.11 Delaware Trustee. . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.12 Execution of Documents. . . . . . . . . . . . . . . . . . 24
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities. . 24
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.16 Property Trustee May File Proofs of Claim . . . . . . . . 27
ARTICLE 4
SPONSOR . . . . . . . . . . . . . . . 28
SECTION 4.1 Responsibilities of the Sponsor. . . . . . . . . . . . . . 28
SECTION 4.2 Indemnification and Expenses of the Trustees . . . . . . . 28
ARTICLE 5
TRUST COMMON SECURITIES HOLDER . . . . . . . . . 29
SECTION 5.1 Debenture Issuer's Purchase of Common Securities . . . . . 29
SECTION 5.2 Covenants of the Common Securities Holder. . . . . . . . . 29
ARTICLE 6
TRUSTEES. . . . . . . . . . . . . . . 29
SECTION 6.1 Number of Trustees . . . . . . . . . . . . . . . . . . . . 29
SECTION 6.2 Delaware Trustee; Eligibility. . . . . . . . . . . . . . . 30
SECTION 6.3 Property Trustee; Eligibility. . . . . . . . . . . . . . . 30
SECTION 6.4 Qualifications of Regular Trustees and Delaware Trustee
Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.5 Initial Regular Trustees . . . . . . . . . . . . . . . . . 31
iii
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SECTION 6.6 Appointment, Removal and Resignation of Trustees . . . . . 31
SECTION 6.7 Vacancies among Trustees . . . . . . . . . . . . . . . . . 32
SECTION 6.8 Effect of Vacancies. . . . . . . . . . . . . . . . . . . . 33
SECTION 6.9 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.10 Delegation of Power . . . . . . . . . . . . . . . . . . . 33
SECTION 6.11 Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 7
TERMS OF SECURITIES . . . . . . . . . . . . 34
SECTION 7.1 General Provisions Regarding Securities. . . . . . . . . . 34
SECTION 7.2 Distributions. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.3 Redemption of Securities . . . . . . . . . . . . . . . . . 37
SECTION 7.4 Redemption Procedures. . . . . . . . . . . . . . . . . . . 38
SECTION 7.5 Voting Rights of Preferred Securities. . . . . . . . . . . 39
SECTION 7.6 Voting Rights of Common Securities . . . . . . . . . . . . 42
SECTION 7.7 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.8 Listing. . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.9 Transfer of Securities . . . . . . . . . . . . . . . . . . 43
SECTION 7.10 Mutilated, Destroyed, Lost or Stolen Certificates . . . . 44
SECTION 7.11 Deemed Security Holders . . . . . . . . . . . . . . . . . 45
SECTION 7.12 Global Securities . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 8
DISSOLUTION AND TERMINATION OF TRUST. . . . . . . . 47
SECTION 8.1 Dissolution and Termination of Trust . . . . . . . . . . . 47
SECTION 8.2 Liquidation Distribution Upon Dissolution of the Trust . . 48
ARTICLE 9
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, DELAWARE TRUSTEES OR OTHERS . . . . 49
SECTION 9.1 Liability. . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.2 Exculpation. . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.4 Indemnification. . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.5 Outside Businesses . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 10
ACCOUNTING . . . . . . . . . . . . . . 54
SECTION 10.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.2 Certain Accounting Matters. . . . . . . . . . . . . . . . 54
SECTION 10.3 Banking . . . . . . . . . . . . . . . . . . . . . . . . . 55
iv
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SECTION 10.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 11
AMENDMENTS AND MEETINGS . . . . . . . . . . . 55
SECTION 11.1 Amendments. . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.2 Meetings of the Holders of Securities; Action by Written
Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 12
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE. . . . . . . . . . . . 59
SECTION 12.1 Representations and Warranties of the Property Trustee. . 59
SECTION 12.2 Representations and Warranties of the Delaware Trustee. . 60
ARTICLE 13
MISCELLANEOUS. . . . . . . . . . . . . . 61
SECTION 13.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 13.2 Governing Law . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 13.3 Intention of the Parties. . . . . . . . . . . . . . . . . 62
SECTION 13.4 Headings. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 13.5 Successors and Assigns. . . . . . . . . . . . . . . . . . 62
SECTION 13.6 Partial Enforceability. . . . . . . . . . . . . . . . . . 62
SECTION 13.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 62
EXHIBITS
Exhibit A Form of Preferred Security Certificate
Exhibit B Form of Common Security Certificate
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"), dated
as of _______ __, ____, by and among LEHMAN BROTHERS HOLDINGS INC., a Delaware
corporation, as Sponsor, and __________________, __________________ and
__________________ as the initial Regular Trustees, The Chase Manhattan Bank, as
the initial Property Trustee and Chase Manhattan Bank Delaware, as the initial
Delaware Trustee, not in their individual capacities but solely as Trustees, and
the holders, from time to time, of undivided beneficial ownership interests in
the Trust to be issued pursuant to this Declaration.
WHEREAS, the Trustees and the Sponsor established Lehman Brothers
Holdings Capital Trust __ (the "Trust"), a business trust under the Business
Trust Act (as defined, together with other capitalized terms, herein) pursuant
to a Declaration of Trust dated as of ____________, 1998, (the "Original
Declaration") and a Certificate of Trust (the "Certificate of Trust") filed with
the Secretary of State of the State of Delaware on ____________, 1998; and
WHEREAS, the sole purpose of the Trust shall be to issue and sell
certain securities representing undivided beneficial ownership interests in the
assets of the Trust, to invest the proceeds from such sales in the Debentures
issued by the Debenture Issuer and to engage in only those activities necessary
or incidental thereto; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees hereby declare that all assets contributed to the Trust be held in
trust for the benefit of the Holders, from time to time, of the Securities
representing undivided beneficial ownership interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.
ARTICLE 1
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
<PAGE>
2
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections,
Recitals and Exhibits are to Articles and Sections of, or Recitals and Exhibits
to, this Declaration unless otherwise specified;
(e) unless otherwise defined in this Declaration, a term defined in
the Trust Indenture Act has the same meaning when used in this Declaration; and
(f) a reference to the singular includes the plural and vice versa
and a reference to any masculine form of a term shall include the feminine form
of a term, as applicable.
(g) the following terms have the following meanings:
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
to bind such Person.
"Beneficial Owners" means, for Preferred Securities represented by a
Global Security, the person who acquires an interest in the Preferred Securities
which is reflected on the records of the Depositary through the Depositary
Participants.
"Business Day" means any day, other than a Saturday or Sunday, that is
not a day on which banking institutions in the Borough of Manhattan, The City of
New York are authorized or required by law, regulation or executive order to
close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Cedel" means Cedel, S.A.
"Certificate" means a Common Security Certificate or a Preferred
Security Certificate.
"Certificate of Trust" has the meaning specified in the Recitals
hereto.
"Closing Date" means the date on which the Preferred Securities are
issued and sold.
<PAGE>
3
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Securities Holder" means Lehman Brothers Holdings Inc., in its
capacity as purchaser and holder of all of the Common Securities issued by the
Trust.
"Common Security" has the meaning specified in Section 7.1
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security, substantially in the form of
Exhibit B hereto.
"Corporate Trust Office" means the principal office of the Property
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Declaration is
located at 450 West 33rd Street, New York, New York 10001.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Lehman Brothers Holdings Inc., in its
capacity as issuer of the Debentures under the Indenture.
"Debenture Issuer Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee or any Affiliate thereof; or (d) any officer, employee or agent
of the Trust or its Affiliates.
"Debenture Trustee" means The Chase Manhattan Bank, in its capacity as
trustee under the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Debentures" means the series of debentures to be issued by the
Debenture Issuer under the Indenture and held by the Property Trustee.
"Delaware Trustee" has the meaning specified in Section 6.2.
"Depositary" means, with respect to Securities issuable in whole or in
part in the form of one or more Global Securities, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such
Securities.
<PAGE>
4
"Depositary Participant" means a member of, or participant in, the
Depositary.
"Direct Action" has the meaning specified in Section 3.8(e).
"Distribution" means a distribution payable to Holders of Securities
in accordance with Section 7.2.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
9.4(b).
"Fiscal Year" has the meaning specified in Section 10.1.
"Global Security" means a fully registered, global Preferred Security
Certificate.
"Guarantee" means the Guarantee Agreement, dated as of _______ __,
____, of the Sponsor in respect of the Securities.
"Holder" means any holder of Securities, as registered on the books
and records of the Trust; provided, however, that in determining whether the
Holders of the requisite liquidation amount of Preferred Securities have voted
on any matter provided for in this Declaration, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Preferred
Securities remain in the form of one or more Global Securities and if the
Depositary which is the holder of such Global Securities has sent an omnibus
proxy to the Trust assigning voting rights to Depositary Participants to whose
accounts the Preferred Securities are credited on the record date, the term
"Holders" shall mean such Depositary Participants acting at the direction of the
Beneficial Owners.
"Indemnified Person" means a Debenture Issuer Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture, dated as of February 1, 1996,
between the Debenture Issuer and The Chase Manhattan Bank, formerly known as
Chemical Bank, as Trustee, and as amended and supplemented by the First
Supplemental Indenture thereto, dated as of February 1, 1996, pursuant to
which the Debentures are to be issued.
"Indenture Event of Default" has the meaning given to the term "Event
of Default" in the Indenture.
"Investment Company" means an investment company as defined in the
Investment Company Act and the regulations promulgated thereunder.
<PAGE>
5
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" means the receipt by the Trust of an
opinion of counsel, rendered by a law firm having a recognized national
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an insubstantial risk
that the Trust is or will be considered an "investment company" that is required
to be registered under the Investment Company Act, which Change in 1940 Act Law
becomes effective on or after the Closing Date.
"Legal Action" has the meaning specified in Section 3.6(g).
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the
terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"New York Stock Exchange" means the New York Stock Exchange, Inc. or
any successor thereto.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by two Authorized Officers of such
Person. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer on behalf of such Person in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
on behalf of such Person to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
<PAGE>
6
(d) a statement as to whether, in the opinion of each such officer
acting on behalf of such Person, such condition or covenant has been complied
with; provided, that the term "Officers' Certificate", when used with reference
to Regular Trustees who are natural persons shall mean a certificate signed by
two of the Regular Trustees which otherwise satisfies the foregoing
requirements.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning specified in Section 7.2(c).
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Certificate" means a definitive certificate in
fully registered form representing a Preferred Security, substantially in the
form of Exhibit A.
"Property Account" has the meaning specified in Section 3.8(c).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3.
"Pro Rata" means pro rata to each Holder of Securities according to
the aggregate liquidation amount of the Securities held by the relevant Holder
in relation to the aggregate liquidation amount of all Securities outstanding.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Redemption/Distribution Notice" has the meaning specified in Section
7.4(a) hereto.
"Redemption Price" means the amount for which the Securities will be
redeemed, which amount will equal (i) the redemption price paid by the Debenture
Issuer to repay or redeem, in whole or in part, the Debentures held by the Trust
plus an amount equal to accumulated and unpaid Distributions on such Securities
through the date of their redemption or (ii) such lesser amount as will be
received by the Trust in respect of the Debentures so repaid or redeemed.
"Regular Trustee" means any Trustee other than the Property Trustee
and the Delaware Trustee.
<PAGE>
7
"Related Party" means, with respect to the Sponsor, any direct or
wholly owned subsidiary of the Sponsor or any Person that owns, directly or
indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer with direct responsibility for the administration of this Declaration
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act or any
successor rule thereunder.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Special Event" means a Tax Event or an Investment Company Event.
"Sponsor" means Lehman Brothers Holdings Inc., a Delaware corporation,
or any successor entity in a merger, consolidation, amalgamation or replacement
by or conveyance, transfer or lease of its properties substantially as an
entirety, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
6.6(b).
"Successor Entity" has the meaning specified in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning specified in Section
6.6(b).
"Successor Security" has the meaning specified in Section 3.15(b)(i)b.
"Super Majority" has the meaning specified in Section 2.6(a)(ii).
"Tax Event" means the receipt by the Trust of an opinion of
independent tax counsel experienced in such matters, to the effect that, as a
result of (a) any amendment to, change in or announced proposed change in the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or (b) any official
administrative pronouncement or judicial decision interpreting or applying
such laws or regulations, which amendment or change is effective or proposed
change, pronouncement or decision is announced on or after the Closing Date,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to the United States
federal income tax with respect to income received or accrued on the
Debentures, (ii) interest payable by the Debenture Issuer on the Debentures
is not, or within 90 days of the date of such opinion, will not be,
deductible by the Debenture Issuer, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes, or (iii) the Trust is,
or will be
<PAGE>
8
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"10% in Liquidation Amount" means, except as provided in the terms of
the Preferred Securities or by the Trust Indenture Act, Holder(s) of outstanding
Securities, voting together as a single class, or, as the context may require,
Holders of outstanding Preferred Securities or Holders of outstanding Common
Securities, voting separately as a class, who are the record owners of 10% or
more of the aggregate liquidation amount (including the stated amount that would
be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust" has the meaning specified in the Recitals hereto.
"Trust Enforcement Event" in respect of the Securities means an
Indenture Event of Default has occurred and is continuing in respect of the
Debentures.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
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9
(c) If and to the extent that any provision of this Declaration
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the Trust's classification as a grantor trust for United States
federal income tax purposes and shall not affect the nature of the Securities as
equity securities representing undivided beneficial ownership interests in the
assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i), except while the Preferred
Securities are represented by one or more Global Securities, at least one
Business Day prior to the date for payment of Distributions, a list, in such
form as the Property Trustee may reasonably require, of the names and addresses
of the Holders of the Securities ("List of Holders") as of the record date
relating to the payment of such Distributions and (ii) at any other time, within
30 days of receipt by the Trust of a written request from the Property Trustee
for a List of Holders as of a date no more than 15 days before such List of
Holders is given to the Property Trustee; provided that neither the Sponsor nor
the Regular Trustees on behalf of the Trust shall be obligated to provide such
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Property Trustee by the Sponsor and the
Regular Trustees on behalf of the Trust. The Property Trustee shall preserve,
in as current a form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity), provided that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Property Trustee shall comply with its obligations under, and
shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of the
Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Preferred Securities), the Property
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to the Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by
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10
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Trust Enforcement Events; Waiver.
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote or written consent, on behalf of the Holders of all of
the Preferred Securities, waive any past Trust Enforcement Event in respect of
the Preferred Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
(i) is not waivable under the Indenture, the Trust Enforcement
Event under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the related
Trust Enforcement Event under the Declaration may only be
waived by the vote or written consent of the Holders of at
least the proportion in liquidation amount of the Preferred
Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Trust Enforcement Event with respect
to the Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration and the Preferred Securities, but
no such waiver shall extend to any subsequent or other Trust Enforcement Event
with respect to the Preferred Securities or impair any right consequent thereon.
Any waiver by the Holders of the Preferred Securities of a Trust Enforcement
Event with respect to the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any such Trust
Enforcement Event with respect to the Common Securities for all purposes of this
Declaration without any further act, vote, or consent of the Holders of the
Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote or written consent, on behalf of the Holders of all of
the Common
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11
Securities, waive any past Trust Enforcement Event in respect of the Common
Securities and its consequences, provided that, if the underlying Indenture
Event of Default:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived
such Trust Enforcement Event under the Declaration as
provided below in this Section 2.6(b), the Trust Enforcement
Event under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived under the Indenture, except where the Holders of the
Common Securities are deemed to have waived such Trust
Enforcement Event under the Declaration as provided below in
this Section 2.6(b), the Trust Enforcement Event under the
Declaration may only be waived by the vote or written
consent of the Holders of at least the proportion in
liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any Trust Enforcement Event and all Trust Enforcement Events with respect to the
Common Securities and the consequences thereof until all Trust Enforcement
Events with respect to the Preferred Securities have been cured, waived or
otherwise eliminated, and until such Trust Enforcement Events with respect to
the Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Preferred Securities and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee in accordance with the terms of
the Securities. The foregoing provisions of this Section 2.6(b) shall be in
lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and
such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are
hereby expressly excluded from this Declaration and the Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such cure, waiver or other elimination, any such default shall
cease to exist and any Trust Enforcement Event with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other Trust Enforcement Event with respect to the Common Securities or impair
any right consequent thereon.
(c) A waiver of an Indenture Event of Default by the Property Trustee
at the direction of the Holders of the Preferred Securities constitutes a waiver
of the corresponding Trust Enforcement Event with respect to the Preferred
Securities under this Declaration. The foregoing provisions of this Section
2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and
such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.
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12
SECTION 2.7 Trust Enforcement Event; Notice.
(a) The Property Trustee shall, within 90 days after the occurrence
of a Trust Enforcement Event, transmit by mail, first class postage prepaid, to
the Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Indenture Event of Default, not including any periods of grace provided for
therein and irrespective of the giving of any notice provided therein); provided
that, except for a default in the payment of principal of (or premium, if any)
or interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 501(1) and 501(2) of the Indenture;
or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of
the Property Trustee charged with the administration of this
Declaration shall have actual knowledge.
ARTICLE 3
ORGANIZATION
SECTION 3.1 Name and Organization.
The Trust hereby continued is named "Lehman Brothers Holdings Capital
Trust __" as such name may be modified from time to time by the Regular Trustees
following written notice to the Holders of Securities. The Trust's activities
may be conducted under the name of the Trust or any other name deemed advisable
by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Lehman
Brothers Holdings Inc., 3 World Financial Center, New York, New York 10285. On
10 Business Days' written notice to the Holders of Securities, the Regular
Trustees may designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities and use the gross proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary or incidental
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13
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified as a grantor trust for United States federal income tax purposes.
By the acceptance of this Trust, none of the Trustees, the Sponsor,
the Holders of the Preferred Securities or Common Securities or the Preferred
Securities Beneficial Owners will take any position for United States federal
income tax purposes which is contrary to the classification of the Trust as a
grantor trust.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee on
behalf of the Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting on behalf of
the Trust, no person shall be required to inquire into the authority of the
Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6(b), provided, that the registration statements referred
to in Section 3.6(b)(i), including any amendments thereto, shall be signed by or
on behalf of a majority of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Account or as otherwise provided in this Declaration, legal title
to all assets of the Trust shall be vested in the Trust. The Holders shall not
have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial ownership interest in the assets of the Trust.
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14
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to establish the terms and form of the Preferred Securities and
the Common Securities in the manner specified in Section 7.1 and issue and sell
the Preferred Securities and the Common Securities in accordance with this
Declaration; provided, however, that the Trust may issue no more than one series
of Preferred Securities and no more than one series of Common Securities, and,
provided further, that there shall be no interests in the Trust other than the
Securities, and the issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Preferred Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) execute and file an application, prepared by the Sponsor, to
the New York Stock Exchange or any other national stock
exchange or the NASDAQ Stock Market for listing of any
Preferred Securities, the Guarantee and the Debentures;
(ii) execute and file with the Commission one or more
registration statements on the applicable forms prepared by
the Sponsor, including any amendments thereto, pertaining to
the Preferred Securities, the Guarantee and the Debentures;
(iii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary,
in order to qualify or register all or part of the Preferred
Securities in any State in which the Sponsor has determined
to qualify or register such Preferred Securities for sale;
and
(iv) negotiate the terms of and execute and enter into an
underwriting agreement and other related agreements
providing for the sale of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular Trustees
shall consult with the
<PAGE>
15
Sponsor and the Property Trustee before taking or refraining from taking any
action in relation to any such Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders, of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of this Declaration and the
Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants to conduct only those services that the Regular Trustees have
authority to conduct directly, and to and pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Debenture Issuer of its election to defer payments
of interest on the Debentures by extending the interest payment period under the
Debentures as authorized by the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities and the Holders of the Common Securities or to enable the Trust to
effect the purposes for which the Trust was created;
<PAGE>
16
(o) to take any action, not inconsistent with applicable law, that
the Regular Trustees determine in their discretion to be necessary or desirable
in carrying out the purposes and functions of the Trust as set out in Section
3.3 or the activities of the Trust as set out in this Section 3.6, including,
but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified as a grantor trust for
United States federal income tax purposes; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture
Issuer for United States federal income tax purposes.
(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees shall exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
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17
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets;
(vi) possess any power or otherwise act in such a way as to vary
the terms of the Securities in any way whatsoever (except to
the extent expressly authorized in this Declaration or by
the terms of the Securities);
(vii) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other
than the Securities;
(viii) other than as provided in this Declaration or by the terms
of the Securities, (A) direct the time, method and place of
exercising any trust or power conferred upon the Debenture
Trustee with respect to the Debentures, (B) waive any past
default that is waivable under the Indenture, (C) exercise
any right to rescind or annul any declaration that the
principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of
the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of
counsel to the effect that such modification will not cause
more than an insubstantial risk that the Trust will be
deemed an Investment Company required to be registered under
the Investment Company Act, or the Trust will not be
classified as a grantor trust for United States federal
income tax purposes;
(ix) take any action inconsistent with the status of the Trust as
a grantor trust for United States federal income tax
purposes; or
(x) revoke any action previously authorized or approved by vote
of the Holders of the Preferred Securities.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the
Property Trustee to the Debentures shall vest automatically in each Person who
may hereafter be appointed as Property Trustee in
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18
accordance with Section 6.6. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Debentures
have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Account") in the name of and
under the exclusive control of the Property Trustee on
behalf of the Holders of the Securities and, upon the
receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds
into the Property Account and make payments to the Holders
of the Preferred Securities and Holders of the Common
Securities from the Property Account in accordance with
Section 7.2. Funds in the Property Account shall be held
uninvested until disbursed in accordance with this
Declaration. The Property Account shall be an account that
is maintained with a banking institution the rating on whose
long-term unsecured indebtedness is at least equal to the
rating assigned to the Preferred Securities by a "nationally
recognized statistical rating organization", within the
meaning of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Preferred
Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as so directed and as
shall be necessary or appropriate to effect the distribution
of the Debentures to Holders of Securities upon the
occurrence of a Special Event.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities.
(e) The Property Trustee shall take any Legal Action which arises out
of or in connection with a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act;
provided however, that if a Trust Enforcement Event
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19
has occurred and is continuing and such event is attributable to the failure of
the Debenture Issuer to pay interest, principal or other required payments on
the Debentures on the date such interest, principal or other required payments
are otherwise payable (or in the case of redemption, on the redemption date),
then a Holder of Preferred Securities may directly institute a proceeding
against the Debenture Issuer for enforcement of payment to such Holder of the
principal of or interest on Debentures having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such Holder (a
"Direct Action") on or after the respective due date specified in the
Debentures.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 6.6.
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if a Trust Enforcement Event actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities.
(h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
The Property Trustee shall exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee.
(a) The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing of all Trust Enforcement Events that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Property Trustee. In case a
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20
Trust Enforcement Event has occurred (that has not been cured or waived pursuant
to Section 2.6) of which a Responsible Officer of the Property Trustee has
actual knowledge, the Property Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of a Trust Enforcement Event and
after the curing or waiving of all such Trust Enforcement
Events that may have occurred:
a. the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of
this Declaration and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations
shall be read into this Declaration against the
Property Trustee; and
b. in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as
to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates
or opinions furnished to the Property Trustee and
conforming to the requirements of this Declaration; but
in the case of any such certificates or opinions that
by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the
Property Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it without
negligence, in good faith in accordance with the direction
of the Holders of not less than a Majority in Liquidation
Amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available
to the Property Trustee, or
<PAGE>
21
exercising any trust or power conferred upon the Property
Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing
that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration
or indemnity reasonably satisfactory to the Property Trustee
against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect to the
custody, safe-keeping and physical preservation of the
Debentures and the Property Account shall be to deal with
such property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to
the protections and limitations on liability afforded to the
Property Trustee under this Declaration and the Trust
Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree
with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in
relation to the Property Account maintained by the Property
Trustee pursuant to Section 3.8(c)(i) and except to the
extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall
the Property Trustee be liable for any default or misconduct
of the Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution,
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22
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting
any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively
rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or
the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument
(including any financing or continuation statement or any
filing under tax or securities laws) or any rerecording,
refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its choice
or other experts and the advice or opinion of such counsel
and experts with respect to legal matters or advice within
the scope of such experts' area of expertise shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion, such
counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The
Property Trustee shall have the right at any time to seek
instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Property
Trustee security and indemnity, reasonably satisfactory to
the Property Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the
Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with
such request or direction, including such reasonable
advances as may be requested by the Property
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23
Trustee; provided that, nothing contained in this Section
3.10(a) shall be taken to relieve the Property Trustee, upon
the occurrence of an Indenture Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through agents, custodians, nominees or attorneys and
the Property Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its
agents alone shall be sufficient and effective to perform
any such action and no third party shall be required to
inquire as to the authority of the Property Trustee to so
act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its
agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right
or taking any other action hereunder, the Property Trustee
(i) may request instructions from the Holders of the
Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the
Securities as would be entitled to direct the Property
Trustee under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing
such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in or accordance with such
instructions;
(xi) except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to
take any
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24
action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered or omitted to be taken by it without
negligence, in good faith and reasonably believed by it to
be authorized or within the discretion, rights or powers
conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 6.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
SECTION 3.12 Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute on behalf of the Trust any documents that the Regular Trustees have
the power and authority to execute pursuant to Section 3.6; provided that, the
registration statements referred to in Section 3.6(b)(ii), including any
amendments thereto, shall be signed by or on behalf of a majority of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Securities, the Debentures or the Indenture.
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25
SECTION 3.14 Duration of Trust.
The Trust shall exist until terminated pursuant to the provisions of
Article 8 hereof.
SECTION 3.15 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor and with the consent
of the Regular Trustees or, if there are more than two, a majority of the
Regular Trustees and without the consent of the Holders of the Securities, the
Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with or
into, or be replaced by or convey, transfer or lease its properties
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that:
(i) if the Trust is not the successor, such successor entity
(the "Successor Entity") either:
a. expressly assumes all of the obligations of the Trust
with respect to the Securities; or
b. substitutes for the Preferred Securities other
securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so
long as the Successor Securities rank the same as the
Preferred Securities rank in priority with respect to
Distributions and payments upon liquidation, redemption
and otherwise;
(ii) the Debenture Issuer expressly appoints a trustee of such
Successor Entity that possesses the same powers and duties
as the Property Trustee as the holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities
exchange or with any other or organization on which the
Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating
organization;
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26
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders of the
Preferred Securities (including any Successor Securities) in
any material respect;
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease the Sponsor has
received an opinion of independent counsel to the Trust
experienced in such matters to the effect that:
a. such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders
of the Preferred Securities (including any Successor
Securities) in any material respect;
b. following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease neither the
Trust nor the Successor Entity will be required to
register as an Investment Company; and
c. following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will
continue to be classified as a grantor trust for United
States federal income tax purposes;
(viii) the Sponsor or any permitted successor or assignee owns all
of the Common Securities and guarantees the obligations of
such Successor Entity under the Successor Securities at
least to the extent provided by the Securities Guarantee;
and
(ix) such Successor Entity expressly assumes all of the
obligations of the Trust with respect to the Trustees.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to, any other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it, if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or Successor
Entity to be classified as other than a grantor trust for United States federal
income
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27
tax purposes and each Holder of the Securities not to be treated as owning an
undivided interest in the Debentures.
SECTION 3.16 Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount Securities, such portion of the
liquidation amount as may be specified in the terms of such Securities) and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
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28
ARTICLE 4
SPONSOR
SECTION 4.1 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission one or
more registration statements on the applicable forms, including any amendments
thereto, pertaining to the Preferred Securities, the Guarantee and the
Debentures;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) to prepare for filing by the Trust an application to the New York
Stock Exchange or any other national stock exchange or the NASDAQ Stock Market
for listing upon notice of issuance of any Preferred Securities, the Guarantee
and the Debentures; and
(d) to negotiate the terms of an underwriting agreement and other
related agreements providing for the sale of the Preferred Securities.
SECTION 4.2 Indemnification and Expenses of the Trustees.
The Sponsor, in its capacity as Debenture Issuer, agrees to indemnify
the Property Trustee and the Delaware Trustee for, and to hold each of them
harmless against, any loss, liability or expense incurred without negligence or
bad faith on the part of the Property Trustee or the Delaware Trustee, as the
case may be, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending either of them against any claim or liability in
connection with the exercise or performance of any of their respective powers or
duties hereunder; the provisions of this Section 4.2 shall survive the
resignation or removal of the Delaware Trustee or the Property Trustee or the
termination of this Declaration.
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29
ARTICLE 5
TRUST COMMON SECURITIES HOLDER
SECTION 5.1 Debenture Issuer's Purchase of Common Securities.
On the Closing Date, the Debenture Issuer will purchase all of the
Common Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
The aggregate stated liquidation amount of Common Securities
outstanding at any time shall not be less than 3% of the capital of the Trust.
SECTION 5.2 Covenants of the Common Securities Holder.
For so long as the Preferred Securities remain outstanding, the Common
Securities Holder will covenant (i) to maintain, directly or indirectly, 100%
ownership of the Common Securities, (ii) to cause the Trust to remain a
statutory business trust and not to voluntarily dissolve, wind up, liquidate or
be terminated, except as permitted by this Declaration, (iii) to use its
commercially reasonable efforts to ensure that the Trust will not be an
investment company for purposes of the Investment Company Act, and (iv) to take
no action which would be reasonably likely to cause the Trust to be classified
as an association or a publicly traded partnership taxable as a corporation for
United States federal income tax purposes.
ARTICLE 6
TRUSTEES
SECTION 6.1 Number of Trustees.
The number of Trustees initially shall be five, and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in Liquidation
Amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities or by written consent in lieu of such meeting; provided
that the number of Trustees shall be at least three; and provided further that
(1) the Delaware Trustee, in the case of a natural person, shall be a person who
is a resident of the State of Delaware or that, if not a natural person, is an
entity which has its principal place of business in the State of Delaware and
otherwise meets the requirements of applicable law; (2) at least one Regular
Trustee is an employee or officer of, or is affiliated with, the Sponsor; and
(3) one Trustee shall be the Property Trustee for so long as this Declaration is
required to qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements.
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30
SECTION 6.2 Delaware Trustee; Eligibility.
If required by the Business Trust Act, one Trustee (which may be the
Property Trustee) (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 6.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (which may be the
Delaware Trustee) which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or other Person permitted by the Commission
to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust owners, having a combined capital and
surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or
examination by federal, State, Territorial or District
of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining
authority referred to above, then for the purposes of
this Section 6.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 6.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 6.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
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31
(d) The Guarantee shall be deemed to be specifically described in
this Declaration for purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
SECTION 6.4 Qualifications of Regular Trustees and Delaware Trustee
Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 6.5 Initial Regular Trustees.
The initial Regular Trustees shall be:
____________, ____________ and ____________, the business address of
all of whom is c/o Lehman Brothers Holdings Inc., 3 World Financial Center, New
York, New York 10285.
SECTION 6.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 6.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in Liquidation Amount of the
Common Securities voting as a class at a meeting of the
Holders of the Common Securities.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 6.6(a) until a successor Trustee possessing the
qualifications to act as Property Trustee under Section 6.3(a) (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor. The Trustee that acts as Delaware Trustee
shall not be removed in accordance with Section 6.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 6.2 and
6.4 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his or its
successor shall have been appointed, until his death or its dissolution or until
his or its removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent
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32
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
a. until a Successor Property Trustee has been appointed
and has accepted such appointment by instrument
executed by such Successor Property Trustee and
delivered to the Trust, the Sponsor and the resigning
Property Trustee; or
b. until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted
such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 6.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee,
as the case may be, shall have been appointed and accepted appointment as
provided in this Section 6.6 within 60 days after delivery to the Sponsor and
the Trust of an instrument of resignation or removal, the resigning or removed
Property Trustee or Delaware Trustee, as applicable, may petition any court of
competent jurisdiction for appointment of a Successor Property Trustee or
Successor Delaware Trustee, as applicable. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 6.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is
increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by
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33
the Regular Trustees or, if there are more than two, a majority of the Regular
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section 6.6.
SECTION 6.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 6.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 6.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice
of such meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.
SECTION 6.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any natural person over the age of 21 his, her or
its power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing.
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of
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34
such instruments either in the name of the Trust or the names of the Regular
Trustees or otherwise as the Regular Trustees may deem expedient, to the extent
such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 6.11 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Property Trustee, the Delaware Trustee
or any Regular Trustee that is not a natural person may be merged or converted
or with such Trustee may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of such Trustee shall be the successor of such Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE 7
TERMS OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one class
of preferred securities representing undivided beneficial ownership interests in
the assets of the Trust and one class of common securities representing
undivided beneficial ownership interests in the assets of the Trust.
(i) Preferred Securities. The Preferred Securities of the
Trust have an aggregate liquidation amount with respect
to the assets of the Trust of _____________ dollars
($_____________) and a liquidation amount with respect
to the assets of the Trust of $1,000 per Preferred
Security. The Preferred Securities are hereby
designated for identification purposes only as ___%
Preferred Securities (the "Preferred Securities"). The
Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form
of Exhibit A to the Declaration, with such changes and
additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to
conform to the rules of any stock exchange on which the
Preferred Securities are listed or quoted.
(ii) Common Securities. The Common Securities of the Trust
have an aggregate liquidation amount with respect to
the assets of the Trust of _____________ dollars
($_____________) and a liquidation amount with respect
to the assets of the Trust of $1,000 per Common
Security. The Common Securities are
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35
hereby designated for identification purposes only as
___% Common Securities (the "Common Securities" and,
together with the Preferred Securities, the
"Securities"). The Common Security Certificates
evidencing the Common Securities shall be substantially
in the form of Exhibit B to the Declaration, with such
changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
(b) Payment of Distributions on, and payment of the Redemption Price
upon a redemption of, the Preferred Securities and the Common Securities, as
applicable, shall be made Pro Rata based on the liquidation amount of such
Preferred Securities and Common Securities; provided, however, that if on any
date on which amounts payable on distribution or redemption an Indenture Event
of Default shall have occurred and be continuing, no payment of any Distribution
on, or Redemption Price of, any of the Common Securities, and no other payment
on account of the redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the outstanding Preferred Securities for all
Distribution periods terminating on or prior thereto, or, in the case of amounts
payable on redemption, the full amount of the Redemption Price for all of the
outstanding Preferred Securities then called for redemption, shall have been
made or provided for, and all funds available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions on, or the
Redemption Price of, the Preferred Securities then due and payable. The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case a Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Securities may be listed, or to conform to usage.
A Certificate representing Preferred Securities shall not be valid
until authenticated by the manual signature of an authorized signatory of the
Property Trustee. Such signature shall be conclusive evidence that such
Certificate has been authenticated under this Declaration.
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36
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Certificates representing Preferred
Securities for original issue. The aggregate number of Preferred Securities
outstanding at any time shall not exceed the liquidation amount set forth in
Section 7.1(a)(i).
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Certificates. An authenticating agent may
authenticate Certificates whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as
the Property Trustee to deal with the Sponsor or an Affiliate of the Sponsor.
(d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable beneficial ownership interests in the assets of the Trust.
(f) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the terms of the Securities, the Guarantee,
the Indenture and the Debentures.
(g) The holders of the Securities shall have no preemptive rights.
SECTION 7.2 Distributions.
(a) Holders of Securities shall be entitled to receive cumulative
cash Distributions at the rate per annum of ____% of the stated liquidation
amount of $1,000 per Security. The amount of Distributions payable for any
period shall be computed (i) for any full 180-day semi-annual distribution
period on the basis of a 360-day year of twelve 30-day months, (ii) for any
period shorter than a full 180-day semi-annual distribution period for which
Distributions are computed, on the basis of a 30-day month and (iii) for
periods of less than a month, the actual number of days elapsed per 30-day
month. Subject to Section 7.1(b), Distributions shall be made on the
Preferred Securities and the Common Securities on a Pro Rata basis.
Distributions on the Securities shall, from the date of original issue,
accrue and be cumulative and shall be payable [semi-annually], in arrears, on
each [___________ __ and ___________ __], commencing ___________ __, ____,
when, as and if available for payment, by the Property Trustee, except as
otherwise described below. Distributions are payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent that the Trust has funds available for the payment of such
Distributions in the Property Account.
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37
(b) Distributions not paid on the scheduled payment date will
accumulate and compound [semi-annually] at the rate of ____% per annum
("Compounded Distributions"). "Distributions" shall mean ordinary cumulative
distributions together with any Compounded Distributions.
(c) If and to the extent that the Debenture Issuer makes a payment of
interest, premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a Pro Rata distribution of the Payment Amount to Holders,
subject to Section 7.1(b).
(d) Distributions on the Securities shall be payable to the Holders
thereof as they appear on the register of the Trust as of the close of business
on the relevant record dates. While the Preferred Securities are represented by
one or more Global Securities, the relevant record dates shall be the close of
business on the Business Day next preceding such Distribution payment date,
unless a different regular record date is established or provided for the
corresponding interest payment date on the Debentures. The relevant record
dates for the Common Securities shall be the same as for the Preferred
Securities. If the Preferred Securities shall not continue to remain
represented by one or more Global Securities, the relevant record dates for the
Preferred Securities shall be selected by the Regular Trustees and shall be at
least one Business Day prior to the relevant payment dates. At all times, the
Distribution payment dates shall correspond to the interest payment dates on the
Debentures. Distributions payable on any Securities that are not punctually
paid on any Distribution payment date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures, shall cease to be payable
to the Person in whose name such Securities are registered on the relevant
record date, and such defaulted Distribution will instead be payable to the
Person in whose name such Securities are registered on the special record date
or other specified date determined in accordance with this Declaration. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, with the same force and effect as if made on such
payment date.
(e) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata among the Holders of the Securities.
SECTION 7.3 Redemption of Securities.
(a) Upon the repayment or redemption, in whole or in part, of the
Debentures held by the Trust, whether at the stated maturity of the Debentures
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be simultaneously applied Pro Rata (subject to
Section 7.1(b)) to redeem Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Debentures so
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38
repaid or redeemed at the Redemption Price. Holders shall be given not less
than 30 nor more than 60 days notice of such redemption in accordance with
Section 7.4.
(b) If, at any time, a Special Event shall occur and be continuing,
the Regular Trustees may, within 90 days following the occurrence of such
Special Event, elect to dissolve the Trust upon not less than 30 nor more than
60 days' notice and, after satisfaction of liabilities to creditors, if any,
cause the Debentures to be distributed to the holders of the Securities in
liquidation of the Trust.
(c) On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Securities will no longer be deemed to be
outstanding and (ii) certificates representing Securities will be deemed to
represent the Debentures having an aggregate principal amount equal to the
stated liquidation amount of, and bearing accrued and unpaid distributions equal
to accrued and unpaid distributions on, such Securities until such certificates
are presented to the Sponsor or its agent for transfer or reissuance.
SECTION 7.4 Redemption Procedures.
(a) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution Notice"),
which notice shall be irrevocable, will be given by the Trust by mail to each
Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than
60 days before the date fixed for redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for redemption of the Debentures.
For purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 7.4(a), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Securities at the address of each such Holder appearing in the
register of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any other
Holder.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata (subject to Section 7.1(b)) and the Preferred Securities to be redeemed
will be redeemed as described in Section 7.4 below. The Trust may not redeem
the Securities in part unless all accumulated and unpaid Distributions to the
date of redemption have been paid in full on all Securities then outstanding.
For all purposes of this Declaration, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Security redeemed or to be redeemed only in part, to
the portion of the aggregate liquidation amount of Preferred Securities which
has been or is to be redeemed.
(c) Subject to the Trust's fulfillment of the notice requirements set
forth in Section 7.4(a) above, if Securities are to be redeemed, then (i) with
respect to Preferred Securities represented by one or more Global Securities, by
12:00 noon, New York City time,
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39
on the redemption date (provided that the Debenture Issuer has paid the Property
Trustee a sufficient amount of cash in connection with the related redemption or
maturity of the Debentures), the Property Trustee will deposit irrevocably with
the Depositary or its nominee (or successor Clearing Agency or its nominee)
funds sufficient to pay the applicable Redemption Price with respect to the
Preferred Securities and will give the Depositary irrevocable instructions and
authority to pay the Redemption Price to the Holders of the Preferred Securities
and (ii) with respect to Securities not represented by one or more Global
Securities (provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Debentures), the Paying Agent will pay the relevant Redemption Price to
the Holders of such Securities by check mailed to the address of the relevant
Holder appearing on the register of the Trust on the redemption date. If any
date fixed for redemption of Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any Securities is
improperly withheld or refused and not paid either by the Property Trustee or by
the Sponsor as guarantor pursuant to the Guarantee, Distributions on such
Securities will continue to accrue at the then applicable rate from the original
redemption date to the actual date of payment, in which case the actual payment
date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price. For these purposes, the applicable Redemption
Price shall not include Distributions which are being paid to Holders who were
Holders on a relevant record date. If a Redemption/Distribution Notice shall
have been given and funds deposited or paid as required, then immediately prior
to the close of business on the date of such deposit or payment, Distributions
will cease to accrue on the Securities called for redemption and all rights of
Holders of such Securities so called for redemption will cease, except the right
of the Holders to receive the Redemption Price, but without interest on such
Redemption Price, and from and after the date fixed for redemption, such
Securities will cease to be outstanding.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have been
called for redemption, except in the case of any Securities being redeemed in
part, any portion thereof not to be redeemed.
(d) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Debenture Issuer or its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
SECTION 7.5 Voting Rights of Preferred Securities.
(a) Except as provided under Section 11.1 and this Article 7 and as
otherwise required by the Business Trust Act, the Trust Indenture Act and other
applicable law, the Holders of the Preferred Securities shall have no voting
rights.
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(b) Subject to the requirement of the Property Trustee obtaining a tax
opinion in certain circumstances set forth in Section 7.5(d) below, the Holders
of a Majority in Liquidation Amount of the Preferred Securities voting
separately as a class have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
to direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Debentures, to (i) exercise the remedies available to it under the
Indenture as a Holder of the Debentures; (ii) consent to any amendment or
modification of the Indenture or the Debentures where such consent shall be
required or (iii) waive any past default and its consequences that is waivable
under Section 513 of the Indenture; provided, however, that if an Indenture
Event of Default has occurred and is continuing, then the Holders of 25% of the
aggregate liquidation amount of the Preferred Securities may direct the Property
Trustee to declare the principal of and interest on the Debentures due and
payable; provided, further, that where a consent or action under the Indenture
would require the consent or act of the Holders of more than a majority of the
aggregate principal amount of Debentures affected thereby, only the Holders of
the percentage of the aggregate stated liquidation amount of the Preferred
Securities which is at least equal to the percentage required under the
Indenture may direct the Property Trustee to give such consent to take such
action.
(c) If the Property Trustee fails to enforce its rights under the
Debentures after a Holder of Preferred Securities has made a written request,
such Holder of Preferred Securities may, to the extent permitted by
applicable law, institute a legal proceeding directly against the Debenture
Issuer to enforce the Property Trustee's rights under the Indenture without
first instituting any legal proceeding against the Property Trustee or any
other person or entity. In addition, if a Trust Enforcement Event has
occurred and is continuing and such event is attributable to the failure of
the Debenture Issuer to make any interest, principal or other required
payments when due under the Indenture, then a Holder of Preferred Securities
may directly institute a Direct Action against the Debenture Issuer on or
after the respective due date specified in the Debentures.
(d) The Property Trustee shall notify all Holders of the Preferred
Securities of any notice of any Indenture Event of Default received from the
Debenture Issuer with respect to the Debentures. Such notice shall state that
such Indenture Event of Default also constitutes a Trust Enforcement Event.
Except with respect to directing the time, method, and place of conducting a
proceeding for a remedy, the Property Trustee shall be under no obligation to
take any of the actions described in clause 7.5(b)(i) and (ii) above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that the Trust will not fail to be classified as a grantor trust for
United States federal income tax purposes as a result of such action, and each
Holder will be treated as owning an undivided beneficial ownership interest in
the Debentures.
(e) In the event the consent of the Property Trustee, as the Holder
of the Debentures, is required under the Indenture with respect to any
amendment or modification of the Indenture, the Property Trustee shall
request the direction of the Holders of the Securities with respect to such
amendment or modification and shall vote with respect to such amendment or
modification as directed by not less than 66-2/3% of the aggregate
liquidation amount of the Securities voting together as a single class;
provided, however, that where a consent under the Indenture
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41
would require the consent of the Holders of more than a majority of the
aggregate principal amount of the Debentures, the Property Trustee may only give
such consent at the direction of the Holders of at least the same proportion in
aggregate stated liquidation amount of the Securities. The Property Trustee
shall not take any such action in accordance with the directions of the Holders
of the Securities unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes as a
result of such action, and each Holder will be treated as owning an undivided
beneficial ownership interest in the Debentures.
(f) A waiver of an Indenture Event of Default with respect to the
Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.
(g) Any required approval or direction of Holders of Preferred
Securities may be given at a separate meeting of Holders of Preferred Securities
convened for such purpose, at a meeting of all of the Holders of Securities or
pursuant to written consent. The Regular Trustees shall cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
shall include a statement setting forth the following information: (i) the date
of such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents.
(h) No vote or consent of the Holders of Preferred Securities shall be
required for the Trust to redeem and cancel Preferred Securities or distribute
Debentures in accordance with the Declaration and the terms of the Securities.
(i) Notwithstanding that Holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Securities that are owned at such time by the Debenture Issuer, the Trustees or
any entity directly or indirectly controlled by, or under direct or indirect
common control with, the Debenture Issuer or any Trustee, shall not be entitled
to vote or consent and shall, for purposes of such vote or consent, be treated
as if such Securities were not outstanding.
(j) Holders of the Preferred Securities shall have no rights to
appoint or remove the Trustees, who may be appointed, removed or replaced solely
by the Common Securities Holder.
(k) If an Indenture Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by a
Majority in Liquidation Amount of the Preferred Securities.
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42
SECTION 7.6 Voting Rights of Common Securities.
(a) Except as provided under Section 6.1(b), this Section 7.6 or
Section 11.1 or as otherwise required by the Business Trust Act, the Trust
Indenture Act or other applicable law or provided by the Declaration, the
Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities shall be entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all Trust
Enforcement Events with respect to the Preferred Securities have been cured,
waived, or otherwise eliminated and subject to the requirement of the Property
Trustee obtaining a tax opinion in certain circumstances set forth in this
paragraph (c), the Holders of a Majority in Liquidation Amount of the Common
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as Holder of
the Debentures, to (i) exercise the remedies available to it under the Indenture
as a Holder of the Debentures, (ii) consent to any amendment or modification of
the Indenture or the Debentures where such consent shall be required or
(iii) waive any past default and its consequences that is waivable under Section
513 of the Indenture; provided, however, that where a consent or action under
the Indenture would require the consent or act of the Holders of more than a
majority of the aggregate principal amount of Debentures affected thereby, only
the Holders of the percentage of the aggregate stated liquidation amount of the
Common Securities which is at least equal to the percentage required under the
Indenture may direct the Property Trustee to have such consent or take such
action. Except with respect to directing the time, method, and place of
conducting a proceeding for a remedy, the Property Trustee shall be under no
obligation to take any of the actions described in clause 7.6(c)(i) and (ii)
above unless the Property Trustee has obtained an opinion of independent tax
counsel to the effect that, as a result of such action, for United States
federal income tax purposes the Trust will not fail to be classified as a
grantor trust and each Holder will be treated as owning an undivided beneficial
ownership interest in the Debentures.
(d) If the Property Trustee fails to enforce its rights under the
Debentures after a Holder of Common Securities has made a written request,
such Holder of Common Securities may, to the extent permitted by applicable
law, directly institute a legal proceeding directly against the Debenture
Issuer to enforce the Property Trustee's rights under the Debentures without
first instituting any legal proceeding against the Property Trustee or any
other person or entity.
(e) A waiver of an Indenture Event of Default with respect to the
Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.
(f) Any required approval or direction of Holders of Common Securities
may be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are
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entitled to vote, or of any matter on which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Common
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents.
(g) No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
Debentures in accordance with the Declaration and the terms of the Securities.
SECTION 7.7 Paying Agent.
In the event that any Preferred Securities are not in book-entry only
form, the Trust shall maintain in the Borough of Manhattan, City of New York,
State of New York, an office or agency where the Preferred Securities may be
presented for payment ("Paying Agent"). The Trust may appoint the paying agent
and may appoint one or more additional paying agents in such other locations as
it shall determine. The term "Paying Agent" includes any additional paying
agent. The Trust may change any Paying Agent without prior notice to the
Holders. The Trust shall notify the Property Trustee of the name and address of
any Paying Agent not a party to this Declaration. If the Trust fails to appoint
or maintain another entity as Paying Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent. The Chase
Manhattan Bank shall initially act as Paying Agent for the Securities. In the
event The Chase Manhattan Bank shall no longer be the Paying Agent, the Regular
Trustees shall appoint a successor (which shall be a bank or trust company
acceptable to the Debenture Issuer) to act as Paying Agent. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Debenture Issuer.
SECTION 7.8 Listing.
The Sponsor shall use its best efforts to cause the Preferred
Securities to be listed for quotation on the New York Stock Exchange.
SECTION 7.9 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article 7, Preferred Securities shall be freely
transferable.
(c) The Trust shall cause to be kept at the Corporate Trust Office of
the Property Trustee a register (the register maintained in such office being
herein sometimes referred to as the "Security Register") in which, subject to
such reasonable regulations as it
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may prescribe, the Trust shall provide for the registration of Preferred
Securities and of transfers of Preferred Securities. The Property Trustee is
hereby appointed "Security Registrar" for the purpose of registering Preferred
Securities and transfers of Preferred Securities as herein provided.
(d) Upon surrender for registration of transfer of any Security at an
office or agency of the Trust designated for such purpose, the Trust shall
execute, and the Property Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like aggregate principal amount.
(e) At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Trust
shall execute, and in the case of Preferred Securities the Property Trustee
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
(f) Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Trust or the Property
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Trust and the Security Registrar duly executed, by
the Holder thereof or his attorney duly authorized in writing.
(g) No service charge shall be made for any registration of transfer
or exchange of Securities, but the Trust may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities.
(h) If the Securities are to be redeemed in part, the Trust shall not
be required (A) to issue, register the transfer of or exchange any Securities
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of any such Securities selected for
redemption under Section 7.4 and ending at the close of business on the day of
such mailing, or (B) to register the transfer or exchange of any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
SECTION 7.10 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
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(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them, the Sponsor and the
Trust harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 7.10, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
SECTION 7.11 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the register of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 7.12 GLOBAL SECURITIES.
The Preferred Securities may be issued in the form of one or more
Global Securities. If the Preferred Securities are to be issued in the form of
one or more Global Securities, then the Regular Trustee on behalf of the Trust
shall execute and the Property Trustee shall authenticate and deliver one or
more Global Securities that (i) shall represent and shall be denominated in an
amount equal to the aggregate liquidation amount of all of the Preferred
Securities to be issued in the form of Global Securities and not yet cancelled,
(ii) shall be registered in the name of the Depositary for such Global Security
or Preferred Securities or the nominee of such Depositary, and (iii) shall be
delivered by the Property Trustee to such Depositary or pursuant to such
Depositary's instructions. Global Securities shall bear a legend substantially
to the following effect:
"This Preferred Security is a Global Security within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Depositary"), or a
nominee of the Depositary. This Preferred Security is exchangeable for
Preferred Securities registered in the name of a person other than the
Depositary or its nominee only in the limited circumstances described in the
Declaration and no transfer of this Preferred Security (other than a transfer of
this Preferred Security as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
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Unless this Preferred Security Certificate is presented by an
authorized representative of the Depositary to Household Capital Trust III or
its agent for registration of transfer, exchange or payment, and any Preferred
Security Certificate issued is registered in the name of Cede & Co. or such
other name as registered by an authorized representative of the Depositary (and
any payment hereon is made to Cede & Co. or to such other entity as is requested
by an authorized representative of the Depositary), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein."
Preferred Securities not represented by a Global Security issued in
exchange for all or a part of a Global Security pursuant to this Section 7.12
shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Property Trustee. Upon execution and
authentication, the Property Trustee shall deliver such Preferred Securities not
represented by a Global Security to the persons in whose names such definitive
Preferred Securities are so registered.
At such time as all interests in Global Securities have been redeemed,
repurchased or cancelled, such Global Securities shall be, upon receipt thereof,
cancelled by the Property Trustee in accordance with standing procedures of the
Depositary. At any time prior to such cancellation, if any interest in Global
Securities is exchanged for Preferred Securities not represented by a Global
Security, redeemed, cancelled or transferred to a transferee who receives
Preferred Securities not represented by a Global Security therefor or any
Preferred Security not represented by a Global Security is exchanged or
transferred for part of Global Securities, the principal amount of such Global
Securities shall, in accordance with the standing procedures of the Depositary,
be reduced or increased, as the case may be, and an endorsement shall be made on
such Global Securities by the Property Trustee to reflect such reduction or
increase.
The Trust and the Property Trustee may for all purposes, including the
making of payments due on the Preferred Securities, deal with the Depositary as
the authorized representative of the Holders for the purposes of exercising the
rights of Holders hereunder. The rights of the owner of any beneficial interest
in a Global Security shall be limited to those established by law and agreements
between such owners and depository participants or Euroclear and Cedel;
provided, that no such agreement shall give any rights to any person against the
Trust or the Property Trustee without the written consent of the parties so
affected. Multiple requests and directions from and votes of the Depositary as
holder of Preferred Securities in global form with respect to any particular
matter shall not be deemed inconsistent to the extent they do not represent an
amount of Preferred Securities in excess of those held in the name of the
Depositary or its nominee.
If at any time the Depositary for any Preferred Securities represented
by one or more Global Securities notifies the Trust that it is unwilling or
unable to continue as Depositary for such Preferred Securities or if at any time
the Depositary for such Preferred Securities shall no longer be eligible under
this Section 7.12, the Trust shall appoint a successor Depositary with respect
to such Preferred Securities. If a successor Depositary for
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such Preferred Securities is not appointed by the Trust within 90 days after the
Trust receives such notice or becomes aware of such ineligibility, the Trust's
election that such Preferred Securities be represented by one or more Global
Securities shall no longer be effective and the Trust shall execute, and the
Property Trustee will authenticate and deliver, Preferred Securities in
definitive registered form, in any authorized denominations, in an aggregate
liquidation amount equal to the principal amount of the Global Security or
Preferred Securities representing such Preferred Securities in exchange for such
Global Security or Preferred Securities.
The Trust may at any time and in its sole discretion determine that
the Preferred Securities issued in the form of one or more Global Securities
shall no longer be represented by a Global Security or Preferred Securities. In
such event the Trust shall execute, and the Property Trustee, shall authenticate
and deliver, Preferred Securities in definitive registered form, in any
authorized denominations, in an aggregate liquidation amount equal to the
principal amount of the Global Security or Preferred Securities representing
such Preferred Securities, in exchange for such Global Security or Preferred
Securities.
Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in Section 7.9), Global Securities may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
Interests of beneficial owners in a Global Security may be transferred
or exchanged for Preferred Securities not represented by a Global Security and
Preferred Securities not represented by a Global Security may be transferred or
exchange for Global Securities in accordance with rules of the Depositary and
the provisions of Section 7.9.
ARTICLE 8
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust.
(a) The Trust shall dissolve upon the earliest of:
(i) the bankruptcy of the Holder of the Common Securities
or the Sponsor;
(ii) the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor; the filing of a
certificate of cancellation with respect to the Trust
after obtaining the consent of the Holders of at least
a Majority in Liquidation Amount of the Securities to
the filing of a certificate of cancellation with
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respect to the Trust or the revocation of the Sponsor's
charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) the entry of a decree of judicial dissolution of the
Sponsor or the Trust;
(iv) the time when all of the Securities shall have been
called for redemption and the amounts then due shall
have been paid to the Holders in accordance with the
terms of the Securities;
(v) upon the election of the Regular Trustees, following
the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved
in accordance with the terms of the Securities, and all
of the Debentures shall have been distributed to the
Holders of Securities in exchange for all of the
Securities; or
(vi) the time when all of the Regular Trustees and the
Sponsor shall have consented to dissolution of the
Trust provided such action is taken before the issuance
of any Securities;
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and upon completion of the winding up and
liquidation of the Trust, the Trustees shall terminate the Trust by filing a
certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) The provisions of Section 4.2 and Article 9 shall survive the
termination of the Trust.
SECTION 8.2 Liquidation Distribution Upon Dissolution of the Trust.
(a) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Trust (each a "Liquidation"), the Holders of
the Preferred Securities on the date of the Liquidation will be entitled to
receive, out of the assets of the Trust available for distribution to Holders of
Securities after satisfaction of the Trusts' liabilities to creditors, if any,
distributions in cash or other immediately available funds in an amount equal to
the aggregate of the stated liquidation amount of $1,000 per Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
Liquidation, Debentures in an aggregate stated liquidation amount equal to the
aggregate stated liquidation amount of, with a distribution rate identical to
the distribution rate of, and accrues and unpaid distributions equal to
accumulated and unpaid Distributions on, such Securities shall be distributed on
a Pro Rata basis to the Holders of the Securities in exchange for such
Securities.
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(b) If, upon any such Liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis. The Holders
of the Common Securities will be entitled to receive distributions upon any such
Liquidation Pro Rata with the Holders of the Preferred Securities except that if
an Indenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the Common Securities with regard to
such distributions.
ARTICLE 9
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, DELAWARE TRUSTEES OR OTHERS
SECTION 9.1 Liability.
(a) Except as expressly set forth in this Declaration, the Guarantee
and the terms of the Securities, the Sponsor:
(i) shall not be personally liable for the return of any
portion of the capital contributions (or any return
thereon) of the Holders of the Securities which shall
be made solely from assets of the Trust; and
(ii) shall not be required to pay to the Trust or to any
Holder of Securities any deficit upon dissolution of
the Trust or otherwise.
(b) Pursuant to Section 3803(a) of the Business Trust Act, the Holder
of the Common Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware; provided, however,
the Holders of the Common Securities shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 9.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this
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50
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 9.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to an other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
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(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires,
including its own interests, and shall have no duty or
obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express
standard and shall not be subject to any other or
different standard imposed by this Declaration or by
applicable law.
SECTION 9.4 Indemnification.
(a)(i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Debenture Issuer Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason
of the fact that he is or was a Debenture Issuer Indemnified Person against
expenses (including attorney fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Debenture Issuer Indemnified Person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Debenture Issuer Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he is or was a Debenture Issuer Indemnified
Person against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Debenture Issuer Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of this
Section 9.4(a) (unless ordered by a court) shall be made by the Debenture Issuer
only as authorized in
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the specific case upon a determination that indemnification of the Debenture
Issuer Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority vote of a
quorum consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred by a Debenture
Issuer Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 9.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Debenture Issuer Indemnified Person to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 9.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Regular Trustees
by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts
known to the Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Debenture Issuer Indemnified Person acted in
bad faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect to any criminal
proceeding, that such Debenture Issuer Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall any
advance be made in instances where the Regular Trustees, independent legal
counsel or Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Preferred Security
Holders.
(v) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 9.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Debenture
Issuer or Preferred Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section 9.4(a)
(a) shall be deemed to be provided by a contract between the Debenture Issuer
and each Debenture Issuer Indemnified Person who serves in such capacity at
any time while this Section 9.4(a) is in effect. Any repeal or modification
of this Section 9.4(a) shall not affect any rights or obligations then existing.
(vi) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Debenture Issuer Indemnified
Person against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Debenture Issuer would have the power to indemnify him against such liability
under the provisions of this Section 9.4(a).
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(vii) For purposes of this Section 9.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(viii) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 9.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Debenture
Issuer Indemnified Person and shall inure to the benefit of the heirs, executors
and administrators of such a person. The obligation to indemnify as set forth
in this Section 9.4(a) shall survive the resignation or removal of the Delaware
Trustee or the Property Trustee or the termination of this Declaration.
(b) The Debenture Issuer agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee
and the Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents of
the Property Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to
hold each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 9.4(b)
shall survive the satisfaction and discharge of this Declaration.
SECTION 9.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the activities of the Trust, and the Trust and the Holders of Securities shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the activities of the Trust, shall not be deemed
wrongful or improper. No Covered Person, the Sponsor, the Delaware Trustee or
the Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the
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Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE 10
ACCOUNTING
SECTION 10.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 10.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, within 90 days after the end of each Fiscal
Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, an annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
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SECTION 10.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Account and no other funds of the Trust shall be deposited in the
Property Account. The sole signatories for such accounts shall be designated by
the Regular Trustees; provided, however, that the Property Trustee shall
designate the signatories for the Property Account.
SECTION 10.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of
any claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE 11
AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by the Sponsor and (i) the Regular
Trustees (or, if there are more than two Regular Trustees, a majority of the
Regular Trustees) and (ii) the Property Trustee if the amendment affects the
rights, powers, duties, obligations or immunities of the Property Trustee; and
(iii) by the Delaware Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that
such amendment is
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permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or
immunities of the Property Trustee, the Property
Trustee shall have first received:
a. an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including
the terms of the Securities); and
b. an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted
by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
a. cause the Trust to be classified other than as a
grantor trust for United States federal income tax
purposes;
b. reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust
Indenture Act; or
c. cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment
Company Act.
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would (i) adversely affect the powers,
preferences or special rights of the Securities, whether by way of amendment to
the Declaration or otherwise or (ii) result in the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of this Declaration or
(iii) change the amount or timing of any distribution of the Securities or
otherwise adversely affect the amount of any distribution required to be made in
respect of the Securities as of a specified date or (iv) restrict the right of a
Holder of Securities to institute suit for the enforcement of any such payment
on or after such date, then the holders of the Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of each of
the Holders of the Securities affected thereby; provided that, if any amendment
or proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in Liquidation
Amount of such class of Securities affected thereby.
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(d) This Section 11.1 shall not be amended without the consent of all
of the Holders of the Securities.
(e) Article 4 shall not be amended without the consent of the Holders
of a Majority in Liquidation Amount of the Common Securities.
(f) The rights of the Holders of the Common Securities under Article
5 to increase or decrease the number of, and appoint and remove Trustees shall
not be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities.
(g) Notwithstanding Section 11.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change
in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or
regulatory authority which amendment does not have a
material adverse effect on the rights, preferences or
privileges of the Holders; or
(v) to modify, eliminate and add to any provision of this
Declaration to ensure that the Trust will be classified
as a grantor trust for United States federal income tax
purposes at all times that any Securities are
outstanding or to ensure that the Trust will not be
required to register as an Investment Company under the
Investment Company Act; provided, however, that such
modification, elimination or addition would not
adversely affect in any material respect the rights,
privileges or preferences of any Holder of the
Securities.
SECTION 11.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall
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call a meeting of the Holders of such class if directed to do so by the Holders
of at least 10% in Liquidation Amount of such class of Securities. Such
direction shall be given by delivering to the Regular Trustees one or more calls
in a writing stating that the signing Holders of Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Holders of Securities calling a meeting shall specify in
writing the Certificates held by the Holders of Securities exercising the right
to call a meeting and only those Securities specified shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at
least 7 days and not more than 60 days before the date
of such meeting. Whenever a vote, consent or approval
of the Holders of Securities is permitted or required
under this Declaration or the rules of any stock
exchange on which the Preferred Securities are listed
or admitted for trading, such vote, consent or approval
may be given at a meeting of the Holders of Securities.
Any action that may be taken at a meeting of the
Holders of Securities may be taken without a meeting if
a consent in writing setting forth the action so taken
is signed by the Holders of Securities owning not less
than the minimum amount of Securities in liquidation
amount that would be necessary to authorize or take
such action at a meeting at which all Holders of
Securities having a right to vote thereon were present
and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders of
Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any
written ballot submitted to the Security Holders for
the purpose of taking any action without a meeting
shall be returned to the Trust within the time
specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of
Securities is entitled to participate, including
waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid
after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Holder of
Securities executing such proxy. Except as otherwise
provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations
thereunder, as if the Trust
<PAGE>
59
were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the
listing rules of any stock exchange on which the
Preferred Securities are then listed for trading,
otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions
relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice,
action by consent without a meeting, the establishment
of a record date, quorum requirements, voting in person
or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE 12
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of the Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Declaration;
(b) the Property Trustee satisfies the requirements set forth in
Section 6.3(a);
(c) the execution, delivery and performance by the Property Trustee
of this Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee. This Declaration has been duly executed
and delivered by the Property Trustee, and it constitutes a legal, valid and
binding obligation of the Property Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy,
<PAGE>
60
reorganization, moratorium, insolvency and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
(d) the execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with or constitute a breach of the
articles of association or incorporation, as the case may be, or the by-laws (or
other similar organizational documents) of the Property Trustee; and
(e) no consent, approval or authorization of, or registration with or
notice to, any State or federal banking authority is required for the execution,
delivery or performance by the Property Trustee of this Declaration.
SECTION 12.2 Representations and Warranties of the Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee satisfies the requirements set forth in
Section 6.2 and has the power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration and, if it
is not a natural person, is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization;
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law);
and
(c) no consent, approval or authorization of, or registration with or
notice to, any State or federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration.
<PAGE>
61
ARTICLE 13
MISCELLANEOUS
SECTION 13.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Property Trustee, the Delaware Trustee and the Holders of
the Securities):
c/o Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
Attention: Corporate Counsel
Telecopy No: (212) 526-3774
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Regular Trustees, the Property Trustee and the Holders of the Securities):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trustee Administration
Telecopy No: ________________
(c) if given to the Property Trustee, at its Corporate Trust Office
(or such other address as the Property Trustee may give notice of to the Regular
Trustees, the Delaware Trustee and the Holders of the Securities).
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Property Trustee, the Delaware
Trustee and the Trust):
(e) if given to any other Holder, at the address set forth on the
register of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed or mailed by first class mail, postage prepaid
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which
<PAGE>
62
no notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION 13.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware.
SECTION 13.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted in a manner consistent with
such classification.
SECTION 13.4 Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 13.5 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 13.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 13.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
<PAGE>
63
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
LEHMAN BROTHERS HOLDINGS INC.
as Sponsor and as Common Securities Holder
BY:
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Property Trustee
BY:
-------------------------------
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
as Delaware Trustee
BY:
-------------------------------
Name:
Title:
----------------------------------
, as Regular Trustee
----------------------------------
, as Regular Trustee
----------------------------------
, as Regular Trustee
<PAGE>
EXHIBIT A
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL SECURITY, INSERT THE
FOLLOWING: THIS PREFERRED SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF
THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A
NOMINEE OF THE DEPOSITARY. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR
PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
DECLARATION AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF
THIS PREFERRED SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
CERTIFICATE NO. NUMBER OF PREFERRED SECURITIES:
CUSIP NO.
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST __
____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $1,000 PER PREFERRED SECURITY)
Lehman Brothers Holdings Capital Trust __, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that Cede & Co. (the "Holder") is the registered owner of ___ preferred
securities of the Trust representing undivided beneficial ownership interests in
the assets of the Trust designated the ____% Preferred Securities (liquidation
amount $1,000 per Preferred Security) (the "Preferred Securities"). The
Preferred Securities are transferable on the register of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer as provided in the Declaration (as defined
below). The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Preferred Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust, dated as of _____ __, ____ (as the
same may be amended from time to time (the "Declaration"), among LEHMAN BROTHERS
HOLDINGS INC., as Sponsor, _____________, _______________ and _________________,
as Regular Trustees, THE CHASE MANHATTAN BANK as Property Trustee, and CHASE
MANHATTAN BANK DELAWARE, as Delaware Trustee. Capitalized
<PAGE>
A-2
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Guarantee to the
extent described therein. The Sponsor will provide a copy of the Declaration,
the Guarantee and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of undivided indirect beneficial ownership interests in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
day of , .
LEHMAN BROTHERS HOLDINGS
CAPITAL TRUST __
By:
--------------------------------
Name:
Title: Regular Trustee
This is one of the Securities referred to in the within-mentioned
Declaration.
THE CHASE MANHATTAN BANK,
as Trustee
By:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NO. NUMBER OF COMMON SECURITIES: ____
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
LEHMAN BROTHERS HOLDINGS CAPITAL TRUST __
COMMON SECURITIES
(LIQUIDATION AMOUNT $1,000 PER COMMON SECURITY)
Lehman Brothers Holdings Capital Trust __, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby certifies
that LEHMAN BROTHERS HOLDINGS INC. (the "Holder") is the registered owner of
common securities of the Trust representing an undivided beneficial ownership
interest in the assets of the Trust designated the ____% Common Securities
(liquidation amount $1,000 per Common Security) (the "Common Securities"). The
Common Securities are not transferable and any attempted transfer thereof shall
be void. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust, dated as of _____ __, ____ (as the
same may be amended from time to time, the "Declaration"), among LEHMAN BROTHERS
HOLDINGS INC. as Sponsor, __________________, __________________ and
__________________, as Regular Trustees, THE CHASE MANHATTAN BANK, as Property
Trustee and CHASE MANHATTAN BANK DELAWARE, as Delaware Trustee. The Holder is
entitled to the benefits of the Guarantee to the extent described therein.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Sponsor will provide a copy of the Declaration, the
Guarantee and the Indenture to the Holder without charge upon written request to
the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of an undivided indirect beneficial ownership interest in the
Debentures.
<PAGE>
B-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of _______, ____.
LEHMAN BROTHERS HOLDINGS
CAPITAL TRUST __
By:
---------------------------------
Name:
Title: Regular Trustee
<PAGE>
[THE FOLLOWING EXHIBIT 4(bb) IS THE FORM OF GUARANTEE TO BE USED
BY EACH OF LEHMAN BROTHERS HOLDINGS CAPITAL TRUST I, LEHMAN BROTHERS
HOLDINGS CAPITAL TRUST II AND LEHMAN BROTHERS HOLDINGS CAPITAL TRUST III]
Exhibit 4(bb)
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Lehman Brothers Holdings Capital Trust__
Dated as of ___________ __, ____
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE*
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.8; 4.1(c)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(a); 2.9
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b); 2.9
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.9
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d); 3.2(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.6; 5.4(a)
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
- ------------------------------
* The Cross-Reference Table does not constitute part of the Agreement and
shall not have any bearing upon the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1
INTERPRETATION AND DEFINITIONS . . . . . . . . . . . . 1
SECTION 1.1 Interpretation and Definitions . . . . . . . . . . . . . . . . . 1
ARTICLE 2
TRUST INDENTURE ACT . . . . . . . . . . . . . . . 5
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . 5
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . 5
SECTION 2.3 Reports by Guarantee Trustee . . . . . . . . . . . . . . . . . . 5
SECTION 2.4 Periodic Reports to Guarantee Trustee. . . . . . . . . . . . . . 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . 6
SECTION 2.6 Guarantee Event of Default; Waiver . . . . . . . . . . . . . . . 6
SECTION 2.7 Guarantee Event of Default; Notice . . . . . . . . . . . . . . . 6
SECTION 2.8 Conflicting Interests. . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.9 Disclosure of Information. . . . . . . . . . . . . . . . . . . . 6
SECTION 2.10 Guarantee Trustee May File Proofs of Claim. . . . . . . . . . . 7
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE. . . . . . . . . . . . . . . . 7
SECTION 3.1 Powers and Duties of Guarantee Trustee . . . . . . . . . . . . . 7
SECTION 3.2 Certain Rights of Guarantee Trustee. . . . . . . . . . . . . . . 9
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee. . . . . . 10
ARTICLE 4
GUARANTEE TRUSTEE. . . . . . . . . . . . . . . . 11
SECTION 4.1 Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . 11
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee. . . . 11
ARTICLE 5
GUARANTEE. . . . . . . . . . . . . . . . . . 12
SECTION 5.1 Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.2 Waiver of Notice and Demand. . . . . . . . . . . . . . . . . . . 12
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.4 Rights of Holders. . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.6 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.7 Independent Obligations. . . . . . . . . . . . . . . . . . . . . 15
-i-
<PAGE>
Page
----
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION. . . . . . . . . . 15
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . . . . 15
SECTION 6.2 Ranking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 7
TERMINATION . . . . . . . . . . . . . . . . . 16
SECTION 7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 8
INDEMNIFICATION . . . . . . . . . . . . . . . . 16
SECTION 8.1 Exculpation. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 9
MISCELLANEOUS. . . . . . . . . . . . . . . . . 17
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.4 Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 18
-ii-
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of _________ __,
____, is executed and delivered by Lehman Brothers Holdings Inc., a Delaware
corporation (the "Guarantor"), and The Chase Manhattan Bank, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Securities (as defined herein) of Lehman Brothers Holdings
Capital Trust __, a Delaware statutory business trust (the "Trust").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to the Declaration (as defined herein), the Trust is
issuing on the date hereof $__________ aggregate liquidation amount of preferred
securities, having a liquidation amount of 1,000 per security and designated the
___% Preferred Securities of the Trust (the "Preferred Securities") and
$__________ aggregate liquidation amount of common securities, having a
liquidation amount of $1,000 per security and designated the ___% Common
Securities of the Trust (the "Common Securities" and, together with the
Preferred Securities, the "Securities");
WHEREAS, as incentive for the Holders to purchase the Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth in this Guarantee, to pay to the Holders of the Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein; and that if a Trust Enforcement Event (as defined
herein) has occurred and is continuing, the rights of holders of the Common
Securities to receive Guarantee Payments under this Guarantee are subordinated
to the rights of Holders of Preferred Securities to receive Guarantee Payments
under this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.
ARTICLE 1
INTERPRETATION AND DEFINITIONS
SECTION 1.1 INTERPRETATION AND DEFINITIONS. In this Guarantee,
unless the context otherwise requires:
(a)capitalized terms used in this Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
<PAGE>
2
(b) a term defined anywhere in this Guarantee has the same meaning
throughout;
(c) all references to "the Guarantee" or "this Guarantee" are to this
Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Guarantee to Articles, Sections and
Recitals are to Articles, Sections and Recitals of this Guarantee,
unless otherwise specified;
(e) unless otherwise defined in this Guarantee, a term defined in the
Trust Indenture Act has the same meaning when used in this Guarantee;
(f) a reference to the singular includes the plural and vice versa and
a reference to any masculine form of a term shall include the feminine form
of a term, as applicable; and
(g) the following terms have the following meanings:
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" has the meaning specified in the Declaration.
"Common Securities" has the meaning specified in the Recitals hereto.
"Corporate Trust Office" means the principal office of the Guarantee
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Guarantee is located
at 450 West 33rd Street, New York, New York 10001.
"Covered Person" means a Holder or beneficial owner of Securities.
"Debentures" means the series of subordinated deferrable interest
debentures to be issued by the Guarantor designated the ____% Junior
Subordinated Debentures due 20__ held by the Property Trustee (as defined in the
Declaration) of the Trust.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of _______ ___, ____, as amended, modified or supplemented from time to
time, among the trustees of the Trust named therein, the Guarantor, as sponsor,
and the Holders, from time to time, of undivided beneficial ownership interests
in the assets of the Trust.
"Global Security" means a fully registered, global Preferred Security.
"Guarantee Event of Default" means a default by the Guarantor on any
of its payment or other obligations under this Guarantee.
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"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Securities, to the extent not paid by
or on behalf of the Trust: (i) any accumulated and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Securities to
the extent the Trust has sufficient funds available therefor at the time, (ii)
the redemption price, including all accumulated and unpaid Distributions to the
date of redemption, with respect to any Securities called for redemption by the
Trust, to the extent the Trust shall have sufficient funds available therefor at
the time or (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the distribution of
Debentures to the Holders in exchange for Securities as provided in the
Declaration), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Securities to the date of payment,
to the extent the Trust has sufficient funds available therefor and (b) the
amount of assets of the Trust remaining available for distribution to Holders in
liquidation of the Trust (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The Chase Manhattan Bank, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"Holder" means any holder of Securities, as registered on the books
and records of the Trust; provided, however, that, in determining whether the
Holders of the requisite percentage of Preferred Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor or any other obligor on the
Preferred Securities; and provided further, that in determining whether the
Holders of the requisite liquidation amount of Preferred Securities have voted
on any matter provided for in this Guarantee, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Preferred
Securities remain in the form of one or more Global Certificates (as defined in
the Declaration), the term "Holders" shall mean the holder of the Global
Certificate acting at the direction of the Beneficial Owners (as defined in the
Declaration).
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Guarantee
Trustee.
"Indenture" means the Indenture, dated as of February 1, 1996, between
the Guarantor (the "Company") and The Chase Manhattan Bank, formerly known as
Chemical Bank, as trustee, as amended and supplemented by the First Supplemental
Indenture dated as of February 1, 1996, and by any other indenture supplemental
thereto pursuant to which the Debentures are to be issued to the Property
Trustee (as defined in the Declaration) of the Trust.
"Majority in Liquidation Amount" means, except as provided in the
terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a
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4
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accumulated and unpaid Distributions to the date
upon which the voting percentages are determined) of all outstanding Securities
of the relevant class. In determining whether the Holders of the requisite
amount of Securities have voted, Securities which are owned by the Guarantor or
any Affiliate of the Guarantor or any other obligor on the Securities shall be
disregarded for the purpose of any such determination.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by two Authorized Officers (as
defined in the Declaration) of such Person. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Guarantee shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer on behalf of such Person in
rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer on behalf of such Person to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer
acting on behalf of such Person, such condition or covenant has been
complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities" has the meaning specified in the Recitals
hereto.
"Redemption Price" has the meaning specified in the Declaration.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any officer with direct responsibility for the administration of this Guarantee
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Securities" has the meaning specified in the Recitals hereto.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
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"Trust Enforcement Event" in respect of the Securities means an
Indenture Event of Default (as defined in the Indenture) has occurred and is
continuing in respect of the Debentures.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION. (a) This Guarantee is
subject to the provisions of the Trust Indenture Act that are required to be
part of this Guarantee and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Guarantee limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES. (a) The Guarantor shall
provide the Guarantee Trustee (i) except while the Preferred Securities are
represented by one or more Global Securities at least one Business Day prior to
the date for payment of Distributions, a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of the record date relating to the payment of
such Distributions, and (ii) at any other time, within 30 days of receipt by the
Guarantor of a written request from the Guarantee Trustee for a List of Holders
as of a date no more than 15 days before such List of Holders is given to the
Guarantee Trustee; provided that the Guarantor shall not be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Guarantee Trustee by the Guarantor.
The Guarantee Trustee shall preserve, in as current a form as is reasonably
practicable, all information contained in Lists of Holders given to it, provided
that the Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY GUARANTEE TRUSTEE. Within 60 days after May
15 of each year (commencing with the year of the first anniversary of the
issuance of the Securities), the Guarantee Trustee shall provide to the Holders
of the Securities such reports as are required by Section 313 of the Trust
Indenture Act (if any) in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
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SECTION 2.4 PERIODIC REPORTS TO GUARANTEE TRUSTEE. The Guarantor
shall provide to the Guarantee Trustee such documents, reports and information
as required by Section 314(a) (if any) of the Trust Indenture Act and the
compliance certificate required by Section 314(a) of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314(a) of the Trust
Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 GUARANTEE EVENT OF DEFAULT; WAIVER. The Holders of a
Majority in Liquidation Amount of the Securities may, by vote or written
consent, on behalf of the Holders of all of the Securities, waive any past
Guarantee Event of Default and its consequences. Upon such waiver, any such
Guarantee Event of Default shall cease to exist, and any Guarantee Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Guarantee, but no such waiver shall extend to any subsequent or other
default or Guarantee Event of Default or impair any right consequent thereon.
SECTION 2.7 GUARANTEE EVENT OF DEFAULT; NOTICE. (a) The Guarantee
Trustee shall, within 90 days after the occurrence of a Guarantee Event of
Default, transmit by mail, first class postage prepaid, to the Holders of the
Securities, notices of all Guarantee Events of Default actually known to a
Responsible Officer of the Guarantee Trustee, unless such defaults have been
cured before the giving of such notice; provided, that the Guarantee Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Guarantee Event of Default unless the Guarantee Trustee shall have received
written notice thereof or a Responsible Officer of the Guarantee Trustee charged
with the administration of the Declaration shall have obtained actual knowledge
thereof.
SECTION 2.8 CONFLICTING INTERESTS. The Declaration shall be deemed
to be specifically described in this Guarantee for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 2.9 DISCLOSURE OF INFORMATION. The disclosure of information
as to the names and addresses of the Holders of the Securities in accordance
with Section 312 of the Trust Indenture Act, regardless of the source from which
such information was derived, shall not be deemed to be a violation of any
existing law, or any law hereafter enacted which does not specifically refer to
Section 312 of the Trust Indenture Act, nor shall the Guarantee Trustee be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
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SECTION 2.10 GUARANTEE TRUSTEE MAY FILE PROOFS OF CLAIM. Upon the
occurrence of a Guarantee Event of Default, the Guarantee Trustee is hereby
authorized to (a) recover judgment, in its own name and as trustee of an express
trust, against the Guarantor for the whole amount of any Guarantee Payments
remaining unpaid and (b) file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have its claims and those of the
Holders of the Securities allowed in any judicial proceedings relative to the
Guarantor, its creditors or its property.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF GUARANTEE TRUSTEE.
(a) This Guarantee shall be held by the Guarantee Trustee on behalf of
the Trust for the benefit of the Holders of the Securities, and the Guarantee
Trustee shall not transfer this Guarantee to any Person except a Holder of
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee in and to this Guarantee shall automatically
vest in any Successor Guarantee Trustee, and such vesting and succession of
title shall be effective whether or not conveyance documents have been executed
and delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a Responsible
Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee for the benefit of the Holders of the
Securities.
(c) The Guarantee Trustee, before the occurrence of any Guarantee
Event of Default and after the curing of all Guarantee Events of Default that
may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee, and no implied covenants shall be read
into this Guarantee against the Guarantee Trustee. In case a Guarantee Event of
Default has occurred (that has not been cured or waived pursuant to Section 2.6)
and is actually known to a Responsible Officer of the Guarantee Trustee, the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
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8
(i) prior to the occurrence of any Guarantee Event of
Default and after the curing or waiving of all such Guarantee Events
of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee, and the Guarantee Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Guarantee, and no implied
covenants or obligations shall be read into this Guarantee
against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Guarantee Trustee,
the Guarantee Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of
this Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee, or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee or if the Guarantee Trustee shall have
reasonable grounds for believing that an indemnity, reasonably
satisfactory to the Guarantee Trustee, against such risk or liability
is not reasonably assured to it under the terms of this Guarantee.
<PAGE>
9
SECTION 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE. (a) Subject to the
provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee shall be sufficiently evidenced by an Officers'
Certificate;
(iii) Whenever, in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Guarantor;
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration or any instrument (or any
rerecording, refiling or re-registration thereof);
(v) The Guarantee Trustee may consult with counsel, and the
advice or opinion of such counsel with respect to legal matters shall
be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel
to the Guarantor or any of its Affiliates and may include any of its
employees. The Guarantee Trustee shall have the right at any time to
seek instructions concerning the administration of this Guarantee from
any court of competent jurisdiction;
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of
the Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided, that nothing contained
in this Section 3.2(a)(vi) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of a Guarantee Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Guarantee;
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10
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due
care by it hereunder;
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to inquire
as to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Guarantee,
both of which shall be conclusively evidenced by the Guarantee
Trustee's or its agent's taking such action; and
(x) Whenever in the administration of this Guarantee the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (i) may request written instructions
from the Holders of a Majority in Liquidation Amount of the
Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such written instructions are received,
and (iii) shall be protected in conclusively relying on or acting in
accordance with such written instructions.
(b) No provision of this Guarantee shall be deemed to impose any duty
or obligation on the Guarantee Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Guarantee Trustee does not assume any responsibility for
their correctness. The Guarantee Trustee makes no representations as to the
validity or sufficiency of this Guarantee.
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ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall be at all times a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any state or territory thereof
or of the District of Columbia, or a corporation or other Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under
such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE
TRUSTEE.
(a) Subject to Section 4.2(b), unless a Guarantee Event of Default
shall have occurred and be continuing, the Guarantee Trustee may be appointed or
removed with or without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold such office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to
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12
the Guarantor, which resignation shall not take effect until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Guarantee Trustee and delivered
to the Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within [30] [60] days after
delivery to the Guarantor of an instrument of removal or resignation, the
removed or resigning Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions to
act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation of
the Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to
the Guarantee Trustee all amounts owing for fees and reimbursement of expenses
which have accrued to the date of such termination, removal or resignation.
ARTICLE 5
GUARANTEE
SECTION 5.1 GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders. Notwithstanding anything to
the contrary herein, the Guarantor retains all of its rights under the
Indenture to (i) extend the interest payment period on the Debentures and the
Guarantor shall not be obligated hereunder to make any Guarantee Payments
during any Extension Period (as defined in the certificate evidencing the
Debentures) with respect to the Distributions (as defined in the Declaration)
on the Securities, and (ii) change the maturity date of the Debentures to the
extent permitted by the Indenture.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of this Guarantee and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Trust or any other
Person before proceeding against the
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Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall be absolute and unconditional and shall remain in
full force and effect until the entire liquidation amount of all outstanding
Securities shall have been paid and such obligation shall in no way be affected
or impaired by reason of the happening from time to time of any event, including
without limitation, the following, whether or not with notice to, or the consent
of, the Guarantor:
(a) The release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Securities to be performed or
observed by the Trust;
(b) The extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Securities or the extension
of time for the performance of any other obligation under, arising out of,
or in connection with the Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that results from the extension of any interest payment
period on the Debentures or any change to the maturity date of the
Debentures permitted by the Indenture);
(c) Any failure, omission, delay or lack of diligence on the part of
the Property Trustee or the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Property Trustee or the
Holders pursuant to the terms of the Securities, or any action on the part
of the Trust granting indulgence or extension of any kind;
(d) The voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust
or any of the assets of the Trust;
(e) Any invalidity of, or defect or deficiency in, the Securities;
(f) The settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) Any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
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14
There shall be no obligation of the Guarantee Trustee or the Holders
to give notice to, or obtain consent of the Guarantor or any other Person with
respect to the happening of any of the foregoing.
No setoff, counterclaim, reduction or diminution of any obligation, or
any defense of any kind or nature that the Guarantor has or may have against any
Holder shall be available hereunder to the Guarantor against such Holder to
reduce the payments to it under this Guarantee.
SECTION 5.4 RIGHTS OF HOLDERS.
(a) The Holders of at least a Majority in Liquidation Amount of the
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee.
(b) If the Guarantee Trustee fails to enforce this Guarantee, then
any Holder of Securities may, subject to the subordination provisions of Section
6.2, institute a legal proceeding directly against the Guarantor to enforce the
Guarantee Trustee's rights under this Guarantee without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. In addition, if the Guarantor has failed to make a Guarantee Payment, a
Holder of Securities may, subject to the subordination provisions of Section
6.2, directly institute a proceeding against the Guarantor for enforcement of
the Guarantee for such payment to the Holder of the Securities of the principal
of or interest on the Debentures on or after the respective due dates specified
in the Debentures, and the amount of the payment will be based on the Holder's
pro rata share of the amount due and owing on all of the Securities. The
Guarantor hereby waives any right or remedy to require that any action on this
Guarantee be brought first against the Trust or any other person or entity
before proceeding directly against the Guarantor.
SECTION 5.5 GUARANTEE OF PAYMENT.
This Guarantee creates a guarantee of payment and not of collection.
SECTION 5.6 SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Securities against the Trust in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if at the time of any such payment,
any amounts are due and unpaid under this Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Guarantee Trustee for the benefit of the Holders.
<PAGE>
15
SECTION 5.7 INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections 5.3(a) through 5.3(g),
inclusive, hereof.
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS.
So long as any Securities remain outstanding, if (i) there shall
have occurred an event of default under the Indenture with respect to the
Debentures, (ii) there shall be a Guarantee Event of Default or (iii) the
Guarantor shall have given notice of its election of an Extension Period as
provided in the certificate evidencing the Debentures and shall not have
rescinded such notice, or such Extension Period or any extension thereof
shall be continuing, then Guarantor shall not, and shall not permit any
subsidiary of the Guarantor, to (x) declare or pay any dividends or
distributions on, or redeem, purchase acquire or make a liquidation payment
with respect to any of the Guarantor's capital stock or (y) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Guarantor that rank on a parity with or junior in
interest to the Debentures or make any guarantee payments with respect to any
guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor if such guarantee ranks on a parity with or junior in interest to
the Debentures (other than (a) dividends or distributions in common stock of
the Guarantor, (b) payments under this Guarantee and (c) any declaration of a
dividend in connection with the implementation of a shareholders' rights
plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, and (d)
purchases of common stock related to the issuance of common stock or rights
under any of the Guarantor's benefit plans).
SECTION 6.2 RANKING.
This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, (ii) on a parity with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and
with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred securities of any Affiliate of the Guarantor and (iii)
senior to the Guarantor's common stock. In addition, at all times such
obligations will be structurally subordinated to the liabilities and
obligations of the Guarantor's subsidiaries.
If a Trust Enforcement Event has occurred and is continuing under the
Declaration, the rights of the holders of the Common Securities to receive
Guarantee Payments hereunder shall be subordinated to the rights of the Holders
of the Preferred Securities to receive Guarantee Payments under this Guarantee.
<PAGE>
16
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION.
This Guarantee shall terminate upon (i) full payment of the Redemption
Price of all Securities, (ii) distribution of the Debentures to the Holders of
all the Securities or (iii) full payment of the amounts payable in accordance
with the Declaration upon liquidation of the Trust. Notwithstanding the
foregoing, this Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any Holder of Securities must restore payment
of any sums paid under the Securities or under this Guarantee.
ARTICLE 8
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage, liability, expense or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance with
this Guarantee and in a manner that such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Guarantee or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 8.2 INDEMNIFICATION.
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
<PAGE>
17
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Guarantee.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Securities then
outstanding.
SECTION 9.2 AMENDMENTS.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders
will be required), this Guarantee may not be amended without the prior
approval of the Holders of not less than 66-2/3% of the aggregate liquidation
amount of the Securities. The provisions of Section 11.2 of the Declaration
with respect to meetings of, and action by written consent of, the Holders of
the Securities apply to the giving of such approval.
SECTION 9.3 NOTICES.
All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered by hand,
telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee
Trustee may give notice of to the Guarantor and the Holders of the
Securities):
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention:_______________
Telecopy no.: (212)_______________
(b) If given to the Guarantor, at the Guarantor's mailing addresses
set forth below (or such other address as the Guarantor may give notice of
to the Guarantee Trustee and the Holders of the Securities):
<PAGE>
18
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
Attention: Corporate Counsel
Telecopy no.: (212) 526-3774
(c) If given to any Holder of Securities, at the address set forth on
the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.4 BENEFIT.
This Guarantee is solely for the benefit of the Holders of the
Securities and, subject to Section 3.1(a), is not separately transferable from
the Securities.
SECTION 9.5 GOVERNING LAW.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES THEREOF.
<PAGE>
19
IN WITNESS WHEREOF, this Guarantee is executed as of the day and year
first above written.
LEHMAN BROTHERS HOLDINGS INC.,
as Guarantor
By:
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Guarantee Trustee
By:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT 5(a)
LEHMAN BROTHERS HOLDINGS INC.
THREE WORLD FINANCIAL CENTER
NEW YORK, NY 10285
April 15, 1998
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 and by Lehman Brothers Holdings Capital Trust
I, Lehman Brothers Holdings Capital Trust II and by Lehman Brothers Holdings
Capital Trust III (the "LBH Trusts") with the Securities and Exchange
Commission (the "SEC") on the date hereof. The Registration Statement
relates to the registration of $6,000,000,000 of (A) (i) debt securities
consisting of senior debt (the "Senior Debt Securities") and subordinated
debt (the "Subordinated Debt Securities"), (ii) preferred stock, par value
$1.00 per share (the "Preferred Stock"), (iii) depositary shares (the
"Depositary Shares") and (iv) guarantees of Trust Preferred Securities (as
hereinafter defined) and certain back-up obligations (the "Guarantees") which
Holdings may issue from time to time in one or more series and (B) trust
preferred securities (the "Trust Preferred Securities") which the LBH Trusts
may issue from time to time in one or more series.
In that connection, I or members of my staff have examined or 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 opinions hereinafter set forth. In such examination, I
have assumed the genuineness and authenticity of all documents examined by me
or members of my staff and all signatures thereon, the legal capacity of all
persons executing such documents, the conformity to originals of all copies
of documents submitted to us and the truth and correctness of any
representations and warranties contained therein.
Based upon the foregoing, I am of the opinion that:
(i) the Senior Debt Securities have been duly authorized and the
indenture (the "Senior Indenture") between Holdings and Citibank, N.A., as
Trustee (the "Senior Debt Trustee"), pursuant to which the Senior Debt
Securities will be issued has been duly executed and delivered, and when the
terms of the Senior Debt Securities have been established in conformity with
the Senior Indenture and the Senior Debt Securities have been executed by
Holdings, authenticated by the Senior Debt Trustee in accordance with the
terms of the Senior Indenture and issued and delivered against payment
therefor, the Senior Debt Securities will be legally issued and will
constitute valid and binding obligations of Holdings, entitled to the
benefits of the Senior Indenture and enforceable against Holdings in
accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and by an implied covenant of good faith and fair dealing;
(ii) the Subordinated Debt Securities have been duly authorized and the
indenture (the "Subordinated Indenture") between Holdings and The Chase
Manhattan Bank, as successor to Chemical Bank, as Trustee (the "Subordinated
Debt Trustee"), pursuant to which the Subordinated Debt Securities will be
issued has been duly executed and delivered, and when the terms of the
Subordinated Debt Securities have been established in conformity with the
Subordinated Indenture and the Subordinated Debt Securities have been
executed by Holdings, authenticated by the Subordinated Debt Trustee in
accordance with the terms of the Subordinated Indenture and issued and
delivered against payment therefor, the Subordinated Debt Securities will be
legally issued and will constitute valid and binding obligations of Holdings,
entitled to the benefits of the Subordinated Indenture and enforceable
against Holdings in accordance with their terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and by an implied covenant of good faith and fair dealing;
(iii) The Preferred Stock has been duly authorized and, when issued and
delivered against payment therefor, the Preferred Stock will be validly
issued, fully paid and non-assessable, and no holder thereof will be subject
to personal liability by reason of being such a holder;
(iv) The Depositary Shares have been duly authorized and, when issued
and delivered against payment therefor, the Depositary Shares will be validly
issued, fully paid and non-assessable, and no holder thereof will be subject
to personal liability by reason of being such a holder; and
(v) The Guarantees have been duly authorized and, when executed and
delivered by the parties thereto, the Guarantees will be valid and binding
agreements of Holdings, enforceable against Holdings in accordance with their
terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium
<PAGE>
and other similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and by an implied covenant of good faith and fair dealing.
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 (and this consent) 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 SEC
issued thereunder, with respect to any part of the Registration Statement,
including this exhibit.
I also hereby consent to the incorporation by reference of this opinion
(and this consent) as an exhibit to any registration statement providing for
the registration of additional securities, including Senior Debt Securities,
Subordinated Debt Securities, Preferred Stock, Depositary Shares, Guarantees
and/or Trust Preferred Securities, pursuant to Rule 462(b) under the Act.
Very truly yours,
/s/ Karen M. Muller
--------------------------
Karen M. Muller
Deputy General Counsel
<PAGE>
EXHIBIT 5(b)
RICHARDS, LAYTON & FINGER
A PROFESSIONAL ASSOCIATION
ONE RODNEY SQUARE
P.O. Box 551
WILMINGTON, DELAWARE 19899
TELEPHONE (302) 658-6541
TELECOPIER (302) 658-6548
April 15, 1998
Lehman Brothers Holdings Inc.
Lehman Brothers Holdings Capital Trust I
Lehman Brothers Holdings Capital Trust II
Lehman Brothers Holdings Capital Trust III
c/o Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
Re: Lehman Brothers Holdings Capital Trust I, Lehman Brothers Holdings
Capital Trust II and Lehman Brothers Holdings Capital Trust III
Ladies and Gentlemen:
We have acted as special Delaware counsel for Lehman Brothers Holdings Inc.,
a Delaware corporation (the "Company"), Lehman Brothers Holdings Capital Trust
I, a Delaware business trust ("Trust I"), Lehman Brothers Holdings Capital Trust
II, a Delaware business trust ("Trust II"), and Lehman Brothers Holdings Capital
Trust III, a Delaware business trust ("Trust III") (Trust I, Trust II and Trust
III are hereinafter collectively referred to as the "Trusts" and sometimes
hereinafter individually referred to as a "Trust"), in connection with the
matters set forth herein. At your request, this opinion is being furnished to
you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of Trust I, as filed with the office of the
Secretary of State of the State of Delaware (the "Secretary of State") on
January 16, 1998;
(b) The Certificate of Trust of Trust II, as filed with the Secretary of
State on January 16, 1998;
(c) The Certificate of Trust of Trust III, as filed with the Secretary of
State on January 16, 1998;
<PAGE>
Lehman Brothers Holdings Inc.
Lehman Brothers Holdings Capital Trust I
Lehman Brothers Holdings Capital Trust II
Lehman Brothers Holdings Capital Trust III
April 15, 1998
Page 2
(d) The Declaration of Trust of Trust I, dated as of January 16, 1998 among
the Company and the trustees of Trust I named therein;
(e) The Declaration of Trust of Trust II, dated as of January 16, 1998 among
the Company and the trustees of Trust II named therein;
(f) The Declaration of Trust of Trust III, dated as of January 16, 1998
among the Company and the trustees of Trust III named therein;
(g) The Registration Statement (the "Registration Statement") on Form S-3,
including a preliminary prospectus with respect to the Trusts (the
"Prospectus"), relating to the Preferred Securities of the Trusts representing
preferred undivided beneficial ownership interests in the assets of the Trusts
(each, a "Preferred Security" and collectively, the "Preferred Securities"), to
be filed by the Company and the Trusts with the Securities and Exchange
Commission;
(h) A form of Amended and Restated Declaration of Trust for each of the
Trusts, to be entered into between the Company, the trustees of the Trust named
therein, and the holders, from time to time, of the undivided beneficial
ownership interests in the assets of such Trust (including Exhibits A and B
thereto) (collectively, the "Declarations" and individually, a "Declaration"),
attached as an exhibit to the Registration Statement; and
(i) A Certificate of Good Standing for each of the Trusts, dated January
21, 1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are used
as defined in the Declarations.
For purposes of this opinion, we have not reviewed any documents other than
the documents listed in paragraphs (a) through (i) above. In particular, we have
not reviewed any document (other than the documents listed in paragraphs (a)
through (i) above) that is referred to in or incorporated by reference into the
documents reviewed by us. We have assumed that there exists no provision in any
document that we have not reviewed that is inconsistent with the opinions stated
herein. We have conducted no independent factual investigation of our own but
rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
<PAGE>
Lehman Brothers Holdings Inc.
Lehman Brothers Holdings Capital Trust I
Lehman Brothers Holdings Capital Trust II
Lehman Brothers Holdings Capital Trust III
April 15, 1998
Page 3
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that each of the
Declarations will constitute the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the applicable Trust, and that the Declarations and
the Certificates of Trust will be in full force and effect and will not be
amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its organization or formation, (iii) the legal capacity
of natural persons who are parties to the documents examined by us, (iv) that
each of the parties to the documents examined by us has the power and authority
to execute and deliver, and to perform its obligations under, such documents,
(v) the due authorization, execution and delivery by all parties thereto of all
documents examined by us, (vi) the receipt by each Person to whom a Preferred
Security is to be issued by the Trusts (collectively, the "Preferred Security
Holders") of a Preferred Security Certificate for such Preferred Security and
the payment for such Preferred Security, in accordance with the Declarations and
the Registration Statement, and (vii) that the Preferred Securities are
authenticated, issued and sold to the Preferred Security Holders in accordance
with the Declarations and the Registration Statement. We have not participated
in the preparation of the Registration Statement or the Prospectus and assume no
responsibility for their contents.
This opinion is limited to the laws of the State of Delaware (excluding the
securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of law
and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. Each of the Trusts has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
<PAGE>
Lehman Brothers Holdings Inc.
Lehman Brothers Holdings Capital Trust I
Lehman Brothers Holdings Capital Trust II
Lehman Brothers Holdings Capital Trust III
April 15, 1998
Page 4
2. The Preferred Securities of each Trust will represent valid and, subject
to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the applicable
Trust.
3. The Preferred Security Holders, as beneficial owners of the applicable
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. We hereby consent to the
use of our name under the heading "Legal Opinions" in the Prospectus. In giving
the foregoing consents, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. Except as stated above, without our prior written
consent, this opinion may not be furnished or quoted to, or relied upon by, any
other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger P.A.
EAM
<PAGE>
EXHIBIT 8
SIMPSON THACHER & BARTLETT
A PARTNERSHIP WHICH INCLUDES
PROFESSIONAL CORPORATIONS
425 LEXINGTON AVENUE
NEW YORK, NY 10017-3954
(212) 455-2000
FACSIMILE: (212) 455-2502
TELEX: 129158
April 15, 1998
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
Ladies and Gentlemen:
We have acted as special United States tax counsel to Lehman Brothers
Holdings Inc. (the "Company") in connection with the preparation and filing
of the Registration Statement on Form S-3 filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Registration Statement"), in respect of Debt Securities, Offered Preferred
Stock, Depositary Shares and Guarantees to be offered by the Company, and
Preferred Securities to be offered by Lehman Brothers Holdings Capital Trust
I, Lehman Brothers Holdings Capital Trust II, and Lehman Brothers Holdings
Capital Trust III.
We have examined the Registration Statement, including the prospectus
dated April 15, 1998, that forms a part thereof, relating to the above-
described transaction. In addition, we have examined such other documents,
and have made such other and further investigations, as we have deemed
relevant and necessary as a basis for the
<PAGE>
Lehman Brothers Holdings Inc. -2- April 15, 1998
opinion hereinafter set forth. In such examination, we have assumed the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as drafts or as
certified, conformed, photostatic or facsimile copies, and the authenticity
of the originals of such latter documents.
Based upon the foregoing, we hereby confirm our opinions set forth
that, subject to the qualifications and limitations stated herein and
therein, the statements set forth in the Registration Statement under the
caption "United States Taxation", insofar as they purport to constitute
summaries of matters of United States federal tax law and regulations or
legal conclusions with respect thereto, constitute accurate summaries of the
matters described therein in all material respects.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the federal law of
the United States.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement and to
the reference to our firm under the heading "United States Taxation" and
"Legal Opinions" in the prospectus that forms a part of the Registration
Statement.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
EXHIBIT 23(C)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm as experts under the caption
"Independent Accountants" in this Registration Statement on Form S-3 and related
Prospectus of Lehman Brothers Holdings Inc. (the "Company") and Lehman Brothers
Holdings Capital Trust I, Lehman Brothers Holdings Capital Trust II and Lehman
Brothers Holdings Capital Trust III (collectively, the "LBH Trusts") for the
registration of Debt Securities, Preferred Stock and Depositary Shares of the
Company, Preferred Securities of the LBH Trusts and Guarantees of the Company
of Preferred Securities issued by the LBH Trusts and to the incorporation by
reference therein of our report dated January 7, 1998 with respect to the
consolidated financial statements and financial statement schedule of the
Company included in its Annual Report on Form 10-K for the year ended November
30, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
New York, New York
April 15, 1998
<PAGE>
EXHIBIT 24
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 or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her
and in his or her 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 or she 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.
Dated: April 15, 1998
SIGNATURES TITLE
- ------------------------------ --------------------------
Chief Executive Officer
/s/ RICHARD S. FULD, JR. and Chairman of the
- ------------------------------ Board of Directors
Richard S. Fuld, Jr. (principal executive
officer)
/s/ CHARLES B. HINTZ Chief Financial Officer
- ------------------------------ (principal financial and
Charles B. Hintz accounting officer)
- ------------------------------ Director
Michael L. Ainslie
/s/ JOHN F. AKERS
- ------------------------------ Director
John F. Akers
/s/ ROGER S. BERLIND
- ------------------------------ Director
Roger S. Berlind
/s/ THOMAS H. CRUIKSHANK
- ------------------------------ Director
Thomas H. Cruikshank
/s/ HENRY KAUFMAN
- ------------------------------ Director
Henry Kaufman
/s/ HIDEICHIRO KOBAYASHI
- ------------------------------ Director
Hideichiro Kobayashi
/s/ JOHN D. MACOMBER
- ------------------------------ Director
John D. Macomber
/s/ DINA MERRILL
- ------------------------------ Director
Dina Merrill
<PAGE>
Exhibit 25(a)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305 (b)(2) ____
------------------------
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
Identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
-----------------------
LEHMAN BROTHERS HOLDINGS INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3216325
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification no.)
American Express Tower
3 World Financial Center
New York, NY 10285
(Address of principal executive offices) (Zip Code)
-------------------------
Debt Securities
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
Item 16. List of Exhibits.
Exhibit 1 - Copy of Articles of Association of the Trustee, as
now in effect. (Exhibit 1 to T-1 to Registration Statement
No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration Statement
No. 2-29577).
Exhibit 3 - Copy of authorization of the Trustee to exercise
corporate trust powers. (Exhibit 3 to T-1 to Registration
Statement No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit
4 to T-1 to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section
321(b) of the Trust Indenture Act of 1939. (Exhibit 6 to T-1
to Registration Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of
Citibank, N.A. (as of September 30, 1997 - attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
2
<PAGE>
------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and
existing under the laws of the United States of America, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York and State of New York,
on the 6th day of April, 1998.
CITIBANK, N.A.
By: /s/ Arthur W. Aslanian
-----------------------
Arthur W. Aslanian
Vice President
3
<PAGE>
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING Exhibit 7
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
Citibank, N.A.
of New York in the State of New York, at the close of business on December
31, 1997, published in response to call made by Comptroller of the Currency,
under Title 12, United States Code, Section 161. Charter Number 1461
Comptroller of the Currency Northeastern District.
ASSETS
<TABLE>
<CAPTION>
Thousands
of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.............. $ 7,788,000
Interest-bearing balances......................................... 14,245,000
Held-to-maturity securities....................................... 0
Available-for-sale securities..................................... 28,951,000
Federal funds sold and securities purchased under
agreements to resell.......................................... 9,776,000
Loans and lease financing receivables:
Loans and Leases, net of unearned income........................ $153,670,000
LESS: Allowance for loan and lease losses....................... 4,264,000
------------
Loans and leases, net of unearned income, allowance,
and reserve..................................................... 149,406,000
Trading assets.................................................... 36,106,000
Premises and fixed assets (including capitalized leases).......... 3,338,000
Other real estate owned........................................... 609,000
Investments in unconsolidatedsubsidiaries and
associated companies............................................ 1,320,000
Customers' liability to this bank on acceptances
outstanding..................................................... 1,726,000
Intangible assets................................................. 164,000
Other assets...................................................... 9,071,000
------------
TOTAL ASSETS...................................................... $262,500,000
------------
------------
LIABILITIES
Deposits:
In domestic offices............................................ $ 37,569,000
Noninterestbearing............................................. $ 13,472,000
Interestbearing................................................ 24,097,000
In foreign offices, Edge and Agreement subsidiaries, and IBFs 141,000,000
Noninterest-bearing............................................ 9,460,000
Interest-bearing............................................... 131,540,000
------------
Federal funds purchased and securities sold under agreements
to repurchase.................................................. 8,574,000
Trading liabilities.............................................. 27,811,000
Other borrowed money (includes mortgage indebtedness and
obligations under capitalized leases):
With a remaining maturity of one year or less................. 8,647,000
With a remaining maturity of more than one year through
three years................................................. 2,530,000
With a remaining maturity of more than three years............ 910,000
Bank's liability on acceptances executed and outstanding........ 1,826,000
Subordinated notes and debentures............................... 5,600,000
Other liabilities............................................... 10,865,000
------------
TOTAL LIABILITIES............................................... $245,332,000
------------
------------
EQUITY CAPITAL
Perpetual preferred stock and related surplus.................. 0
Common stock................................................... $ 751,000
Surplus........................................................ 7,453,000
Undivided profits and capital reserves......................... 9,318,000
Net unrealized holding gains (losses) on available-for-sale
securities................................................... 345,000
Cumulative foreign currency translation adjustments............ (699,000)
------------
TOTAL EQUITY CAPITAL........................................... $ 17,168,000
------------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND
EQUITY CAPITAL............................................... $262,500,000
------------
------------
</TABLE>
I, Roger W. Trupin, Controller of the
above-named bank do hereby declare that this Report of Condition is true and
correct to the best of my knowledge and belief.
ROGER W. TRUPIN
CONTROLLER
We, the undersigned directors, attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions and
is true and correct.
PAUL J. COLLINS
JOHN S. REED
WILLIAM R. RHODES
DIRECTORS
<PAGE>
Exhibit 25(b)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Lehman Brothers Holdings Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-3216325
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 World Financial Center 10285
New York, New York (Zip Code)
(Address of principal executive offices)
-------------------------------------
Subordinated Debt Securities
(Title of the indenture securities)
-----------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 9th day
of April, 1998.
THE CHASE MANHATTAN BANK
By /s/ F. Springer
---------------------------
F. Springer
Assistant Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ................... $ 12,428
Interest-bearing balances ............................................ 3,428
Securities: ..............................................................
Held to maturity securities................................................ 2,561
Available for sale securities.............................................. 43,058
Federal funds sold and securities purchased under agreements to resell .... 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income ...... $129,260
Less: Allowance for loan and lease losses ..... 2,783
Less: Allocated transfer risk reserve ......... 0
--------
Loans and leases, net of unearned income, allowance, and reserve .... 126,477
Trading Assets ........................................................... 62,575
Premises and fixed assets (including capitalized leases).................. 2,943
Other real estate owned .................................................. 295
Investments in unconsolidated subsidiaries and associated companies....... 231
Customers' liability to this bank on acceptances outstanding ............. 1,698
Intangible assets ........................................................ 1,466
Other assets ............................................................. 10,268
---------
TOTAL ASSETS ............................................................. $297,061
---------
---------
</TABLE>
- 4 -
<PAGE>
<TABLE>
LIABILITIES
<S> <C>
Deposits
In domestic offices .................................................... $94,524
Noninterest-bearing ........................... $39,487
Interest-bearing .............................. 55,037
-------
In foreign offices, Edge and Agreement, subsidiaries and IBF's.......... 71,162
Noninterest-bearing ........................... $ 3,205
Interest-bearing .............................. 67,957
Federal funds purchased and securities sold under agreements to repurchase... 43,181
Demand notes issued to the U.S. Treasury .................................... 1,000
Trading liabilities ......................................................... 48,903
Otherborrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less .......................... 3,599
With a remaining maturity of more than one year through three years..... 253
With a remaining maturity of more than three years...................... 132
Bank's liability on acceptances executed and outstanding..................... 1,698
Subordinated notes and debentures ........................................... 5,715
Other liabilities............................................................ 9,896
-------
TOTAL LIABILITIES ........................................................... 280,063
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................ 0
Common stock ................................................................ 1,211
Surplus (exclude all surplus related to preferred stock).................... 10,291
Undivided profits and capital reserves ...................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities .......................................... (22)
Cumulative foreign currency translation adjustments ......................... 16
TOTAL EQUITY CAPITAL ........................................................ 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ......................................... $297,061
---------
---------
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and
is true to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and
correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
- 5 -
<PAGE>
Exhibit 25(c)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Lehman Brothers Holdings Capital Trust III
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 World Financial Center 10285
New York, New York (Zip Code)
(Address of principal executive offices)
Trust Preferred Securities
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 9th day of April, 1998.
THE CHASE MANHATTAN BANK
By /s/ F. Springer
---------------------------
F. Springer
Assistant Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .................................................... $ 12,428
Interest-bearing balances ............................................ 3,428
Securities: ..............................................................
Held to maturity securities................................................ 2,561
Available for sale securities.............................................. 43,058
Federal funds sold and securities purchased under
agreements to resell ................................................. 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,260
Less: Allowance for loan and lease losses 2,783
Less: Allocated transfer risk reserve ......... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .............................................. 126,477
Trading Assets ........................................................... 62,575
Premises and fixed assets (including capitalized
leases)................................................................... 2,943
Other real estate owned .................................................. 295
Investments in unconsolidated subsidiaries and
associated companies................................................. 231
Customers' liability to this bank on acceptances
outstanding ......................................................... 1,698
Intangible assets ........................................................ 1,466
Other assets ............................................................. 10,268
---------
TOTAL ASSETS ............................................................. $297,061
---------
---------
</TABLE>
- 4 -
<PAGE>
<TABLE>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices ................................................. $94,524
Noninterest-bearing ........................... $39,487
Interest-bearing .............................. 55,037
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's............................................... 71,162
Noninterest-bearing ........................... $ 3,205
Interest-bearing .............................. 67,957
Federal funds purchased and securities sold under agree-
ments to repurchase ...................................................... 43,181
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 48,903
Otherborrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ........... 3,599
With a remaining maturity of more than one year .
through three years........................................... 253
With a remaining maturity of more than three years................... 132
Bank's liability on acceptances executed and outstanding 1,698
Subordinated notes and debentures ........................................ 5,715
Other liabilities......................................................... 9,896
TOTAL LIABILITIES ........................................................ 280,063
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock)... 10,291
Undivided profits and capital reserves ................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (22)
Cumulative foreign currency translation adjustments ...................... 16
TOTAL EQUITY CAPITAL ..................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ...................................... $297,061
---------
---------
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and
is true to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and
correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
- 5 -
<PAGE>
Exhibit 25(d)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Lehman Brothers Holdings Capital Trust II
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 World Financial Center 10285
New York, New York (Zip Code)
(Address of principal executive offices)
Trust Preferred Securities
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 9th day of April, 1998.
THE CHASE MANHATTAN BANK
By /s/ F. Springer
---------------------------
F. Springer
Assistant Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .................................................... $ 12,428
Interest-bearing balances ............................................ 3,428
Securities: ..............................................................
Held to maturity securities................................................ 2,561
Available for sale securities.............................................. 43,058
Federal funds sold and securities purchased under
agreements to resell ................................................. 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,260
Less: Allowance for loan and lease losses 2,783
Less: Allocated transfer risk reserve ......... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .............................................. 126,477
Trading Assets ........................................................... 62,575
Premises and fixed assets (including capitalized
leases)................................................................... 2,943
Other real estate owned .................................................. 295
Investments in unconsolidated subsidiaries and
associated companies................................................. 231
Customers' liability to this bank on acceptances
outstanding ......................................................... 1,698
Intangible assets ........................................................ 1,466
Other assets ............................................................. 10,268
---------
TOTAL ASSETS ............................................................. $297,061
---------
---------
</TABLE>
- 4 -
<PAGE>
<TABLE>
LIABILITIES
<S> <C>
Deposits
In domestic offices ................................................. $94,524
Noninterest-bearing ........................... $39,487
Interest-bearing .............................. 55,037
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's............................................. 71,162
Noninterest-bearing ........................... $ 3,205
Interest-bearing .............................. 67,957
Federal funds purchased and securities sold under agree-
ments to repurchase .................................................... 43,181
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 48,903
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ....................... 3,599
With a remaining maturity of more than one year
through three years........................................... 253
With a remaining maturity of more than three years................... 132
Bank's liability on acceptances executed and outstanding.................. 1,698
Subordinated notes and debentures ........................................ 5,715
Other liabilities......................................................... 9,896
TOTAL LIABILITIES ........................................................ 280,063
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock)................. 10,291
Undivided profits and capital reserves ................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (22)
Cumulative foreign currency translation adjustments ...................... 16
TOTAL EQUITY CAPITAL ..................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ...................................... $297,061
---------
---------
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and
is true to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and
correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
- 5 -
<PAGE>
Exhibit 25(e)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Lehman Brothers Holdings Capital Trust III
(Exact name of obligor as specified in its charter)
Delaware To be applied for
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 World Financial Center 10285
New York, New York (Zip Code)
(Address of principal executive offices)
---------------------------------------
Trust Preferred Securities
(Title of the indenture securities)
---------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 9th day of April, 1998.
THE CHASE MANHATTAN BANK
By /s/ F. Springer
---------------------------
F. Springer
Assistant Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .................................................... $ 12,428
Interest-bearing balances ............................................ 3,428
Securities: ..............................................................
Held to maturity securities................................................ 2,561
Available for sale securities.............................................. 43,058
Federal funds sold and securities purchased under
agreements to resell ................................................. 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,260
Less: Allowance for loan and lease losses 2,783
Less: Allocated transfer risk reserve ......... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .............................................. 126,477
Trading Assets ........................................................... 62,575
Premises and fixed assets (including capitalized
leases)................................................................... 2,943
Other real estate owned .................................................. 295
Investments in unconsolidated subsidiaries and
associated companies................................................. 231
Customers' liability to this bank on acceptances
outstanding ......................................................... 1,698
Intangible assets ........................................................ 1,466
Other assets ............................................................. 10,268
---------
TOTAL ASSETS ............................................................. $297,061
---------
---------
</TABLE>
- 4 -
<PAGE>
<TABLE>
LIABILITIES
<S> <C>
Deposits
In domestic offices ................................................. $94,524
Noninterest-bearing ........................... $39,487
Interest-bearing .............................. 55,037
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's............................................... 71,162
Noninterest-bearing ........................... $ 3,205
Interest-bearing .............................. 67,957
Federal funds purchased and securities sold under agree-
ments to repurchase ...................................................... 43,181
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 48,903
Otherborrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ........... 3,599
With a remaining maturity of more than one year .
through three years........................................... 253
With a remaining maturity of more than three years................... 132
Bank's liability on acceptances executed and outstanding 1,698
Subordinated notes and debentures ........................................ 5,715
Other liabilities......................................................... 9,896
TOTAL LIABILITIES ........................................................ 280,063
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock)... 10,291
Undivided profits and capital reserves ................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (22)
Cumulative foreign currency translation adjustments ...................... 16
TOTAL EQUITY CAPITAL ..................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ...................................... $297,061
---------
---------
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and
is true to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and
correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
- 5 -
<PAGE>
Exhibit 25(f)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
---------
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Lehman Brothers Holdings Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-3216325
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 World Financial Center 10285
New York, New York (Zip Code)
(Address of principal executive offices)
Guarantee of Trust Preferred Securities
Issued by Lehman Brothers Holdings Capital Trust I
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 9th day
of April, 1998.
THE CHASE MANHATTAN BANK
By /s/ F. Springer
--------------------------
F. Springer
Assistant Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .................................................... $ 12,428
Interest-bearing balances ............................................ 3,428
Securities: ..............................................................
Held to maturity securities................................................ 2,561
Available for sale securities.............................................. 43,058
Federal funds sold and securities purchased under
agreements to resell ................................................. 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,260
Less: Allowance for loan and lease losses 2,783
Less: Allocated transfer risk reserve ......... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .............................................. 126,477
Trading Assets ........................................................... 62,575
Premises and fixed assets (including capitalized
leases)................................................................... 2,943
Other real estate owned .................................................. 295
Investments in unconsolidated subsidiaries and
associated companies................................................. 231
Customers' liability to this bank on acceptances
outstanding ......................................................... 1,698
Intangible assets ........................................................ 1,466
Other assets ............................................................. 10,268
---------
TOTAL ASSETS ............................................................. $297,061
---------
---------
</TABLE>
- 4 -
<PAGE>
<TABLE>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices ................................................. $94,524
Noninterest-bearing ........................... $39,487
Interest-bearing .............................. 55,037
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's............................................... 71,162
Noninterest-bearing ........................... $ 3,205
Interest-bearing .............................. 67,957
Federal funds purchased and securities sold under
agreements to repurchase ............................................... 43,181
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 48,903
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ........... 3,599
With a remaining maturity of more than one year .
through three years........................................... 253
With a remaining maturity of more than three years................... 132
Bank's liability on acceptances executed and outstanding 1,698
Subordinated notes and debentures ........................................ 5,715
Other liabilities......................................................... 9,896
TOTAL LIABILITIES ........................................................ 280,063
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock)... 10,291
Undivided profits and capital reserves ................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (22)
Cumulative foreign currency translation adjustments ...................... 16
TOTAL EQUITY CAPITAL ..................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ...................................... $297,061
---------
---------
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
- 5 -
<PAGE>
Exhibit 25(g)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Lehman Brothers Holdings Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-3216325
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 World Financial Center 10285
New York, New York (Zip Code)
(Address of principal executive offices)
----------------------------------------------------
Guarantee of Trust Preferred Securities
Issued by Lehman Brothers Holdings Capital Trust II
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 9th day
of April, 1998.
THE CHASE MANHATTAN BANK
By /s/ F. Springer
-------------------------------
F. Springer
Assistant Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .................................................... $ 12,428
Interest-bearing balances ............................................ 3,428
Securities: ..............................................................
Held to maturity securities................................................ 2,561
Available for sale securities.............................................. 43,058
Federal funds sold and securities purchased under
agreements to resell ................................................. 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,260
Less: Allowance for loan and lease losses 2,783
Less: Allocated transfer risk reserve ......... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .............................................. 126,477
Trading Assets ........................................................... 62,575
Premises and fixed assets (including capitalized
leases)................................................................... 2,943
Other real estate owned .................................................. 295
Investments in unconsolidated subsidiaries and
associated companies................................................. 231
Customers' liability to this bank on acceptances
outstanding ......................................................... 1,698
Intangible assets ........................................................ 1,466
Other assets ............................................................. 10,268
---------
TOTAL ASSETS ............................................................. $297,061
---------
---------
</TABLE>
- 4 -
<PAGE>
<TABLE>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices ................................................. $94,524
Noninterest-bearing ........................... $39,487
Interest-bearing .............................. 55,037
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's............................................... 71,162
Noninterest-bearing ........................... $ 3,205
Interest-bearing .............................. 67,957
Federal funds purchased and securities sold under agree-
ments to repurchase ...................................................... 43,181
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 48,903
Otherborrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ........... 3,599
With a remaining maturity of more than one year .
through three years........................................... 253
With a remaining maturity of more than three years................... 132
Bank's liability on acceptances executed and outstanding 1,698
Subordinated notes and debentures ........................................ 5,715
Other liabilities......................................................... 9,896
TOTAL LIABILITIES ........................................................ 280,063
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock)... 10,291
Undivided profits and capital reserves ................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (22)
Cumulative foreign currency translation adjustments ...................... 16
TOTAL EQUITY CAPITAL ..................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ...................................... $297,061
---------
---------
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
- 5 -
<PAGE>
Exhibit 25(h)
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
--------------------------------------------
Lehman Brothers Holdings Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-3216325
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 World Financial Center 10285
New York, New York (Zip Code)
(Address of principal executive offices)
----------------------------------------
Guarantee of Trust Preferred Securities
Issued by Lehman Brothers Holdings Capital Trust III
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
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<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to
Commence Business (see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 33-50010, which is incorporated by reference. On
July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which
is incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 9th day
of April, 1998.
THE CHASE MANHATTAN BANK
By /s/ F. Springer
--------------------------
F. Springer
Assistant Vice President
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<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin .................................................... $ 12,428
Interest-bearing balances ............................................ 3,428
Securities: ..............................................................
Held to maturity securities................................................ 2,561
Available for sale securities.............................................. 43,058
Federal funds sold and securities purchased under
agreements to resell ................................................. 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income $129,260
Less: Allowance for loan and lease losses 2,783
Less: Allocated transfer risk reserve ......... 0
--------
Loans and leases, net of unearned income,
allowance, and reserve .............................................. 126,477
Trading Assets ........................................................... 62,575
Premises and fixed assets (including capitalized
leases)................................................................... 2,943
Other real estate owned .................................................. 295
Investments in unconsolidated subsidiaries and
associated companies................................................. 231
Customers' liability to this bank on acceptances
outstanding ......................................................... 1,698
Intangible assets ........................................................ 1,466
Other assets ............................................................. 10,268
---------
TOTAL ASSETS ............................................................. $297,061
---------
---------
</TABLE>
- 4 -
<PAGE>
<TABLE>
LIABILITIES
<S> <C>
Deposits
In domestic offices ................................................. $94,524
Noninterest-bearing ........................... $39,487
Interest-bearing .............................. 55,037
-------
In foreign offices, Edge and Agreement,
subsidiaries and IBF's............................................... 71,162
Noninterest-bearing ........................... $ 3,205
Interest-bearing .............................. 67,957
Federal funds purchased and securities sold under agree-
ments to repurchase ...................................................... 43,181
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 48,903
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less ........... 3,599
With a remaining maturity of more than one year .
through three years........................................... 253
With a remaining maturity of more than three years................... 132
Bank's liability on acceptances executed and outstanding 1,698
Subordinated notes and debentures ........................................ 5,715
Other liabilities......................................................... 9,896
TOTAL LIABILITIES ........................................................ 280,063
-------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock ............................................................. 1,211
Surplus (exclude all surplus related to preferred stock)... 10,291
Undivided profits and capital reserves ................................... 5,502
Net unrealized holding gains (losses)
on available-for-sale securities ......................................... (22)
Cumulative foreign currency translation adjustments ...................... 16
TOTAL EQUITY CAPITAL ..................................................... 16,998
---------
TOTAL LIABILITIES AND EQUITY CAPITAL ...................................... $297,061
---------
---------
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR.)
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