EXHIBIT 1.09
LEHMAN BROTHERS HOLDINGS IC.
Prudential Research Universe Diversified Equity NotesSM
PRUDENTSSM Due December 29, 2004
Number R-1 $40,000,000
CUSIP 524908 DK 3
See Reverse for Certain Definitions
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS 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 SUCH 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. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO LEHMAN BROTHERS HOLDINGS INC. OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized
and existing under the laws of the State of Delaware (hereinafter called the
"Company"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, on the Stated Maturity, in such coin or
currency of the United States of America at the time of payment shall be legal
tender for the payment of public and private debts, for each $1,000 principal
amount of the Securities represented hereby, an amount equal to the greater of
(a) $1,000 and (b) the Alternative Redemption Amount (the "Maturity Payment
Amount").
Any amount payable hereon will be paid only upon presentation
and surrender of this Security.
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REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET
FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
"Prudential Research Universe Diversified Equity Notes" and
"PRUDENTS" are service marks of Prudential Securities.
This Security 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.
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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.
Dated: June 29, 2001 LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Barrett S. DiPaolo
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Name: Barrett S. DiPaolo
Title: Vice President
[SEAL]
Attest: /s/ Cindy Gregoire
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Name: Cindy Gregoire
Title: Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
Dated: June 29, 2001
CITIBANK, N.A.
as Trustee
By: ___________________________
Authorized Signatory
[Form of Reverse of Security]
This Security is one of a duly authorized series of Securities of the
Company designated as Prudential Research Universe Diversified Equity NotesSM,
PRUDENTSSM Due December 29, 2004 (herein called the "Securities"). The Company
may, without the consent of the holders of the Securities, create and issue
additional notes ranking equally with the Securities and otherwise similar in
all respects so that such further notes shall be consolidated and form a single
series with the Securities; provided that no additional notes can be issued if
an Event of Default has occurred with respect to the Securities. This series of
Securities is one of an indefinite number of series of debt securities of the
Company, issued and to be issued under an indenture, dated as of September 1,
1987, as amended (herein called the "Indenture"), duly executed and delivered by
the Company and Citibank N.A., as trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), 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 Company, the Trustee and the Holders of the Securities.
The Average Level of the Underlying Basket used to calculate
the Alternative Redemption Amount shall be determined by the Calculation Agent.
All percentages resulting from any calculation with respect to
the Securities will be rounded at the Calculation Agent's discretion.
The Trustee shall fully rely on the determination by the
Calculation Agent of the Maturity Payment Amount and shall have no duty to make
any such determination.
This Security is not subject to any sinking fund and is not
redeemable prior to its Stated Maturity.
If an Event of Default with respect to the Securities shall
occur and be continuing, the amounts payable on all of the Securities may be
declared due and payable in the manner and with the effect provided in the
Indenture. The amount payable to the Holder hereof upon any acceleration
permitted under the Indenture will be equal to the Maturity Payment Amount
calculated as though the date of acceleration was the Stated Maturity.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than 662/3% in
aggregate principal amount of each series of 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) 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
therein 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,
2
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 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 Security shall
be conclusive and binding upon such Holder and upon all future holders and
owners of this Security and any Securities which may be issued in exchange or
substitution hereof, irrespective of whether or not any notation thereof is made
upon this Security or such other Securities.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal amount with
respect to this Security.
The Securities are issuable in denominations of $1,000 and any
integral multiple of $1,000.
The Company, the Trustee, and any agent of the Company or of
the Trustee may deem and treat the registered holder (the "Holder") hereof as
the absolute owner of this Security (whether or not this Security 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 Security.
No recourse for the payment of the principal of, premium, if
any, or interest on this Security, 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 Security, 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 Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the Corporate Trust Office or agency in a Place of Payment for this
Security, 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 Securities of this series or of like tenor and of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
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THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Set forth below are definitions of some of the terms used in
this Security.
"Alternative Redemption Amount" shall mean the product of (a)
the Issue Price and (b) the Average Level of the Underlying Basket divided by
100.
"AMEX" shall mean the American Stock Exchange.
"Average Execution Price" for a security or other property
shall mean the average execution price that an affiliate of the Company receives
or pays for such security or property, as the case may be, to hedge the
Company's obligations under the Securities.
"Average Level of the Underlying Basket" shall be equal to the
arithmetic average of the Level of the Underlying Basket on each of the
Calculation Dates.
"Business Day" notwithstanding the Indenture, shall mean any
day other than a Saturday, a Sunday or a day on which either the NYSE or the
AMEX is not open for securities trading or commercial banks in New York City are
authorized or required by law or executive order to remain closed.
"Calculation Agency Agreement" shall mean the Calculation
Agency Agreement, dated as of June 29, 2001, between the Company and the
Calculation Agent, as amended, modified or supplemented from time to time.
"Calculation Agent" shall mean the person that has entered
into an agreement with the Company providing for, among other things, the
determination of the Level of the Underlying Basket and the Maturity Payment
Amount. The initial Calculation Agent is Lehman Brothers Inc.
.
"Calculation Date" shall mean each of September 26, 2001,
December 26, 2001, March 26, 2002, June 26, 2002, September 26, 2002, December
26, 2002, March 26, 2003, June 26, 2003, September 26, 2003, December 26, 2003,
March 26, 2004, June 26, 2004, September 26, 2004 and December 26, 2004.
"Close of Trading" shall mean 4:00 p.m., New York City time.
"Closing Price," means the following, determined by the
Calculation Agent based on information reasonably available to it:
(i) If the Underlying Security is listed on a United States national
securities exchange, trading system or is a NASDAQ Stock Market, Inc.
security, the last reported sale price at the Close of Trading, regular
way, on such day, on the primary securities exchange or trading system
registered under the Securities Exchange Act of 1934 on which such
Underlying Security is listed or admitted to trading or NASDAQ Stock
Market, Inc., as the case may be.
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(ii) If the Underlying Security is listed on a non-United States securities
exchange, trading system (other than a bulletin board) or market, the
last reported sale price at the Close of Trading, regular way, on such
day, on the primary exchange, trading system or market on which such
Underlying Security is listed or admitted to trading, as the case may
be. The Closing Price will then be converted into U.S. dollars using
the Official W.M. Reuters Spot Closing Rate.
(iii) If the Underlying Security is not listed on a national securities
exchange or trading system or is not a NASDAQ Stock Market, Inc.
security, and is listed or traded on a bulletin board, the Average
Execution Price of the Underlying Security. If such Underlying Security
is listed or traded on a non-United States bulletin board, the Closing
Price will then be converted into U.S. dollars using the Official W.M.
Reuters Spot Closing Rate.
(iv) If a Market Disruption Event has occurred for an Underlying Security on
a day on which the Closing Price for such Underlying Security is to be
calculated, the Closing Price for such Underlying Security shall
initially be determined using the Closing Price for such Underlying
Security on the next preceding Trading Day on which a Market Disruption
Event did not occur. Once the Market Disruption Event has ceased, the
Closing Price of such Underlying Security shall then be adjusted to
equal the Average Execution Price of the Underlying Security.
"Issue Price" shall mean $1,000.
"Level of the Underlying Basket", when used with respect to
any Calculation Date shall equal the sum of (a) the sum of the products of the
Closing Prices and the applicable Multipliers for each Underlying Security for
which a Market Disruption Event does not occur on such Calculation Date, (b) if
a Market Disruption Event occurs for an Underlying Security on such Calculation
Date, the product of the Closing Price for such Underlying Security and the
Multiplier for such Underlying Security and (c) any Cash included in the
Underlying Basket on such Calculation Date.
"Market Disruption Event" with respect to an Underlying
Security means any of the following events as determined by the Calculation
Agent:
(i) A suspension, absence or material limitation of trading of such Underlying
Security has occurred on that day, in each case, for more than two hours of
trading or during the one-half hour period preceding the Close of Trading
on the primary organized U.S. exchange or trading system on which such
Underlying Security is traded or, in the case of an Underlying Security not
listed or quoted in the United States, on the primary exchange, trading
system or market for such Underlying Security. Limitations on trading
during significant market fluctuations imposed pursuant to NYSE Rule 80B or
any applicable rule or regulation enacted or promulgated by the NYSE, any
other exchange, trading system, or market, any other self regulatory
organization or the Securities and Exchange Commission of similar scope or
as a replacement for Rule 80B, may be considered material. Notwithstanding
the first sentence of this paragraph, a Market Disruption Event for an
Underlying Security traded on a bulletin board means a suspension, absence
or material limitation of trading of such Underlying Security for more than
two hours or during the one hour period preceding 4:00 p.m., New York City
time.
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(ii) A suspension, absence or material limitation has occurred on that day,
in each case, for more than two hours of trading or during the one-half
hour period preceding the Close of Trading in options contracts related
to such Underlying Security, whether by reason of movements in price
exceeding levels permitted by an exchange, trading system or market on
which options contracts related to such Underlying Security are traded
or otherwise.
(iii) Information is unavailable on that date, through a recognized system of
public dissemination of transaction information, for more than two
hours of trading or during the one-half hour period preceding the Close
of Trading, of accurate price, volume or related information in respect
of such Underlying Security or in respect of options contracts related
to such Underlying Security, in each case traded on any major U.S.
exchange or trading system or in the case of Underlying Securities of a
non-U.S. issuer, the primary non-U.S. exchange, trading system or
market.
For purposes of determining whether a Market Disruption Event has
occurred:
(i) a limitation on the hours or number of days of trading will not
constitute a Market Disruption Event if it results from an announced
change in the regular business hours of the relevant exchange, trading
system or market;
(ii) any suspension in trading in an option contract on an Underlying
Security by a major securities exchange, trading system or market by
reason of (a) a price change violating limits set by such securities
market, (b) an imbalance of orders relating to those contracts, or (c)
a disparity in bid and ask quotes relating to those contracts will
constitute a Market Disruption Event notwithstanding that the
suspension or material limitation is less than two hours;
(iii) a suspension or material limitation on an exchange, trading system or
in a market will include a suspension or material limitation of trading
by one class of investors provided that the suspension continues for
more than two hours of trading or during the last one-half hour period
preceding the Close of Trading on the relevant exchange, trading system
or market but will not include any time when the relevant exchange,
trading system or market is closed for trading as part of that
exchange's, trading system's or market's regularly scheduled business
hours; and
(iv) "Trading systems" include bulletin board services
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"Multiplier" relating to each Underlying Security shall mean
the number of shares or other units (including ADRs) (or fractional share or
other unit expressed as a decimal) of such Underlying Security included in the
Underlying Basket. The initial multipliers are as set forth below:
Underlying Security Initial Multiplier (number of shares)
------------------- -------------------------------------
Applied Materials, Inc. 0.1195
Texas Instruments Incorporated 0.1941
American Home Products Corporation 0.0980
Amgen Inc. 0.0950
AOL Time Warner Inc. 0.0946
General Motors Corporation 0.0799
Wal-Mart Stores, Inc. 0.1018
Colgate-Palmolive Company 0.0741
Dreyer's Grand Ice Cream Inc. 0.1645
Alliance Capital Management L.P. 0.0969
American International Group, Inc. 0.0592
Citigroup Inc. 0.0959
Fannie Mae 0.0588
Duke Energy Corporation 0.0879
Enron Corp. 0.0792
General Dynamics Corporation 0.0537
General Electric Company 0.1230
Conoco Inc. (Class A) 0.1686
El Paso Corporation 0.0955
Nabors Industries, Inc. 0.1153
The Multiplier with respect to each Underlying Security shall
remain constant until Stated Maturity unless adjusted for certain extraordinary
corporate events as described in the Calculation Agency Agreement.
"NYSE" shall mean the New York Stock Exchange.
"Official W.M. Reuters Spot Closing Rates" shall mean the
closing spot rates published on Reuters page "WMRA" relevant for such Underlying
Security.
"Stated Maturity" shall mean December 29, 2004, or if a Market
Disruption Event occurs on December 29, 2004 (or if December 29, 2004 is not a
Business Day, on the next Business Day on which the Level of the Underlying
Basket can be calculated), the third Business Day after the date that an
affiliate of the Company completes the sale of the Underlying Security with
respect to which such Market Disruption Event occurred to hedge the Company's
obligations under the Securities.
"Trading Day" shall mean a day on which trading generally is
conducted on the NYSE, AMEX and NASDAQ NMS and in the over-the-counter market
for equity securities as determined by the Calculation Agent.
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"Underlying Basket" shall mean the basket composed of the
Underlying Securities.
"Underlying Securities" shall mean the securities included in the
Underlying Basket from time to time and shall initially be the following twenty
common stocks or other equity securities (as identified by trading symbol):
Applied Materials, Inc. (AMAT), Texas Instruments Incorporated (TXN), American
Home Products Corporation (AHP), Amgen Inc. (AMGN), AOL Time Warner Inc. (AOL),
General Motors Corporation (GM), Wal-Mart Stores, Inc. (WMT), Colgate-Palmolive
Company (CL), Dreyer's Grand Ice Cream Inc. (DRYR), Alliance Capital Management
L.P. (AC), American International Group, Inc. (AIG), Citigroup Inc. (C), Fannie
Mae (FNM), Duke Energy Corporation (DUK), Enron Corp. (ENE), General Dynamics
Corporation (GD), General Electric Company (GE), Conoco Inc. (Class A) (COC/A),
El Paso Corporation (EPG) and Nabors Industries, Inc. (NBR). The Underlying
Securities shall only be adjusted by the Calculation Agent pursuant to the
Calculation Agency Agreement for certain extraordinary corporate events.
All terms used but not defined in this Security are used
herein as defined in the Indenture.
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The following abbreviations, when used in the inscription on
the face of the within Security, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM-as tenants in common UNIF GIFT MIN ACT - ________ Custodian ________
(Cust) (Minor)
TEN ENT-as tenants by the entireties under Uniform Gifts to Minors
JT TEN-as joint tenants with right of Act _________________________
Survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in
the above list.
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FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
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(Name and Address of Assignee, including zip code, must be printed or
typewritten.)
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the within Security, and all rights thereunder, hereby irrevocably constituting
and appointing
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to transfer the said Security on the books of the Company, with full power of
substitution in the premises.
Dated:
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NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Security in every particular, without
alteration or enlargement or any change whatever.
Signature(s) Guaranteed:
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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.